Regulation
How Gary Gensler’s SEC is trumping crypto companies in the courts – DL News
- The cryptocurrency industry has achieved a series of victories in lawsuits against the SEC.
- But a zoomed-in view shows that the regulator is actually doing well in the early stages of cases.
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Kraken’s court battle with the US markets regulator will almost certainly move forward, after a federal judge mentioned he won’t drop the case.
It’s another example of how the Securities and Exchange Commission, chaired by Gary Gensler, is racking up victories in its lawsuit against the cryptocurrency industry.
That’s not what the industry says.
Crypto enthusiasts describe Gensler’s SEC as a serial loser.
It is comprensible.
The SEC did it flooded Crypto firms with enforcement actions.
Among others, the regulator is also suing major exchanges Binance AND CoinBaseaccusing them of offering unregistered crypto securities on their platforms.
The stakes are nothing short of existential for the industry.
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Until Congress gets around to writing crypto-specific laws – and that it may take some time – Court cases will direct the regulation of cryptocurrencies.
So far, however, the SEC hasn’t taken the beating that some would have you believe.
Cryptocurrency failures
Take Kraken.
In court Thursday, Judge William Orrick agreed with the SEC.
He said it is “plausible” that the cryptocurrencies on Kraken are securities, adding that the exchange has its “work to do” for this.
Or take Coinbase.
In March, Judge Katherine Polk Failla sided with the SEC’s argument that 13 tokens listed in its lawsuit against the exchange were securities.
And then there’s Judge Jed Rakoff’s establishing that Terraform Labs offered investors unregistered securities.
Failla, Orrick and Rakoff also paid little attention to the doctrine of the main issues: a a sort of pet theory of cryptocurrency lawyers intended to challenge the authority of the SEC.
Imperfect document
This is not to say that the exchanges are cooked.
Judges rarely dismiss cases this early in a trial.
And their preliminary comments are no guide to how they will ultimately govern.
Furthermore, the SEC’s track record is not perfect:
- Grayscale’s victory the way cleared for Bitcoin spot exchange-traded funds.
- Corrugation laboratories won in his case on the state of the XRP token, at least partially.
- THE The debt box fiasco it was extremely embarrassing for the regulator.
But as far as these cases go, only Ripple was a test for Gensler’s claims that most cryptocurrencies are securities – and even that led to a split decision by the judge.
Proto journalists it crunched the numbers out of 116 closed cryptocurrency cases, showing that the SEC won or settled 95% of them.
Time will test this streak.
The SEC’s cases against the exchanges could end up in appeals courts, where the regulator’s arguments may not be well received.
And the industry is now more proactive, with the Blockchain Association AND Consents filing lawsuits against the SEC.
At this point, however, the SEC is not suffering the defeat in the courts that the industry would like to see.
Reach joanna@dlnews.com.