In a recent address at the SEC’s Securities Enforcement Forum Central, David Hirsch, the Chief of the Crypto Asset and Cyber Unit of the SEC’s Division of Enforcement, delivered a warning to the crypto industry: more investigations and charges are on the horizon. Hirsch’s remarks, first reported by CoinDesk, shed light on the agency’s ongoing efforts to regulate and enforce compliance within the rapidly evolving crypto landscape.
Hirsch made it clear that the agency’s focus extends beyond high-ranking exchanges and includes numerous companies operating in similar ways. He emphasized the SEC’s intention to bring charges against intermediaries such as brokers, dealers, and clearing agencies that fail to meet their regulatory obligations, particularly in terms of registration and providing adequate disclosures.
Acknowledging the vastness of the crypto ecosystem, Hirsch admitted the limitations of the SEC’s enforcement capacities. With over 25,000 tokens and a multitude of exchanges currently in existence, the agency faces resource constraints that make it impossible to pursue every operational project actively.
Despite these challenges, Hirsch highlighted the SEC’s determination to address the growing influence of decentralized finance (DeFi) projects. He dispelled the notion that merely adding the DeFi label would exempt projects from regulatory scrutiny, signaling the SEC’s commitment to ensuring compliance across all segments of the crypto industry.
The SEC’s stance on DeFi was exemplified in the agency’s recent actions. The Commodities Futures Trading Commission (CFTC) attempted to serve papers to members of Ooki DAO, a prominent DeFi project and secured a legal victory after a subsequent legal battle. Additionally, the CFTC charged and settled with three DeFi platforms in September 2023, establishing a precedent for regulatory intervention in the DeFi realm even when associated companies are present.
Further underscoring the SEC’s scrutiny of DeFi, the agency has subpoenaed SushiSwap, another DeFi project, and its lead member. While no charges have been filed against SushiSwap at present, the SEC’s actions indicate an active interest in investigating DeFi projects and associated entities.
As the crypto industry continues to evolve, companies and projects operating in the space must be prepared to navigate a heightened regulatory landscape. The SEC’s assertion of its jurisdiction over DeFi and its expressed intention to bring further charges highlights the importance of compliance and transparency in the rapidly maturing crypto ecosystem.
