The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, with venture capital firms now in its crosshairs. According to DL News, the SEC is investigating companies suspected of selling unregistered securities. BlockTower Capital’s COO, Ari Paul, stated on the Unchained podcast that the SEC’s actions aim to determine whether venture capital firms are operating as brokers of unregistered securities.
Paul noted that these investigations reflect the increasing pressure the Commission is applying to the digital asset industry under the leadership of Chairman Gary Gensler. He mentioned that some individuals engage in practices akin to securities trading by signing pre-agreements to trade crypto projects, thereby violating securities laws.
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Paul explained that before launching their tokens, cryptocurrency projects often reach agreements with market makers or venture capital firms to sell tokens at a significant discount in exchange for promotion. He likened the practices of these securities dealers to dubious “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. Moreover, as of the 28th of the month, the Commission has also targeted the DeFi sector with a lawsuit against Consensys for allegedly selling unregistered securities.
