Once again, SEC Chairman Gary Gensler is in the hot seat. There’s a whole lot going on in the crypto world that is stirring up anger, controversy, and confusion over the regulation of altcoins in America.
The latest in this ongoing saga is a lawsuit between the agency and Ripple Labs. In a recent Wall Street Journal opinion, Gensler said the Securities and Exchange Commission treats crypto like any other security. However, 200 crypto division lawsuits, $1 billion lost to fraud, and $15 billion in the suit against Ripple raised eyebrows. It appears that the SEC is treating crypto differently than traditional assets.
Mark Cuban fired back at Gensler’s claims
The issue at hand is unclear guidelines for crypto regulation. Gensler says the laws have existed for decades. But, as a Forbes article points out, no such regulatory rules exist on SEC.gov. In addition, billionaire entrepreneur Mark Cuban took to Twitter to criticize Gensler’s claims.
“If you were working on behalf of investors you make it easy for questions by investors and businesspeople to be asked and answered,” Cuban tweeted. “You make it near impossible. Those [who] can’t afford lawyers can only guess.” The tweet directly replies to Gensler, who said in his Twitter thread that the SEC’s ultimate goal is to protect investors.
Cuban’s criticism is that the SEC quickly takes enforcement action against uncompliant companies, but unclear guidelines make compliance difficult. The Forbes article reiterates that sentiment, noting that nearly 90% of the SEC’s crypto lawsuits settle out of court. This indicates that most of the time, these lawsuits happen because of ambiguous rules. Less than half of the 200 cases since the creation of the Crypto Assets and Cyber Unit target fraud. “So many lawsuits suggests that the SEC prefers ‘regulation by enforcement’ […] rather than ‘regulation by rules,’” reads the Forbes article.
The SEC and crypto have a rocky relationship
In his opinion, Gensler argues that the “SEC will serve as the cop on the beat” in the crypto market. And, as Forbes reports, investors have indeed lost over $1 billion due to fraud since 2021. Some form of regulation is necessary. Bad actors have run rampant in an industry founded on decentralization. However, as Forbes notes, what’s $1 billion compared to the $15 billion spent on the lawsuit against Ripple Labs? The federal agency filed the case in 2020, alleging Ripple offered XRP as an unregistered security.
SEC crypto regulation lacks transparency
As mentioned, there are no clear SEC guidelines for offering or investing in cryptocurrency yet. However, the agency has filed 200 lawsuits against crypto companies since establishing the Crypto Assets and Cyber Unit in 2017. Cuban and Roslyn Layton, the author of the Forbes article, point out that investors and entrepreneurs need more explicit rules. If the SEC truly intends to protect investors, they must know the dos and don’ts before investing.