SEC boss Gary Gensler warns crypto investors about lawlessness
While the crypto market waits for the approval of Bitcoin Spot ETFs in the USA, SEC boss Gary Gensler is warning crypto investors about the existing lawlessness in the USA. Companies that issue cryptocurrencies rarely comply with state laws. The 66-year-old’s tweet mainly caused ridicule.
SEC boss Gary Gensler warns crypto investors about lawlessness
SEC boss Gary Gensler warns crypto investors about existing lawlessness in the USA. Investors run the risk of experiencing losses if their investment does not achieve the expected success. There is no legal certainty because profiting companies do not comply with applicable laws, he explains.
“Some things to consider if you want to invest in cryptocurrencies ,” Gensler prefaces his Twitter post . He then gives investors three different tips.
“1. Those offering crypto investments/services may not be compliant with applicable law,” the Democratic politician said.
Gensler has been claiming for some time that existing securities laws apply to the crypto industry. He has received criticism for this, particularly from the industry itself in the USA. Many representatives are calling for the creation of a new crypto law that will ensure legal certainty. Despite criticism, Gensler has stuck to his stance for months.
According to Gensler, there is a particular risk that crypto publishers do not provide the necessary, basic transparency so that interested parties can even understand the project.
“2. Investing in crypto assets can also be exceptionally risky and often volatile. A number of major platforms and crypto assets have become insolvent and/or lost value,” adds Gensler.
The collapse of the former top cryptocurrency Terra (LUNA) in May 2022 and the collapse of the second largest crypto exchange FTX, which embezzled billions of US dollars through fraud by November 2022, received particular attention.
Cryptocurrencies popular with scammers
Finally, Gensler warns against the misuse of cryptocurrencies by fraudsters. In fact, they have an easy time of it in the crypto world. For example, they offer their own tokens, which can then only be traded against other cryptocurrencies. As a result, tracing the masterminds becomes difficult or even impossible.
This fraud cannot really be prevented. It is therefore important that investors are clear about how they spend their money to avoid falling for fraud.
3. Scammers continue to exploit the rising popularity of cryptoassets to lure retail investors into scams. These investments remain rife with fraud – false offers, Ponzi and pyramid schemes, and outright theft where those responsible disappear with investors’ money.
Most recently, the well-known pyramid scheme surrounding SafeMoon was exposed. The cryptocurrency had previously been successful for many months and provided those behind it with a monthly income of millions. Two of the three main perpetrators have now been arrested.
Only project founder Kyle Nagy is still at large. His location is still unknown to law enforcement authorities.
Twitter mocks Gensler
Gensler’s very neutral message does not convince many Twitter users. Some readers direct a variety of criticisms at the American. Some users criticize him for acting as a political person instead of concentrating on regulating the financial market.
Other readers see the warning as a clear sign that approval of Bitcoin Spot ETFs in the USA is imminent. This is expected for tomorrow, Wednesday.
