John Reed Stark, President, John Reed Stark Consulting LLC, has shared his views on the U.S. (United States) SEC’s (Securities and Exchange Commission) crypto exchange crackdowns in an exhaustive LinkedIn post. “An SEC Crypto-Exchange Crackdown Has Begun (And The SEC Is Apparently Taking No Prisoners),” wrote Stark.
In the post in question, he commented on the recent SEC crackdowns of Beaxy, Bittrex, and Coinbase exchanges. Stark attributed the “4 recent SEC events” to indicate that the cryptocurrency exchanges will have to change “their current form” to continue operating in the U.S.
Sharing his views, John Reed Stark tweeted:
Newsflash: An SEC crypto-exchange crackdown has begun – and the SEC is apparently taking no prisoners. 4 recent SEC events indicate that crypto-exchanges, platforms, etc. will have to stop doing business in the US, at least in their current form. More at:https://t.co/pCnF98Pyxa pic.twitter.com/YQqEvF9lPE
— John Reed Stark (@JohnReedStark) April 17, 2023
Quoting Stark’s tweet, John E. Deaton tweeted mentioning the judges’ replies in the Ripple, LBRY, Grayscale, and Voyager cases:
In Ripple, the Judge said the SEC “lacks faithful allegiance to the law.” In LBRY, the Judge shamed the SEC over the lack of clarity. In Grayscale, the Court said the SEC’s arguments made no sense. In Voyager, the Judge BLASTED the SEC’s ethics and behavior.
— John E Deaton (@JohnEDeaton1) April 17, 2023
The SEC will lose. https://t.co/CYPCxw5hlS
Beaxy and its executives, Stark wrote, are charged by the SEC to have failed to register “as a national securities exchange, broker and clearing agency.” Artak Hamazaspyan, founder, Beaxy, and Beaxy Digital, Ltd. are also charged by the SEC to have raised $8 million in the form of an “unregistered offering of the Beaxy token.”
The SEC has also alleged a misappropriation of a minimum of $900,000 by Hamazaspyan for personal use (such as gambling, etc.). The Beaxy Platform market makers are charged by the SEC as being unregistered dealers.
As reported by WSJ (Wall Street Journal), Stark stated, Bittrex has been served a Wells Notice by the SEC as the exchange didn’t “register as an exchange, broker-dealer and clearinghouse.” A Wells Notice has also been served by the SEC to Coinbase for U.S. securities laws’ violations. In that, the U.S. SEC probed Coinbase’s crypto platform-listed assets and its staking and wallet services.
Stark also stated that the comment period for the SEC Rule 3b-16 Proposal has been “reopened.” Stark added that the “supplemental info” on amendments that are proposed for the definition of “exchange” under Exchange Act Rule 3b-16 is also made available.
Stark quoted SEC Chair Gary Gensler’s statement on the matter, as well. In the statement, Gary Gensler warned the crypto community that various crypto trading platforms fall under the purview of the U.S. securities laws.
SEC Chair Gensler did not mince words: Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws. Investors in the crypto markets must receive the same time-tested protections that the securities laws provide in all other markets.
