‘Paternalistic And Lazy’: Regulators Unleash Flurry Of Actions Against Crypto Companies, But Not All Of Them Are On Board | Eastern NC Now

    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    Some federal regulators, including Securities and Exchange Commission Chairman Gary Gensler, have cracked down on a number of cryptocurrency firms as lawmakers and agencies seek to introduce regulations in the nascent sector.

    The SEC announced on Thursday that cryptocurrency exchange Kraken would pay a $30 million settlement for failing to register its staking-as-a-service initiative, under which retail investors are compensated for holding certain digital assets. "Whether it's through staking-as-a-service, lending, or other means, crypto intermediaries, when offering investment contracts in exchange for investors' tokens, need to provide the proper disclosures and safeguards required by our securities laws," Gensler said in a statement.

    Coindesk also revealed in a report on Thursday that stablecoin issuer Paxos is currently under investigation from the New York Department of Financial Services. The news came shortly after the firm made headlines over rumors that the United States Office of the Comptroller of the Currency would ask executives to withdraw their application for a full banking charter.

    The moves, according to Fox Business journalist Eleanor Terrett, are the beginning of "a myriad of enforcement actions" against cryptocurrency firms in the coming weeks. Prices for Bitcoin have fallen 5.7% over the past week, while prices for Ethereum have fallen 6.5%. Both assets had largely rebounded from declines induced by the collapse of cryptocurrency exchange FTX, which occurred after customers and investors learned Sam Bankman-Fried, the company's chief executive, had commingled funds with sister trading firm Alameda Research.

    Shares for exchange platform Coinbase have likewise fallen more than 22% over the past week. The company is owned by Digital Currency Group, which also holds investments in Genesis Global Holdco; the company and two of its subsidiaries filed for bankruptcy last month, although Genesis Global Trading and other subsidiaries will continue operations. The insolvency announcement came days after the SEC charged Genesis Global Capital, one of the two subsidiaries that folded, and Gemini Trust Company for raising billions of dollars in cryptocurrency assets through an unregistered offer.

    "We allege that Genesis and Gemini offered unregistered securities to the public, bypassing disclosure requirements designed to protect investors," Gensler said in another statement. "Today's charges build on previous actions to make clear to the marketplace and the investing public that crypto lending platforms and other intermediaries need to comply with our time-tested securities laws. Doing so best protects investors."

    Gensler's actions are by no means universally approved within his agency. SEC Commissioner Hester Peirce, another member of the five-person board which leads the agency, wrote a dissenting opinion on the Kraken settlement on Thursday. "A paternalistic and lazy regulator settles on a solution like the one in this settlement: do not initiate a public process to develop a workable registration process that provides valuable information to investors, just shut it down," she wrote.

    Recent tumult in the cryptocurrency sector and the widely publicized criminal proceedings against Bankman-Fried have quickly eroded consumers' trust in the novel assets: a survey conducted by CNBC and Momentive found that 60% of Americans see the risk of cryptocurrency investments as "high," while only 10% say the assets carry little or no risk.

    The actions from the SEC also come as lawmakers consider regulations of their own in the aftermath of the FTX collapse. Members of the Senate Agriculture Committee recently held a hearing with Commodity Futures Trading Commission Chairman Rostin Behnam on increasing federal oversight of the nascent industry, while members of the House Financial Services Committee questioned FTX CEO John Ray III on the abuses that had occurred at the company.