David Hirsch, the head of the SEC’s Crypto Assets And Cyber Unit, recently promised further enforcement actions against crypto platforms deemed to be non-compliant with the agency’s demands.
The announcement was made at the SEC’s yearly Securities Enforcement Forum Central event, which took place at the Four Seasons hotel in Chicago this year and was streamed online for those who could not attend.
During the event, which hosted speakers from several of the SEC’s subdivisions, Hirsch stated that his team will continue bringing lawsuits against crypto platforms that do not meet its requirements in spite of the uncertain rate of success. He also took aim at DeFi platforms that, in reality, may not be as decentralized as they claim.
“We’re going to continue to be active regarding brokers, dealers, exchanges, clearing agencies or any others who are active in this space, are within our jurisdiction and not meeting their obligations. […] We’re going to continue to conduct investigations, we’re gonna be active in the space, and adding the label of DeFi is not going to be something that’s going to deter us from continuing our work.”
The outcome of the SEC’s landmark case against Ripple has somewhat dampened the public’s view of the enforcement agency. However, the agency has also scored some victories recently, albeit in less high-profile cases.
When asked how the SEC plans to work through its immense backlog – which its team has just promised to add to – Hirsch conceded that his organization is already working at full capacity and that it simply does not have the manpower to go after every platform it would like to at the moment.
“There are more tokens extant — I think maybe 20,000, 25,000, last I read — than the SEC or any agency has the resources to pursue directly, and similarly, there are a number of centralized platforms out there, some that are acting as unregistered exchanges.”
However, many shitcoins, and the companies that mint them, could be effectively neutralized by enforcing regulation on the platforms that allow trading in these cryptocurrencies – many of which have a very small market cap, to begin with.
Ultimately, it is up to the courts to decide whether the SEC is overstepping its boundaries. Upcoming cases will also be able to lean on the legal precedent established in the past few years as the enforcement agency stepped up its scrutiny of the crypto space.