SEC Director Says “Nothing Has Changed” For Law Enforcement Even As Crypto Industry Rumbles

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As the U.S. Securities and Exchange Commission continues to scrutinize the crypto industry, agencies enforcement director Gurbir Grewal says the regulator is not concerned with labels or technology, but with whether the titles are being sold in a format that complies with existing laws.

During an interview at an event hosted by Rutgers Universitys School of Law and law firm Lowenstein Sandler last Friday, Grewal said the SEC is concerned about offers in the crypto markets.

When we look under the hood, when we kick the tires, we saw plenty of DeFi products [and] DeFi offerings that are neither decentralized nor financial, but rather a simple fraud, Grewal said. We’ve seen a lot of stablecoins that aren’t stablecoins or coins, but [are] fraudulent.

The enforcement director also pointed out that crypto products and services such as protocols and smart contracts are supposed to protect against market manipulation and fraud, but have failed to do so. You can call it crypto, whatever you call it. It is the substance and the reality of what you offer. And if that offer needs to be registered and you don’t register it, hold yourself accountable, he said.

Earlier this month, the SEC indicted the two largest crypto exchanges, Binance and Coinbase, for securities law violations in back-to-back cases, along with other charges.

Grewal said the agency continued the exchanges because it needs to be thoughtful about which cases we bring that will have the most impact and deter other bad actors. [while] promote compliance.

More broadly, he considers the risks in the crypto market to be “too great, just as we are seeing a precipitous decline in the crypto markets, and investors are feeling the brunt.

While many in the crypto industry have called the actions regulatory by enforcement, Grewal thinks not. It’s a catchy but tired chorus. What they were doing was enforcing existing rules and regulations.

Many companies in the web3 space disagree.

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