Skip to content

SEC chief accuses crypto exchanges of trading against clients

Despite the fact that the cryptocurrency market is growing at an ever-increasing rate, with new cryptos and exchanges being added every day, authorities in certain countries are stepping up their efforts to regulate the new asset class and its users.

In particular, one of them is the United States Securities and Exchange Commission (SEC), whose chair Gary Gensler has recently warned the public that some digital asset exchanges may actually be betting against their own customers, as Bloomberg reported on May 10.

Indeed, Gensler told Bloomberg News that all entities trading crypto fall under the regulator’s scope and, therefore, need to register with it. Furthermore, he argued that some of those entities were evading rules, trading ahead of their customers, and:

“In fact, they’re trading against their customers often because they’re market-marking against their customers.”

The SEC chair also criticized stablecoins, including Tether (USDT), USD Coin (USDC), and Binance USD (BUSD), over being affiliated with exchanges, which allows them to “potentially avoid AML and KYC” – anti-money laundering and know-your-customer controls.

The SEC and its history with crypto

Known for its tough stance on all things crypto, the SEC is in the middle of several lawsuits against some of the major names in the crypto and technology industry – including Ripple and Nvidia.

As a reminder, the SEC has been waging a legal battle against Ripple since December 2020, accusing it of illegally selling more than $1.3 billion worth of unregistered XRP tokens between 2013 and December 2020.

More recently, it has settled charges against technology company NVIDIA Corporation (NASDAQ: NVDA) over the failure to disclose the impact that crypto mining has had on the profits from its gaming business.

Two months ago, a group of U.S. congressmen has written to the SEC, concerned over the agency’s information-seeking process, which they considered was stifling innovation, especially where crypto startups were concerned.

At the same time, Finbold reported on the opinion of Jan van Eck, the chief executive of global investment management firm VanEck, who opined that the SEC was holding the spot Bitcoin exchange-traded fund (ETF) hostage over failure to approve the product.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in 70+ cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Read Next:

Weekly Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts