Days after describing Bitcoin’s (BTC) recent upswing as a rollercoaster ride, US Securities and Exchange Commission (SEC) Chair Gary Gensler has taken swipes against the broader virtual currency ecosystem.

In an interview with Yahoo Finance, Gensler described the ecosystem as a cesspit of fraud requiring greater levels of regulatory scrutiny. The SEC boss pointed to the growing trend of rug pulls and a series of high-profile bankruptcies that plagued the industry in 2022.

Gensler’s comments on the state of the cryptocurrency space come amid widespread optimism that the SEC could approve a spot exchange-traded fund (ETF) for Ethereum (ETH). Holding the cards close to his chest, Gensler noted that the SEC will adopt a slow-and-steady pace to avoid dire risks stemming from the ecosystem.

“I think the whole crypto field has challenges,” said Gensler. “The whole field is rife with abuses and fraud. Look at the series of bankruptcies in 2022 and 2023.”

Back in 2022, several mainstream cryptocurrency companies imploded under the weight of an extended bear market and contagions from Terraform’s collapse. Industry heavyweights like Three Arrows Capital (3AC), FTX, Blockfi, and Gemini all filed for bankruptcy, triggering renewed regulatory interest.

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Apart from the collapses, Gensler pointed out that intermediaries are having a run at investors through fraudulent practices. Specifically, the SEC Chair accused service providers of commingling customers’ funds or lending deposits without proper authorization, raising the measure of risks for clients.

“They (intermediaries) are doing things that we would never allow the New York Stock Exchange to do,” Gensler said. “They’re operating as a clearing house, a broker-dealer, and an exchange. I think that puts the investing public at risk.”

Gensler’s latest tirade against the industry comes on the heels of a strong rally by BTC and other cryptocurrencies. BTC soared past $70,000 to hit a new all-time high, while gains made by other assets pushed the industry’s market capitalization to nearly $3 trillion.

Gensler faces his share of criticisms

While the SEC Chair has been flexing his regulatory muscles against the ecosystem, his actions have triggered criticisms from digital asset enthusiasts. At the start of the year, Ripple’s CEO Brad Garlinghouse described Gensler as a “political liability” and called for his removal as CEO Chair.

Gensler’s loudest critics say his policies against virtual currencies have triggered a massive capital and talent flight out of the US since 2021. 

“Gensler, in my opinion, is a slime ball from start to finish and should not be trusted as the chair of the SEC,” said veteran trader Peter Brandt. “Nothing this man, Gary Gensler, says should be considered as in the best interest of investors.”