SEC probes Wall Street advisors over illegal crypto custody

The U.S. Securities and Exchange Commission (SEC) is investigating whether Wall Street financial advisors are providing digital assets to their clients without the appropriate qualifications. According to a Reuters report published on Jan. 26, the probe has been ongoing. However, it was publicized by the media after the FTX debacles. The anonymous sources interviewed have revealed the Securities and Exchange Commission is focusing on white-collar crimes.

According to a person with knowledge of the large case, the SEC is after information regarding cryptocurrency investment processes. The broad filing sweep demonstrates to the SEC’s scrutiny of the cryptocurrency industry is expanding. By law, no cryptocurrency can be kept with a company that binds asset possession. One rule requires that assets be stored with a custodial service.

The Crypto Crusade: Regulation Enforcement and Beyond

The SEC’s dealing with cryptocurrency has continued in new leadership, but the violation of actors in the space remains a key enforcement issue. The current investigation follows a string of bankruptcies in the crypto industry. This includes the charges filed by FTX president’s former executive, Sam Bankman-Fried, for alleged fraud.

The Securities and Exchange Commission is probing whether FTX investors had in fact conducted adequate due diligence procedures prior to purchasing their shares in the exchange in question.