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.”


Get the news in your inbox. Explore Blockworks newsletters:

  • Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
  • Empire: Start your morning with the top news and analysis to inform your day in crypto.
  • Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
  • 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
  • Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
  • The Drop: For crypto collectors and traders, covering apps, games, memes and more.
  • Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
Tags

Upcoming Events

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates.jpg

Research

Bluefin possibly stands at an inflection point. The token is near an all-time low yet the protocol’s spot volume market share and derivatives exchange usage have been increasing month over month since its November launch. Given its current market position and the upcoming upgrades (for both Bluefin and SUI), there may be upside potential before the increased supply growth in December. However, strong opposition from existing competitors (like Cetus and Suilend), as well as new entrants (like Aftermath), pose key challenges to Bluefin’s medium-term success.

article-image

Top Committee Democrat Sen. Elizabeth Warren in her opening statement accused Atkins of “helping billionaire CEOs like Sam Bankman-Fried”

article-image

Introducing garbled circuits for enhanced privacy and regulatory compliance

article-image

Ross Ulbricht was a freedom maximalist building freedom tech, powered by Bitcoin

article-image

Solana validators can reap benefits including payments, votes and community clout

article-image

Sponsored

WalletConnect is cementing itself as the essential connectivity layer, ensuring wallets remain the entry point for billions of users

article-image

According to a legal filing, Galaxy Digital helped boost the price of LUNA while quietly selling its tokens