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June has been quite an eventful month with the U.S. Securities and Exchange Commission (SEC) slapping lawsuits on the two biggest crypto exchanges – Coinbase and Binance – in the first week.
Gary Gensler’s actions have received a lot of flak from players across the industry. Former SEC Chairman Jay Clayton has slammed Gary Gensler’s regulatory approach. During his recent interview with CNBC, Clayton quotes Gensler’s previous remarks “if we’re not losing cases, we aren’t suing enough businesses”.
Clayton believes that this shows a fundamental shift in how Americans see the role of the government and that Gensler’s approach is not the right one. “I don’t want to be in a place where the government brings in cases where they think they are going to lose,” said Clayton.
He added that the regulator should only bring cases that they think will pass the judicial muster. Gemini exchange co-founder Cameron Winklevoss called it a “total abuse of power” by Gary Gensler.
A must watch. Former SEC Chairman Jay Clayton describes the new and deeply un-American ethos of the @SECGov under @GaryGensler — if we're not losing cases, we aren't suing enough businesses. This is a total abuse of power. pic.twitter.com/G0HxL4s8Y1
— Cameron Winklevoss (@cameron) June 28, 2023
There have been comments that Genselr has been behaving more like a politician and not a regulator. However, not to forget that Jay Clayton was the one to slap a lawsuit against Ripple just before signing off from the office in late December 2020.
So far, the SEC has not been successful enough in proving that Ripple sold XRP as unregistered securities during its 2013 ICO.
Gary Gensler Questioned
After Clayton’s comments, other crypto industry players have strengthened their defense on the matter. John Deaton, an attorney representing Ripple said that the judge in the Ripple case pointed out that the SEC lawyers were not faithfully adhering to the law.
In a legal case, it is expected that the lawyers have a sincere belief that they can win by applying the law correctly. They shouldn’t wait for the judge to correct their course. The judge’s comment implies that the SEC lawyers may not have been acting with good intentions in the case.
With financial giant BlackRock filing for spot Bitcoin ETF, many market analysts have questioned that Gensler would be biased towards BlackRock and might give them a pass. It will be interesting to see whether the SEC gives any concession to the big players of traditional finance.
Gary Gensler will soon appear before the US House Committee to revise the market structure for digital assets. After Gensler’s actions this month, Warren Davidson, a Congressman from Ohio, filed for restructuring of the agency and removing Gensler from his post.
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