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The cryptocurrency community has been vocal in its reaction to Gary Gensler, Chair of the United States Securities and Exchange Commission (SEC). His regulatory approach, especially towards high-profile entities like Ripple and Kraken, has sparked significant controversy and backlash from industry leaders.
Ripple CEO Brad Garlinghouse: An Incendiary Perspective
Recently, Ripple CEO Brad Garlinghouse has been particularly outspoken, labelling Gensler’s tactics as “insanity” and referring to him as a “political liability.” His criticism is rooted in the SEC’s legal actions against Ripple, the protracted process of approving Bitcoin ETFs, and concerns over Gensler’s commitment to the public interest and economic growth.
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This is not the first time Brad has taken it out on Gensler. Gensler was allegedly implicated in the most giant scam in recent history, according to Garglinghouse, who seemed to be alluding to his meetings with former FTX CEO Sam Bankman-Fried. The CEO of Ripple included a video that raised questions about a string of conversations between Gensler and Bankman-Fried around the time when the FTX violations were taking place. Thousands of individual investors saw their wealth plummet when the FTX collapsed in November 2022.
Industry’s Reaction to Gensler’s Crypto Stance
While a positive step, the SEC’s recent approval of Spot BTC ETFs has not quelled the discontent. Gensler’s continued emphasis on the risks of cryptocurrency products and their vulnerability to manipulation has only added fuel to the fire.
The crypto community quickly rallied on social media platforms, with figures like Dogecoin founder Billy Markus pointing out the SEC’s lack of clear regulatory guidelines late last year. This has led to accusations of “stunning hypocrisy” undermining the agency’s credibility.
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The Kraken Lawsuit: A Flashpoint in SEC-Crypto Relations
The SEC’s lawsuit against Kraken has galvanized industry leaders and legal experts. Kraken’s Jesse Powell describes the SEC as the “top decel” in the U.S. and warns businesses to consider relocating. Dave Ripley, Kraken’s current CEO, expressed the company’s disagreement with the SEC’s allegations and pledged to defend the industry’s right to exist in the U.S.
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Prominent cryptocurrency attorney John Deaton condemned Gensler as a “despicable and dishonourable regulator,” reflecting a widespread sentiment within the industry. Crypto criminal defence attorney Carlo D’Angelo highlighted the shaky legal grounds of the SEC’s arguments, suggesting that the judiciary might not favour the SEC’s stance.
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A Call for Legislative Action
The legal ambiguity surrounding digital asset exchanges and cryptocurrencies has not gone unnoticed. Figures like U.S. Senator Cynthia Lummis have called for the SEC to halt its “rule by enforcement” approach, advocating for legislative clarity in the crypto space. Minnesota’s Tom Emmer has also emerged as a vocal industry supporter, criticizing the SEC’s anti-crypto campaign.
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Cathie Wood of Ark Investment Management LLC disapproved of the SEC chief’s critical comments. In an interview with Bloomberg Radio, Wood conveyed her dissatisfaction, noting that scepticism is typical in fields undergoing disruptive innovation. She observed that the SEC chief primarily criticized the cryptocurrency industry, which she found unbelievable, as she believes such scepticism is a standard response to paradigm-shifting innovations.
Wood also commented on the dynamic of traditional systems confronting innovations, likening it to “ancient DNA” criticizing “modern DNA,” highlighting the world’s abundance of curious individuals exploring these new frontiers.
The ongoing tension between the SEC and the crypto community underscores a critical juncture in the evolution of digital assets. While regulatory challenges persist, the collective voice of industry leaders, legal experts, and supportive lawmakers highlights a resilient sector poised to navigate and shape its regulatory landscape.