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Gary Gensler

Crypto Industry’s Future Hangs on Gensler’s Senate Testimony

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In the realm of crypto, despite a series of recent legal setbacks, Gary Gensler, Chair of the United States Securities and Exchange Commission, remains resolute that the SEC should be the primary regulator. Gensler’s unwavering commitment will come into focus as he readies himself to speak before the Senate Banking Committee on September 12.

In the past two months, the SEC faced significant setbacks, with defeats against crypto industry giants Grayscale and Ripple, both seen as substantial blows to the regulatory body. However, Gensler is not deterred and intends to emphasize his belief that digital assets are, indeed, securities that should fall under the SEC’s purview.

The Senate hearing’s primary focus is the SEC’s oversight in specific matters related to the crypto industry. In his prepared testimony, Gensler draws parallels between the current crypto landscape and the unregulated chaos of the 1920s before the federal securities laws were established. He argues that widespread noncompliance with securities laws has led to numerous issues in the crypto markets.

Continuing his consistent stance, Gensler asserts that the Howey test, a legal benchmark for determining whether an asset qualifies as a security, is met by the vast majority of virtual tokens. He firmly states, “The vast majority of crypto tokens likely meet the investment contract test.” This viewpoint naturally leads to his conclusion that most digital asset intermediaries must also adhere to securities laws.

Grayscale Saga: SEC’s Second Crypto Defeat Raises Questions

The SEC’s first major legal defeat came on July 13 when Judge Analisa Torres partially ruled in favor of Ripple, stating that the sale of XRP tokens to retail consumers did not violate federal securities laws. Although the SEC is pursuing an appeal, this decision is expected to be cited by other crypto companies facing lawsuits from the regulator.

The SEC’s second major loss occurred on August 29 when a judge declared the SEC’s rejection of Grayscale’s request to convert its Bitcoin Trust into a Bitcoin exchange-traded fund as “arbitrary and capricious.” These high-profile losses have encouraged blockchain-based payments network LBRY to file an appeal against its own securities law violation ruling, signaling its commitment to fight the SEC’s decision rather than winding down.

Gensler’s steadfast determination to assert the SEC’s regulatory authority over the digital asset industry remains undeterred, despite recent legal defeats. As the crypto industry and regulators continue to grapple with defining and regulating digital assets, the upcoming Senate Banking Committee hearing promises to be a crucial moment in shaping the future of crypto regulation in the United States.

Ripple: SEC Eyes Options After “Disappointed” Summary Judgement

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SEC head Gary Gensler has spoken for the first time after blockchain firm Ripple earned major relief in the recent precedent-setting ruling that said XRP was “not necessarily a security on its face”. It wasn’t a total victory for Ripple, as the judge also ruled that sales of XRP by Ripple to institutional buyers do count as unregistered sales of securities.

Although he was happy with the part of the order that found that the institutional sale of the tokens did, in fact, violate federal securities laws, Gensler voiced his disappointment with the district court’s decision on exchanges and programmatic sales. Speaking at the National Press Club in Washington, DC, Gensler said,

We’re pleased with that decision recognizing the importance of protecting investors on institutional investors. While disappointed with what they said about retail investors, we’re still looking at it and assessing that opinion.

According to the court, the SEC was not able to prove that the speculative investors had “a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.” As mentioned earlier, the watershed ruling did not represent a total win for Ripple.

The judge stated that XRP was not a security but acknowledged that some institutional sales of the token did qualify as securities transactions. For instance, the court determined that the $728.9 million in XRP sales to institutions did qualify as securities because there was a common enterprise and an expectation of profit, and Ripple is still liable for those sales.

On the other side, General Counsel Stu Alderoty admitted that it won’t shy away from an appeal and that the company would analyze its future course of action.

Ripple’s Business Won’t Suffer: Stu Alderoty

“She [Judge Analisa Torres] found — although we had disagreed with her — that our earlier sales directly to institutional buyers had the attributes of a security and should have been registered,” he said.

He also stated that Ripple’s business won’t be affected by that component of the ruling as its customers are primarily based outside of the U.S.

“We’ll study the judge’s decision; we’ll look at our client’s needs; we’ll look at the market; and we’ll see if there’s a situation here that complies with the four corners of what the judge found when it comes to institutions,” Alderoty added.

SEC Chair Gary Gensler Not Resigning? Rumor Debunked

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Rumors of SEC Chair Gary Gensler’s resignation have turned out to be false. A recent news article on the website “thecryptoalert.com” saying that Gensler had “submitted his resignation following an internal investigation,” citing an unnamed official, caused a huge Twitter outcry.

Popular XRP accounts, in particular Documenting Ripple, have played a key role in disseminating false information.

However, not everyone has bought into the claims; some have questioned the veracity of the source and stated that Gensler’s resignation appears extremely unlikely.

This is due to the fact that no SEC head has ever quit during the first two years of their position, making Gensler’s purported resignation even more speculative.

Things became more clear after Cointelegraph reported that the article’s text scored nearly 97% on their AI-detector ZeroGPT, indicating a significant amount of AI text production.

Further analysis revealed that the website had just 17 posts overall, with the first one going live on June 22. All of these publications did indicate a substantial reliance on artificial intelligence, which raised red flags.

SEC: Fox Journalist Put An End To The Resignation Rumors

Still, a number of accounts continued parading the story on Twitter. Among the most widely viewed post was Whalechart whose tweet received over 13k likes.

After Fox Business Network reporter Charles Gasparino tweeted on July 3 that Gary Gensler is not retiring after allegedly hearing from the SEC, the rumors were finally put to rest.

While we talk about integrating artificial intelligence and the cryptocurrency industry, these kinds of false news generated by AI stir up controversy and have highlighted the risks of cutting-edge technology.

That said, this is not the first time Gensler has faced resignation calls. On June 11, Citadel Securities and Citadel Market Maker accused the hawkish chair of manipulating the markets by engaging in short sales of equities with a connection to cryptocurrencies, notably AMC Theatres and GameStop.

According to the allegations, the trades allegedly took place through the Vanguard Group and BlackRock, two venerable financial institutions.

Following the startling accusations, the demand for Gensler’s resignation quickly grew, TronWeekly reported.

In a Change.org petition, the crypto community denounced the top exec for his failure to protect retail investors from fraudulent activities.

Gary Gensler On The Edge; Congressmen Introduce Bill To Expel SEC Chair

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SEC chair Gary Gensler, also known as Wall Street’s top cop gained notoriety after pursuing 150 crypto-enforcement actions against some of the crypto industry’s biggest players.

Last week, the US regulator took on CZ-led Binance and Coinbase striking the two firms with multiple charges including violations of securities laws. In response to that, one legislator is now taking legal action.

Warren Davidson, U.S. representative for Ohio’s 8th congressional district [R-OH] has filed the SEC Stabilization Act to restructure the agency and oust the current chair.

In the announcement post, the former military officer called Gensler a “tyrannical chairman” that must be removed to protect the US capital market.

Majority Whip Tom Emmer who previously questioned Gary Gensler regarding the SEC’s regulation-by-enforcement agenda joined the introduction of Davidson’s SEC Stabilization Act.

American investors and industry deserve clear and consistent oversight, not political gamesmanship. The SEC Stabilization Act will make common-sense changes to ensure that the SEC’s priorities are with the investors they are charged to protect and not the whims of its reckless Chair. Thank you, Representative Davidson, for leading this important effort to restore sanity at the SEC.

Davidson emphasized the requirement for “real reform and to remove Gary Gensler as Chair of the SEC.” And how the SEC’s tactics are pushing innovation outside of the US.

“Conversely, the call for a change in leadership has been consistent. Specifically because of the concern regarding how the SEC’s actions could affect the industry. Subsequently, this is pushing digital asset development away from the US,” he concluded.

The latest action comes after Gensler was charged with manipulating the markets by engaging in short sales of equities with a connection to cryptocurrencies, notably AMC Theatres and GameStop.

Gary Gensler Faces Market Manipulation Charges

As reported by TronWeekly, the allegations led by Citadel Securities and Citadel Market Maker accused the chairman of being implicit and carrying out the alleged transactions through the Vanguard Group and BlackRock, two reputed financial institutions.

After the unexpected revelations, calls for Gensler’s dismissal swiftly increased. Criticizing the top exec, the crypto community said he failed to shield small investors from dishonest practices in a Change.org petition.

According to the petitioners, the SEC chair’s oversight permitted Citadel’s two entities to engage in “naked short selling and dark pool abuse,” which damaged the confidence of regular investors.

SEC’s Gary Gensler Faces Resignation Calls After Citadel’s Accusations

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SEC chairman Gary Gensler is in the limelight due to his aggressive enforcement drive against some of the major market players in the crypto industry.

In an unexpected turn of events, Citadel Securities and Citadel Market Maker have charged Gensler with manipulating the markets by engaging in short sales of equities with a connection to cryptocurrencies, notably AMC Theatres and GameStop.

According to the allegations, the trades allegedly took place through the Vanguard Group and BlackRock, two venerable financial institutions.

Following the startling accusations, the demand for Gensler’s resignation quickly grew.

In a Change.org petition, the crypto community has denounced the top exec for his failure to protect retail investors from fraudulent activities.

The SEC chair’s oversight, claimed the petitioners, has allowed Citadel’s two firms to engage in practices including “naked short selling and dark pool abuse,” weakening the trust of ordinary investors.

The US regulator dropped the biggest bombshell last week, when it sued Coinbase and Binance, accusing both of selling unregistered securities, among other charges.

Four of the ten leading crypto assets have since had a value decline of at least 15% this week. according to CoinMarketCap.

Due to Cardano, Polygon, and Solana being listed as securities in the filings, trading platform Robinhood said last Friday that it would stop trading these cryptocurrencies.

On the same day, Crypto.com announced it would close its institutional exchange in the United States.

SEC’s Gary Gensler Draws Ire Over This Statement

In a speech on June 8, Gary Gensler defended the decisions, comparing the present crypto market to the American stock market in the 1920s and claiming that it is full of “hucksters,” “fraudsters,” and “Ponzi schemes.”

He highlighted that by implementing these regulations, his agency is merely cleaning up the cryptocurrency market, much like Congress had done with the stock market by enacting securities laws back then.

Gensler lauded the Securities Acts of 1933 and 1934 in his speech, saying that this legislation allowed the U.S. securities markets to “thrive” over the ensuing 88 years.

He maintained that current digital asset firms are not “less deserving of the protections” the laws offer, the modern “crypto securities markets” ought to gain from them as well.

The spotlight has now firmly rested on Gary Gensler and his time as SEC chair as the crisis intensifies and the crypto sector launches a legal onslaught.

Binance Vs SEC; New Filing Hints At A Troubled Relationship

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Binance’s lawyers submitted documents suggesting Gary Gensler, the chair of the Securities and Exchange Commission, was interested in serving as an advisor to the crypto exchange, according to a CNBC report.

This was discussed over a series of meetings with Zhao and executives from Binance in March 2019, which culminated in a face-to-face lunch meeting between Gensler and CZ in Japan, lawyers from Gibson Dunn and Latham & Watkins law firms, claimed.

During that time, Gensler was a faculty member at the MIT Sloan School of Management and assumed the role of Chairman at SEC in 2021.

The CEO was also invited to attend an interview with Gensler as part of a cryptocurrency course he was teaching at MIT, according to Zhao’s attorneys, who deduce that the SEC chair was the one cozying up to the firm.

But for reasons unknown, things turned awry as evidenced by the latest filing where the SEC referred to Zhao, as a “foreign national” with a tendency for “geographic elusiveness.”

Since taking the role, he has adopted a tough stance on the digital asset industry, slapping lawsuits against top crypto players for allegedly selling unregistered securities.

Binance and CEO Zhao, which so far able to withstand regulatory maelstrom got hit by 13 charges by the SEC earlier this week, sending shockwaves across the space.

Some of these accusations were that the firm did not register as a broker-dealer or an exchange, its funds were unlawfully mixed, and that it lacked essential internal controls over its operations.

Zhao’s lawyers now say the CEO was aware that Gensler was “comfortable serving as an informal advisor.

Binance Saw a Net Outflow of Roughly $280 Million – Glassnode

Following the Securities and Exchange Commission filing of a lawsuit against the biggest crypto exchange, considerable fluctuations in its Bitcoin [BTC] holdings were observed.

Glassnode reported a net outflow of 10.5K BTC, or around $280 million, making it the 12th largest net outflow day for Binance in terms of BTC.

It however remains substantially lower than the peak net outflow of 40.3K BTC or about $1.04 billion in USD.

The total amount of Bitcoin stored across Binance’s exchange addresses is still sizable despite the large outflows that were seen throughout this time. Currently, Binance has a solid 694K BTC, which is only 10.5K BTC short of its all-time high [ATH], which is 704.5K BTC.

Ethereum: Crypto Community Livid Over SEC Chair’s “Vague” Response

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The classification of Ethereum, the second-ranked crypto in the world, has caused more confusion in the US since regulators cannot agree on whether it is a security or a commodity.

At a recent congressional oversight session, Congressman Patrick McHenry pressed Securities and Exchange Commission chair Gary Gensler about whether Ether is security.

Gensler avoided giving a straight answer, which drew criticism from the crypto community.

McHenry also emphasized the murky legal landscape around the crypto business, noting that while the previous SEC director Bill Hinman had proclaimed Bitcoin and Ethereum to be non-securities, the current chair chose to institute several enforcement proceedings without clearly defining the asset class first.

The Commodity Futures Trading Commission, likewise responsible for overseeing the US derivatives markets, recently took steps that further demonstrated the lack of agreement in the sector of digital assets.

On 27 March, CFTC filed suit against Binance for engaging in “Willful Evasion” of laws by selling unregistered crypto derivative products.

The regulator’s definition of Ethereum as a commodity in the filing contrasted with the SEC’s classification of them as securities, demonstrating the regulators’ ambiguity about the classification of digital assets.

As reported by TronWeekly, Gary Gensler, the chairman of the SEC previously warned that Ethereum’s upgrade could mean the cryptocurrency could be regulated as a security that sparked a price sell-off then.

Gensler’s comments were made during Ethereum’s Merge upgrade where it officially transitioned to a proof-of-stake system, last year.

This arrangement where Ethereum’s proof-of-stake, allowed holders to lock up their coins to earn a return, is what caught SEC’s attention to regulating Ethereum as a security.

Ethereum Staking Business Face Uncertain Future In The U.S

Many in the crypto community feel that SEC’s crackdown on the passive investment offering has allegedly forced American crypto businesses to go offshore.

Not all crypto players, however, submitted; firms like Ripple continue to fight back against the agency’s claim that the XRP token is an unregistered security.

In the latest update, the blockchain payment firm offered a strong rebuttal to SEC’s supplementary letter seeking to squash Ripple’s Fair Notice Defense.

For perspective, Ripple’s fair notice defense argues that it was unable to foresee the SEC’s enforcement action against it because there are no regulations governing the crypto market.

Binance Planned To Circumvent US Regulators- WSJ Report

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In a report by Wall Street Journal, the world’s largest crypto exchange Binance has allegedly devised plans to circumvent US regulations. One of them even included hiring SEC chair Gary Gensler as an adviser before he became chairman of the United States Securities and Exchange Commission.

The explosive revelation was taken from messages, interviews, and documents from the platform’s former execs’ during 2018 and 2020, WSJ claimed. 

Gensler, while he was teaching at the Massachusetts Institute of Technology, was approached by Ella Zhang, then head of Binance’s venture investing arm, and Harry Zhou, co-founder of firm Koi Trading, the Journal reported.

After Gensler turned down the advisor position, Zhou, according to a former employee, wrote in the chat that the former would be “likely back in a regulators seat if Dems win the 2020 election.”

The second meeting between Gensler and Changpeng “CZ” Zhao, the CEO of Binance, took place in Tokyo in March 2019. Gensler was appointed chair of the SEC in April 2021.

The report also revealed Binance’s strategy for avoiding regulatory scrutiny in the United States, which involved creating a minimally functional American platform called Binance.US that would license the firm’s intellectual property and brand but otherwise present as completely separate from it.

Binance And Its US Platform Has More Deeper Connections- WSJ

“But the entities have been much more intertwined than the companies have disclosed, mixing staff and finances and sharing an affiliated entity that bought and sold cryptocurrencies,” WSJ stated.

These alleged links if proven would put the trading platform and its billionaire founder and chief executive, Changpeng Zhao, as well as his undisclosed finances under closer scrutiny.

A Texas financial regulator recently said in a court filing that Binance.US was denied a license to operate in the state because its major shareholder, Mr. Zhao, refused to give financial details.

Both Binance and its CEO Changpeng Zhao had not replied to the accusations as of the time this story was being written.

The developments come at a time when various senators have called out Binance.US for engaging in “potentially illegal” activity and asked the firm to answer several questions.

Previously reported by TronWeekly, U.S Sens. Elizabeth Warren (D., Mass.), Chris Van Hollen (D., Md.), and Roger Marshall (R., Kan.) sent a letter to C.Z and his top U.S. deputy, Brian Shroder, requesting various documents from the exchange, including balance sheets from 2017 to the present.

Ripple’s General Counsel Tears Into SEC Chair’s Testimony

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Ripple’s general counsel Stuart Alderoty slammed U.S. Securities and Exchange Commission Chair Gary Gensler for his remark that the Supreme Court has already determined what is and isn’t considered a security.

“Was it intentional or does he really not know the law? Which is worse?” Alderoty tweeted.

“Gensler said it’s security if the investing public is anticipating profits based on the efforts of a common enterprise. The Courts already rejected that, b/c it collapses two separate Howey prongs into one and: “We do not interpret the Howey test to be so easily satisfied,” Ripple’s GA added.

On September 15, Republican Senator Pat Toomey quizzed Gary Gensler, chairman of the regulatory giant, regarding the structure the agency uses to oversee cryptocurrencies and on Gensler’s statements that almost all cryptocurrencies are similar to unregistered securities.

During the Senate Banking Committee oversight hearing, Toomey expressed concern that the agency isn’t doing its duties to its standard.

The US senator for Pennsylvania also asserted that the SEC lacks the necessary transparency. The issue, he claimed, is that the commission refuses to divulge the structure it employs.

Toomey also pointed out the differences between traditional securities and crypto, noting that these differences “merit a clearly stated and tailored regulatory framework.”

On the other hand, Gensler responded and maintained his stance that there is a well-established, multifactor standard that most tokens meet and that the Supreme Court has already addressed the meaning of security.

Toomey added that the SEC should offer “far more clarity” in the interim until Congress can step in and create a clear framework for crypto investors. The republican member also called out the financial watchdog for its inability to help investors adequately when the market had a dip earlier this year.

Ripple’s Stuart Alderoty Accused SEC Of Power Grabbing

In response, Gensler said that many companies need to come forward and directly talk with the SEC about listing and selling tokens. Gensler also thinks that there should be “one officer on the beat” in charge of overseeing cryptocurrency regulation.

The SEC chairman dismissed the notion that cryptocurrencies need specific regulation in a recent statement at an industry conference.

Alderoty of Ripple has repeatedly criticized the SEC’s stance saying that it was behind a “political power grab.”

Ripple is currently entangled in a grueling legal battle with the SEC, whose outcome is widely believed to have massive implications for the cryptocurrency industry.