SEC adds more bodies to crypto enforcement unit as companies still await rule book from Gensler

March 2, 2023, 5:56 PM UTC
Securities and Exchange Commission Chairman Gary Gensler has called crypto the "Wild West."
Ting Shen—Bloomberg via Getty Images

The Securities and Exchange Commission is adding agents to its crypto-focused division as it continues to ramp up enforcements.

The agency announced in May that it would add 20 employees to its Crypto Assets and Cyber Unit, which would bring the total number of people in the unit to 50. It has nearly filled all those spots, CoinDesk reported, and plans to add even more employees to the unit in the future, although it didn’t say how many.

In a statement from May, the agency claimed that its Crypto Assets and Cyber Unit had brought more than 80 enforcement actions against unregistered crypto asset offerings and platforms since it was established in 2017, resulting in monetary relief of more than $2 billion. 

The SEC didn’t immediately respond to Fortune’s request for comment.

The additions to the crypto-specific unit come as the SEC and chairman Gary Gensler have brought a flurry of enforcement actions against the crypto industry in recent months. Meanwhile, leaders in the space, such as Coinbase CEO Brian Armstrong, have called for a “clear rule book” on crypto assets, and have criticized Gensler’s regulation-by-enforcement approach.

Last month, the agency settled with the U.S.-based crypto exchange Kraken to the tune of $30 million over allegations its “staking” product offered customers unregistered securities. While Kraken agreed to shutter the product, it did not deny or admit to the agency’s allegations.

The SEC also indirectly hit top crypto exchange Binance last month by saying it planned to sue Paxos, the U.S.-based creator of BUSD, the stablecoin that uses its name. The agency said in a notice to Paxos that the BUSD stablecoin is an unregistered security.

It also cracked down on Terraform Labs, the company run by Do Kwon, whose cryptocurrencies, the stablecoin TerraUSD and Luna, spectacularly failed last year and caused billions in investor losses. The SEC accused Terraform Labs and Kwon of fraud and the sale of unregistered securities. 

Gensler has continued to increase pressure on the industry in the wake of FTX’s bankruptcy late last year. The SEC chairman has previously said that crypto is the “Wild West,” and that most digital tokens are securities.

At a conference Thursday, Gensler added that crypto exchanges should also not be considered qualified custodians for the storage of assets, including cryptocurrencies, and warned investment advisers to be wary of working with them.

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