Tag: Chairman Gensler

Bitnomial Suit Highlights Crypto Turf War Between SEC, CFTC

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By Professor Tonya Evans. (Law360). October 31. 2024.

Bitnomial Exchange LLC’s lawsuit[1] against the U.S. Securities and Exchange Commission, filed on Oct. 10 in the U.S. District Court for the Northern District of Illinois, signals a major shift as digital asset exchanges push back against regulatory overreach. Bitnomial is seeking a declaratory judgment to challenge the SEC’s expansive jurisdiction over digital assets, fighting for clear and legally sound rules that foster innovation rather than stifle it.

The commission’s enforcement strategy under SEC Chair Gary Gensler has created regulatory uncertainty. Gensler’s “regulation by enforcement” approach diverges from established securities law and risks weakening U.S. leadership in financial technology.

By filing suit, Bitnomial aims to expose the pitfalls in the SEC’s regulatory tactics, joining other exchanges in a broader legal effort to reshape the rules governing digital assets.

Read the full article here: Law360.

Gary Gensler Has to Go

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By Jared Whitley. (Townhall). October 12, 2024.

After 21 years with the Securities and Exchange Commission (SEC), enforcement director Gurbir Grewal, has resigned. Why? The same day that Gary Gensler’s head of enforcement announced his resignation, the SEC appealed its most famous crypto enforcement action against Ripple, challenging the recent civil penalties ruling, prolonging the case even further. Ripple’s Chief Legal Officer Stu Alderoty took notice of the parallel moves, as Grewal’s resignation was announced a mere hour before the filing. 

Gensler is undoubtedly aware of his political fall from grace, if he were ever held in high regard. Indeed, Commissioner Hester Pierce dared to openly challenge his policies during the House hearing and Gensler’s hands began to visibly tremble throughout. Rep. Warren Davidson (R-OH) asked Peirce if the SEC’s enforcement agenda “reflects the priorities of the commissioners as a whole,” or if it is “an extension of Chairman Gensler’s agenda?” Peirce was blunt: “The agenda is the chairman’s agenda,” and that there are “other things we should be spending our time on.” 

There is no clearer example of Gensler’s muddled agenda than the prolonged litigation battle between the SEC and the U.S. crypto payments company Ripple. The SEC made over-the-top legal allegations as a proxy fight against the entire crypto industry and has dragged the case out for almost four years (and counting) in a naked attempt to bulldoze the company’s business. The case centered on Ripple’s sales of the XRP token to a variety of buyers, including anonymous trades on public exchanges.

Read the full piece here: Townhall.

SEC’s Chairman Gensler Faces Congressional Grilling Over Crypto Oversight

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Nina Bambysheva. (Forbes). September 24, 2024.

In a highly anticipated Congressional hearing today, U.S. Securities and Commission (SEC) Chairman Gary Gensler and his fellow commissioners faced intense scrutiny over the agency’s handling of digital asset regulation.

For the first time since 2019, all five commissioners including Caroline Crenshaw, Hester Peirce, Jaime Lizárraga, and Mark Uyeda testified together before the House Financial Services Committee. The hearing laid bare the growing tension surrounding the SEC’s oversight of cryptocurrencies, which critics argue has become overreaching and legally ambiguous.

Committee Chairman Patrick McHenry, a Republican from North Carolina, wasted no time in setting the tone, calling out Gensler for what he sees as regulatory overreach. “Chair Gensler’s legacy will be defined by turning the once proud institution of the SEC into a rogue agency,” McHenry said, accusing the SEC of enforcing regulations “often without adequate justification, economic analysis, or public engagement.” The SEC’s heavy-handed approach has targeted a broad range of U.S. crypto companies—from exchanges like Coinbase to decentralized finance (DeFi) platforms like Uniswap and NFT marketplaces such as OpenSea.

Read the full piece here: Forbes.

Gary Gensler Under Fire for Alleged Political Favoritism in SEC Appointments

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By Vismaya V. (DeCrypt). September 12, 2024.

The U.S. Securities and Exchange Commission (SEC) chair Gary Gensler has come under fire for allegedly hiring civil servants based on political affiliations—a violation of federal law.

The allegations come from a joint letter sent by the House Judiciary, Financial Services, and Oversight Committees. While the allegations don’t appear to overlap with crypto enforcement actions from the regulator, they do arrive at a time when firing Gensler has become one of Republican nominee Donald Trump’s campaign promises as he runs for re-election.

The letter, signed by Judiciary Committee Chairman Jim Jordan (R-OH), Financial Services Committee Chairman Patrick McHenry (R-NC), and Oversight and Accountability Committee Chairman James Comer (R-KY), calls into question the appointment of Dr. Haoxiang Zhu as SEC Director of Trading and Markets.

Read more here: DeCrypt.

Ripple Gets OK To Pause SEC Penalty As It Mulls Appeal

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By Aislinn Keely. (Law360). September 4, 2024.

Law360 (September 4, 2024, 9:34 PM EDT) — A New York federal judge on Wednesday signed off on Ripple Labs’ request to hold off on paying the U.S. Securities and Exchange Commission the $125 million penalty it owes to allow time for either side to appeal the landmark ruling in the agency’s registration case.

The blockchain firm asked U.S. District Judge Analisa Torres earlier Wednesday to delay the monetary portion of her Aug. 7 judgment, which directed Ripple to pay the penalty for failing to register institutional sales of its XRP token. Though Ripple was due to pay up on Friday, Judge Torres allowed a stay until either 30 days after the time to appeal expires, or the resolution of any appeal. 

Read more at: Law360

Court Brings Gavel Down on SEC’s War on Crypto

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By Roslyn Layton. (DC Journal). August 20, 2024.

On August 8, Judge Analisa Torres of the U.S. Southern District of New York issued her judgment on the case brought by the Securities and Exchange Commission against the blockchain payments company Ripple. 

In her 16-page order, Torres brought the District Court’s gavel down on the SEC’s spectacular failure to expand the administrative state beyond what the law allows. The SEC should read the room and move on.

From the moment the SEC filed its case against Ripple in December 2020, the breadth and audacity of its legal assault on the company and its two senior executives rightly dubbed it the cryptocurrency trial of the century. The SEC argued that the XRP token, a digital commodity by any definition, was a security and that all XRP sales between any two parties are investment contracts with Ripple in perpetuity.

Read the full piece here: DC Journal.

How Crypto Money Is Poised to Influence the Election

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By David Yaffe-Bellany, Erin Griffith and Theodore Schleifer. (New York Times). June 17, 2024.

Ryan Selkis, a cryptocurrency executive, was eating dinner at Mar-a-Lago last month when he got an unexpected invitation: Former President Donald J. Trump wanted him to come to the stage and say a few words.

Mr. Selkis, who runs the crypto data firm Messari, was one of a couple hundred attendees at an event celebrating Mr. Trump’s series of nonfungible tokens, the digital collectibles known as NFTs. When he reached the lectern, Mr. Selkis turned to face the former president.

“There’s 50 million crypto holders in the U.S.,” the executive declared. “That’s a lot of voters.”

That message has become a political talking point in the crypto world, as the industry tries to shake off a wave of scandals and establish itself as a powerful force in the 2024 election cycle. Three large crypto firms have banded together to finance a group of affiliated super PACs, investing about $150 million to elect pro-crypto candidates in congressional races.

Read the full piece here: The New York Times.

It’s time to end the SEC’s war on crypto

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By Anthony Scaramucci. (Blockworks). June 6, 2024.

The American government is badly damaged — we need public servants who care more about right or wrong, especially when it comes to the crypto industry.

I’m not denying that there are reasonable questions about how crypto firms should be regulated. Many policy questions still require legislation to resolve. But, our current system is broken.

The Securities and Exchange Commission traditionally does not expose itself and its credibility to an appellate beatdown. But this SEC is different. This SEC and Chair Gary Gensler have an extra-regulatory anti-crypto agenda. And they are using their power to obstruct and delay the industry — imposing their own preferences where they can. 

Gensler may not like bitcoin. But whether you decide to invest in bitcoin is up to you, not the SEC. 

Read the full article here: Blockworks

Why The Securities And Exchange Commission Lost Its War On Crypto

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By Dan Ikenson. (Forbes). May 28, 2024

From banning “non-compete” clauses to re-requiring “net-neutrality” to hyperinflating the costs of taxpayer-funded infrastructure with extravagant union giveaways, the Biden administration has overseen a massive expansion of the regulatory state. But amid this regulatory incontinence, which sows uncertainty, suppresses innovation, and retards investment and growth, there are encouraging signs that Congress, the courts, and US entrepreneurs are fed up with rule by executive fiat.

Take, for example, the escapades of the Securities and Exchange Commission. Since assuming power, Biden’s approach to cryptocurrencies and related technologies has been to delegate and defer to an activist SEC and its crusading chairman, Gary Gensler. Chairman Gensler portrays the crypto industries as “rife with hucksters, fraudsters, [and] scam artists,” which, he seems to believe, excuses him from proposing and promulgating concrete rules, in compliance with statute, for the industry to follow. Instead, Gensler sees crypto companies as undeserving of such regulatory clarity, choosing to keep them off balance through a “regulation by enforcement” approach – aggressively suing crypto companies for non-compliance with securities laws without ever articulating what “compliance” requires.

In the absence of clear, legal pathways, companies in the digital asset space have taken their innovations and expertise to friendlier shores. Governments in places such as the United Kingdom, the European Union, Singapore, and the United Arab Emirates have already established regulatory frameworks and their economies are certain to reap the benefits of the resulting financial and related technological innovations.

Read the full article here: Forbes

The SEC Came to Destroy Crypto, Not to Regulate It

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By Roslyn Layton. (DC Journal). April 3, 2024.

Following the Securities and Exchange Commission’s effort to stretch, bend and twist the law to grant itself authority to regulate cryptocurrencies has been like watching an exhausting video game. By the last level, the monster has grown so grotesque and ridiculous that you’re just waiting for the relief of seeing it explode so the comforting words “game over” can finally appear.

Unfortunately, it’s not a game for many innovative U.S. Financial Tech companies. The SEC has mobilized all its resources to carry out a policy against crypto companies that is not designed to protect investors from fraud or even to clarify what legal compliance means. It is practicing what professor J.W. Verret of George Mason University has called “enforcement by destruction,” trying to turn courts into execution chambers for an industry it never intended to regulate but to destroy.

It comes down to a bait-and-switch strategy by two successive SEC chairmen to claim that every digital asset, no matter how it is designed, is itself a “crypto asset security,” and that gives the agency full authority to require they be registered like stocks. Nothing in nearly a century of securities law provides the SEC such all-encompassing authority over an entire asset class. But the SEC’s strategy was never to prove this theory in court so much as to have a pretext to launch enforcement actions never meant to bring anyone into compliance.

Read the full piece here: DC Journal