The US Securities and Exchange Commission issued an investor alert on Thursday warning that companies offering crypto asset securities may not comply with US laws.
The SEC stated that an unregistered offering of such securities may not provide material data, including audited financial statements, for informed decision making.
The securities watchdog is cracking down on the crypto industry, which its chairman has called a “Wild West” riddled with malpractices. Its efforts accelerated following the November collapse of Sam Bankman-Fried’s cryptocurrency exchange FTX.
Crypto exchange Coinbase announced on Wednesday that it has received a Wells notice – a formal announcement that SEC staff intends to recommend enforcement action.
In its investor alert, the SEC also warned investors about “proof of reserve” services provided by some crypto exchanges, which let users verify that the exchange has the money to back customers’ holdings. There is enough property.
“Crypto asset entities may use these in lieu of audited financial statements to obscure and mislead customers about the security of their assets,” the SEC said.
