SEC Warns Investors about Investing in Crypto Securities

SEC has issued an investor alert on cryptocurrency asset securities, citing a lack of compliance by some crypto trading platforms.

The US Securities and Exchange Commission (SEC) has warned those investing in crypto asset securities to be cautious, claiming that some crypto offerings may be illegal.

The top regulators said that some platforms offering crypto securities may not comply with federal securities law and expose investors to great risk.

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In a March 23rd bulletin, SEC underlined the need for parties offering crypto security investment products and services to register with the relevant authorities, including SEC.

The law requires parties such as securities broker-dealers, investment advisers, and exchanges to register with the SEC, a state regulator, and/or a self-regulatory organization. Moreover, entities and platforms involved in lending or staking crypto assets may be subject to the federal securities laws.

The regulator explained that, during the registration, the issuer of securities products and services provides central information about their business operations. On the other hand, unregistered crypto securities offerings may not disclose information, such as audited financial information, that an investor may need to make informed investment decisions.

The warning by SEC follows a series of regulatory actions against crypto companies since the collapse of cryptocurrency exchange FTX in November 2022. The regulator has since gone after popular crypto platforms, including Binance, Kraken, Terraform Labs, and Paxos.

Recently SEC issued a Wells Notice to Coinbase, implying that it could take legal action against the exchange due to a lack of compliance with federal securities statutes.

Gile K. - Crypto Analyst

by Gile K. – Crypto Analyst, BitDegree

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