Once again the United States Securities and Exchange Commission faces criticism in its dealing with the cryptocurrency industry. This time, Congressman Tom Emmer (R-MN) has become the latest politician to express displeasure with the unethical manner the SEC interacts with crypto.
Emmer posted a video on Tuesday showing his conversation at the House Committee on Financial Services, where he accused the SEC of politicizing regulations. He went on to grill SEC Enforcement Director Gurbir Grewal over SEC’s unethical “industry sweeps” against crypto companies. The Congressman further enquired if these sweeps against crypto companies fall under the jurisdiction of the SEC and what actions the commission takes against companies that don’t volunteer for such voluntary questioning. Grewal admitted to using enforcement actions against companies that are not under their jurisdiction. Emmer said SEC was using its Enforcement branch to unconstitutionally expand its crypto jurisdiction.
[Jha, P. US Congressman blasts SEC for non-judicial actions against crypto companies. (Accessed July 21, 2022)].
[NOTE: To watch the Emmer video above referred, click here].
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Emmer then took a swipe at SEC Chairman, Gary Gensler tweeting:
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“Emmer said SEC’s behavior was absolutely unacceptable and believes the regulatory body is not regulating in good faith especially when it comes to the digital asset market” [Jha, supra].
Although previously calling for a total ban of cryptocurrencies in the United States, Congressman Brad Sherman (D-CA) likewise criticized the SEC for pursuing the ‘little fish’ in lieu of chasing the larger exchanges.
In a Tuesday hearing before the House Committee on Financial Services, Sherman said SEC enforcement director Gurbir Grewal needed to show ‘fortitude and courage’ when pursuing securities cases against cryptocurrency exchanges in the United States. The lawmaker added that the SEC enforcement division had “gone after” XRP as a security, but not the crypto exchanges that processed “tens of thousands” transactions of the token. 'If XRP is a security — and you think it is, and I think it is, why are these crypto exchanges not in violation of law and is it enough that the crypto exchanges have said ‘well, having committed tens of thousands of violations in the past, we promise not to do any more in the future?’ asked Sherman. ‘Is that enough to get you off the hook for enforcement?’
[Wright, T. US lawmaker criticizes SEC enforcement director for not going after ‘big fish’ crypto exchanges. (Accessed July 21, 2022)].
[NOTE: A video showing Representative Sherman’s remarks may be viewed by clicking here].
Grewal responded to Sherman by referring to a case the SEC Enforcement Division brought against Poloniex in August 2021 (said case alleging the trading of crypto deemed to be securities on the Poloniex platform between Poloniex in August 2021). But Sherman countered with Poloniex being only a ‘small fish’ among the major exchanges (i.e. Coinbase, Kraken, etc.) stating:
The big fish operating the major exchanges did many, many tens of thousands of transactions with XRP. You know it’s a security — that means they were illegally operating a securities exchange. They know it’s illegal because they stopped doing it, even though it was profitable […] I hope you focus on that.
[Id].
“Many in the crypto industry were hopeful that Gary Gensler’s appointment as SEC chief would prove beneficial for the crypto regulations, given his crypto/blockchain background. However, on the contrary, Gensler’s approach has been quite opaque and unethical” [Jha, supra]
