Exploring the Difference Between Web 1.0, 2.0, 3.0 and 4.0: Gary Gensler’s $5B Take from Enforcement Actions

Differences Between Web 1.0, 2.0, and 3.0

At the 2023 Securities Enforcement Forum, United States Securities and Exchange Commission (SEC) Chair Gary Gensler shed light on the regulatory body’s enforcement actions amounting to $5 billion in judgments and orders. His criticism of the cryptocurrency market garnered a lot of attention from the crypto community, as he stated: “Don’t get me started on crypto. I won’t even name all the individuals we’ve charged in this highly noncompliant field.”

Gensler noted that the SEC filed more than 780 enforcement actions in 2023, including over 500 standalone cases. These actions resulted in $5 billion in judgments and orders, of which $930 million was distributed to harmed investors.

In addition, the SEC filed lawsuits against 40 firms for violations of various rules and regulations since December 2021, leading to more than $1.5 billion in penalties. The agency also settled recordkeeping-related charges with 23 firms in the same fiscal year.

The SEC chief reiterated his earlier stance on crypto, claiming that most of the crypto market falls under the securities bracket and must be governed under the same law. He explained the concept of an investment contract and why a major chunk of the cryptocurrency market resembles it, noting that most cryptocurrency assets will pass the investment contract test, bringing them under securities regulations.

Crypto Regulations Necessary to Prevent Scams, Frauds and Bankruptcies

Gary Gensler, a former chair of the U.S. Commodity Futures Trading Commission, has drawn parallels between the current crypto ecosystem and the financial landscape of the 1920s, when securities laws were not in place. Gensler noted that the crypto space is similarly suffering from a lack of regulations, resulting in an increase in scams, frauds and bankruptcies. He argued that stricter regulations are necessary to protect investors.

Gensler’s view on the crypto market is not new; he has expressed similar sentiments for years. However, members of Congress, the crypto community and some key businesses operating in the U.S. have asked Gensler to provide more clarity on crypto regulations.

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