The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, this time targeting venture capital firms.
According to DL News, the SEC is investigating similar firms suspected of selling unregistered securities. BlockTower Capital’s Chief Operating Officer, Ari Paul, stated on the Unchained podcast that the SEC’s actions aim to determine whether venture capital firms are operating as unregistered securities dealers.
Paul noted that these investigations reflect increasing pressure from the commission under Chairman Gary Gensler on the digital asset industry. He highlighted that some individuals engage in practices resembling securities trading by trading in encrypted projects through pre-agreements, thereby violating securities laws.
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SEC Continues Crackdown on Cryptocurrency Companies — This Time Targeting Venture Capital
Paul explained that cryptocurrency projects often strike deals with market makers or venture capital firms at significant discounts before launching their tokens to facilitate promotion. He likened these practices by securities dealers to dubious “pump and dump” schemes.
Under Gensler’s leadership, the SEC has already taken legal action against major cryptocurrency exchanges like Coinbase, Kraken, and Binance, alleging they offered unregistered securities. Additionally, as of the 28th of X month, the commission has also filed lawsuits against Consensys in the DeFi space for allegedly selling unregistered securities.
