- 1 Post FTX-saga, the regulatory crackdown on the crypto industry surged by 183%.
- 2 Gary Gensler pointed out parallels between FTX and the world’s biggest crypto exchange.
In the past six months after the infamous FTX-saga, the regulatory crackdown by the SEC on the crypto industry swelled by 183%. The financial watchdog of the United States, the Securities and Exchange Commission, is aggressively attacking crypto entities operating in the States—recent attempts being against the world’s biggest crypto exchange and Coinbase on June 5 and 6, 2023.
SEC’s Aggressive Actions Against Crypto Industry
A deep analysis of the agency’s press releases and news reports before and after the FTX’s collapse reveals that the cases counted to 7 prior. The aggression increased noticeably when the world’s third largest crypto exchange filed for Chapter 11 bankruptcy in Delaware court on November 11, 2023. After that, the agency’s aggression swelled up to 17, an increase of 183%.
Dividing the regulatory and enforcement actions in the first and second half of the year with H1 and H2, respectively, following details can be better understood.
Year | First Half (H1) | Second Half (H2) |
2018 | 2 | 3 |
2019 | 2 | 1 |
2020 | 3 | 3 |
2021 | 3 | 2 |
2022 | 6 | 12 |
2023 | 17 | N.A. |
Interestingly the data does not include the recent lawsuits against Coinbase and the world’s biggest crypto exchange.
This sudden increase in the agency’s aggression leads to speculations that the financial watchdog is trying to compensate for failing to police the FTX crypto exchange in time. While speaking at an event in Washington D.C. on June 7, 2023, United States Representative French Hill said that the recent crackdown was a save-yourself kind of move by Gary Gensler.
Hill further claimed that instead of being proactive in policing FTX at the appropriate time, Securities and Exchange Commission Chair Gary Gensler was busy alleging celebrities like Kim Kardashian for promoting crypto in Super Bowl advertisements.
Parallels Between FTX and World’s Biggest Crypto Exchange
SEC Chair Gary Gensler, while speaking with Bloomberg on June 6, 2023, argued that there are certain parallels between the world’s biggest crypto exchange and the now-bankrupt FTX. He referred to the module in which sister companies were used to move funds.
It is known that FTX used its sister firm Alameda Research in the fraud and how important a role Sam Bankman-Fried played in the orchestration of the financial crime.
On June 5, 2023, the financial watchdog filed a lawsuit against the biggest crypto exchange pressing 13 charges. One claimed that the exchange and its U.S. subsidiary merged their funds into one account controlled by Merit Peak Limited.
Another allegation says that the United States subsidiary was trading through Sigma Chain. The CEO owns the undisclosed primary market-making form. Moreover, Coinbase CEO Brian Armstrong argued that the slew of regulatory actions by the agency could be considered as an attempt to distract the agency’s failure in handling FTX-saga.
The recent regulatory crackdown on the crypto industry has created a hostile environment for the industry’s operation in the United States. Many entities are considering moving offshore, while others are waiting for clear and transparent regulations. Experts believe that the course of action could lead the U.S. to lose the crown of financial superpower amidst the rising power of cryptocurrency.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.