The latest actions by US regulators against crypto companies “are planned product liquidations” and could destroy a growing market. This opinion was expressed by the founder of Compound Labs Robert Leshner in a podcast with Frank Chaparro.
Stablecoins as securities could spell ‘Armageddon’ for crypto 🧨
In this episode @fintechfrank & @rleshner cover:
🚨 the multi-agency crypto crackdown
⚙️ how ‘specialization’ improves DeFi governance
⚖️ why Treasury yields > DeFiFull episode below 👇https://t.co/wM9pigNiEL
— The Scoop (@TheScoopPod) February 16, 2023
Leshner believes that these measures were not taken as a result of an error.
“In many ways, they open a new front against the crypto industry. The argument in both cases was that Kraken and Paxos did not comply with investor protection rules. And there are undisclosed risks. Interestingly, these are pretty strong arguments,” he said.
According to Leshner, users and experts “don’t really know how Kraken works.” The same problem concerned FTX or Celsius, because of which “everything fell like dominoes.” In this regard, he called crypto companies “black boxes”.
In February, the SEC filed claims against Paxos for participating in the issuance and listing of the Binance USD (BUSD) stablecoin. The agency considered the asset to be an unregistered security. Prior to this, the NYDFS had initiated an investigation into the issuer of the stablecoin.
The Kraken Exchange has settled charges filed by the SEC regarding its staking program. The company agreed to shut down the service and pay $30 million in fines.
“The argument that USD Coin or Tether are securities can be disputed for months and years. But if something goes wrong in some respects, I think this is an Armageddon scenario for a lot of cryptocurrencies,” Leshner emphasized.
He recalled that stablecoins account for the bulk of on-chain activity, and tough measures against them put, for example, such an industry sector as DeFi at risk.
In December, Compound investors filed a lawsuit against the platform alleging the sale of unregistered securities in the form of the COMP token.
Recall, Binance Chief Strategy Officer Patrick Hillman said that the company expects to settle claims from the US authorities through the payment of fines. He regarded the latest actions of regulators as a threat to the digital asset industry in the United States.
A similar opinion was expressed by Jake Chervinsky from the Blockchain Association. But the expert is sure that the community in the country will be able to fight this.
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