Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), is under intense investigation in Washington, D.C. He is being criticized for reportedly appointing government employees based on their political ties, which is seen as breaking Federal Regulations. It remains to be seen how the crypto market could be affected by the news.
Major Case Against US SEC Chair Gary Gensler
Earlier today, the House Judiciary, Financial Services, and Oversight Committees sent a joint letter to the agency. The context of the letter was regarding Dr. Haoxiang Zhu’s appointment as SEC Director of Trading and Markets.
It was alleged that Dr. Zhu indicated his political alignment with Gary Gensler before being hired, based on emails disclosed during an SEC rulemaking comment.
This situation triggered an investigation by Reps Jim Jordan, James Comer, and Patrick McHenry. Virtu Financial’s CEO, Doug Cifu, criticized Gensler’s motives as politically driven rather than market-focused. These email trails now serve as additional evidence against the regulatory agency.
Furthermore, the letter asked Gensler to share records and correspondence concerning the recruitment of Directors and Associate Directors. Records of staff in the Chairman’s office from April 2021 onwards and any materials related to the consideration of political affiliations during hiring were also requested.
The SEC was given until September 24, 2024, to comply with this request.
Gary Gensler Fate Hinges on the Upcoming Election
This investigation comes at a time when Gary Gensler’s position is at risk amid a potential change in government. During the Bitcoin 2024 conference, the Republican Party Presidential Candidate, Donald Trump, revealed his intentions to review the crypto policies if he wins the election against Vice President Kamala Harris.
Trump pledged to fire Gensler and appoint a new SEC Chairman with pro-future innovation. He also promised to form a council dedicated to Bitcoin and crypto if he wins the election.
Ripple Labs Inc. CEO Brad Garlinghouse recently predicted that Gensler might leave the SEC, regardless of the election’s result. Garlinghouse suggested that there is a high chance of a leadership shift within the agency.
Many industry leaders have frequently pointed out Gensler’s role in the SEC’s continuous enforcement actions against firms like Ripple Labs, Coinbase, and Binance. Infact, in July U.S. Congressman Tom Emmer called for the removal of Gensler from the agency.
About a week ago, Ripple’s Chief Legal Officer (CLO), Stuart Alderoty, accused the SEC of misleading judges during legal disputes.
The crypto market and SEC regulations – Coinbase, Binance
Undoubtedly, the SEC regulations have had significant impacts on the crypto ecosystem. However, these regulations have also led to scrutiny and enforcement actions against major industry players, leading to debates within the industry.
These conversations center around how the regulatory commission has suggested that Proof-of-Stake tokens may be securities. It also implied that crypto exchanges are illegal and indicated that most digital assets could be considered “investment contracts,” which led to lawsuits against Coinbase and Binance.
Many market experts predicted that the legal action against Coinbase, the United States’ top crypto asset exchange, could prompt the US Congress to act on crypto regulations.
