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SEC to sue crypto platforms operating outside regulatory framework: Gensler

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Cryptocurrency exchanges should note that the United States Securities and Exchange Commission will pursue enforcement action against platforms operating outside of the SEC’s regulatory framework, Chairman Gary Gensler told MarketWatch in a maintenance.

“About 90-95% of crypto lending and trading activity takes place on a platform,” Gensler said. And centralized activity on these platforms needs investor protection, market integrity and anti-manipulation rules that apply to other financial markets, he said.

“I think the problem is that at the moment the public is not well protected and there are a lot of people who are going to be injured,” added Gensler.

The SEC showed its seriousness in its actions against BlockFi, which offered a high-interest crypto loan product, but did not register it as security. On Monday, BlockFi agreed to pay $100 million to the SEC and state regulators to resolve charges against the company.

Last week, the SEC issued an investor bulletin warning that deposits of cryptocurrency assets are not as safe as interest-bearing accounts with a bank or credit union.

Late last year, Gensler hired Corey Frayer to facilitate SEC policy development and interagency work relating to the oversight of crypto assets.