Mark Cuban Warns Bitcoin and Face Crypto of a SEC ‘Nightmare’

Billionaire Mark Cuban warned on Twitter that the SEC’s tight regulation of the crypto industry represented a potential “nightmare” for the struggling sector, whose prices have already been hit by high interest rates and recession fears.

Cuban delivered his stern warning in response to a tweet from Senator Pat Tommy (R-Pen), who criticized the Securities and Exchange Commission after it brought internal trade charges against a former Coinbase product manager.

The senator said the Securities and Exchange Commission took enforcement action without explaining why some cryptocurrencies are considered “securities” similar to stocks or bonds.

“Yesterday’s enforcement action is an excellent example of the SEC having a clear say on how and why certain tokens are classified as securities,” said Tommy, a senior member of the Senate Banking Committee. “However, the Securities and Exchange Commission failed to disclose its view before initiating enforcement action.”

“I guess that’s bad? Wait until you see what they come up with to score tokens,” Cuban tweeted in response to Toomey. “This is the nightmare that awaits the cryptocurrency industry. How else can you keep thousands of lawyers employed and create reasons to demand more taxpayer money?”

The post has reached the Securities and Exchange Commission for comment.

The possibility of requiring cryptocurrency registration as a form of security is a matter of intense debate as feds consider potential regulations for the industry. The debate raged last week after the Securities and Exchange Commission revealed insider trading charges against former Coinbase employee Ishan Wahey, as well as his brother and friend.

SEC President Gary Gensler is pushing for tougher regulation of cryptocurrency.
Bloomberg via Getty Images

The feds allege that the trio used classified information to purchase cryptocurrencies before the public knew Coinbase would include them on its platform. The alleged scheme brought in more than a million dollars in profits.

The Securities and Exchange Commission said it considers at least nine of the 25 tokens the trio bought as securities — a definition that could open Coinbase and other crypto platforms to tougher federal scrutiny and regulation.

Coinbase, which cooperated with the federal investigation and the eventual arrest of its former employee, nonetheless criticized the SEC’s handling of the situation.

Seven of the nine SEC fee-listed assets are listed on Coinbase. “None of these assets are securities,” the company said in a blog post. “Coinbase has a rigorous process for analyzing and reviewing every digital asset before it is made available on the exchange — a process that has been reviewed by the SEC itself.”

Cuban has often clashed with the Securities and Exchange Commission in the past — the agency was once defeated in court after it accused him of participating in an insider trading scheme.

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