SEC Chair Gary Gensler says disclosures not enough to protect crypto exchanges

U.S. Securities and Exchange Commission Chairman Gary Gensler said Wednesday that federal securities agents may continue bringing enforcement actions against crypto exchanges, even if the platforms disclose their products’ risks to retail investors. 

In a CNBC interview, Gensler said crypto exchanges with disclosures aren’t immune to being sued by regulators if they are “manipulating the market.” The companies are also not protected from lawsuits if they publicize “misleading” information that leads traders to pour money into products they otherwise wouldn’t invest in, he said.

“Disclosure doesn't necessarily protect a bad actor,” Gensler said. “You can't just simply disclose that away.”

Gensler also said Wednesday that most crypto companies still do not issue disclosures at all. He told CNBC interviewers that crypto exchanges have long operated in ways in which trading platforms in traditional financial markets would never be allowed to act.

The SEC has cracked down on the digital assets industry in recent years, particularly since the collapse of crypto exchange FTX. The agency has sued Kraken and Binance and is still pursuing a civil case against the U.S.'s largest crypto exchange by daily trading volumes, Coinbase.