The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, with a focus on venture capital firms.
According to DL News, the SEC is investigating similar companies suspected of selling unregistered securities. BlockTower Capital’s Chief Operating Officer Ari Paul said on the Unchained podcast that the SEC’s actions are aimed at determining whether venture capital firms are operating as unregistered securities dealers.
Paul noted that these investigations reflect increasing pressure from the commission on the digital asset industry under Gary Gensler’s leadership.
He mentioned that some individuals engage in practices similar to securities trading by trading cryptocurrency projects through signing pre-agreements, which violate securities laws.
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Paul explained that cryptocurrency projects often reach agreements with market makers or venture capital firms to sell tokens at a significant discount in exchange for promotion before launching their tokens. He likened these practices of securities dealers to suspicious “pump and dump” schemes.
Under Gensler’s leadership, the SEC has taken legal action against major cryptocurrency exchanges such as Coinbase, Kraken, and Binance, accusing them of offering unregistered securities. Additionally, as of May 28, the commission has also filed lawsuits against Consensys in the DeFi sector for allegedly selling unregistered securities.
