Crypto creates ‘perfect storm of investor risk’: SEC enforcement director

The “regulation by enforcement” refrain is tired, the SEC’s Gurbir Grewal said

article-image

SEC Director of the Division of Enforcement Gurbir Grewal | Mark C. Olsen for the New Jersey National Guard (CC license)

share

The public outlash against the SEC for “regulating through enforcement actions” is unfounded, Gurbir Grewal, the agency’s director of the division of enforcement, said. 

“I brush back on this ‘regulation by enforcement’ notion. It’s just a catchy, tired refrain,” Grewal said during a fireside discussion in New York Friday at an event hosted by Lowenstein Sandler law firm and Rutgers law school.  

Since the collapse of crypto exchange FTX, the agency has more than tripled its enforcement actions targeting digital assets companies, leading to public pushback from the industry. Grewal defended his agency’s actions, though, arguing that the SEC is acting in the public’s best interest. 

The crypto industry creates the “perfect storm of investor risk,” Grewal added, so the SEC targeting the industry is not only justified, it’s essential.  

“The real issue is not that people don’t know what the rules are, they don’t like when the rules are applied to their projects,” Grewal added, echoing notions from SEC Chair Gary Gensler, who has repeatedly slammed crypto companies for attempting to claim that more regulatory clarity is needed. 

The SEC is strategic when deciding which firms to target, Grewal said, countering the notion that the SEC’s process is haphazard or random. 

“When we are evaluating which cases to bring…we need to think about where we can address investor harm,” Grewal said. “We have to be thoughtful about bringing the cases that will have the most impact.” 

When asked about the agency’s current process, Grewal said he has encouraged the SEC to have “robust and early” exchanges with companies, rather than hiding evidence until a case goes to trial. Discussing violations openly and quickly is in the best interest of the public and helps create a safer environment for investors, he said. 

“Plenty of innovation has happened within the confines of our regulatory regime,” Grewal said. “We are not here to stifle innovation, we are here to stifle fraud.”


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit