Gary Gensler warns crypto industry on need to comply with securities laws

Securities & Exchange Commission Chair Gary Gensler suggested Wednesday in an exclusive interview with Yahoo Finance Live failed crypto exchange FTX violated securities laws by using customer assets to trade at its affiliated hedge fund, Alameda Research.

“I can’t speak to any one case or any one situation, but our securities laws say that you need to properly segregate customer funds,” Gensler said.

“You also shouldn’t be running a broker dealer or a hedge fund, and an exchange. The New York Stock Exchange doesn’t also have a hedge fund on the side and trade against their customers.”

Gensler said some crypto platforms have asked the SEC to continue the ability to lend, trade, and operate an exchange and a hedge fund under one company, something the agency won’t allow, as is custom under traditional securities laws.

“We have said, no, you have to separate it out,” Gensler said. “Some have come in and said: can we have a lighter touch regulation? We’ve said, no.”

‘The basic message that I have had is the same public message as private message,” said Gensler. “Come into compliance. Your field will not last long outside of public policy norms.”

FTX fallout

Lawmakers on both sides of the aisle have been pointing fingers at the SEC over the failure of FTX.

Democratic Senator Elizabeth Warren has called on the agency to “suit up” and said federal agencies should use their expansive authority to crack down hard on crypto fraud. The SEC and Department of Justice are reportedly…