Enforcement actions related to cryptocurrency by the United States Securities and Exchange Commission (SEC) have seen a significant increase in the six months following the bankruptcy of cryptocurrency exchange FTX.
According to an analysis of SEC press releases and news reports on its actions, the SEC carried out approximately six enforcement actions in the six months preceding FTX’s collapse. However, in the six months after FTX’s bankruptcy in November 2022, the number of SEC enforcement actions related to crypto rose to at least 17, marking an estimated increase of 183% compared to the previous period. It’s worth noting that this analysis does not include the recent lawsuits brought by the SEC against Binance and Coinbase.
This surge in enforcement actions, including those targeting the two exchanges, has led some observers to suggest that the SEC is trying to make up for its perceived failure to regulate FTX properly.
U.S. Representative French Hill reportedly referred to the recent crackdown as a “cover your ass” move by SEC chair Gary Gensler during an event in Washington, D.C. on June 7.
Hill criticized Gensler for focusing on other matters, such as criticizing Kim Kardashian’s promotion of crypto in a Super Bowl ad, instead of overseeing FTX. Hill characterized the increased enforcement actions as an attempt to protect the SEC’s reputation.
Markus Thielen, the head of research and strategy at Matrixport and author of the book “Crypto Titans: How trillions were made and billions lost in the cryptocurrency markets,” expressed his belief that there is a sense of “embarrassment” among those who failed to identify the issues at FTX. Ripple CEO Brad Garlinghouse also chimed in, claiming in a tweet on June 6 that the SEC is resorting to throwing lawsuits at the wall in an effort to divert attention from its handling of the FTX situation.
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