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Lawmaker Slams “Power-Hungry” SEC in Hearing


Key Takeaways

  • The Securities and Exchange Commission Enforcement Director Gurbir Grewal admitted in Congress today that the agency subpoenas crypto companies and individuals that lay outside of its jurisdiction.
  • Rep. Tom Emmer stated that the regulator was trying to “jam” crypto companies” into a violation.”
  • The agency’s approach to crypto regulation is widely criticized across the crypto industry; it has also received backlash from one of its own commissioners.

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The SEC has been in the practice of sending out subpoenas to crypto industry participants that do not lie within its jurisdiction, one of its top officials admitted today in a congressional hearing. The agency’s regulatory approach was met with fierce criticism from Congressman Tom Emmer (R-MN).

“Hellbent”

U.S. Congressman Tom Emmer blasted the Securities and Exchanges Commission’s perceived overreach in its crypto regulation practices during a congressional hearing today.

SEC Division of Enforcement Director Gurbir Grewal admitted in the hearing that the regulatory body has routinely acted against crypto industry participants in ways that may lie outside of its jurisdiction.

When asked by U.S. Representative Tom Emmer how the SEC would react to a crypto company not answering a sweep letter (a request from regulators for companies to produce documents on a voluntary basis) because the company itself doesn’t fall within the SEC’s jurisdiction, Grewal answered that the agency could “proceed with a subpoena, and then a subpoena enforcement action.”

“We’re not limited by our jurisdiction when we’re collecting evidence,” stated Grewal. “We follow the evidence wherever it leads us to.”

The answer prompted a strong rebuke from Rep. Emmer, who declared that SEC Chair Gary Gensler had in the past ordered sweep letters to be sent to crypto industry participants in order to “jam them into a violation” and even “make it a ‘bloodbath’ for [companies that do not respond].” He furthermore stated that:

“The SEC is hellbent on expanding the size of its crypto enforcement division, using enforcement to unconstitutionally expand its jurisdiction. Under Chair Gensler the SEC has become a power-hungry regulator, politicizing enforcement, baiting companies to ‘come in and talk’ to the Commission then hitting them with enforcement actions, and discouraging good faith cooperation.”

The SEC’s approach to crypto has come under fire from multiple sides lately. One of its own commissioners, the notably pro-crypto Hester Peirce, slammed the agency last month for its “flawed” and dangerous crypto regulatory agenda. Meanwhile, a judge recently accused the agency of hypocrisy in its conduct in a court case involving crypto company Ripple.

Disclosure: At the time of writing, the author owned ETH and several other cryptocurrencies. 

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