SEC Official Warns: Get Out of Crypto Platforms Now!

Updated: 10 months

• Former high-ranking SEC official John Reed Stark warns investors to “get out of crypto platforms now” due to a regulatory siege.
• Stark notes that the lack of investor protections and oversight at crypto exchanges opens them up to potential manipulation, insider trading, and other fraudulent activities.
• The SEC recently launched a lawsuit against top global crypto exchange Binance and its CEO Changpeng Zhao, followed by another lawsuit against Coinbase on Tuesday.

Former SEC Official Warns Investors To ‘Get Out Of Crypto Platforms Now’

A former high-ranking official at the U.S. Securities and Exchange Commission (SEC) thinks digital asset investors should “get out of crypto platforms now.” John Reed Stark, who founded the SEC’s Office of Internet Enforcement and spent 11 years as its chief, says crypto exchanges are under “a US regulatory/law enforcement siege which has only just begun.”

Lack Of Investor Protections At Crypto Exchanges

Stark notes that he has been an SEC critic in the past, but believes the regulator’s recent crypto enforcement actions have been “spot on.” He argues that there is a “chasm” of necessary investor protections at crypto exchanges, which results in a lack of requirements regarding record-keeping, cybersecurity, codes of conduct, customer complaints and order flow transactions. Reed also says exchanges currently have “no reason to abide by US statutes and rules prohibiting manipulation, insider trading, trading ahead of customers and other fraudulent behavior by customers or employees.”

SEC Lacks Ability To Detect Fraud At Crypto Exchanges

He also thinks the SEC currently lacks the ability to detect fraud at crypto exchanges: “With traditional SEC-registered financial firms, the SEC has unlimited and instantaneous visibility into every aspect of operations. With crypto trading platforms, the SEC lacks any sort of oversight and access — and has scant ability to detect, investigate and deter fraudulent conduct.”

SEC Launches Lawsuit Against Binance And Coinbase

Crypto prices crashed across the board on Monday after news broke that the SEC launched a lawsuit against top global crypto exchange Binance and its CEO Changpeng Zhao for allegedly violating investor protection laws. The regulator followed up this action with another lawsuit against Coinbase on Tuesday for alleged operating as an unregistered securities exchange broker & clearing agency without authorization from authorities.

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