In an ever-tightening saga around cryptocurrency regulations, Ripple Chief Legal Officer (CLO) Stuart Alderoty and Coinbase CLO Paul Grewal have highlighted recent instances where the U.S. Securities and Exchange Commission (SEC) under Chair Gary Gensler’s watch has faced criticism and legal setbacks. Notably, the SEC’s handling of cases, as well as its purported missteps in rulemaking, have garnered significant attention from the crypto community and legal experts.
WSJ asks: “Is Gary Gensler ever going to win a case?” pic.twitter.com/uW2jxKza7M— Stuart Alderoty (@s_alderoty) November 2, 2023
On November 2, Alderoty took to social media to share an opinion piece from the Wall Street Journal posing the question: “Is Gary Gensler ever going to win a case?” This comes after the Fifth Circuit Court of Appeals delivered a stinging critique of the SEC over its stock-buyback rule, a case brought forward in the U.S. Chamber of Commerce v. SEC lawsuit.
Paul Grewal, Coinbase’s CLO, weighed in on the discourse, highlighting not only the Fifth Circuit’s decision but also referencing the D.C. Circuit’s critique of the SEC’s stance on Grayscale. He noted,
Again and again, federal courts of appeal held that the SEC acted arbitrarily and capriciously in violation of the Administrative Procedure Act. The third branch remains our last, best hope.
Further complicating matters for the SEC, the Government Accountability Office (GAO) recently found that the SAB 121 rule established by the agency failed to involve both regulators and the public. Such an oversight goes against the tenets of both the Administrative Procedure Act (APA) and the Congressional Review Act.
Prominent pro-XRP attorneys John Deaton and Bill Morgan expressed concerns about the SEC’s recent actions. Deaton emphasized the need for Commissioners to rise above political motivations and work to restore the agency’s credibility.
How many Court decisions, crushing the credibility of the @SECGov, is it going to take before the Commissioners decide to act as leaders, and not political operatives? A federal district Court has stated the SEC lacks faithful allegiance to the law. Separate Appellate courts have… https://t.co/NJcorK8Oup— John E Deaton (@JohnEDeaton1) November 1, 2023
He appealed to the Financial Services Committee, urging them to take action by issuing a subpoena, especially when numerous American entrepreneurs face similar scrutiny from the SEC. Meanwhile, Morgan succinctly summarized the prevailing sentiment by asserting, “It is all political and all motivated by a political agenda.” He urged the SEC to refrain from its aggressive stance towards the crypto industry.