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SEC to not offer amnesty to crypto companies that self-report violations

Updated: Jul 25, 2024
Published: Feb 28, 2022
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The United States Securities and Exchange Commission or SEC has indicated that it would not offer amnesty to crypto companies that report their own violation of securities laws; however they might face comparatively smaller penalties.

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SEC to offer greater clarity to crypto firms

As per the report by Reuters, the recent remarks by the agency's enforcement director Gurbir Grewal have offered greater clarity to crypto companies on how they would be treated under the SEC's new Democratic control.

Grewal said that the SEC is not aiming to send the message, "Register your product, and we'll just ignore the billions you have under management in this crypto lending product and your violations of the securities laws."

Some in the business, however, were hoping that the agency would encourage corporations that were violating its rules to voluntarily come under its inspection by offering them a one-time free pass.

Grewal said that a self-reporting amnesty is not on the table by adding that if companies self-report violations, the SEC would "view their conduct more favorably, such as what the remedies will look like, including penalties, and finding a path to complying with the securities laws."

A tough stance

Under Chair Gary Gensler's leadership, the SEC has tightened its grip on cryptocurrency, claiming that existing SEC laws bind many crypto products and platforms.

SEC has recently penalized a subsidiary of crypto firm BlockFi Inc for violating the rules by selling an interest-bearing account. However, it paved the way for the company to register a similar model with the agency. The agreement lays out a path for other firms with similar products to follow.

Moreover, after a heated argument with the regulatory body over whether it should be classified as a security and subject to SEC monitoring, BlockFi competitor Coinbase Global Inc (COIN.O) halted its plans to bring a crypto-lending product last year.

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