The United States Securities and Exchange Commission (SEC) is facing increasing calls for accountability as many business think tanks suspect a conflict of interest among the regulator’s top officials. One of those urging for this responsibility is Stuart Alderoty, the chief legal officer of Ripple Labs Inc. He recently noted that Chairman Gary Gensler’s statements had legal ramifications in response to a tweet from Blockchain Association Policy Lead Jake Chervinsky.
Gensler’s prejudgment
Chervinsky said in a Twitter thread that Gary Gensler should refrain from taking part in enforcement proceedings involving the emerging asset class since he has already determined that every digital asset is a security.
Chervinsky supported his claim by pointing out that every enforcement action taken by the market regulator must adhere to the Wells Process. Here, the commissioners, who are supposed to be unbiased, must review matters submitted by the SEC staff impartially. As a senior official, Chervinsky said that Gensler is far from being an unbiased adjudicator because he frequently refers to all cryptocurrencies other than Bitcoin as securities.
The SEC chair’s stance is viewed as incorrect by many industry insiders, including Chervinsky, who also thinks the top regulator is unwilling to conduct the thorough investigation necessary to decide if any item in the cryptocurrency market is a security or not.
Weighing integrity of SEC crackdowns
Enforcement proceedings against exchanges like Kraken, Bittrex, Coinbase, and Binance have kept the SEC quite busy this year. While criticising cryptocurrency companies seems to be in style right now, industry executives have also accused the commission of favouritism, particularly with regard to the now-defunct FTX derivatives market.
Even Binance CEO Changpeng “CZ” Zhao noted that FTX was not sued despite its unlawful practises, raising concerns about the fairness of its enforcement procedures.
