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The regulator’s crypto enforcer made broad claims that the SEC has more in store for the crypto industry.
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Still, David Hirsch acknowledged that the agency’s current litigation burden is heavy, and that the SEC cannot comment on everything.
The U.S. Securities and Exchange Commission (SEC) isn’t done pursuing crypto exchanges and decentralized finance (DeFi) projects that it considers violating securities laws in the same vein as Coinbase Inc. (COIN) and Binance, said David Hirsch, head of the agency’s Crypto Assets and Cyber Unit.
His enforcement office, which has been litigating before the SEC at a very unusual pace, is aware of and investigating other companies engaged in much the same activities as on these two major platforms and that the industry’s compliance problems “extend far beyond two entities to apply. ,” Hirsch said Tuesday at the Securities Enforcement Forum Central in Chicago.
“We will continue to file these charges,” said Hirsch, who said the regulator has a number of other companies on its radar that operate in similar ways to Coinbase and Binance. His office has already been embroiled in a number of complex crypto cases in federal courts, and – as evidenced by his attempt to appeal a recent Ripple ruling – not always with complete success.
Hirsch said the SEC’s interest in crypto goes well beyond high-profile exchanges.
“We will continue to be active in the intermediaries space,” he said. “These could be brokers, dealers, exchanges, clearing agencies or others who are active in this area, fall within our jurisdiction and fail to meet their obligations. either through registration or through failure to provide adequate or complete information.”
Hirsch said DeFi projects will also not escape the attention of the enforcement department.
“We will continue to conduct research, we will be active in the space, and adding the DeFi label will not stop us from continuing our work,” he said.
The U.S. securities regulator has previously been accustomed to a relatively staid enforcement approach, targeting wrongdoing at regulated companies — often large Wall Street firms with extensive legal departments — that quickly begin negotiating settlements. Because charges against digital asset companies routinely threaten their existence, they tend to take the agency to court.
The SEC has a finite enforcement budget that is often smaller than that of the financial giants it is accustomed to, so its bandwidth is limited.
“We have a lot of litigation going on,” Hirsch admitted.
“It feels like you’re living up to your capabilities,” noted the event’s moderator, A. Kristina Littman, who before Hirsch served as the SEC’s crypto enforcement chief and now works at Willkie Farr & Gallagher.
Hirsch admitted that the SEC can only reach so far.
“There are more tokens held – I think maybe 20,000, 25,000, as I last read – than the SEC or any agency has the resources to pursue directly, and similarly there are a number of centralized platforms, some of which operate as unregistered exchanges,” he said.
Read more: SEC Adds Lawyers to Crypto Enforcement Unit