The SEC under Gary Gensler has failed to protect investors and has forced financial innovators abroad

In April of 2024, two Securities and Exchange Commission (SEC) lawyers were forced to resign as a result of false statements they made in the SEC's case against crypto company Debt Box.  The judge handling the case said that the SEC acted in "bad faith," was "deliberately perpetuating falsehoods" and had engaged in a "gross abuse of the power entrusted to it by Congress."  So egregious were the SEC's action in this case that the judge sanctioned the SEC and ordered it to pay attorneys' fees and legal costs of Debt Box.

The Debt box case is not the first time that the SEC under the current chair Gary Gensler has acted in bad faith against a crypto company.  Indeed, under Gensler's watch, the SEC had previously denied crypto company Grayscale's application to convert its bitcoin trust into an Exchange Traded Fund (ETF).  After the SEC's denial, Grayscale sued the SEC in order to force it to approve the conversion of the bitcoin trust to an ETF.  The judge handling that case labeled the SEC's denial as "arbitrary and capricious," and essentially mandated that the SEC approve Grayscale's bitcoin ETF application.

Gensler has stated numerous times that the crypto industry is full of hucksters, fraudsters, scam artists and ponzi schemes.  And, while this is no doubt the case, the SEC failed to take any action against the most egregious actors in the crypto space -- Sam Bankman-Fried of FTX and Alex Mashinsky of Celsius -- who defrauded customers out of Billions of dollars.  Meanwhile, the SEC has filed lawsuits against companies such as Coinbase and Kraken, exchanges that have never lost customers' assets and have tried to work with the SEC in order to comply with US regulatory laws.

I say "tried to work with the SEC" because it has become apparent that the SEC has no interest providing the legal clarity that the crypto industry needs in order to do business in a fully compliant manner.  To see how far the SEC has gone to avoid providing legal clarity to the crypto industry, one only has to watch this clip:
https://youtu.be/aIcNGfF8FDA?si=rq874dwD_inxyaeK
in which US Representative Patrick McHenry asks Gary Gensler if Ether -- the second largest cryptocurrency by market cap --  is a commodity or a security.  

The above video makes the SEC's playbook against the crypto industry transparent.  First, the SEC states that the laws governing the crypto industry are clear (even though they obviously are not).  Second, the SEC refuses to impart any legal clarity when asked to provide it.  Third, the SEC sues crypto companies for a failure to comply with the law, which, again, is impossible to do given the complete lack of clarity.  

Due to the adversarial relationship Gensler's SEC has created, many American crypto-entrepreneurs have simply decided to incorporate their start-ups abroad.  The long-term result of Gensler's actions will be to hurt America's competitiveness in the fast-growing crypto industry.  

Rather than carry out the mission the SEC -- to protect investors. maintain fair, orderly, and efficient markets, and facilitate capital formation -- Gensler has used his time as chair to carry out a vendetta against the crypto industry.  It is far past time for Gensler to step down from his role as SEC chair and allow someone that puts the mission of the SEC first to take over.