More SEC Enforcement Action is Coming With DeFi in Firing Line, Warns Key Agency Official
The head of the US Security and Exchange Commission (SEC)’s Crypto Assets and Cyber Unit David Hirsch just sent a chilling warning to the crypto industry, which has already found itself heavily in the agency’s crossfire in recent months.
Speaking on Tuesday at the Securities Enforcement Forum Central in Chicago, Hirsch said that aside from Coinbase and Binance, two major cryptocurrency exchanges that the agency has already sued, there are other centralized exchanges and decentralized finance (DeFi) protocols that are not complying with securities law.
The SEC is going to “continue to bring those charges” against a number of other businesses that are operating in similar ways to Coinbase and Binance, he continued.
And even though they operate in very different ways to centralized exchanges like Coinbase and Binance, decentralized applications are also in the firing line.
“We're going to continue to conduct investigations, we're gonna be active in the space, and adding the label of DeFi is not going to be something that's going to deter us from continuing our work,” Hirsch said.
Decentralized applications (dApps) are powered by (normally) immutable smart contracts that have been deployed directly onto a smart-contract-enabled blockchain, like Ethereum.
By nature, dApps are borderless (just as the blockchains they run on are), open source, and all transactions/activity that goes through them is recorded for the whole world to see on the blockchain.
While the SEC has been amping up its enforcement action against the US crypto industry in wake of the FTX disaster in November 2022, Hirsch admitted the agency only has limited capacity, and cannot tackle all non-compliant businesses.
"There are more tokens extant -- I think maybe
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