Director of SEC enforcement alleges that the crypto industry try “creative attempts” to evade regulatory guidelines

The director of SEC enforcement, Gurbir Grewal, stated that the crypto industry is employing inventive strategies to sidestep regulatory guidelines. He emphasized that the SEC’s criteria for determining what constitutes a security, as per the Howey test, have been consistently applied.

Grewal defended the SEC against accusations of arbitrary rule-making in the crypto sphere. He highlighted instances where companies in the crypto sector attempted to evade SEC oversight while operating within the United States. Grewal also addressed concerns regarding the SEC allegedly overstepping its authority or resorting to enforcement actions in lawsuits against crypto firms.

One notable case he referenced was that of Sam Bankman-Fried, the former FTX CEO, who was recently sentenced to federal prison for defrauding investors. Grewal expressed his hope that the focus could shift from legal battles to addressing substantive issues in the industry, such as fraud, transparency deficiencies, asset commingling, conflicts of interest, and lack of oversight.

Regarding the classification of Ether, Grewal emphasized the SEC’s consistent application of the Howey test and the transparency of its analyses. He did not directly address reports suggesting the SEC’s evaluation of Ether as a security rather than a commodity.

Grewal’s remarks came amidst criticism of the SEC’s enforcement practices, with some accusing the regulator of inconsistency and suggesting it could drive businesses away from the United States. These comments followed criticisms from SEC Commissioner Hester Peirce regarding the regulator’s accounting guidelines for institutions custodying crypto assets.