{ "@context": "https://schema.org", "@type": "NewsArticle", "headline": "SEC Backs Big Budget for Crypto Crackdown", "image":"https://www.intelligize.com/wp-content/uploads/2023/04/burning-hole-1200.jpg", "datePublished": "2023-04-11", "description":"The SEC updated its guidance regarding non-GAAP disclosures & how non-GAAP metrics could still be misleading. Learn more about the impact of these updates. ", "keywords":"accounting, GAAP, non-GAAP, financial disclosures, sec", "potentialAction":"Request a Demo", "publisher": [{ "@type": "Organization", "name": "Intelligize", "url":"https://www.intelligize.com/" }], "author": [{ "@type": "Person", "name": "Rob Peters", "jobTitle":"Senior Director of Customer Experience & Knowledge", "worksFor":"Intelligize", "sameAs": "https://www.linkedin.com/in/rob-peters-7aa420b/", "url":"https://www.intelligize.com/author/rpetersintelligize-com/" }] }

SEC Backs Big Budget for Crypto Crackdown

The Biden administration has proposed a record-smashing $2.4 billion budget for the SEC in fiscal year 2024, and it’s apparently already burning a hole in Gary Gensler’s pocket. To hear him tell it, the SEC chair is more than ready to use that funding on his own personal white whale: crypto enforcement.

Gensler made the prospect of enhanced crypto enforcement a centerpiece of his prepared testimony to the House Appropriations Committee, in which he pushed for passage of the super-sized SEC budget, which would buy 170 new staff members, most in enforcement roles. Reaching for an appropriate if tired cliché, he talked about the crypto space as a “Wild West” that is “rife with noncompliance.”

If you had read the news recently, it was hard to argue with his characterization. Two days before Gensler’s testimony, the CFTC hit Binance Holdings Ltd. with charges that it trampled over U.S. derivative rules on its path to becoming the world’s largest cryptocurrency exchange. (Binance disagreed and called the CFTC suit “disappointing.”) Then, on the eve of Gensler’s appearance, federal prosecutors tacked a bribery charge onto the laundry list of criminal charges against FTX founder Sam Bankman-Fried, pointing to a $40 million payment he allegedly made to Chinese officials to unfreeze accounts holding $1 billion in cryptocurrency. Okay, so maybe it’s the Wild East, too.

The SEC isn’t waiting for its new budget to get busy, either. Just last month it brought two high-profile crypto enforcement actions, including one you might have seen on your grocery store’s tabloid rack. In it, the SEC tagged Lindsay Lohan, Jake Paul (a social media personality turned boxer), Lil’ Yatchy (ask your kids), music personality Austin Mahone, and other celebs with touting the Tronix and BitTorrent cryptocurrencies without revealing that they were paid to do so. It also accused BitTorrent founder Justin Sun of the unregistered sale of crypto securities.

Fun fact: in 2021, Lohan did a paid Cameo spot for a crypto news service in which she predicted Bitcoin was going to $100,000 and uttered the words: “I hope you all get to drive your Lambos to the moon.”

Also in March, the SEC charged the trading platform Beaxy with failing to register as a national securities exchange. This enforcement action involves no one from the cast of Freaky Friday, but does include an allegation that Beaxy founder Artak Hamazaspyan appropriated $900,000 of the $8 million he raised in a token offering to gambling and other personal expenses.

After his Congressional appearance, Gensler reportedly had some strong words about the SEC’s role in crypto regulation. The SEC, Congress, and the courts alone get to decide what a security is, he said, not crypto exchanges. Then he added that most cryptocurrencies are in fact securities, which would put them squarely within the SEC’s jurisdiction. Biden’s budget, if passed, would put a whole lot of money where Gensler’s mouth is.

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