Thodex exchange founder Faruk Fatih Ozer, who fled Turkey to Albania the day before the crypto platform stopped operating in 2021. Now claims to have traveled to meet with investors

The founder of the now defunct Turkish cryptocurrency exchange Thodex, Faruk Fatih Ozer. Who is accused of embezzling millions of dollars from customer funds, said at a court hearing on July 13. That he is not guilty of fraud. On the contrary, according to Ozer, “he was set up,” reports the Turkish publication Sabah.

Thodex is a Turkish cryptocurrency exchange founded in 2017. In April 2021, its founder Ozer suddenly left the country. And the platform ceased operations. More than 2,000 Thodex customers sued it, alleging fraud and theft of millions of dollars.

The indictment said total losses due to the exchange’s collapse amounted to 356 million Turkish liras ($24 million). As reported by the Turkish news agency DHA, Ozer fled Turkey with about $2 billion worth of customers’ cryptocurrency.

During the investigation, Turkish law enforcement authorities detained 21 people. Also including Ozer’s brother and sister. Employees of the crypto exchange accused of fraud faced prison terms of up to 40,500 years each.

Ozer himself was detained in Albania in August 2022 and extradited to Turkey.

On June 13, he appeared in court, where he said the media allegations and court charges were unfounded and he had not deceived anyone.

“This situation puts a heavy burden on me. The allegations in the media and the indictment are unfounded. I didn’t deceive anyone, I was set up,” Ozer said.

He also said his sister and brother had been illegally imprisoned. Ozer said he was the only one at Thodex who had the right to make decisions.

The defendant also pointed out that the user agreement spelled out. That he was not liable in the event of any damage. And his platform customers were aware of this.

Ozer said he left Turkey to negotiate with investors because he wanted to sell Thodex after losses of 16 million Turkish liras ($677,000) incurred as a result of the hacks of the exchange.

He said he talked to investors – one in Italy and one in the Balkans. But because he was “hampered by panic requests” from exchange customers to buy and sell cryptoassets. So he decided to temporarily freeze the work of the site and put an article on the site about the maintenance of the service.

Our experts note that as a result of the proceedings, the court ruled to cancel the judicial review measures for seven detainees. As well as to continue the detention of the remaining defendants in custody. And to refer the case to the prosecutor of the Republic of Turkey.

In the attack on the account of a cryptotrader on Coinbase, scammers used his personal data. And which they could only get through leaked information

Famous cryptotrader Jacob Canfield became a victim of a complex scam scheme. And with the help of which fraudsters tried to gain access to his account on Coinbase. Suspecting a data breach, he warned other exchange users to change their passwords.

Canfield wrote on Twitter that he first received a text message. And which said that his Coinbase two-factor authentication (2FA) had been changed. Shortly thereafter, he received three phone calls purportedly from Coinbase’s customer support line.

The scammers asked Canfield if he had traveled outside the U.S. and if he had requested a 2FA and email change. He replied that he hadn’t. And then he received a text message canceling the change request.

Canfield’s call was then transferred to “Coinbase security” to verify his account. In order to avoid a 48-hour suspension of transactions. The scammers asked him for a verification code. But Canfield refused to provide it. The cryptotrader’s interlocutor warned that the account would then be blocked for seven days. But he ended up getting angry and hanging up.

“They had my name, my email address and my location, and they sent an email with a confirmation code from help@coinbase.com to my personal email,” Canfield wrote.

He also added that the code the hackers sent was real. And they sent it from their email and logged into Canfield’s account while the conversation was taking place over the phone.

Our experts note that Coinbase responded to the situation and stated that there was no data leak from the exchange. At the same time, crypto detective ZachXBT wrote that other customers of the exchange have been victims of a similar scam before.

“It’s better to reassure yourself and change passwords if you’re a Coinbase customer than regret it later,” Canfield warned users.

The U.S. remains a key market for large blockchain services, including Polygon. But strict regulation of their token circulation is forcing them to find new ways to position their assets and developments

MATIC is a Polygon blockchain token developed by the American company Polygon Labs with an investment of more than $450 million and a valuation of $20 billion. The market capitalization of the token, even after a major price drop, exceeds $6 billion. And the asset itself is in the top ten of CoinMarketCap. Polygon solutions are used by major brands, including Adobe, Starbucks, Mastercard, Reddit, etc.

Faced with the growing consequences of sensational lawsuits by U.S. regulators. Now Polygon Labs has unveiled a concept for the Polygon 2.0 network update package. And among which is an emphasis on the “utility and evolution of the native token.” Interestingly, two days before the announcement, the company released a statement on Twitter. In which it openly emphasized its focus on the market outside of the U.S.

“We are proud of the history of the Polygon network – developed outside the US, deployed outside the US, and focused to this day on the global community that supports the network. MATIC was a necessary part of the Polygon technology from Day 1, ensuring that the network would be secure – and remains so to this day,” the company wrote. And while adding that “the market outside the U.S. is the largest in the world.”

In April 2019, when the project was called Matic Network before rebranding to Polygon. At that time, the team held an ICO token sale, raising $5.6 million. Several investment rounds followed. And the main event of which was a closed sale of tokens worth $450 million. American investors participated in the financing of the company. As well as firms such as Galaxy Digital or Seven Seven Six. Polygon says that while they always intended to “make MATIC accessible to a wide range of individuals,” the fundraising “has never been aimed at the United States.”

Polygon 2.0

The announcement of the new network from Polygon Labs also emphasizes. That the initiative belongs to the global community of token holders and developers interested in the development of the project. “Only the community that controls the Polygon protocol has the right to adopt and implement Polygon 2.0 solutions,” the publication states. However, our experts note that Polygon Labs, as the main developer of the protocol, obviously has significant influence over the project. And so the ability of the “community” to manage the development of the network is somehow limited.

According to SEC head Gary Gensler, decentralized finance (DeFi) projects are often not technically very decentralized. And their developers make profits in the same way that traditional businesses do. At some point there is always management or developers present. And sometimes there are investors who can be held accountable on behalf of the project.

“The core development teams of Uniswap, Open Sea, Alchemy and many other major Web3 projects are still based in the United States.” Antonio Giuliano, co-founder of decentralized cryptocurrency exchange dYdX, wrote this. His service runs on smart contracts, which does not involve a centralized intermediary. But behind its development and support is an American company, dYdX Trading, which employs about 50 people.

According to Giuliano, the U.S. has a very proper approach to technology. And all that regulators need to do in the matter of regulating the Web3 sphere is to “at least regard it prudently.”

Analysts believe the hackers are affiliated with the Lazarus Group of North Korea

Atomic Wallet hackers transfer stolen funds through the Garantex cryptocurrency exchange. Experts from Elliptic, a cybersecurity company, also discovered this. Several exchanges have frozen addresses related to the incident. But the stolen assets were routed to a platform listed last year by the U.S. Treasury Office of Foreign Assets Control (OFAC) on its sanctions lists.

Earlier, Elliptic reported that the Atomic Wallet hacker used cryptomixer Sinbad.io to launder stolen funds. Analysts stressed that this service is popular with Lazarus Group hackers from North Korea. And based on that, they believe the incident is related to the DPRK.

Also Elliptic has now clarified that the stolen assets were first exchanged through an intranet tool from the 1inch project. And then they were transferred to the Garantex exchange, where they were then exchanged for Bitcoins and redirected to cryptomixer Sinbad.

Elliptic noted that thanks to the company’s proactive actions, many crypto platforms blocked addresses. Which are related to Atomic hacking. “Lazarus has now turned to OFAC-sanctioned exchange Garantex to exchange their assets for BTC,” the analysts said in a statement.

Our experts note that OFAC sanctioned Garantex in April 2022 at the same time as the darknet marketplace Hydra. OFAC said the exchange was “deliberately ignoring its obligations” to combat money laundering and terrorist financing.

Crypto Upvotes experts told about what will affect the price of Bitcoin. And to what levels its price may rise or fall

On June 13, Bitcoin price is fluctuating around the mark of $25.8 thousand. On the weekend of June 10-11, the price of the asset fell to $25.5 thousand. As well as many altcoins from the top 100 cryptocurrencies lost 20-25% in price. At the beginning of the week, rates rose slightly and BTC recovered to around $26k.

After it became known today that the growth of inflation in the US slowed down from 4.9% to 4% year-on-year in May (better than the forecast of 4.1%). Then immediately the rate of Bitcoin rose to $26.35 thousand, but then fell back to $26 thousand.

Recovery from collapse

Bitcoin hit the $26.2K mark, even though it was trading at $25,500 on the weekend. Last week, its price was down 7.5%. This was affected by the fall of BTC/USDT pair on June 5 (down to $25,700 from intraday low of $25,300) and charges of illegal operation, filed against Binance by Securities and Exchange Commission (SEC).

The lawsuit against Coinbase for allegedly violating securities trading rules did not add to the positivity either. We see a targeted campaign by the U.S. administration against crypto-exchanges. And recently, similar accusations were made against Bittrex and Kraken exchanges.

That said, the U.S.-based Bittrex began bankruptcy proceedings on May 8 following an April 17 SEC lawsuit. Kraken, meanwhile, continues to operate. But in February it agreed to pay $30 million in fines and refused to provide stacking services.

The tokens that fell the hardest over the weekend were the tokens that the regulator recognized as securities – BNB (BNB), Cardano (ADA) and Solana (SOL). Bitcoin was also affected. Its high last week was $27,39 thousand, which was followed by a decrease in price.

While investors continue to “speculate” on new crypto industry news. The major cryptocurrency is starting to recover. Our experts believe that already tomorrow we will see a rate of $26.4 thousand, and by the end of the week it will approach $27.2 thousand.

Support and resistance levels of BTC

The first target this week is to get back to the closing level of Friday, June 9, on the CME (Chicago Mercantile Exchange Group). It was $26.47 th.

Then, up to $27K, there is dense, saturated resistance. It will be very difficult to overcome this level.

Support lines of BTC at the moment are at the levels of $25.2 ths and $24.4 ths.

This week the market is expecting more volatility on June 14. On that day, the U.S. Federal Open Market Committee (FOMC) will meet and the U.S. interest rate decision will be released.

Negative and positive scenarios

SEC lawsuits and the recognition of a number of altcoins as securities may cause crypto investors to choose to withdraw assets from altcoins and move them into Bitcoin. But for now, the overall situation is in the hands of the bears. And Bitcoin is unlikely to rise in the coming week.

It is unlikely that the price of BTC will fall below $24k, but it won’t be able to grow above $28k either. In other words, in the next 7 days the price of the asset will fluctuate in this range.

The negative scenario is that a criminal prosecution of Binance, which was warned about by former SEC lawyer John Reed Stark, could be launched. That would bring Bitcoin down to $20,000 – the level of the regional average cost of mining it.

The positive scenario is that the situation will quiet down for a few months. And there will be no criminal prosecution in the coming weeks. In that case, Bitcoin will be able to strengthen its position and return to the $28,000 mark. And maybe even test $30k. But so far, such a possibility is seen at best in the perspective of three to four weeks.

Wallet developers are not cooperating with the investigation and refuse to provide data to back up their claims of hacking

In early June, users of the popular cryptocurrency wallet Atomic Wallet faced massive thefts of cryptocurrency. The first occurred back on June 2.Since then, several analysts in the investigation and have traced more than $35 million worth of stolen money. The wallet team said it was investigating the hack. But at the time of publication, it had not released any details of the incident.

Our experts note that Atomic is is a non-custodial cryptocurrency wallet. Unlike exchanges, such wallets allow users to store funds independently of a third party. The service originally launched in 2017 as a cryptocurrency exchanger called Atomic Swap. According to the official website, Atomic Wallet has more than 5 million users.

Although the standard in cryptocurrencies is considered open source. In Atomic Wallet’s case, it has always kept its code closed, including from independent auditors. Some cryptocurrency projects prefer not to disclose the software code. In order to avoid being copied by competitors. However, users, since they cannot view the code. And they cannot check if it really works the way it is supposed to and does not contain bugs. Instead, they are forced to trust the developers.

Details of the hack have not yet been disclosed

Transparency of blockchain as a public registry of cryptocurrency transfers allows to identify the addresses of affected wallets. As well as the further movement of funds. According to an analysis by an online detective known in the cryptocurrency community under the ZachXBT. According to his conclusions, hackers stole about $35 million in various cryptocurrencies. The researcher was also contacted by victims. In doing so, providing him with transaction data on the wallet. The hack stole funds in Ethereum (ETH), Dogecoin (DOGE), Litecoin (LTC), BNB (BNB) and Polygon (MATIC) cryptocurrencies. And one of the victims lost $8 million worth of crypto-assets.

According to Elliptic’s blockchain analysts, the hacker used Sinbad.io, a cryptomixer popular with North Korean hackers, to launder stolen funds. Based on the results of past major hacks, investigators estimate. That the North Korean hacker group Lazarus Group laundered more than $100 million through it. Analysts did not name the amount of Atomic users’ funds spent through the mixer. But they did say that Sinbad.io is probably a revamped version of Blender.io, a service heavily used by Lazarus Group. And the first mixer to be sanctioned by the U.S. Treasury Department.

The investigation requires obtaining so-called server logs, an activity log that logs all user activity on the site. But Atomic Wallet refuses to provide the necessary files to analysts from various companies, despite numerous requests.

A new list of cryptocurrency-friendly banks emerged after the collapse of Silvergate and Signature. And at the moment more fragmented and less U.S.-oriented. Crypto Upvotes expert review

Bloomberg compiled a list of banks working with cryptocurrency companies. The journalists interviewed more than a dozen industry players, including banks, crypto exchanges and trading firms. As well as startups and consultants, and formed a list of banks around the world. Which are ready to accept clients from the crypto industry.

Two months after the collapse of Silvergate and Signature banks – amid increasing pressure from U.S. regulators on the crypto industry. Then a new cryptocompany-friendly banking system is now taking shape. In the U.S., firms are going to small regional lenders. Likewise, more and more market participants are turning to Swiss and Asian banks.

As a result, the new system is more fragmented. It’s also less U.S.-oriented and less publicized, the publication notes.

The following banks now work with cryptocurrency firms in the U.S:

Customers Bancorp of West Reading, Pennsylvania, operates CBIT, a real-time payments platform for trading firms, exchanges and institutional investors. The platform allows transfers in U.S. dollars seven days a week. It is used by Circle, the issuer of USD Coin Stablecoin, and the Coinbase and Bitstamp exchanges were also Customers customers.

Cross River Bank, based in Fort Lee, New Jersey, is known for its ties to fintech companies. It provides banking services to some cryptocurrency firms. Such as Coinbase and Circle.

Western Alliance Bank, based in Phoenix, Arizona. It also has a digital asset and blockchain division. Which serves customers in this sector. It also offers real-time payment capabilities.

Axos Financial Bank, based in Las Vegas, Nevada. It also opens bank accounts for some cryptocurrency firms. The SEC lawsuit lists it as one of the banks used by Binance.US. The bank previously had big plans to move into cryptocurrencies. But now they are frozen indefinitely.

FV Bank International, registered in Puerto Rico (a self-governing territory under U.S. control). It also allows customers to keep Bitcoin and U.S. dollars in the same bank account. It is launching conversions of some cryptocurrency tokens into U.S. dollars, using third-party brokers for the exchange.

In the Asian market the publication singled out the following 3 banks:

London-based Standard Chartered offers banking services to a “very select” group of digital asset service providers. And it supports them in providing services to connect and disconnect platform users. The bank’s services for digital asset firms include corporate accounts. As well as client asset accounts and currency exchange, primarily in Singapore, Hong Kong and the United Arab Emirates.

DBS Group Holdings is Singapore’s largest bank. It was founded in 1968, three years after Singapore broke away from Malaysia. And became a separate country. The bank offers deposit accounts to regulated companies. Who deal in digital assets and blockchain. It also offers corporate, institutional and accredited clients the ability to deposit. As well as withdrawals through its own digital platform, the DBS Digital Exchange.

ZA Bank is the largest virtual bank in Hong Kong. It now plans to offer conversion of tokens into fiat currencies on licensed exchanges. In addition, the bank plans to provide an account service for the digital sector.

Among the European banks the publication singled out the following:

London-based BCB Group offers customers access to its Blinc payment network for issuing digital assets. It operates in the European region. And in doing so, it allows participants to instantly pay each other in different currencies. The firm offers business accounts, over-the-counter trading in cryptocurrencies. As well as fiat currencies, digital asset storage and treasury services for clients. And also including exchanges, market makers, lenders, funds, brokers and traders.

Bank Frick & Co, based in Liechtenstein, offers banking services. Such as business accounts, for example, for established firms and startups in the blockchain and cryptocurrency sectors. It also offers trading and storage of some cryptocurrencies, including Bitcoin and Ethereum.

SEBA Bank AG in Switzerland offers individuals, companies and institutional clients access to trading. As well as investments in structured products, storage and borrowing of digital and traditional assets. SEBA has term deposit accounts and payment services. But it also offers crypto investment trackers and a cryptocurrency credit card.

Sygnum Bank AG, based in Switzerland and Singapore. It specializes in digital assets for institutional and private qualified investors. As well as corporate clients and financial institutions. It offers custody, brokerage, tokenization, asset management, lending. And business banking, accepting deposits in Swiss francs, euros, Singapore dollars and U.S. dollars to buy, trade and hold cryptocurrencies.

Payment service provider Clear Junction offers financial institutions, including cryptocurrency companies, access to UK bank accounts. As well as virtual international bank account numbers, payment networks, currency exchange and e-wallets. Companies can receive deposits to buy digital tokens. And they can accept payments through traditional bank transfers. And keep funds under their own name using correspondent accounts.

Our experts tell us how a complex cryptographic concept found application in the cryptosphere. And why startups that use ZK technology attract millions of dollars from investors

As early as 2019, cryptocurrency-oriented venture capitalists have been supporting startups. Which are engaged in the development of technical solutions somehow related to zero-knowledge proofs technology (zero-knowledge proofs or ZK-proofs, ZK). It is largely thanks to the cryptosphere that the complex cryptographic concept has become a successful marketing tool for startups. Who are creating tools to optimize Ethereum and other networks.

Matter Labs has raised nearly $0.5 billion from foundations to develop its zkSync solution. And the launch of Polygon’s zkEVM software environment by Polygon Labs, with similar funding, was an event in the cryptocurrency community. Projects like Starknet or Scroll are worth billions of dollars. And they all use ZK-proofs technology in one way or another.

In 1985, scientists Shafi Goldwasser, Silvio Micali and Charles Rakoff published a paper called “Knowledge Complexity of Interactive Proof-Systems. This was the first theoretical formulation of zero-disclosure proof technology.

To greatly simplify, this cryptographic technique allows you to prove that you know something without revealing exactly what you know. In the context of cryptocurrency, this can be illustrated, for example, as verifying that the user has the funds to transfer. And without revealing to the other participants of the network who this user is and how much money he has in his wallet.

Such proofs are technically complex and computationally intensive

Since it is very complicated, this technology did not come to any practical realization for quite a long time. And it was discussed mainly in scientific circles. But starting in 2010, researchers realized that ZK-proofs can be implemented on current computers.

So too with the emergence of faster computers and more funding for research in cryptography. And researchers, including Georgetown University associate professor Justin Thaler, have described how to generate zero-disclosure proofs on real computing machines. Thaler is also a researcher at a16z crypto, a division of the venture capital firm Andreessen Horowitz. He also manages four funds to invest in blockchain projects totaling more than $7 billion.

The launch and distribution of cloud computing has also given further impetus to the adoption of the technology. Laptops or smartphones, for example, are slower than the combined power of Amazon’s servers. But with ZK-proofs, a single computer can confirm that multiple computers have executed the program correctly.

When Bitcoin emerged in 2009, there was early discussion about reducing the computational burden on the blockchain and privacy in the blockchain. And then two problems emerged – the relatively slow performance of the blockchain because of its decentralized structure. And also its transparency, allowing analysts to identify and track wallets with ties to real users.

In 2013, a group of scientists, based on improvements in the implementation of ZK-proofs technology, laid out proposals for a Zerocoin solution. And which was supposed to help make Bitcoin transactions completely anonymous. Teaming up with Zuko Wilcox, they eventually launched the cryptocurrency Zcash (ZEC). It was probably the first implementation of ZK-proofs technology on a large scale.

Essence of ZK technology for cryptocurrencies

The essence of technology in the context of cryptocurrencies is not just about privacy. When Ethereum grew in popularity with the spread of blockchain technology. And more and more developers were creating more complex applications to run on it. But they, in turn, needed ways to increase the speed of applications. Ethereum, to simplify things a bit, is essentially a decentralized computer that runs relatively slowly.

Ethereum co-founder Vitalik Buterin has repeatedly said that it is solutions using ZK-proofs. And in particular the so-called ZK-rollups will help to increase the bandwidth of the network. And in the future will be integrated into its software code.

Zero-disclosure proofs allow one to prove the truth of something without checking each statement. Using this property, solutions such as zkSync “minimize”. That is, they compile and process transactions outside of the main Ethereum blockchain and prove that they did so accurately. Already then the main blockchain only verifies this proof. And that takes significantly less time compared to verifying each transaction in the usual way.

Dozens of startups are developing a flood of solutions using ZK, including the same zkSync, Aztec, Scroll, Starknet and others. They compete with another group of Ethereum scaling solutions collectively called Optimistic rollups. And the best known of which are the Optimism and Arbitrum projects. The companies have formed an entire industry within the crypto market and have collectively attracted several billion dollars from investors.

Accelerate Ethereum

On June 8, the Taiko project announced that it had raised $22 million to develop its own zkEVM. It is a solution that Vitalik Buterin called essential for scaling the Ethereum blockchain.

The zkEVM (Zero-Knowledge Ethereum Virtual Machine) is a development that combines Ethereum capabilities with the concept of zero-knowledge proofs. It was the company behind the zkSync solution that Matter Labs first deployed its version of zkEVM to the public along with the launch of the zkSync Era network.

The zkEVM solution is primarily a tool for scaling Ethereum. But which also includes privacy enhancing features. It combines the benefits of ZK-proof technology and compatibility with the Ethereum Virtual Machine (EVM) application environment. While providing faster, cheaper and simultaneously more private transactions.

Simply said, zkEVM allows developers to create second-tier solutions such as ZK rollups. This helps reduce congestion and bandwidth constraints on the core Ethereum network. And that leads to faster and cheaper transfers. The approach of projects like zkSync allows fast and inexpensive transactions in Ethereum. While maintaining data security and privacy.

Our experts point out that the slow operation of the network and high commissions hinder the mass spread of blockchain technology. Therefore, it makes sense for investors to support startups that offer efficient solutions.

Our experts suggest a strategy for investing in the collapse of the crypto market and the actions of U.S. regulators

The Securities and Exchange Commission (SEC) has targeted two major trading exchanges at once. The lawsuit against Coinbase is informative primarily because it mentions a number of popular cryptocurrencies. And which the SEC calls securities. This is clearly a blow to the cryptocurrency market, which logically expects further developments not in the most positive direction.

At the same time, it should be noted that Bitcoin (BTC) reacted rather reservedly to reports of lawsuits against major cryptocurrency exchanges. This is largely due to the fact that holders of those altcoins, which were declared securities in the lawsuit against Coinbase. Then they rushed to withdraw some assets, but not completely leave the crypto market. But to redirect capital to Bitcoin as a more reliable digital asset. And this is a very smart investment idea in the current environment. The current rate of Bitcoin looks attractive enough to enter.

This is not a short-term investment, and it is unlikely that Bitcoin will go sharply up or down in the coming weeks. This is due not only to the regulatory uncertainty that has intensified since the SEC lawsuits. But also with the upcoming U.S. Federal Reserve meeting in the middle of the month, where most investors expect the key rate to remain unchanged.

So, entering Bitcoin now looks like a sensible and effective move for those who would like to increase their presence in the crypto market. But it is logical to be suspicious of possible problems with altcoins.

In addition to Bitcoin, it is worth taking a closer look at the tokens of decentralized crypto-exchanges. Which, clearly, against the backdrop of tighter regulation in the U.S. will experience an influx of new users and strengthen their presence in the global market. However, there is a risk that these tokens will also be classified as securities. So, the risks for altcoins are still quite high and we can expect high volatility.

Disclaimer:

Crypto-Upvotes does not provide investment advice. This material is for information purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.

Gary Gensler said that securities laws helped defeat financial fraud in the 1930s and will help the cryptocurrency industry today

Gary Gensler, head of the Securities and Exchange Commission (SEC), compared the cryptocurrency industry to the American stock market of the 1920s, full of “huckster and fraudsters”.

Speaking at the Piper Sandler Global Exchange & Fintech Conference on June 8, Gensler said that the passage of securities laws in 1933 and 1934 in the United States helped fight stock market scams. These same laws will also help “clean up” the cryptocurrency market.

“With widespread non-compliance with the law, it’s honestly not surprising that we’re seeing a lot of problems in these markets. We’ve seen this story before. It’s reminiscent of what we had in the 1920s before the federal securities laws were introduced. Hucksters, fraudsters, and Ponzi schemes. And the public was lining up in bankruptcy court,” said the SEC Chairman.

The solution, according to Gensler, is for cryptocurrency issuers and trading platforms to comply with securities laws. He said that the laws of the 30s allowed American securities markets to “flourish” for the next 90 years. And today’s “cryptocurrency securities markets” should also benefit from these laws. Therefore, they are no “less worthy of the protection” of those laws.

The SEC argues that most cryptocurrencies fall under the definition of securities. And even if the tokens have additional utility (which the cryptocurrency community cites to deny the regulator’s position). That doesn’t take “cryptocurrency is a security” out of the definition of an investment contract, Gensler said.

He explained that cryptocurrency exchanges must comply with securities laws. And including the requirement to separate “exchange, broker-dealer and clearing functions.” In his view, such separation “helps mitigate conflicts that can arise when such services are combined.”

Our experts note that two days earlier, speaking on CNBC on June 6, Gensler said that cryptocurrencies are essentially unnecessary. In his opinion, digital fiat currencies-the dollar, the euro, and others-are sufficient.