SEC Conducting Extrajudicial Industry Sweeps on Crypto Sector Says Tom Emmer

Updated by Kyle Baird
In Brief
  • Tom Emmer says the SEC is using enforcement to widen its jurisdiction.
  • Industry sweeps on companies beyond its authority have been occurring.
  • The SEC wants to control the crypto sector, treating them as securities.
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The U.S. Securities and Exchange Commission (SEC) is still on the crypto warpath and has reached beyond its own jurisdiction, according to Senator Tom Emmer.

Republican Senator Tom Emmer has questioned the level of trust the public has in the U.S. financial system. He added that the SEC has blamed this erosion of trust on “industry participants and companies.”

He accused the agency of using enforcement to expand its jurisdiction at the expense of public resources and trust, more so with the digital asset industry.

On July 19, Senator Emmer posted the video of the dialogue between himself and directors at the financial regulator.  

A ‘hellbent’ SEC

Senator Emmer questioned SEC Enforcement Director Gurbir Grewal about “industry sweeps” receiving confirmation that they do occur. When asked about current industry sweeps, Grewal refused to give details citing SEC policy.

The Enforcement Director also admitted to carrying out “extra judicial requests” on companies that do not fall under the SEC’s authority.

Senator Emmer also stated that SEC Chair Gary Gensler has directed the division of enforcement to send “sweep letters” to a particular sector of the crypto community designed to “jam them into a violation that is allegedly unconstitutional.”

Those failing to respond to supposedly voluntary information requests would, in the words of the SEC, face a “bloodbath.” Senator Emmer proceeded to accuse the agency of dissolving the division designed to craft crypto regulations.

“The SEC is hellbent on expanding the size of its crypto enforcement division using enforcement to unconstitutionally expand its jurisdiction,” he added.

“Under Chair Gensler, the SEC has become a power-hungry regulator, politicizing enforcement, baiting companies to “come in and talk” to the Commission, then hitting them with enforcement actions, discouraging good-faith cooperation.”

Lummis-Gillibrand bill in limbo

A recent ray of light in the form of the proactive Lummis-Gillibrand bill is unlikely to be voted upon this year. Speaking to Bloomberg on July 19, Senator Lummis said that the wide-ranging scope of the legislation may make it difficult for lawmakers to digest quickly. Therefore, the Senate is unlikely to vote on it before the end of 2022.

Gary Gensler has repeatedly criticized the bill claiming that it is a threat to the $100 trillion traditional finance sector. He wants the SEC to have sole jurisdiction over digital assets so that he can regulate them the same as securities and stocks.

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