The SEC’s uncovering of an alleged fraudulent cryptocurrency pyramid scheme comes at a foul time for traders, and an excellent worse time for the crypto trade (“SEC costs 11 in ‘large’ crypto Ponzi scheme”, Report, August 2).
We should always notice that dangerous actors exist throughout all industries and that fraud is just not distinctive to crypto.
Nevertheless, given the heightened scrutiny that crypto has confronted following the market’s downturn earlier this 12 months, it has by no means been extra essential for crypto to start implementing extra stringent client safeguards.
Failure to do that can have penalties on a client and regulatory degree.
From the patron standpoint, the tons of of hundreds of thousands stolen via this pyramid scheme are surprising, however our notion of this sort of fraudulent exercise shouldn’t be primarily based on numbers alone.
Actual individuals have been led astray by the promise of huge returns and have misplaced important sums of cash, inflicting very actual ache in consequence. The trade should take accountability to introduce measures that may set up better transparency, schooling and safety.
The absence of such measures will result in what now we have lengthy warned the trade of: heavy-handed regulation that might doubtlessly stifle innovation.
The SEC has clearly flexed its muscle mass, signalling to crypto that it will possibly police the trade via enforcement actions if needed.
If crypto desires to keep away from heavy-handed policing, it should act now to show the integrity wanted to regain the belief of customers and regulators alike.
Managing Director, R3
Former Chief Working Officer on the Commodity Futures Buying and selling Fee
New York, NY, US