SEC enforcement director accuses crypto industry of employing innovative methods to circumvent guidelines

Gurbir Grewal, the head of enforcement at the US Securities and Exchange Commission (SEC), has responded to criticism that the regulator is creating rules for cryptocurrencies on an ad-hoc basis. Speaking at an SEC event on 3 April, Grewal argued that companies in the crypto sector have used various tactics to evade the regulator’s oversight, while also rejecting claims that the SEC exceeded its authority in lawsuits against crypto firms.
Grewal cited the case of Sam Bankman-Fried as evidence of the need for enforcement actions. Bankman-Fried, the former CEO of FTX, was recently sentenced to 25 years in prison for defrauding investors. Grewal expressed hope that the SEC could move beyond such cases and address wider concerns in the industry, such as fraud, lack of transparency, and conflicts of interest.
Grewal also defended the SEC’s approach to determining whether a cryptocurrency is a security under the Howey test, stating that the standard had been consistently applied. He did not comment on reports that the SEC is considering classifying Ether (ETH) as a security rather than a commodity.
The SEC has faced criticism for its inconsistent enforcement approach towards crypto firms, with some warning that it could prompt companies to leave the US. Grewal’s comments followed criticism from SEC Commissioner Hester Peirce, who had previously raised concerns about the regulator’s accounting guidelines for crypto custody.