SEC Chair Gary Gensler Insists Crypto Field Is 'Rife With Abuses and Fraud'

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, emphasized in an interview with Yahoo Finance on Friday that the crypto industry is plagued by fraud and noncompliance.

When asked about the potential approval of spot ether (ETH) exchange-traded funds (ETFs), Gensler emphasized that he wouldn't prejudge any applications, as the SEC currently has 10 spot ether ETF filings under review. Moreover, he described: "I think the whole crypto field has challenges. The whole field is rife with abuses and fraud. Look at the series of bankruptcies in '22 and '23."

He explained that in the middle of the market, "there are intermediaries that are pulling together your hard-earned assets ... and not giving you the proper disclosures."

Noting that "They're doing things that we would never allow the New York Stock Exchange to do," Gensler detailed: "They're trading against you. They're commingling your funds. They're maybe lending your funds out. They're operating as a clearing house, a broker-dealer, and an exchange. I think that puts the investing public at risk."

Regarding whether the SEC will approve a spot ethereum ETF, Gensler explained that the securities watchdog looks at "the facts and circumstances" in front of it.

He noted that when the Commission approved 11 spot bitcoin ETFs in early January, he thought it was "the most sustainable path forward." Gensler opined: "Investors got additional disclosures based upon those exchange-traded products. They get certain protections on the stock exchanges." Nonetheless, Gensler proceeded to caution: "But they should also, I would say, be aware it's a highly speculative volatile underlying asset: bitcoin."