Lawyers Attack SEC Chair Over Remark on Crypto Securities

A number of lawyers have attacked the United States Securities and Exchange Commission (SEC) Chair Gary Gensler over his claim that “all cryptocurrencies are securities”.

One of the crypto lawyers, Alexander Grieve, argued that the SEC chair has no legal standing to police the space. He further made a mockery of the situation that Gensler may be acting in good faith in trying to stamp out an entire industry.

Gensler in @NYMag on crypto:

-everything is a security except bitcoin
-every company out there is in violation
-crypto is pointless but blockchain is kinda neat

Hard to argue you’re acting in good faith if admittedly trying to stamp out an entire industry. pic.twitter.com/Ozw8ZJ3ETO

— Alexander Grieve (@AlexanderGrieve) February 26, 2023

Earlier on Feb. 23 in an exclusive interview with New York Magazines, SEC Chair Gary Gensler remarked that every cryptocurrency except Bitcoin (BTC) is a security that should be regulated by his agency. 

He further argued that all crypto projects are securities because there is often a group on one hand, and the public on the other hand with the latter expecting profits based on the activities of the group, which is not the case with Bitcoin. 

Meanwhile, Jake Chervinsky, a lawyer and policy lead at the crypto advocacy group the Blockchain Association, countered Gensler that his opinion cannot be regarded as a law even though he is the chair of the regulatory agency.

Chervinsky stressed further that Gensler’s claim on crypto as securities can only hold sway if it is proven in a court of competent jurisdiction. 

In the same vein, crypto lawyer Logan Bolinger remarked that Gensler’s views on what is or isn’t security are not legally dispositive. This implies that Gensler does not embody final legal determination. 

Addressing Cryptocurrencies as Securities

For the U.S. SEC Chair Gary Gensler to actualize his claim of all cryptocurrencies as securities, SEC will need to file 12,305 lawsuits against all existing tokens worth over $663 billion.

According to Gabriel Shapiro, the general counsel at investment firm Delphi Labs, SEC will have to charge each token creator in order to cement its rule on the issue. 

@coingecko puts the total crypto market cap at $1.13T, consisting of 12,306 tokens

BTC is $467B/~40% of that

ex hypothesi, this means 12,305 tokens/$663B in value are illegal in the U.S. b/c they trade publicly as unregistered securitieshttps://t.co/JPGEkPp1XR. pic.twitter.com/lenBWW9JvY

— _gabrielShapir0 (@lex_node) February 26, 2023

Shapiro further suggested that the SEC will either fine token creators and mandate them to register or destroy and delist the tokens from exchanges.

He concluded that SEC registration is not only too expensive for most token creators, but there is no clear regulation guiding token registration. While this has been the claim by many individuals, efforts should be made by the SEC for better clarity.