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Crypto companies seeking to go public over the past year have faced increased scrutiny from the Securities and Exchange Commission, as financial distress and failures spread across the volatile industry, the Wall Street Journal reported. Crypto-focused companies including Bullish Global, Circle Internet Financial and eToro Group Ltd. have failed to secure the SEC approvals that are required of companies going public. The firms were seeking stock-exchange listings through mergers with special-purpose acquisition companies, an alternative path to going public that thrived in 2020 and 2021 before heightened regulatory checks and market turbulence ended the SPAC boom. Another crypto broker, Galaxy Digital Holdings Ltd., GLXY 3.75%increase; green up pointing triangle has faced repeated rounds of questions from SEC staff about its business since filing paperwork to go public on the Nasdaq Stock Market, according to people familiar with the questioning. Galaxy, which isn’t using a SPAC structure, announced in March 2021 that it wanted to become a U.S.-listed public company and hoped to clear SEC review by the end of that year. The SEC didn’t set out to stop the companies from going public, but crypto firms believe the pace of the agency’s review hurt their efforts, particularly after the crash of a well-known cryptocurrency and the failure of a large crypto hedge fund that hit many exchanges and lenders. The bankruptcy of crypto exchange FTX and a bear market in digital asset prices may keep the door closed. Most crypto firms say their digital assets aren’t securities, and therefore they don’t need to comply with investor-protection rules. SEC Chair Gary Gensler disagrees and contends that much of the industry is noncompliant.

Crypto lender Nexo Capital Inc. agreed to pay $45 million to settle claims that its product violated investor-protection laws, becoming the second digital-asset lender in a week to face a major enforcement action, the Wall Street Journal reported. The Securities and Exchange Commission said Nexo’s Earn Interest Product was the type of investment that should have been registered with regulators before being sold to the public. Crypto middlemen such as Nexo recruited huge numbers of customers over the past several years by offering interest rates in excess of 10% to people who would loan out their crypto. Nexo settled the SEC’s investigation without admitting or denying wrongdoing, and agreed to pay half of the $45 million fine to the federal agency and half to a group of states that had already sued it. The SEC last week sued crypto lender Genesis Global Capital LLC, alleging its crypto-lending program is a security that should have followed federal rules. Nexo agreed with the SEC to stop offering the program to American investors, and had already decided in December to start phasing it out in the U.S., the SEC said. A group of states including California and New York sued Nexo in September over the same claims the SEC alleged on Thursday. The company settled with 17 states on Thursday, according to the North American Securities Administrators Association.

The US Securities and Exchange Commission is pushing back on Binance.US’s plan to buy bankrupt crypto lender Voyager Digital in a deal valued at about $1 billion, according to a bankruptcy court filing, Bloomberg News reported. The purchase agreement underpinning the deal doesn’t include sufficient detail about Binance’s ability to close the transaction, the SEC said in a limited objection Wednesday. More disclosure is needed about what Binance’s U.S. operations will look like following the deal, along with more information about how customer assets will be secured, lawyers for the SEC said. “A diligent review of the deal is to be expected and welcomed,” Binance.US said in a statement. “We will work with the relevant parties to provide any requested information. We look forward to completing the transaction and bringing Voyager customers to Binance.US.” The SEC has communicated the concerns to Voyager’s lawyers and has been advised that revised documents will be filed, according to the objection. The agency added it reserves the right to amend its objection later.

The U.S. Securities and Exchange Commission is awarding more than $37 million to a whistleblower whose information contributed to a successful SEC enforcement action, Bloomberg News reported. The SEC said the whistleblower was the initial source of a company’s internal investigation, and the source for investigations by the commission and another agency. In line with the SEC’s policy, the regulator didn’t disclose details about the case. Congress established the SEC whistleblower program after the financial crisis, and the agency has paid out more than $1 billion since issuing its award in 2012. Whistleblowers are eligible for awards ranging from 10% to 30% of the amount of money collected in enforcement cases where penalties exceed $1 million.

The U.S. Securities and Exchange Commission on Wednesday voted to propose some of the biggest changes to American equity market structure in nearly two decades, aimed at boosting transparency and fairness while increasing competition for individual investors' stock orders, Reuters reported. The proposals include requiring marketable retail stock orders to be sent to auctions before they are executed, a new standard for brokers to show they get the best possible executions for client orders, and lower trading increments and access fees on exchanges, the SEC said. "We feel that these reforms, if enacted, will ultimately help the price discovery process and save investor’s money," said Joe Saluzzi, co-manager of trading at Themis Trading. "Allowing orders to interact with each other, rather than segmenting them, will enhance competition and yield better prices." Opening up individual investor orders that can be immediately executed to competitive auctions could lead to "significantly" better prices for investors, the SEC said. Under current practice, retail brokers send most such orders to wholesale brokers, sometimes for a fee.

The U.S. government has charged eight social media influencers with securities fraud, alleging they used Twitter and messaging app Discord to manipulate exchange-traded stocks as part of a $100 million fraud scheme, The Hill reported. The Securities and Exchange Commission (SEC) said in a release that seven of those charged promoted themselves as successful traders and gained hundreds of thousands of followers on Twitter and in stock trading chatrooms on Discord since January 2020. They allegedly bought certain stocks and encouraged their followers to do the same by indicating that they were buying, holding or adding to their stock positions. But an SEC complaint states that when share prices or trading volumes rose in the promoted stocks, they regularly sold their shares without disclosing their plans to drop their securities.

The U.S. securities regulator on Thursday advised public companies to examine whether they need to disclose to investors any potential impacts from turmoil in the cryptocurrency industry, Reuters reported. The guidance from the Securities and Exchange Commission's (SEC) division of corporation finance - tasked with ensuring that public companies give investors key information - is the latest sign that regulators are on high alert for further fallout in the wake of the collapse of major crypto firms, including FTX and BlockFi Inc. In guidance to public companies, the SEC laid out information businesses may have to share with their investors, including whether the firms have any financially material exposures to counterparties that have filed for bankruptcy or become insolvent.

U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler said that companies that help facilitate transactions in the cryptocurrency market should come into compliance with law, Reuters reported. "Their business model right now is offering the public … an interest return in crypto … and then possibly trading against their customers," Gensler told Yahoo Finance in an interview on Tuesday. "The runway is getting shorter" between crypto lenders' compliance and SEC enforcement, the SEC chair added. The SEC has enough authority but could use more resources, Gensler said in the interview. He labeled the crypto intermediaries as "crypto casinos." "The entrepreneurs in this field have chosen - it's a choice - to try and skirt the law, whether they're setting up overseas and servicing overseas actors," Gensler said. "But if they're tapping into U.S. markets, they need to come into compliance." The SEC chair added that next Wednesday, the agency will take up recommendations from agency staff on equity market structure.

Virtu Financial Inc. said yesterday that it has sued the U.S. Securities and Exchange Commission, alleging the regulator failed to respond to the market maker's public records request, Reuters reported. Virtu said it submitted a request through the Freedom of Information Act (FOIA) in June to determine if the SEC had met legal requirements to evaluate potential investor harm and market risks while weighing new rules for retail stock order handling and execution. The SEC did not immediately respond to a request for comment. Agencies are required by law to respond to a FOIA request within twenty days, but the law does not require agencies provide all responsive documents within that time frame. Such document requests do not always yield substantive responses and can have lengthy waiting periods. The SEC under Democratic chair Gary Gensler has come under scrutiny from Republican lawmakers and industry for what they describe as an aggressive and sweeping overhaul of existing rules and shortened time lines for public comment.