A recent announcement from the U.S. Securities and Exchange Commission (SEC) suggests that the crypto industry may be in for even more pain as it continues to suffer the far-reaching impact that the Commission’s enforcement actions have had on it.
More Pain for Crypto?
During the Securities Enforcement Forum Central 2023, David Hirsch stated that his office plans to take action against other crypto companies that violated the law. Hirsch heads the agency’s unit (Crypto Assets and Cyber Unit) that handles cryptocurrency enforcement, including the lawsuits against the world’s largest crypto exchanges. Binance And Coin baseand another against Ripple.
These actions are already having a negative impact on these companies and, by extension, on the crypto industry. As such, any further action could further dampen the mood in the crypto market. For example, Binance US, the American branch of Binance, has seen this a significant drop in its trading volumes since it faced regulatory scrutiny.
In June the SEC has sued Binance US for a range of violations, including misrepresentations about trading controls and oversight of the platform. This forced the company to suspend trading for over 100 token pairs, causing a significant drop in trading activity and investor confidence.
Even despite securing a big win Against the SEC, Ripple’s XRP has lost most of its profits resulting from the verdict. The XRP price has generally remained lukewarm, and one reason for this could be that the Commission’s regulatory position on Ripple has raised doubts in the minds of potential investorsespecially with the SEC battle Ruling by Judge Analisa Torres.
The SEC’s continued crackdown on companies in the industry is apparently impacting how outsiders interact with industry stakeholders as they may want to avoid the SEC’s wrath. Ripple CTO David Schwartz also recently revealed how the SEC’s lawsuit caused the company to take a loss dealing with a stablecoin issuer.
Meanwhile, others in the sector may be forced to exit the market or close parts of their operations, as in the case of crypto exchange Bittrex, which had to suspend its US operations earlier this year.
DeFi not exempt from SEC’s wrath
So far, it is known that the SEC has largely gone after crypto projects that are more centralized. However, Hirsch stated that Decentralized Finance (DeFi) projects, which could be a direct reference to Decentralized Exchanges (DEXs), would not be exempt from his unit’s enforcement actions as the “label of DeFi” will not prevent them conduct investigations and conduct their jobs.
However, he admitted that the Commission may not have sufficient resources to follow up on all these projects as they are already facing several legal cases. This is in line with pro-XRP legal expert Fred Rispoli’s reasoning that the Commission may want to avoid further legal battles as they do not have enough manpower to handle any additional legal proceedings.
Total market cap trailing at $1.039 trillion | Source: Crypto Total Market Cap on Tradingview.com
Featured image of The Street, chart from Tradingview.com
