Hester Peirce, has lambasted the SEC’s $10 million settlement with Poloniex, questioning the opaque restrictions that crypto companies in the United States must navigate.
Commissioner Hester Peirce, also known as “Crypto Mom,” has lambasted the United States government. The Securities and Exchange Commission (SEC) has awarded Poloniex a $10 million settlement following a legal dispute between the two companies.
Poloniex was accused with facilitating trading in unregistered securities between July 2017 and November 2019. The SEC announced the $10 million settlement on August 9, with Poloniex being fined a total of $1 million.
In its complaint, the SEC asserted that Poloniex employees “stated internally” that they wanted to be “aggressive” in circumventing securities regulation in order to increase market share by listing new digital assets that may be deemed securities under the Howey Test of 1946 in order to increase market share.
Poloniex made the decision to neither admit nor deny any wrongdoing on their part.
On the same day, Peirce issued a public statement in which he criticised the regulator’s actions, underlining the murky regulatory landscape through which crypto businesses must traverse in the United States.
As part of his remarks, the commissioner addressed several regulatory issues that the SEC has been criticised for failing to clarify in relation to digital asset businesses, including how to determine whether an asset is a security and what licence and exemption are appropriate for the operation of a cryptocurrency exchange:
“Given how slow we have been in determining how regulated entities can interact with crypto, market participants may understandably be surprised to see us come onto the scene now with our enforcement guns blazing and argue that Poloniex was not registered or operating under an exemption as it should have been.”
If Poloniex had attempted to register as a securities exchange or as an alternative trading system (ATS) with the Securities and Exchange Commission (SEC), the firm “likely would have waited…and waited…and waited some more.” Circle, the issuer of the USD coin (USDC), acquired Poloniex for $400 million in 2018.
Following this, in October of the following year, Circle spun out Poloniex’s exchange operation, selling it to a group of institutional investors.
In November of this year, Cointelegraph claimed that Justin Sun, the founder of the cryptocurrency Tron (TRX), was one of the investors who had purchased the exchange.