Accusations of Prejudgment and Conflict of Interest
Chervinsky’s Twitter thread accused Gary Gensler of prematurely categorizing every digital asset as a security. Consequently, Chervinsky argues that Gensler should recuse himself from enforcement actions related to the emerging asset class. To support his argument, Chervinsky referenced the Wells Process, which requires impartial assessment of cases initiated by the SEC staff by the neutral commissioners. Chervinsky posits that Gensler, as a senior official, cannot be considered a neutral arbiter due to his consistent characterization of all cryptocurrencies, except Bitcoin, as securities. Many industry insiders share this view, asserting that the SEC chair’s position is flawed and that he is reluctant to engage in the necessary careful analysis to determine the security status of individual crypto assets.
Growing Demands for Accountability at SEC
Calls for increased accountability at the United States Securities and Exchange Commission (SEC) are gaining momentum within the industry, with concerns raised about potential conflicts of interest among the regulator’s leadership. Stuart Alderoty, the chief legal counsel at Ripple Labs Inc, is among those advocating for accountability. He recently emphasized the legal ramifications of Chairman Gary Gensler’s statements, responding to a tweet from Blockchain Association Policy Lead Jake Chervinsky.
Allegations of Favoritism and Questionable Enforcement Proceedings
Throughout the year, the SEC has been actively pursuing enforcement actions against exchanges such as Kraken, Bittrex, Coinbase, and Binance. While the crackdown on crypto firms seems to be a prevailing trend, industry leaders have accused the commission of playing favorites, particularly in the case of the now bankrupt FTX derivatives exchange.
