Crypto Exchanges Are Selling Coins Deemed Illegal By SEC

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US cryptocurrency exchanges list more than a dozen digital coins banned by regulators.

That’s according to a Wall Street Journal (WSJ) report on Monday, May 8, which also notes that the number of cryptocurrencies labeled by the Securities and Exchange Commission (SEC) has nearly tripled in the past year.

The SEC can only regulate digital coins classified as securities, the report says, and SEC Chairman Gary Gensler said most cryptocurrencies fall under that designation.

According to the report, this means that many of these tokens have been distributed illegally, as the securities can only be sold to the public after they have been registered with the SEC and the issuers have published financial and risk information.

Since late 2017, the SEC Securities and Exchange Commission and US courts have identified 76 cryptocurrencies as securities. Of those 76, 16 were available for trading on one or more major U.S. crypto exchanges, the WSJ said.

The report comes amid an ongoing clash between the SEC and crypto firms, which have complained that the United States is lagging behind other countries when it comes to digital asset rules.

Among them is Ripple CEO Brad Garlinghouse, who told CNBC during the Dubai Fintech Summit on Monday (May 8) that the United States was overshadowed by other countries in this area.

He added that by the time a lawsuit filed by the SEC against Ripple in December 2020 is resolved, the company will have spent $200 million defending itself.

I find that as a company that started in the United States, as an American citizen, it’s sad, like I have sadness about it, Garlinghouse said. The United States is overwhelmed, not just a little, but a lot.

The UAE has the Virtual Assets Regulatory Authority and the European Union has the Crypto Asset Markets (MiCA), but the United States has put politics ahead of politics, he said.

Meanwhile, PYMNTS reported last week that the SEC has strengthened its enforcement against crypto companies under Gensler’s leadership.

In 2022, the agency filed a total of 30 cryptocurrency-related enforcement actions, a 50% increase from the previous year. And in the first few months of 2023, the SEC issued 13 enforcement actions, up more than 25% from last year’s numbers.

In addition to shifting the focus from individual tokens to trading platforms that cater to US investors, Gensler has separately increased the number of law enforcement attorneys in the company’s crypto unit. SEC, a decision that observers say indicates the SEC Chairman intends to pursue further charges in the coming months. his agency is casting as wide a net as possible, PYMNTS wrote.

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