Are All Crypto Funds Basically Engaging in Illegal Activity Now? - Ep. 700
Episode publishedPodcast: UnchainedUnchained
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We are kinda getting caught in a trap here where we're required to comply with regulations, but the regulator itself is making it nearly impossible to comply.
Hi, everyone. Welcome to Unchained, your no hype resource for all things crypto. I'm your host, Laura Shin, author of The Cryptopians. I started covering crypto 9 years ago and as a senior editor at Forbes, was the 1st Mainstream reporter to cover cryptocurrency full time. This is the September 6th, 2024 episode of Unchained. Where can you find $700,000,000 in real world assets, 11,000,000 daily operations with industry low fees powered by 450,000 plus on and off ramps across 180 countries, the Stellar network. Today's episode is brought to you by Gemini, a US based crypto exchange built for n
Laura. Thanks for having me.
This week, we got news of an interesting enforcement action by the SEC against Galois Capital, a trading firm that went under because a significant portion of its funds were on FTX. What was this enforcement action about? So
there are a few different parts to this. Some may be more surprising than others. I think one of the primary things that was happening here was the SEC claims that they were holding tokens, and this is the specific language, out of the out of the settlement, tokens that were offered and sold as securities. So there's a little bit of a change from what we've heard from the SEC before. But as part of that, the SEC claimed that Galois Capital was holding these tokens that were securities, not with qualified custodians, which is a requirement for all registered investment advisors. And
and what was the previous language? So
very often they would say crypto asset securities and sort of leave it there rather than here, they've added more nuance to it than they typically do, saying the tokens were offered and sold as securities. So tokens maybe are not per se securities, but were being quote unquote offered and sold as them. Okay.
Yeah. It's almost like they're incorporating some of the criticism from, for instance, like, am I right that it would be like the ripple ruling or what would be?
Yeah, that's that's right. It's a little difficult to even really pinpoint what the SECs internal theory is on this since from case to case when they actually go to trial, they've sort of changed and adjust the theory and it changes a bit depending on what court they're in. So they've gone with the tokens are securities. They've tried this. They were offered and sold as securities before. It's it's a little bit all over the map, although this seems like they're focusing more recently on this offered and sold as securities. Presumably, they think that's a better winning argument for them when t
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