KEY POINTS
- Grewal noted that there were 'many, many creative attempts' by industry players to avoid being regulated
- He blasted the 'decade's worth of verbal gymnastics' that only distract the world from real crypto-related issues
- The SEC recently scored a win in its Coinbase lawsuit as a judge ruled that it will proceed to trial
Nearly three months since the U.S. Securities and Exchange Commission (SEC) made the historical move of approving 11 spot Bitcoin exchange-traded funds (ETFs), some of the regulator's leaders still have a negative view of the cryptocurrency industry.
Gurbir Grewal, head of the SEC's Division of Enforcement, slammed the crypto sector Wednesday, saying there has been "significant non-compliance and many, many creative attempts by market participants to avoid our jurisdiction, with some claiming that we are making it up as we go or regulating by enforcement, and others arguing that we are recklessly exceeding our authorities."
He went on to say during his speech at the SEC Speaks 2024 event that some crypto players have made various arguments to prevent the regulator from monitoring its activities. Some said their digital assets were "currencies" and were, therefore, beyond the scope of the SEC's jurisdiction.
Others supposedly argued that the term "investment contract" was "unconstitutionally vague and could not be applied to crypto." Some underlined the crypto industry's decentralized state, wherein no entities or entrepreneurs were involved, which supposedly means the SEC should have no jurisdiction over the sector's activities.
For Grewal, the past 10 years of back-and-forth arguments were just "a decade's worth of verbal gymnastics that are just a backhanded way of saying, 'we want a different set of rules than those that apply to everyone else.'" He said the arguments only served as a distraction "from the very real issues and risks that the crypto markets present for the investing public."
To prove his point on the risks related to cryptocurrency investments, Grewal reminded the public of Sam Bankman-Fried's case. He said the victim statements in the case only prove how massive of an impact the fraud had on investors – a broad demographic that includes grandparents, single parents, young people, and retirees.
"In the end, the stories of the victims in all of these cases are absolutely devastating and they are our 'why,'" he noted.
He then highlighted the SEC's work in helping take down fraudulent crypto operations and other related activities, including the "unlawful tactics" supposedly used by "influencers" who touted unregistered crypto asset offerings "without disclosing that they are being compensated to do so."
Grewal's statements came as the SEC grapples with a host of crypto firms who are pushing back on the regulator's complaints that range from fraud to unregistered securities, and other related cases.
Among the latest developments in the SEC's bid to rein in cryptocurrency is the lawsuit it filed against crypto exchange Coinbase. Just last week, a federal judge ruled in favor of the regulator to proceed with the trial, rejecting the exchange's bid to dismiss the unregistered securities sales complaint.
