Crypto lawyers and industry advocates have been mounting pressure on Securities and Exchange Commission (SEC) Gary Gensler. The latest is a call for him to disqualify himself as the arbiter and judge over digital asset enforcement actions.
On June 29, lawyer and chief policy officer at the Blockchain Association, Jake Chervinsky, penned a lengthy article on why Gensler should recuse himself.
SEC Crypto War Inexcusable
The crypto attorney said that Gary Gensler has “wrongly prejudged that all digital assets are securities.”
“As a result, federal law requires that he recuse himself from all enforcement decisions related to digital assets.”
He argued that every SEC enforcement action must follow the “Wells process.”
This is a process whereby SEC Commissioners are supposed to act as neutral arbiters. Their job is to impartially weigh the evidence and arguments presented by SEC staff and the target of the enforcement.
“When it comes to digital assets, Chair Gensler is far from a neutral arbiter,” he said before adding:
“Since his appointment, he has repeatedly stated his view that all digital assets other than Bitcoin are securities, end of story.”
Learn more about the tools that the SEC is using to crack down on crypto: What Is the Howey Test and How Does It Impact Crypto?
Congress has yet to provide any official legislation classifying digital assets as securities or commodities. Therefore, this appears to be Gensler’s own personal warpath against the industry.
Additionally, this SEC attack on the crypto industry has resulted in millions in legal fees and untold losses for the investors Gensler is claiming to protect.
Furthermore, Chervinsky added that when an SEC Commissioner “has in some measure adjudged the facts as well as the law of a particular case in advance of hearing it,” the law demands recusal.
“Chair Gensler has clearly prejudged the facts and law in every case involving digital assets. He must recuse himself.”
He argued that the SEC chair has voted on crypto enforcement actions himself which are unlawful. Those enforcement actions should be invalidated now, he added. Furthermore, Gensler should be disqualified from voting on any more in the future.
The lawyer said that these issues should be raised by anyone currently under SEC investigation.
Gensler Paving The Way For TradFi
Over the past couple of years, the agency has sued a large number of the bigger players in the American crypto asset industry.
The latest two high-profile lawsuits were against Binance and Coinbase. Moreover, the action has wiped billions off the crypto market, which may have been the SEC’s intention.
Industry observers have also claimed that the SEC has cracked down on crypto companies to enable Traditional Finance to take over the sector. This appears to be happening at the moment. A recent slew of ETF applications by huge financial institutions has happened, though the regulator has yet to approve a spot crypto ETP.
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