Unchained

Are All Crypto Funds Basically Engaging in Illegal Activity Now? - Ep. 700

Sep 6, 2024
Guest
Larry Florio
Larry Florio, general counsel at 1kx, provides crucial insights into the shifting landscape of crypto regulation. He discusses the implications of the SEC's recent actions against Galois Capital and Uniswap, suggesting these may mark a new era of enforcement. Florio highlights the ambiguity surrounding qualified custodians, the challenges asset managers face with compliance, and the SEC's potential overreach that could suffocate the industry. He emphasizes the urgent need for clearer guidelines on crypto asset securities amidst rising frustrations within the sector.
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INSIGHT

SEC's Shift in Language

  • The SEC's enforcement action against Galois Capital involves tokens "offered and sold as securities".
  • This differs from the previous language, "crypto asset securities," possibly incorporating criticisms like the Ripple ruling.
INSIGHT

Unnamed Tokens

  • The SEC's complaint omits the names of specific tokens deemed securities.
  • This lack of clarity creates frustration as it introduces new implications for custodial regulations.
INSIGHT

Custodial Issues

  • Galois Capital was penalized for using FTX, which might have qualified as a custodian if not for the fraud.
  • This is concerning as FTX was a regulated entity and seemingly fit the criteria.
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