**Crypto News Update: SEC Intensifies Its Oversight of the Cryptocurrency Sector**
Following its notable setback in the Ripple case, the U.S. Securities and Exchange Commission (SEC) shows no signs of easing its pressure on the cryptocurrency market.
By: Mete Demiralp
Date: 09.08.2024 – 17:33
Last Updated: 55 minutes ago
In a significant move, the SEC has issued subpoenas to at least three venture capital (VC) firms involved in cryptocurrency this year, indicating a heightened level of scrutiny over the digital asset landscape.
Sources close to the ongoing investigation reveal that these subpoenas are part of a broader initiative aimed at determining potential violations of federal securities laws within the crypto investment realm. One subpoena specifically addressed “Concerning Certain Crypto-Asset Offering Intermediaries” and indicated that SEC staff were probing for possible breaches of federal regulations.
This recent development illustrates the SEC’s expanding focus, which now encompasses the foundational stages of crypto capital inflow, targeting the venture capitalists that provide essential funding to numerous crypto startups. The issuance of similar requests to at least two other crypto VCs implies that the SEC is adopting a comprehensive strategy in its inquiries.
According to insiders, the subpoenas require VCs to provide all agreements linked to their token transactions. An attorney representing a crypto VC that has not been subpoenaed described the SEC’s actions as an “overly broad investigative drive,” highlighting the substantial compliance costs involved.
Elisha Kobre, a legal expert in securities and commodities fraud at Bradley Arant Boult Cummings, stated that the SEC’s intensified focus on venture capital firms is a logical progression in its enforcement actions. “This is a natural additional area of enforcement that the SEC would consider pursuing,” Kobre remarked.
In July, Ari Paul, the Chief Investment Officer of BlockTower Capital, a prominent institutional investor, noted in a podcast that the SEC was investigating crypto VCs.
A knowledgeable source regarding the SEC’s investigation indicated that the regulator is particularly examining whether crypto VCs are acting as brokers for unregistered securities, essentially introducing them to the retail market while claiming exemptions for accredited investors. If substantiated, such activities could jeopardize the initial issuance of these tokens and complicate the SEC’s regulatory framework.
*This is not investment advice.
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