The US Securities and Exchange Commission warned investors in a Thursday investor advisory that companies selling securities backed by cryptoassets could not be abiding by US legal requirements. The SEC warned that unregistered offerings of these securities might not include critical information, such as audited financial statements, needed for wise decision-making.
The crypto industry is being aggressively pursued by the securities watchdog, whose chair has referred to it as a “Wild West” full of dishonest practises. With the fall of Sam Bankman-cryptocurrency Fried’s exchange FTX in November, its activities accelerated.
A Wells notice, which is a formal notification that SEC officials intend to recommend an enforcement action, was received by cryptocurrency exchange Coinbase, according to a statement made on Wednesday.
The SEC also cautioned investors in its investor advisory about “proof of reserves” services provided by some cryptocurrency exchanges, which are meant to allow users to confirm that an exchange has enough assets to support clients’ holdings.
“Crypto asset entities might use these in lieu of audited financial statements in order to obscure and confuse customers about the safety of their assets,” the SEC said.