U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler says the regulator needs extra funding to keep up with emerging capital markets like crypto. He has supported President Biden’s request to add $2.4B in funding to the SEC to help crack down on crypto “misconduct.”
SEC seeking funding to continue cracking down on crypto
The U.S. SEC is all out to ‘streamline’ the crypto space by requesting an extra $2.4B in funding to help regulate the space. Its Chair, Gary Gensler, voiced his testimony on March 29, 2023, budget hearing with the House Appropriations Committee, saying that his commission needs more money to keep up with the ongoing innovation.
In his words, Gary Gensler said:
“Rapid technological innovation in the financial markets has led to misconduct in emerging and new areas, not least in the crypto space. Addressing this requires new tools, expertise, and resources.”
https://youtu.be/ZDDWLeeiHv4
He explained that the 2022 budget increase helped them bring staffing levels above what was recorded in 2016 for the first time. However, it is still not good enough, as the commission is finding it tough to match the growth rate of bad actors. He also revisited his previous comments calling crypto wild west once more.
SEC wants to become busier with the crypto space
The SEC has been busy in the past few months as it has been seen charging individuals and crypto organizations openly. It has charged Kraken, Justin Sun Linsay Lohan, Jake Paul, Beaxy crypto exchange, FTX, SBF, Terraform labs, Do Kwon, Gemini, Genesis, and others.
Today we charged crypto entrepreneur Justin Sun and three of his wholly-owned companies for the unregistered offer and sale of crypto asset securities Tronix and BitTorrent.
— U.S. Securities and Exchange Commission (@SECGov) March 22, 2023
The commission also warned about charging Coinbase for offering some ‘questionable’ services in the U.S. without its approval. Now, its Chair has expressed interest in going further with its efforts by asking for more funding.
In the budget hearing, Gensler explained that they had received 35,000 separate tips and complaints in 2022. These tips helped them serve over 750 enforcement actions and orders for over $6.4B in penalties and disgorgements. He added that a third of these complaints were connected to the crypto space, which shows an increased need for regulation.
Investments in crypto asset securities can be exceptionally volatile & speculative, & the platforms where investors buy, sell, borrow/lend these securities may lack important protections for investors. @SEC_Investor_Ed to investors: exercise caution w/ crypto asset securities.
— U.S. Securities and Exchange Commission (@SECGov) March 23, 2023
Keep watching Fintech Express for updates on regulation and other finance-related developments
Bank of England (BoE) Governor Andrew Bailey has asked banks to be vigilant as the current market is unfavorable, echoing President Joe Biden’s latest sentiments that the ongoing banking collapse is not anywhere near its end.
Bank of England Governor Andrew Bailey asks banks to be vigilant
Financial and political leaders are actively touching on the ongoing financial collapse. Banking stocks are nose-diving globally following a series of Bank collapses that were started by the fall of Silicon Valley bank.
Now, the BoE Chief, Andrew Bailey, has come out to tell the banks to brace themselves as the current market will not be easy. He made these comments on March 28, 2023, where he vowed to be vigilant amid the current market shake, which he termed a “testing out” to find banks’ weaknesses.
Bailey revealed to U.K.’s Treasury Select Committee that the U.S. is clearing its mess in regional banking and that Credit Suisse was an institutional issue that is not widespread in the U.K. He also added that the country’s banking system is strong and has good liquidity.
Bailey compared the U.K. and the U.S. banking systems saying that the set regulations for the treatment of interest rate risk in the banking book (IRRBB)- that refers to the prospective risks to bank capital and earnings from adverse movements in interest rates-as the main reason why the British banking system still stands while US one is on shaky ground.
President Biden says the banking crisis is not over yet
At around the same time, U.S. President Joe Biden said that the White House’s response to the banking crisis is not over. He said he believes his team has handled the crisis well but is still watching to see what happens even though they are convinced they are moving in the right direction.
Biden also explained that his administration looked at legislative changes to ensure such a crisis would never happen again. However, he expressed concerns that it may be difficult to do so as they have a split Congress. Keep watching Fintech Express for updates on macro-finance and other related developments.
NFT investor Brandon Riley has lost $135K by burning his crypto punk NFT when trying to get a loan by collateralizing it. He used the wrong method permanently removing his NFT from circulation.
‘Hard-to-use’ UI costs an investor a $135K NFT
Brandon has gone on Twitter to mourn his massive five-figure loss earlier today, claiming that his process of borrowing money has cost him 77 ETH. Riley had purchased the crypto punk NFT alongside another BAYC NFT earlier this month and said he hoped to hold them through to the next decade.
Now feels like an appropriate time to introduce #BAYC 586 to #Punk 685 (acquired a week ago). Hope to hold both for a decade… LGF! 🚀 pic.twitter.com/SLb68rY6MR
In a tweet, he said he believes he has the stomach to ride the bull and bear runs and can manage to watch the assets get a 90%+ downturn. He added that he believes the assets will most likely have appreciated by far in the next decade.
I will. These hands aren’t made of glass. I know (from experience) I have the stomach for +90% downturns. The probably of be being down (in $) a decade from now is almost zero.
Now, his dream of holding his beloved punk has gone in flames. Riley is a seasoned NFT collector who knows the need to buy NFTs before a bull market. However, he needed some cash and opted to get a loan against his punk NFT.
Some Twitter users asked him what happened, and he explained that the unfamiliar wrapping of the NFT cost him. He accidentally sent that asset to a burn wallet after completing the process.
I did do the first part with my own address I’m step 2. But then when I got to step 5 the burn address was the one listed under “9. proxyInfo” and I was told to follow the directions exactly, so I did. I just shouldn’t have attempted this on my own I guess.
Riley explained that he was not wrapping the asset to sell it on Blur but wanted to make it his “forever punk.” He added that the asset was beloved to him as its number was the exact reverse of his BAYC, and he was wrapping it only because he needed to draw some liquidity from it.
Some onlookers believed Riley had “deep pockets,” which he denied by claiming that he bought the asset with borrowed money. While concluding and conceding the mistake, Riles noted, “I just shouldn’t have attempted this on my own, I guess,” which should be a lesson for everyone.
Jack Dorsey has lost over $500M as his company, Block, was preyed on by short sellers resulting in the collapse of its stock shares. The short seller, Hindenburg Research, accused his platform of being involved in money laundering and skirting banking laws.
Jack Dorsey gets a rough day as Block gets preyed on by short sellers
The report from Hindenburg Research has made the market go wild, leading to Jack Dorsey’s net-worth slumping 11% in a day. This fall in Dorsey’s net worth came from the sell-off of Square shares, a subsidiary of Block.
Block is the parent company of Square and Cash App. Square has been trading publicly since listing on New York Stock Exchange in 2015. It had been operating smoothly for all that long until it became the target of Hindenburg Research which saw its shares lose value by 15% during the close of Thursday.
NEW FROM US:
Block—How Inflated User Metrics and "Frictionless" Fraud Facilitation Enabled Insiders To Cash Out Over $1 Billionhttps://t.co/pScGE5QMnX$SQ
Square is one of many companies that short-seller Hindenburg Research has targeted. The short seller has followed other big names like Indian Billionaire Gautam Adani and hydrogen-powered car maker Nikola.
Block to use litigation against Hindenburg Research
On Thursday, Dorsey’s Block said it was preparing to take legal action against Hindenburg Research. The company said that reports against it were misleading and false. It added that it would work with the Securities and Exchange Commission to prove its innocence legally.
Conversely, the short seller said that it had been conducting deep investigations for the past two years and discovered that Block artificially inflated the number of its registered customers to facilitate shady deals. It said it had conducted dozens of interviews with former employees, partners, and industry experts, which helped it conclude that Block was operating against US banking laws.
However, till now, Block has not taken any legal action against Hindenburg research. Keep watching Fintech Express for updates on this and other fintech-related stories.
The US SEC has issued a Wells notice to crypto exchange Coinbase over its crypto staking services. A Wells notice always comes before this regulator legally presses charges.
SEC issues a Wells notice to Coinbase
The US SEC has continued its crypto crackdowns, with Coinbase as its latest victim. It has issued a Wells notice saying that the exchange is offering some services in the US that can be classified as securities without its clearance.
1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.
This Wells notice is the second that the SEC issued this year after it sent one to Paxos in February. At the time, the SEC claimed that Binance USD pegged stablecoin, BUSD was a security, and Paxos should cease issuing it. The SEC has also charged Kraken, another crypto exchange, $30M for offering unregistered crypto staking services in the US. This news rocked the internet and caused a series of debates as Coinbase CEO had claimed that they had received rumors that the SEC was preparing to fight crypto staking.
Oh man, all I had to do was fill out a form on a website and tell people that staking rewards come from staking? Wish I'd seen this video before paying a $30m fine and agreeing to permanently shut down the service in the US. How dumb do I look. Gosh. ⛽️💡https://t.co/UPdQdnI6xN
Due to regulatory uncertainty, the news of a Well notice being issued to Coinbase has greatly shaken its stocks. The shares fell almost 12% in extended trading and another 8.16% during the trading hours.
Coinbase stands its ground against SEC charges
Coinbase has issued a statement regarding the notice saying that it supposes the SEC may aim to use enforcements on its Spot market, staking services, Coinbase Prime, Earn program, and the Coinbase Wallet.
It noted, “The potential civil action may seek injunctive relief, disgorgement, and civil penalties.”
The company’s CEO has called out the SEC, saying the SEC scrutinized their products pre-launch and gave them the go-ahead. He assured Coinbase clients that the company is ready to prove its products are law-compliant in court and will continue supporting them.
3/ While we understand that this is all part of the journey to reforming our financial system, we are right on the law, confident in the facts, and welcome the opportunity for Coinbase (and by extension the broader crypto community) to get before a court.
It is not the first time he has said that his company is ready to use legislation and defend its operation from a hawkish SEC. In February, he condemned the SEC for charging Kraken and said Coinbase would face the regulator in court.
Keep watching Fintech Express for regulation and fintech-related news.
