Itâs hard to keep up with all the crypto companies being accused of crimes.
What will it take to send the crypto bros to prison? Itâs been a rough couple months for some people whoâve had it easy for a long time. A growing number of cryptocurrency operations may finally be facing some consequences for their alleged illegal actions. On Monday, the Securities and Exchange Commission [charged]( 11 people behind Forsage, calling it a $300 million Ponzi scheme disguised as a smart contract system. This was less than a week after the New York Times reported that crypto trading platform Kraken [was being investigated]( by the Treasury Department for violating US sanctions against Iran. And just a few days before that, the FBI and a US district attorney in New York [indicted three former Coinbase employees]( for insider trading. Which agency is in charge of regulating cryptocurrency [isnât clear-cut](. Both the Commodity Futures Trading Commission and the SEC claim jurisdiction here. The SEC, however, seems particularly interested in going after crypto schemes that fall under its purview â which seems to be most of them. âThe SEC is in the midst of a continuing onslaught against crypto firms from every direction,â John Reed Stark, a cybersecurity expert and former SEC enforcement attorney, told Recode. Stark noted that the agency has [expanded]( its crypto unit and SEC chair Gary Gensler has [made no secret]( of his belief that many cryptocurrencies are securities, and that he intends to regulate them as such. So even though itâs hot outside, weâre in the middle of a [crypto winter]( that may never end. During the pandemic, the cryptocurrency market [ballooned to $3 trillion](, helped along by new platforms that made investing easy enough for just about anyone to do. Since last November, however, the market has plummeted. Itâs now worth [about a third]( of what it was at its peak, and thereâs no sign that value will bounce back significantly anytime soon. The crash has devastated some of the companies operating in this space â and their customers, too. Now, the law is coming for certain crypto companies and their leaders. But it remains to be seen exactly what consequences, if any, many of these companies and the people behind them will face. Unlike with traditional banks, when crypto lending platforms go belly-up, there are no protections in place to ensure that investors are made whole. Two crypto lending platforms, Celsius and Voyager, went bankrupt in July, and their customers [may never]( get their money back. Some supposedly safe crypto investments called âstablecoins,â which are pegged to the value of a fiat currency like the US dollar, have also been proven to not be very stable at all. Last May, stablecoin Terraâs value [plummeted](, dragging down the Luna coin, whose value was [linked to Terraâs](, with it. Luna was once worth as much as $116. Now, itâs worth a fraction of a cent. But as investorsâ losses mount and enforcersâ expanded crypto arms get to work, it looks like a day of reckoning is finally coming for some of these companies, which have been operating in a space with few rules. The outright scams, obviously, werenât following the rules at all. But some of the more legitimate companies, allegedly, have played fast and loose with them too. âThe arrogance and the hubris in the realm of crypto is so beyond measure,â Stark said. âThey're always belligerent, combative, and calling the SEC [sketchy](.â âIâve never seen anything like this and Iâve been practicing for over 30 years,â he added. Again, the SEC is only one of [several government agencies]( going after crypto. And when a lot of people [lose a lot of money](, the government is going to pay even closer attention. But there may not be much it can do for some people, as crypto isnât regulated like traditional banks and securities â something many crypto investors didnât realize until it was too late. âWith so much new money pumping up token values, so many people wanted in without understanding anything about the space,â said Matt Binder, a reporter for Mashable who also [hosts Scam Economy](, a podcast dedicated to crypto and Web3 scams. âAnd the industry took advantage of a lot of those people.â It didnât help that some of their favorite celebrities [endorsed]( these projects, or that some of these companies were seemingly so flush with cash that they could buy ad space on the most [expensive show]( in town. It also didnât help that crypto became as easy to buy as an [ATM transaction](. And it really didnât help that many people went into crypto knowing little, but assuming theyâd have the same protections as they do from more regulated institutions like traditional banks and investment firms. Stark predicts that weâll see more action against these crypto companies in the coming months and years, with the SEC focusing its efforts not on the small-time scammers, but on the gatekeepers they use for their scams: âtrading exchanges, platforms, whatever you want to call them.â And he thinks it and any other agencies investigating the world of crypto will get a lot of help, possibly from people inside of it. âWhen companies start engaging in this kind of stuff, you do get people who want to be whistleblowers or they become complainants,â Stark said. âAnd when criminal prosecutors start nosing around, people can become informants very quickly.â Molly White, who has chronicled various Web3 failures at [Web3 Is Going Just Great](, isnât so sure yet that the increased scrutiny, investigations, and charges will add up to a real change. âThe insider trading charges feel like a drop in the bucket compared to the amount of insider trading that has been plainly known to be happening at Coinbase and elsewhere, but it is at least something,â she said. âIt's concerning to me how slow these actions are coming out in an industry where people can perpetrate scam after scam in the meantime.â âI'll believe there's progress when I see it,â she said. If regulators canât make that progress in court, perhaps at the very least all of the attention the crypto crash has gotten will discourage potential investors from putting money into a volatile market that they donât really understand and offers them few protections. âI think these crackdowns can help keep the public away from crypto,â Binder said. âThere will be some companies that try to âgo legitimate,â but at the end of the day, they're still a crypto company, selling the dream of getting rich via speculative asset trading, with no actual real product or service.â That wonât do much for the people whose dreams have already become nightmares, however. White said that while some of the earlier crypto loss stories were more amusing and the victims less sympathetic (see: â[All My Apes Gone](â), thatâs not the case anymore. âNow we're seeing people [writing letters]( to a bankruptcy judge about how they're financially ruined and contemplating suicide,â she said. 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