The SEC has urged caution with regards to crypto assets, stating that they should be treated as securities due to their risks. Despite this warning, Bitcoin is seeing a surge in value, although in the past 24 hours there has been news of attacks on various companies and individuals in the crypto market, including Ripple and Kraken. Furthermore, Biden has proposed a 30% tax on crypto mining electricity and a clampdown on tax loss harvesting for crypto. Additionally, a short seller has accused cash app owner, Block, of misleading investors and compliance worst practices, causing their stock to drop by 20%. The SEC has also reiterated the significant risks involved with investing in crypto asset securities.
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The SEC Urges Caution with Crypto Assets
The Securities and Exchange Commission (SEC) has issued a warning for investors to exercise caution when dealing with crypto assets. The SEC has classified these assets as securities, emphasizing the risks involved. This article will cover some of the recent events in the crypto market, including market movements and attacks on companies in the industry.
Recent Market Movements
Bitcoin has experienced a significant increase in value, approaching yesterday’s high. However, recent news has also caused volatility in the market, leading to liquidations of $357 million in leveraged positions. Investors are urged to be cautious during these times of high volatility.
Coordinated Attacks on Crypto Companies
The SEC has continued its battle with Ripple over whether it classifies as a security or commodity. Other companies, such as Kraken and Paxos, have also faced legal action from the SEC. Signature Bank recently announced its closure, impacting ways to transfer money into the crypto market. In addition, President Biden has proposed a 30% tax on crypto mining electricity and plans to double capital gains taxes while clamping down on tax loss harvesting.
Companies Facing Legal Action
Coinbase received a Wells notice, which often precedes an enforcement action or lawsuit. Block, which owns Cash App, experienced a 20% drop in value due to allegations from a short-selling firm about misleading investors. Although these actions are not directly related to the crypto side of their businesses, they do indicate a pattern of companies in the crypto market being targeted.
Exercise Caution
Investors should exercise caution when dealing with crypto assets, recognizing that investments can be exceptionally speculative and volatile. They should carefully review the platforms where they buy, sell, and lend crypto asset securities, as these platforms may lack important investor protections. The risk of loss for individual investors remains significant.
