Former SEC Official Calls Crypto Trading Platforms Dangerous and Unsafe

Liputan6.com, Jakarta Founder and former head of the US Securities and Exchange Commission (SEC) Internet Enforcement Office, John Reed Stark recently issued his opinion regarding the agency’s legal action against Coinbase and Binance, two cryptocurrency exchanges.

Stark, who has worked with the SEC for more than 19 years, said this may be the start of a regulatory cryptocurrency “siege” that could reach other companies in the industry.

“Getting off the crypto platform now, I couldn’t have said it any clearer. I believe we now know for a fact that crypto trading platforms are under a siege by US regulations or law enforcement that has just started,” said Stark, quoted from Bitcoin.com, Monday (19/6/2023).

Stark further clarified that, in his view, the crypto trading platform was “high risk, dangerous, and fundamentally unsafe,” stating the SEC was on the right track with its enforcement action.

Lack of SEC Registration

Stark discussed how this exchange’s lack of registration with the SEC limited the organization’s capacity to protect crypto investors. This lack of registration allows crypto markets to operate without much scrutiny.

“With crypto trading platforms, the SEC does not have any oversight and access and has little ability to detect, investigate, and prevent fraudulent behavior,” explained Stark.

Criticism for the SEC

Coinbase and Binance have been tasked with operating an unregistered trading platform; however, Coinbase CEO Brian Armstrong issued a response to the SEC lawsuit, denying the company could register its activities after having numerous conversations with the organization.

By the same token, lawmakers have also criticized the SEC’s stance on the matter, accusing it of failing the cryptocurrency industry.

Senator Cynthia Lummis said the SEC failed to provide a pathway for digital asset exchanges to register, and did not provide adequate legal guidance on what differentiates a security from a commodity.

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