SEC Chairman Gary Gensler could see his crypto ambitions diminished if a judge dismisses SEC cases against Ripple and Coinbase. Courts rebuked the SEC for failing to correctly interpret the law in at least four court cases, putting Gensler’s future in doubt. Crypto lawyer John Deaton bought XRP when the SEC sued Ripple, believing judges would uphold the accurate interpretation of the laws.
US Securities and Exchange Commission (SEC) Chairman Gary Gensler has attracted political opposition for his approach to cryptocurrencies. Judges in the Ripple and Coinbase cases have rebuked the agency for its lack of consistency in applying the laws.
In the Ripple case, the court found the SEC guilty of “hypocrisy” for arguing its case without being faithful to the law. The agency also did not respond in “good faith” to a request for clarity on cryptocurrency rules submitted by the US exchange Coinbase.
Gensler Could Lose SEC War Against Ripple
Furthermore, a recent op-ed describes Gensler’s push to curb cryptocurrencies and other industries as ideological rather than practical. Congressman Ritchie Torres, a vocal critic of Gensler, said the former Goldman Sachs partner “is a politician disguised as a regulator.”
Gensler’s crackdown on cryptocurrencies has even faced resistance from his own political party. The U.S. Supreme Court has also become hostile toward agencies that regulate industries at their discretion.
Coinbase cited the so-called material issues doctrine in its defense against SEC accusations that it ran an unregistered brokerage. Coinbase argued that Congress will not allow agencies to expand their jurisdiction on important economic or political issues.
In a candid statement, Deaton clarified that he was not an angry investor who only wanted to sue the US Securities and Exchange Commission over his personal losses. “Anyone who has seriously followed me knows this. When I sued the SEC, SEC lawyers like Jorge Tenreiro lied and told the Judge I was a disgruntled XRP holder who was upset because I bet on the wrong token and lost money.”
Ripple Labs successfully challenged the SEC’s allegations that its sales of XRP to retail buyers were unregistered securities. If the court rules that sales to institutional investors were unregistered securities, then Ripple could surface documents where a former SEC official said that Bitcoin (BTC) and Ethereum were not securities.
If it loses the Coinbase and Ripple cases, the SEC could be prevented from exercising rights that Congress did not grant it. Gensler has three years left in office, but the courts could put a dent in his crypto ambitions before then.
Ripple Lawyers Criticize SEC’s Inconsistencies
In the SEC case against Ripple, the court reprimanded the financial watchdog for what it considered hypocritical behavior. The court found inconsistencies in the SEC’s arguments and criticized the commission for not faithfully following the law.
Ripple’s XRP price remains in profit, at $0.622, positive forecasts persist due to its conflict against the SEC.
The court called the SEC’s rejection of Grayscale’s request to convert its Bitcoin trust into an exchange-traded fund “arbitrary and capricious.” In a Twitter thread last Friday, Ripple lawyer Stuart Alderoty said the court asked the SEC why it shouldn’t be sanctioned for making “false and misleading representations” in another case, SEC v. Debt.
Pro-crypto lawyer John Deaton said he decided to buy XRP after the SEC sued Ripple because he believed the judge would uphold the law. Deaton also recently offered his interpretation of an investment contract to highlight the SEC’s inconsistent applications of securities laws.
By Leonardo Perez
