SEC Commissioner Crenshaw Calls SEC's New Approach to Crypto "Regulation by Non-Enforcement"

Plus SEC commissioners, community express support for Enforcement staff.

Author

Bruce Carton
March 03, 2025

Good morning! Here’s what’s up.

People

Ed Siskel, former White House Counsel for President Biden, has joined Latham & Watkins as a partner in the firm’s Chicago office.

Jonathan Polkes, former Deputy Chief of the Business and Securities Fraud Unit of the EDNY, has joined White & Case as a partner in the firm’s New York office.

Clips ✂️

SEC‘s ‘Demolition’ of Crypto Enforcement Met With Cheers as Well as Jeers

In the last month alone, the securities watchdog has dismissed or paused at least eight cases against crypto companies, including those that targeted some of the sector’s most prominent faces. The running tally includes high-profile lawsuits against crypto exchanges Coinbase Global Inc and Binance Holdings Ltd. — who were sued within one day of each other in mid-2023 — as well as threats of legal action against Robinhood Markets Inc., Uniswap Labs and OpenSea.

“It’s a multifaceted demolition of the most successful SEC enforcement program in history,” said John Reed Stark, a former SEC enforcement chief and now consultant. Following the election of President Donald Trump, Stark said the agency’s message to the world has been: “We’re going to grind to a screeching halt every single aspect of the SEC crypto enforcement program in a manner that’s not just unprecedented and unusual, it’s beyond imagination.”

by Bloomberg

👉 Observing this slow-motion “demolition” unfold, SEC Commissioner Crenshaw issued a statement late last week that the SEC’s actions are resulting in less clarity about crypto, not more:

“What exactly is the law as it applies to crypto assets? How can we pursue fraudulent conduct in this space while casting doubt on our regulatory jurisdiction? Are we eroding our ability to police fraudulent Ponzi schemes? Are we poised to give special treatment to crypto assets over traditional assets, or even other emerging assets? What effects will this have on our traditional markets and financial instruments? …. In fact, the most salient change to date has been this retreat from enforcement of the securities laws with respect to crypto. Or, ‘regulation by non-enforcement.’”

CoinDesk has this graphic summarizing the crypto cases that are now dropped, paused, or still open.

Statement in Support of Enforcement Staff

By law and in practice, responsibility for SEC action lies with its presidentially-appointed Commissioners, not its career staff. Commissioner Peirce, my colleague and head of the SEC Crypto Task Force, spoke to this yesterday when she said that staff “appropriately worked hard to execute as effectively as possible the Commission’s directives” on an enforcement matter. No matter our policy differences, this is something on which we wholeheartedly agree – there is no critique to be made of hardworking civil servants for simply doing their jobs.

Statement by SEC Commissioner Caroline Crenshaw

👉 On Wednesday of last week after the SEC dropped its case against Gemini, Gemini President Cameron Winklevoss went on a tirade against the SEC and its staff. He said that the SEC should be required to reimburse Gemini for 3x its legal costs. As reported here, Winklevoss also called for all SEC staff members involved in the Gemini case to be publicly fired, and their “names, roles, and the actions they participated in should be posted on the SEC website.” The Coinbase article continues:

“It should not be acceptable to bring the full might of the U.S. government to bear against fledgling companies in a nascent industry and then hide behind a faceless agency or say you were ‘just doing your job’ or ‘following orders.’ These individuals had a choice,” Winklevoss wrote. “They could have asked to be reassigned or resigned. Nobody was forcing them to work at the SEC.”

Shortly thereafter, John Stark stated in this Law360 article by Jessica Corso that it would be "outrageous and unprecedented" for the SEC to take such action against staff who worked on crypto matters. He added that “it's shameful that SEC leadership has not stood up and defended the SEC staff. It's absolutely shameful."

On LinkedIn, Sara Cortes similarly urged her “SEC friends and colleagues who have the power to do so without threat of retaliation to publicly support SEC staff by condemning the vitriol and threats contained in the Winklevoss post…. This is not about crypto or ‘regulation by enforcement’ or ‘overreach.’ This is about professionalism and integrity.”

In addition to Commissioner Crenshaw’s specific “Statement in Support of Enforcement Staff,” Commissioner Peirce also emphasized in a statement that “although staff represent the Commission in court and their names are on Commission filings, the ultimate decision about whether to institute or settle enforcement actions lies with the Commission. The Commission’s vote to institute or settle an enforcement action is not a mere formality, and the Commission bears sole responsibility for its decisions.”

Trump Announces Strategic Crypto Reserve Including Bitcoin, Ether, Solana, XRP and Cardano

Crypto prices surged Sunday after President Trump said he would move forward on a U.S. crypto strategic reserve that would include bitcoin and ether, as well as three smaller and riskier tokens.

“A U.S. Crypto Reserve will elevate this critical industry after years of corrupt attacks by the Biden Administration,” said Trump in a Sunday post on his social-media platform Truth Social. “I will make sure the U.S. is the Crypto Capital of the World.”

Trump said the crypto strategic reserve will also include solana, Ripple-linked XRP and cardano. Unlike bitcoin, which is the largest and oldest cryptocurrency, these tokens were created more recently and often by a small team, making them more susceptible to wild price swings and other risks.

by WSJ

X