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SEC blasted for non-judicial action against crypto companies

Tom Emmer is the latest politician to grill the SEC for its unethical approach to dealing with crypto companies

Published: Jul 22, 2022 02:59:40 PM IST

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Tom Emmer, a Republican Congressman from Minnesota, has criticised the US Securities and Exchange Commission (SEC) for its unethical actions against crypto companies. He accused the agency of using enforcement to broaden its jurisdiction at the expense of public resources and trust, particularly with regard to the digital asset industry.

On Tuesday, Emmer released a video of his testimony before the House Financial Services Committee accusing the SEC of politicising regulations in that video. He took to Twitter to say: "The SEC Director of Enforcement admits the SEC is cracking down on companies outside its jurisdiction. Absolutely unacceptable."

He went on to question SEC Enforcement Director Gurbir Grewal about the SEC's unethical 'industry sweeps' against crypto companies. Grewal refused to provide details about current industry sweeps, citing SEC policy. The Enforcement Director also admitted to making 'extrajudicial requests' on companies that are not subject to the SEC's jurisdiction.

Senator Emmer also claimed that Gensler directed the enforcement division to send 'sweep letters' to 'jam them into a presumably prohibited violation.' Emmer accused SEC Chairman Garry Gensler of threatening and baiting companies. In his words: “Under Chair Gensler, the SEC has become a power-hungry regulator, politicising enforcement, baiting companies to ‘come in and talk’ to the Commission, then hitting them with enforcement actions, discouraging good-faith cooperation."

Brad Sherman, a Democrat from California, also criticised the Securities and Exchange Commission's (SEC) approach to enforcement among major crypto exchanges. Sherman stated during a hearing before the House Committee on Financial Services that SEC enforcement director Gurbir Grewal must demonstrate 'fortitude and courage' when pursuing securities cases against crypto exchanges in the United States.

He questioned SEC Enforcement Director Gurbir Grewal about why the agency isn't looking into XRP crypto exchanges. He said, "You've gone after XRP because XRP is a security, but you haven't gone after all the major crypto exchanges that process tens of thousands, if not far more, transactions…If XRP is a security — and you think it is, and I think it is — why are these crypto exchanges not in violation of the law?"

Senator Emmer then accused the agency of dissolving the division tasked with developing crypto regulations. "The SEC is hellbent on expanding the size of its crypto enforcement division using enforcement to unconstitutionally expand its jurisdiction," he added.

SEC chair Gary Gensler has repeatedly criticised the bill, claiming that it threatens the $100 trillion traditional finance industry. He wants the SEC to have sole authority over digital assets so that he can regulate them similar to securities and stocks. However, his approach so far has been quite opaque and unethical.

Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash