The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the crypto sector, this time targeting venture capital firms. According to DL News, the SEC is investigating such companies for the alleged sale of unregistered securities. On the Unchained podcast, Ari Paul, Chief Operating Officer of BlockTower Capital, stated that the SEC’s actions aim to determine whether venture capital firms are operating as dealers of unregistered securities.
Paul noted that these investigations reflect the increasing pressure the Commission is placing on the digital asset industry under the leadership of Chairman Gary Gensler. He mentioned that some of them engage in practices similar to securities trading, making preliminary trading agreements with crypto projects, thereby violating securities laws.
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Paul explained that before a crypto project launches its token, it often makes agreements with market makers or venture capital firms, selling tokens at a significant discount in exchange for promotion. He likened the practices of these dealers to dubious “pump-and-dump” schemes.
Under Gensler’s leadership, the SEC has already taken legal action against major crypto exchanges like Coinbase, Kraken, and Binance, accusing them of offering unregistered securities. Additionally, the Commission has targeted the DeFi sector, filing a lawsuit against Consensys on June 28 for allegedly conducting sales of unregistered securities.
