A former high-ranking official at the U.S. Securities and Exchange Commission (SEC), John Reed Stark, is advising digital asset investors to leave crypto platforms immediately.

Stark, who played a pivotal role in establishing the SEC’s Office of Internet Enforcement, believes that crypto exchanges are currently facing an escalating regulatory and law enforcement siege.

Stark, who acknowledges his previous criticism of the SEC, commends the regulator’s recent enforcement actions in the crypto space. He emphasizes that crypto trading platforms are inherently high-risk, unsafe, and lacking necessary investor protections.

According to Stark, a significant gap exists in areas such as record-keeping, cybersecurity, codes of conduct, addressing customer complaints, and ensuring transparent order flow transactions. These deficiencies expose investors to potential fraud and manipulation without adequate safeguards.

One of Stark’s key arguments is that crypto exchanges currently operate without abiding by U.S. statutes and rules that prohibit fraudulent activities like manipulation, insider trading, and trading ahead of customers.

He highlights the lack of oversight, access, and detection capabilities that the SEC faces when monitoring crypto exchanges, in stark contrast to the unlimited visibility it possesses over traditional SEC-registered financial firms.

This regulatory blind spot hampers the SEC’s ability to effectively investigate and deter fraudulent conduct within the crypto ecosystem.

On Monday, crypto prices tumbled following the news of the SEC’s lawsuit against Binance, a leading global crypto exchange, and its CEO Changpeng Zhao.

The SEC alleges that Binance violated investor protection and securities laws. The following day, the SEC filed a lawsuit against Coinbase, a top U.S. crypto exchange, accusing the company of operating as an unregistered securities exchange, broker, and clearing agency.