The U.S. Securities and Exchange Commission (SEC) has intensified its scrutiny of the cryptocurrency industry, with venture capital firms as the latest target.
According to DL News, the SEC is investigating similar firms 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 in encrypted projects through pre-agreements, thereby violating securities laws.
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The SEC Continues Crackdown on Cryptocurrency Companies – Their Latest Target
Paul explained that cryptocurrency projects often reach agreements with market makers or venture capital firms to sell tokens at significant discounts before their launch as a promotional strategy. He likened these practices by securities dealers to suspicious “pump and dump” schemes.
Under Gensler’s leadership, the SEC has already taken legal action against major cryptocurrency exchanges like Coinbase, Kraken, and Binance, accusing them of offering unregistered securities. Additionally, as of July 28, the commission has also filed lawsuits against Consensys in the DeFi sector for allegedly selling unregistered securities.
