Cryptocurrency companies that self-report their violations won’t get amnesty, but could face smaller penalties for their infractions, U.S. Securities and Exchange Commission (SEC) Enforcement Director Gurbir Grewal told Reuters Monday (Feb. 28).
“Our message to them is not, ‘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,’” Grewal said.
The SEC has taken a strong stance against the crypto sector under Chairman Gary Gensler, who has said many crypto-related products and platforms are governed by existing federal regulations. Many in the digital assets industry had hoped for the SEC to employ self-reporting amnesty, but Grewal — who joined the commission in July — said that option hasn’t been considered.
“Our message is that we’ll view their conduct more favorably if they come in — such as what the remedies will look like, including penalties, and finding a path to complying with the securities laws,” he said in the report. “That’s the benefit entities get from self-reporting violations and working with us.”
Gensler has described the crypto industry as a Wild West-like space that’s full of risk for investors.
Related: From the US and EU to Russia, Crypto Money Laundering Is Under Attack
Meanwhile, crypto’s use as a tool for money laundering tool came under attack this week as prosecutors and politicians increased the use of criminal charges to fight against dirty money through blockchains — as well as any unregulated and unidentified use of cryptocurrencies.
The U.S. Department of Justice announced two guilty pleas in its groundbreaking prosecution of the leaders of the BitMEX cryptocurrency derivatives exchange for ignoring anti-money-laundering (AML) regulations, while the European Union reportedly plans to give its new bloc-wide AML agency oversight of crypto.
On top of that, Canadian authorities referred a complaint about two major exchanges CEOs’ tweets about the seizure of Freedom Convoy protestors’ crypto donations to law enforcement.
Also, Chinese authorities added jail sentences to the penalties for illegally raising funds by selling cryptocurrency to the public, Russia is planning to criminalize peer-to-peer trading and a Brazilian Senate committee approved legislation including new AML oversight and criminal penalties for virtual asset violations. Finally, India recently banned crypto as a payment form.
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