SEC Issues Critical Warning to U.S. Crypto Companies

SEC Issues Critical Warning to U.S. Crypto Companies

The U.S. Securities and Exchange Commission (SEC) has called on public companies to analyze and disclose information about their losses, including whether they are doing business with any firm associated with cryptocurrencies.

The regulator, which oversees the U.S. publicly traded disclosures that occurred this year, said the guidance was due to “recent bankruptcies and financial distress among crypto asset market participants,” which have caused “widespread disruption in those markets.”

“Companies may have disclosure obligations under the federal securities laws related to the direct or indirect impact that these events and collateral events have had or may have on their business,” read the SEC statement. “The Division of Corporation Finance believes that companies should evaluate their disclosures with a view towards providing investors with specific, tailored disclosure about market events and conditions, the company’s situation in relation to those events and conditions, and the potential impact on investors. Companies with ongoing reporting obligations should consider whether their existing disclosures should be updated.”

The collapse of the well-known cryptocurrency exchange FTX has caused financial concerns in the cryptocurrency markets and has also tightened SEC scrutiny. In addition, the regulator stated that the directive on cryptocurrencies that public companies must comply with and guidance on information that should be disclosed to the public will be published on the official website of the SEC.

The collapse of FTX was the latest in a series of recent bankruptcies that began with the collapse of Terra (LUNA). It is not yet known whether subsequent collapses will have a different effect.

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