Amid what seems to be a crusade waged by the United States Securities and Exchange Commission (SEC) against the cryptocurrency industry despite the lack of clear regulatory guidelines, legal expert Bill Morgan has accused the agency of “making sh*t up” as they go.
As it happens, the chief legal officer (CLO) at Coinbase, a crypto exchange and the regulator’s current target, Paul Grewal, pointed out the inconsistencies in the SEC’s reasoning, to which Morgan mocked the agency as making arguments up as they went, in his X post on April 4.
SEC answer:
“we can’t answer that, we are just making this 💩up as we go.” https://t.co/SYBnJd7YrI
— bill morgan (@Belisarius2020) April 4, 2024
Inconsistencies in regulation
Specifically, Grewal was referring to the facts that everyone agreed that Bitcoin (BTC) was not a security, including the SEC Chairman Gary Gensler, at the same time wondering why the same principle could not apply to other assets in the crypto sector:
“So how exactly can BTC be ‘independently consumed or used’ and not ‘intermingled with its digital network,’ so as to avoid security status in transactions, but other tokens cannot?”
Not long afterward, Morgan threw another scathing critique in the SEC’s direction, agreeing with macro investor Declan Gorman that the agency “is orchestrating a systematic dismantling of the cryptocurrency industry in the United States, displaying a blatant disregard for innovation.”
On top of that, the lawyer, who is also a popular commentator on the securities watchdog’s long-running Ripple SEC legal standoff over sales of the XRP token, added that “other countries are benefiting from the flight of US blockchain innovation offshore.”
Other countries are benefitting from the flight of US blockchain innovation offshore. https://t.co/YRpiwNYhmy pic.twitter.com/7oAnaWyH4b
— bill morgan (@Belisarius2020) April 4, 2024
Crypto companies jumping ship
Indeed, the SEC’s crackdown on crypto has already caused multiple companies in this sector to leave the US and relocate to a crypto-friendlier country, undercutting the country’s aspirations to become a center of technology innovation in finance, as noted by one of the regulator’s own people.
As a reminder, back in April 2023, dissenting SEC commissioner Hester Peirce publicly shared her criticism of the agency’s enforcement practices of “regulation by ambiguity” and “jurisdictional maximalization” or launching cases for the purpose of growing its mandate, stating that:
“It makes me sad because it’s about the capability of a regulator to deal with a new technology and asset class. (…) We’re showing ourselves to be incapable of making any accommodation for experimentation.”
All things considered, the SEC doesn’t lack vocal critics against its behavior toward crypto firms, but only time will tell if the organization eases up its grip and/or introduces clearer and more consistent guidelines and regulations across the industry in terms of what and what does not constitute a security.
