Over the past year, the U.S. Securities and Exchange Commission subpoenaed at least three venture capital firms, according to reporting from DL News.
Those subpoenas asked for “any contract for any token deal the investors have ever done,” DL News reported on Friday, citing a source familiar. One subpoena was titled “in the matter of certain crypto asset offering intermediaries,” according to a first page reviewed by the news outlet.
In an emailed statement to The Block, an SEC spokesperson said the agency does not comment on the “existence or nonexistence of a possible investigation.”
The agency has cracked down on the crypto industry, filing charges against large crypto exchanges, including Binance, Coinbase and Kraken, following the industry’s fallout after the collapse of FTX in late 2022. SEC Chair Gary Gensler has argued that most cryptocurrencies are securities and has said firms need to register. The crypto industry, meanwhile, has said they need clear rules and lawmakers have been working to craft a federal framework for crypto.
Lawyers told The Block last year that the SEC was closing in on venture capital funds that invest in digital assets following market fallout. Other regulators, too, warned of risks. Commodity Futures Trading Commission’s Christy Goldsmith Romero spoke about a “trust deficit” among venture capital firms in a speech in January 2023. Romero added there should have been red flags regarding FTX, giving voice to growing rumbling from Washington about the industry.
“Questions arise whether these investors turned a blind eye when conducting due diligence to facts that would normally serve as flashing red lights because of the promise of innovation, hype surrounding FTX, and what is now understood to be misplaced trust in FTX and its founder,” Romero said in her speech from early 2023.
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About Author
Sarah is a reporter at The Block covering policy, regulation and legal happenings. Before, Sarah was a reporter with CQ Legal writing about securities regulation, which is where she first started reporting on crypto. Sarah has also written for The Bond Buyer and American Banker, among other finance-related publications. She graduated from the University of Missouri and earned a degree in print and digital journalism. Sarah is based in Washington D.C., and is an avid coffee lover. You can follow her on Twitter @ForTheWynn.