In his latest speech at Piper Sandler Global Exchange and Fintech Conference, Gary Gensler grilled the crypto industry by calling it full of fraudsters. The Chair of the SEC also compared the crypto market to a 1920s stock market by stating that it was full of Ponzi schemes. He highlighted that the SEC would clean up the crypto market by applying a set of securities laws, similar to those of Congress while cleaning up the stock market back then.
Gary Gensler openly praised the Securities Act of 1933, along with the Securities Exchange Act of 1934, and continuously argued that these laws enabled the US securities markets to thrive considerably till now. At the same time, he stated that the crypto securities markets must also benefit from these laws, as they are not less deserving of the protection provided through these laws.
“With wide-ranging noncompliance, frankly, it’s not surprising that we’ve seen many problems in these markets. We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were put in place. Hucksters. Fraudsters. Scam artists. Ponzi schemes.”
Gensler stated that all assets and exchanges in the crypto space are not exempted from regulation. Many people believe that the statement debunked claims that tokens provide utility and can evade being classified as securities.
Gary Gensler and His Controversial Role In the Crypto Space
Gary Gensler expressed harsh criticism toward Binance during his speech. He revealed that the regulator has internal communications suggesting that Changpeng Zhao knowingly violated securities laws. However, there is a visible difference between the lawsuits filed against Binance and other exchanges, and the lawsuit surrounding Binance accuses its CEO of willingly commingling the funds of customers.
Furthermore, it has recently come to light that Gary Gensler offered himself to Binance to become its advisor back in 2019, as alleged by Changpeng Zhao and the lawyers. Gensler also met Zhao in Japan in March 2019. Later, Gensler was nominated by President Biden to the SEC in February 2021 and then he was appointed as SEC chair in April 2021.
As a result, Binance’s lawyer states,
“Mr. Gensler should have been recused from any consideration in this matter based on this history and the prospect that Mr. Gensler may be a material fact witness.”
Based on the speculations, Gensler’s role in the lawsuit against Binance has become more controversial. It is yet to be seen how the case folds out and impacts the crypto market in the coming days.