US watchdog warns of risks of buying crypto asset securities

The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their  headquarters in Washington, D.C.The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly/File Photo

March 23 (Reuters) – The U.S. Securities and Exchange Commission on Thursday issued an investor alert warning that firms offering crypto asset securities may not be complying with U.S. laws.

Unregistered offerings of such securities may not provide important data, including audited financial statements, for informed decision making, the SEC said.

The securities watchdog has been cracking down on the crypto industry, which its chair has called a "Wild West" riddled with misconduct. Its efforts gathered pace after November's collapse of Sam Bankman-Fried's cryptocurrency exchange FTX.

Crypto exchange Coinbase (COIN.O) announced on Wednesday that it had received a Wells notice – a formal declaration that SEC staff intend to recommend an enforcement action.

In its investor alert, the SEC also warned investors about "proof of reserves" services offered by some crypto exchanges that are supposed to let users verify that an exchange has enough assets to back customers' holdings.

"Crypto asset entities might use these in lieu of audited financial statements in order to obscure and confuse customers about the safety of their assets," the SEC said.

Hannah Lang

Thomson Reuters

  • VideoFuture of MoneycategoryCryptoverse: Bitcoin miners get stuck in a bear pit, article with videoSeptember 27, 2022
  • VideoFuture of MoneycategoryCryptoverse: Ether snaps at bitcoin's heels in race for crypto crown, article with videoSeptember 13, 2022
  • GalleryFuture of MoneycategoryCryptoverse: Blockchain bridges fall into troubled waters, article with galleryAugust 11, 2022
  • GalleryFuture of MoneycategoryCryptoverse: What crisis? Venture capitalists bet big on crypto, article with galleryJuly 26, 2022


Related posts

Exclusive: US to build $300 mln database to fuel Alzheimer’s research

Cynthia Danforth

Online marketplace Etsy says U.S. sellers must verify bank accounts

Cynthia Danforth

Nestle unveils $100 million Colombia investment to grow capacity

Cynthia Danforth

Leave a Comment