23 March 2023: SEC issues official warning to crypto investors

[samcrypto]

Now today we got CTFC suing Binanace. It seems this is not going to end soon. If you read the lawsuit, most likely it means that Binance US is dead and most likely it will be impossible to use any US banks to transfer USD into and out of the Binance exchange.

That's much likely of it. They'll chase any company that have been in the hot seat if it's for the US. And with that, it's what the other countries could do if they don't have such a lovely and friendly approach with crypto. Well then, this has been seen years ago and many of them don't really like bitcoin. But just to see them neutral is already more than enough that there's no such worries but with such statement from SEC itself, it looks scary and providing FUD to every possible guy that shows interest in investing on crypto.

This could be alarming but we should not panic and remain focus with out goal, expect the market to react on this and a possible correction, FUB is not leaving cryptomarket after all and this is expected. Government agencies are attacking crypto, and mostly those are agencies that came from US so you’ll see the pattern here. Most probably they are preparing for the worst crisis that can ever happen to them, and they have to control every market as much as possible or else they will lose control. A case against Binance is a true test for crypto exchanges, let’s be more updated for this case and act accordingly.

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[yhiaali3]

Spot on. This not about securing the assets of those who believe in decentralized money, like Bitcoin, but rather we are witnessing the beginning of a more aggressive campaign against one of the most important parts of the market: the stable coin liquidity.

The SEC and the government of the United States are not stupid, there are aware that in order to exercise the surveillance and control they seek with their incoming CBDCs, they may need to kill the competitors through legal means.

That is, yes I said this before they could not target bitcoin and cryptocurrency directly so they direct their war against stablecoins to cut the link and prevent the flow of liquidity to crypto.

In addition to targeting stablecoins, they are also targeting Crypto VIPs such as the CEO of Binance CZ and Justin Sun, the founder of Tron (TRX) ....etc.

So yes, they are trying to "kill competitors through legal means".

[tabas]

That's much likely of it. They'll chase any company that have been in the hot seat if it's for the US. And with that, it's what the other countries could do if they don't have such a lovely and friendly approach with crypto. Well then, this has been seen years ago and many of them don't really like bitcoin. But just to see them neutral is already more than enough that there's no such worries but with such statement from SEC itself, it looks scary and providing FUD to every possible guy that shows interest in investing on crypto.

This could be alarming but we should not panic and remain focus with out goal, expect the market to react on this and a possible correction, FUB is not leaving cryptomarket after all and this is expected. Government agencies are attacking crypto, and mostly those are agencies that came from US so you’ll see the pattern here. Most probably they are preparing for the worst crisis that can ever happen to them, and they have to control every market as much as possible or else they will lose control. A case against Binance is a true test for crypto exchanges, let’s be more updated for this case and act accordingly.

It's alarming for those companies that don't comply to the US regulations. But as an individual, we don't have to worry about nothing. Let us say that they're just doing their jobs and that's pretty normal for them to do it since we've known them to be against really to crypto. It's temporary like that and in the past, they're not aggressive at all because it's not gaining traction. And now that it has become popular and gaining the traction that we all want on this community, they're now starting to do what they think is right. However, that right of them isn't really right at all because they're aware that many lives have been changed by crypto and those that have been bad did lacked of their own proper researches.

[NotATether]

I read that as a declaration of war, really.

It's alarming for those companies that don't comply to the US regulations. But as an individual, we don't have to worry about nothing. Let us say that they're just doing their jobs and that's pretty normal for them to do it since we've known them to be against really to crypto. It's temporary like that and in the past, they're not aggressive at all because it's not gaining traction. And now that it has become popular and gaining the traction that we all want on this community, they're now starting to do what they think is right. However, that right of them isn't really right at all because they're aware that many lives have been changed by crypto and those that have been bad did lacked of their own proper researches.

Well, pretty much every foreign exchange company has come under fire from the US in one place or another, and have been forced to restrict their services to US people respectively. And it's not just them, but some other countries like the United Kingdom as well.

They might be better off putting that warning at the next Superbowl, really. Or on any crypto ad airing then or anywhere else. Think people will have their guard up if a friend whispers crypto in their ear but it's when Tom Brady and Matt Damon splashes coins in their face that they need to have their spider sense up...

It would give me some laughs if they spent the money they fined these exchanges with on a Super Bowl ad like that. 

[dragonvslinux]

TLDR:  The SEC’s Office of Investor Education and Advocacy continues to urge investors to be cautious if considering an investment involving crypto asset securities.  Investments in crypto asset securities can be exceptionally volatile and speculative, and the platforms where investors buy, sell, borrow, or lend these securities may lack important protections for investors.

Correct me if I'm wrong but this is about crypto-based securities, not cryptocurrencies as a whole. I highlighted the relevant bit from the quote which to me spelt it out, as well the following:

1. Those offering crypto asset investments or services may not be complying with applicable law, including federal securities laws.

The reasons why crypto-based securities are high risk is clearly because they aren't approved by the SEC, and so far there has been no regulation surrounding them, at least no relevant legislation.

I also think this is merely further clarity after the exchanged-based staking-related change up, that exchanges can't offer a %, only the crypto protocol in itself can.

Needless to say this doesn't effect Bitcoin, nor other cryptocurrencies it seems. Only companies that are making security based offerings.

[lixer]

It seems true, this statement is not something new, in fact every day we echo the same thing to anyone who wants to invest in bitcoin or altcoin. But underneath all that, I think they're hatching a plan to be able to prevent some people from entering the crypto space especially into bitcoin after the bank crash. This is a classic plan that may have been the first step to prevent many billionaires from turning to bitcoin, but sadly it cannot be prevented completely.

I think we shouldn't think in advance and be negative. They can also be sincere when they say that. They know that cryptos are unstoppable and they can't do much about it but only give people a piece of advice.

Even if they are planning on something to prevent people from entering, I don't think they will be successful with it. People knows what they want and they know that getting involved in crypto will help them on achieving their dreams so why will they allow someone to stop them? Banks have crashed last time but what was the connect of it to crypto? They better be concerned on the banks so that they won't experience the same issue ever again.

[pawel7777]

The reasons why crypto-based securities are high risk is clearly because they aren't approved by the SEC, and so far there has been no regulation surrounding them, at least no relevant legislation.

I also think this is merely further clarity after the exchanged-based staking-related change up, that exchanges can't offer a %, only the crypto protocol in itself can.

The problem is SEC itself is unable/unwilling to clearly define what falls into definition of crypto-based security. There's not much clarity in that statement neither.
They've already hinted in the past that even well-known cryptos like ETH may actually be securities. If, for all those years SEC themselves cannot provide a clear rule, then how can any crypto-business potentially comply to their rules?
The recent case with Paxos being ordered to stop minting new BUSD tokens, because they may fall into the definition of security, shows how loosely they use that definition.
The most accepted method of determining if something is security or not, is the Howey test, which has 4 conditions:
1 - An investment of money
2 - In a common enterprise
3 - With the expectation of profit
4 - To be derived from the efforts of others

No stable coin, by definition, bears any expectations of profit - yet, that didn't stop SEC/NYDFS from going after Paxos.

[pooya87]

What I said before is starting to come true, a large number of Americans have been pulling their money out of the banks. So far hundreds of billions of dollars have been pulled out. Very few of those who make a withdrawal would put it in their mattress! Majority of them would try to invest into something specially since dedollarisation is expanding to more countries and the threat of dollar collapsing is more serious now; obviously one of the very viable options is bitcoin.
Hence the SEC fear and their subsequent warning...

[harapan]

This kind of announcement is not new.  I think every now and then SEC gives a warning to crypto investors especially when the cryptocurrency market is getting bullish.  Now that they have CBDC I believe SEC will be more aggressive in their propaganda to discredit the cryptocurrency industry, especially these stablecoins to kill competition and will possibly promote or suggest CBDC as a better replacement.

This was exactly came to my mind while reading the post. People should be cautious if considering any investment at all, why do they need to always target the crypto market? Just take a look at their second statement, "Investments in crypto asset securities can be exceptionally volatile and speculative". Please I would like to know a market be it stock, forex that is not speculative. Yea, we know its good advice, I see advices like this all most everyday even on this forum but when it comes from people whose aim to to cripple the crypto market then it's a subtle attack.

I believe once the preparation for CBDC is complete (study, laws, regulation. technology), SEC will launch more thorough propaganda that can defame cryptocurrency and promote CBDC.

You know them too well. Funny how they hate cryptocurrency so much but their big idea came through cryptocurrencies. Their hypocrisy stinks.

[dragonvslinux]

The reasons why crypto-based securities are high risk is clearly because they aren't approved by the SEC, and so far there has been no regulation surrounding them, at least no relevant legislation.

I also think this is merely further clarity after the exchanged-based staking-related change up, that exchanges can't offer a %, only the crypto protocol in itself can.

The problem is SEC itself is unable/unwilling to clearly define what falls into definition of crypto-based security. There's not much clarity in that statement neither.

They've already hinted in the past that even well-known cryptos like ETH may actually be securities. If, for all those years SEC themselves cannot provide a clear rule, then how can any crypto-business potentially comply to their rules?

Indeed, very good point. I think they are mainly unable and unwilling as they quite simply don't know/understand what constitutes a security, in regards for cryptocurrencies. For example if they could charge the Ethereum protocol itself as being a security because of APY from staking, then they probably would, but obviously there is no company responsible for this offering (and it's not a guarantee either).

The recent case with Paxos being ordered to stop minting new BUSD tokens, because they may fall into the definition of security, shows how loosely they use that definition.
The most accepted method of determining if something is security or not, is the Howey test, which has 4 conditions:
1 - An investment of money
2 - In a common enterprise
3 - With the expectation of profit
4 - To be derived from the efforts of others

No stable coin, by definition, bears any expectations of profit - yet, that didn't stop SEC/NYDFS from going after Paxos.

This is all very true. I also think Paxos will end up fighting this accusation of BUSD being a security, on the very basis it can't be. To me this case just seems like they are "testing the water" as to what they can claim is a security and what is not, unless there is something about Paxos/BUSD that we don't know about. Maybe there was borrowing/lending going, or it was "staking" options from centralised providers?

Notably, they didn't try go after the bigger stablecoins like USDT/USDC, so seems like they were targeting small fish instead, as I said to test the water here. That's just my interpretation of it anyway. Having stablecoins deemed illegal forms of producing (and potentially inflating) fiat currencies seems like a simpler root to shutting them down at least. But that involves new laws I imagine.

[Lucius]

~snip~

The amount of withdrawn deposits from banks is slightly less than $300 billion in the US, and that's only in this month, and I already wrote in my previous post that money market funds profited the most from this. Probably some of that money went into Bitcoin and some altcoins, possibly into gold and bonds, which people still consider a much safer way of storing value than fiat.

Goldman Sachs, JPMorgan Chase and Fidelity are the biggest winners from investors pouring cash into US money market funds in the past two weeks as the collapse of two US regional banks and the bailout deal Credit Suisse have raised concerns about the security of bank deposits.

More than $286 billion has flowed into money market funds so far in March, making it the biggest month of inflows since the depths of the Covid-19 crisis, according to data provider EPFR.

Goldman’s US money market funds have taken in nearly $52 billion, an increase of 13%, since March 9, the day before US authorities took control of Silicon Valley Bank. JPMorgan funds received nearly $46 billion and Fidelity saw inflows of nearly $37 billion, iMoneyNet data showed Friday morning.

Source

[pawel7777]

What I said before is starting to come true, a large number of Americans have been pulling their money out of the banks. So far hundreds of billions of dollars have been pulled out. Very few of those who make a withdrawal would put it in their mattress! Majority of them would try to invest into something specially since dedollarisation is expanding to more countries and the threat of dollar collapsing is more serious now; obviously one of the very viable options is bitcoin.
Hence the SEC fear and their subsequent warning...

If there's indeed a massive cash pull-out, I don't expect this would be driven by an average Joes converting the fiat into bitcoins and/or other investments. Certainly this is not reflected in BTC price.
I would be guessing it's either the wealthy individuals or businesses escaping with any excess cash to mitigate the risk. The FDIC insurance only covers up to $250k, so it's best to strategically move any excess either to another bank or somewhere else.

[speedy963]

~snip

If, for all those years SEC themselves cannot provide a clear rule, then how can any crypto-business potentially comply to their rules?

This statement alone makes them already bias, since their behavior towards crypto is unclear. I always think that they are only using the word "law" as an excuse for them to gain more benefit whenever they have something they want. They're only using it as means when it is convenient for them. A friend of mine living in US told me that some Americans are little by little pulling out their money from the banks and started to either invest into crypto or invest into stocks. Their reason is that, they no longer trust the words of the government, and either they profit or lose the money at least they were the ones playing with their own money rather than letting the banks play them, is what my friend said.

[BobK71]

This should be what about government agencies always warn to the investors. Government agencies have always been and are negative towards Bitcoin or cryptocurrencies. But having the adverse situation the market achieve its goals. But there is no doubt that they are trying to attack cryptocurrency. In this regard they will never achieve that success. Because cryptocurrencies are not governed by the laws of any particular country. However, it is very important for the government or government agencies to take strict action against those who want to scam with the people but not for all.

[tygeade]

The amount of withdrawn deposits from banks is slightly less than $300 billion in the US, and that's only in this month, and I already wrote in my previous post that money market funds profited the most from this. Probably some of that money went into Bitcoin and some altcoins, possibly into gold and bonds, which people still consider a much safer way of storing value than fiat.

Markets could be crazy like that. You watch 2 banks going bankrupted and swallowed hole, and the entire nation gets together to save the people who deposited, so you think to yourself "hmm the people who deposited their money into a bankrupted bank still got their money back, so there is no danger" and invest even more? That's really it? That's how the market thought?

These people are crazy and I would really wonder how their brain works in other situations. Hmm my friend almost got eaten by a shark here, but didn't, so I could safely go in there myself as well? Because that is exactly what happened and that's exactly how they are responding to this situation.

[imamusma]

This should be what about government agencies always warn to the investors. Government agencies have always been and are negative towards Bitcoin or cryptocurrencies. But having the adverse situation the market achieve its goals. But there is no doubt that they are trying to attack cryptocurrency. In this regard they will never achieve that success. Because cryptocurrencies are not governed by the laws of any particular country. However, it is very important for the government or government agencies to take strict action against those who want to scam with the people but not for all.

Firstly, this warning is something that has been said many times, thousands of times on forums by thousands of people, I think.
Then furthermore, every country has rules regarding cryptocurrencies so you know for sure that in the jurisdictions of certain countries crypto is not a legal currency. It's just that the government cannot control it (unless it is centralized), while only users can be controlled with some rules.

The government's statement is only because they want to prevent and raise doubts among potential new investors towards crypto. I know this is nothing new, you must have noticed this too.

[OgNasty]

It seems like the SEC and government officials as a whole have started taking a more aggressive stance against crypto and Bitcoin. It seems like they’re getting their “anti-crypto army” assembled and are preparing for a fight. While the government trying to stop crypto has always been the biggest hurdle to climb, and it appears that battle is about to begin, I would remind people that first they ignore you, then they laugh at you, then they fight you… Now is when we win.