According to Thomas Gorman, a Dorsey & Whitney partner and a former SEC senior adviser, the Securities and Exchange Commission (SEC) cryptocurrency It has a well-prepared plan for regulating its units and will not slow down its enforcement actions.
Gorman, who specializes in advocating SEC investigations and enforcement actions, said SEC chairman Gary Gensler had dozens of meetings with people in the crypto space and laid out the rules for them. However, he said that many did not listen to him and he was only giving the organizer a showpiece.
Gorman said the rules for determining whether a digital asset is a security are very clear and have been on the books for decades. He referred to the Howey test, a 1946 Supreme Court case that established a four-part test for securities. Gorman summed up this test as “an investment of money in a joint venture with the expectation of profits from the efforts of others.”
“Howey’s rules are very simple. You take people’s money, pool it somewhere, make a promise, and profit from the pool transaction and return it. Securities experts who have been working in this field for years know this.
Gorman said that some major platforms in the crypto industry admit to doing so, but that they are not complying with securities laws. He stated that the crypto industry wants to be treated differently, but he sees no reason to do so.
“This is a different kind of security. But securities laws have been designed to cover any variation that has arisen for decades. You don’t want to issue a brand new charter every time you make a variation of all of these things. This is actually what they want. They want something that is different for them,” he said.
Gorman said that the problem with changing the rules for the crypto industry will result in less investor protection and less information sharing. He stated that consumers who entrust their money to these platforms may not be fully aware of what they are doing and may not be able to make good decisions.
Gorman stated that he thinks his recent lawsuits are quite winnable for the SEC, and they are very concise. He said he expects the SEC to impose more sanctions against crypto platforms and exchanges in the future.
*Not investment advice.
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