Gary Gensler: Crypto market is like 1920s stock market, full of 'fraudsters'
In a June 8 speech at the Piper Sandler Global Exchange & Fintech Conference, United States Securities and Exchange Commission (SEC) Chair Gary Gensler compared the current crypto market to the 1920s U.S. stock market, saying that it is full of “hucksters,” “fraudsters,” and “Ponzi schemes.” Just as Congress cleaned up the stock market by enacting securities laws, the current SEC can also clean up the crypto market by applying these laws, he argued.
JUST IN: SEC Chair Gary Gensler says crypto is all "hucksters, fraudsters, scam artists." pic.twitter.com/1xRWUMzbel
In the talk, Gensler praised the Securities Act of 1933 and Securities Exchange Act of 1934, claiming that these laws allowed the U.S. securities markets to “thrive” over the next 88 years. He argued that the “crypto securities markets” of today should also benefit from these laws, as they are not “less deserving of the protections” they provide.
Pointing to a court ruling against Telegram Open Network, Gensler argued that crypto asset securities are not exempt from securities laws even if they have utility.
“Some promoters of crypto asset securities contend that their token has a function beyond simply being an investment vehicle," Gensler stated. " As the courts in the Telegram case and others have said, however, some additional utility does not remove a crypto asset security from the definition of an investment contract.”
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This means that crypto security exchanges must comply with securities laws, including the requirement to separate “the exchange, broker-dealer, and clearing functions,” Gensler stated. In his view, this separation “helps mitigate the conflicts that can arise with the
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