Crypto creates ‘perfect storm of investor risk’: SEC enforcement director
The “regulation by enforcement” refrain is tired, the SEC’s Gurbir Grewal said

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