CDS Crypto News SEC Targets ShapeShift in Crackdown on Unregistered Securities Dealers
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SEC Targets ShapeShift in Crackdown on Unregistered Securities Dealers

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Sec Targets Shapeshift In Crackdown On Unregistered Securities Dealers

SEC Targets ShapeShift in Crackdown on Unregistered Securities Dealers

Crypto NewsThe US Securities and Exchange Commission (SEC) has set its sights on ShapeShift, a cryptocurrency exchange with a decade-long operational history. Hailing from Denver, Colorado, ShapeShift found itself under scrutiny by the SEC on allegations of operating as an unregistered securities dealer.

In the wake of the industry-wide collapses experienced in 2022, the SEC has escalated its regulatory oversight over the cryptocurrency sector.

ShapeShift’s entanglement with the SEC stems from charges brought forth prior to the firm’s cessation of exchange activities in the US in 2021. Following these allegations, ShapeShift reached a settlement on Tuesday, agreeing to pay a $275,000 fine. Moreover, they vowed to steer clear of future violations of the Securities Exchange Act.

The SEC accused ShapeShift of offering “at least 79 crypto assets” to its user base, with some of these assets being identified as investment contracts. However, the SEC did not specify which assets were considered securities. This scenario mirrors similar charges leveled against other prominent US cryptocurrency exchanges such as Coinbase, Kraken, and Binance.US.

According to the SEC, ShapeShift engaged directly with its customers by buying and selling crypto assets from its own accounts, effectively functioning as a buyer and seller on its platform. This alleged practice persisted from 2014 until the company halted its US exchange operations in 2021.

In response to the SEC’s actions, Erik Voorhees, the founder of ShapeShift, clarified that the firm neither admitted nor denied the allegations. He invoked the Federalist Papers, emphasizing the crucial balance between government oversight and the need for self-regulation.

“ShapeShift paid $275,000 to settle the matter. There was no admission or denial of wrongdoing,” Voorhees stated.

Under the leadership of Chairman Gary Gensler, the SEC has initiated a record number of enforcement actions against the cryptocurrency industry. This assertive approach has sparked concern across the sector.

Sec Targets Shapeshift In Crackdown On Unregistered Securities Dealers

The recent crackdown by the SEC includes subpoenas targeting the principal promoters of NovaTech. The company allegedly employs a multilevel marketing strategy and has drawn the SEC’s scrutiny for potential violations of securities laws.

Furthermore, the SEC’s rigorous enforcement has prompted lawsuits within the cryptocurrency industry. Lejilex, a cryptocurrency firm based in Texas, along with the Crypto Freedom Alliance of Texas (CFAT), have initiated legal action against the SEC. They contest the agency’s classification of certain digital assets as securities, citing a lack of legal clarity and the imposition of unnecessary regulatory burdens.

This sentiment resonates throughout the cryptocurrency industry, which is seeking clearer regulatory guidelines.

Sec Targets Shapeshift In Crackdown On Unregistered Securities Dealers

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