Is the US Securities and Exchange Commission (SEC) getting a little overzealous with cryptocurrency-related businesses? That’s the interpretation being put forward by more and more judges in the USA, in the face of the US financial watchdog’s relentless campaign. Could this be the start of a wider protest
A judge again nails the SEC for its zeal in the face of a crypto company
It’s been many months since the SEC launched an unprecedented campaign against crypto companies offering their services in the United States. And while until now it was mainly those concerned who accused the SEC of being too harsh, it would appear that this is no longer the case.
Proof of this came this week when a Utah court judge threatened the SEC with sanctions. The U.S. financial regulator is opposed to the DEBT Box company, which it accuses of offering unauthorized financial securities. But during the trial, the judge in charge of the case took a firm stand and condemned the SEC’s actions:
“The Court is concerned that the Commission provided false or misleading information, […] which violates the integrity of the proceedings. “
In particular, the judge accuses the SEC of having frozen DEBT Box’s assets without there being any reason to do so, a measure that is supposed to be exceptional. The Court is therefore considering sanctions against the US financial regulator. Debt Box’s lawyers also reacted, condemning the SEC’s actions:
“The SEC got this case wrong, very wrong. It should not be allowed to continue making fallacious arguments. “
A trend now well established?
In the crypto ecosystem, the SEC’s zeal is now well known. But at the same time, more and more players are pointing the finger at the American institution’s sometimes hasty or erroneous procedures. Ripple’s head of legal affairs, Stuart Alderoty, has listed the SEC’s mistakes in cases involving crypto companies:
A troubling pattern emerges:
– Court finds the SEC demonstrated “hypocrisy” by making inconsistent arguments to the Court and not acting out of a “faithful allegiance to the law.” SEC v Ripple, 7/12/22
– Court agrees that the SEC defaulted on its duty to respond in good faith to…– Stuart Alderoty (@s_alderoty) December 1, 2023
He mentions several cases where the SEC has been accused of “hypocrisy” and inconsistency in its statements and judgments. Notably the Coinbase case: the Securities and Exchange Commission had never responded to the exchange platform’s requests for regulatory clarification. These events have all taken place over the past year, under Gary Gensler’s leadership.
According to Stuart Alderoty, a “disturbing trend” has thus emerged. What is being questioned in subtext is the SEC’s ability to judge appropriately and unbiasedly the cases that pit it against crypto companies. And questions of this kind are becoming increasingly numerous beyond the ecosystem.
