The SEC filed a lawsuit against Ripple Labs Inc., the firm behind the XRP cryptocurrency, in December 2020, saying that the company engaged in an unregistered securities offering of XRP for $1.38 billion. The case is still ongoing, and the conclusion could have far-reaching consequences for the XRP cryptocurrency and the broader crypto sector.
Moreover, by the end of 2022, FTX collapsed and filed for bankruptcy. The FTX collapse was not the result of bad management or oversight, but of deliberate fraud. Another description of the alleged crimes is that they are “one of the biggest financial frauds in American history.”
Could the FTX collapse and people losing millions be prevented if the SEC had focused on the right people? Let’s see
Gasparino Criticizes SEC’s Judgment
Charles Gasparino is an American journalist, blogger, and radio host. On the Fox Business Network, he participates on panels frequently. In a recent tweet, he criticized the SEC’s judgment to go after crypto companies.
He has revealed how Sam Bankman-Fried, the founder of FTX, had two meetings with the SEC. He continues by saying that the SEC botched its regulatory strategy by going after Ripple over unregistered XRP when there were significant concerns about potential fraud with exchanges.
In response to this tweet, John E Deaton, the CryptoLaw founder has stated that it’s not just Ripple that has become a target of SEC’s poor regulatory agenda. The SEC sued LBRY, a small company in New Hampshire in another non-fraud case over the LBC token. Then there’s dragonchain whose DRGN token is governed by the Ethereum Blockchain and also with respect to Kim Kardashian. Pointing out the incompetence and failure of the SEC Chairman, Gary Gensler.
The SEC brought an enforcement action against LBRY in March 2021, claiming that LBRY had offered and sold LBC as an unregistered security in violation of Sections 5(a) and 5(c) of the Securities Act.
Further, The Securities Exchange Commission pursued charges against blockchain-company Dragonchain, alleging that the 2017 ICO and subsequent offers and sales of their DRGN token, which raised over $16.5 million in proceeds, were illegal sales of unregistered securities.
The Securities and Exchange Commission in October 2022, announced charges against Kim Kardashian for touting on social media a crypto asset security offered and sold by EthereumMax without disclosing the payment she received for the promotion.
Community Reaction to this
The majority of the community believes that if SEC had focused its attention on potential fraud by FTX and SBF, it could have prevented severe losses suffered by the FTX collapse.
The majority agrees with Charles Gasparino and John E Deaton and has expressed their disappointment with SEC and Gary Gensler.