The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, focusing this time on venture capital firms.
According to DL News, the SEC is investigating companies suspected of selling unregistered securities. Ari Paul, Chief Operating Officer of BlockTower Capital, stated on the Unchained podcast that the SEC’s actions aim to determine if venture capital firms are operating as dealers of unregistered securities.
Paul noted that these investigations reflect increasing pressure on the digital asset industry under Chairman Gary Gensler’s leadership. He mentioned that some individuals engage in practices resembling securities transactions by trading crypto projects through pre-sale agreements, which contravenes securities laws.
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SEC Continues Crackdown on Crypto Companies – This Time Targeting Venture Capital
Paul explained that crypto projects often reach agreements with market makers or venture capital firms to sell tokens at significant discounts before their launch, in exchange for promotion. He likened these practices by securities dealers to dubious “pump and dump” schemes.
Under Gensler’s leadership, the SEC has already taken legal actions against major cryptocurrency exchanges such as Coinbase, Kraken, and Binance, alleging them of offering unregistered securities. Additionally, as of July 28th, the Commission has filed lawsuits against DeFi entities, including allegations against Consensys for selling unregistered securities.
