The actions of his agency are incomprehensible and no person exhibiting this level of brazen ridiculousness should be in charge of running a federal agency. Pure and simple.
This man took to Twitter to announce that the SEC is suing both Gemini and Genesis for non-compliance with securities law. This is because both companies offered yield-bearing accounts on crypto asset deposits. In the eyes of the SEC, without the proper mafia tribute compliance, those accounts exist in violation of securities law. Why does this matter? Well, because Gemini lent client assets to Genesis and Genesis can’t pay back the loan. Both companies are now in serious solvency doo doo.
Naturally, under the guise of “investor protection,” Gensler’s SEC has decided to make it an issue all of Gemini’s customers lost their money. This was not the case when the SEC threatened to sue Coinbase COIN 8.87%^ in 2021 if it proceeded with its plan for yield earning products. It wasn’t the case when the SEC siphoned a $100 million settlement from BlockFi shortly before that company fell apart after Terra collapsed last year. There has been plenty of precedent from the SEC going after these kind of product offerings long before the companies blew up.
Gemini, while not as big as Coinbase, is one of the top crypto exchanges in the industry. Genesis was also a large industry player. It is impossible that the SEC wasn’t aware of these businesses before this week. The fact that the SEC is suing them now when they’re both already insolvent is just ridiculous. Staffing issue? Spare me. The SEC has gone on record deeming the token associated with DFX Finance (DFX-USD) to be an unregistered security. The SEC has the staff to perform due diligence on DFX, a token with a market cap rank near 3,000, but doesn’t have the staff strength to keep up with Genesis and Gemini?
Gensler’s tweet, which was rightfully ratio’d, even shared a 2 minute video with Gensler and some graphic artistry explaining how securities laws are like seatbelt safety laws for auto manufacturers:
As with seatbelts in cars, we need to ensure that investor protection comes standard in the crypto market.
Wonderful, Gary. Sounds great. Here’s the problem; suing Gemini and Genesis now is like suing Chevy and Dodge for selling cars without seatbelts while simultaneously allowingF -1.24%v to sell cars without seatbelts for years and then suing Ford all of Ford’s customers have crashed through the windshields…
Gensler needs to go. His departure won’t stop crypto scammers from scamming people, but stopped crypto scammers from scamming people either. All he has accomplished in his time running the agency is confusion and the destruction of obscure fledgling crypto businesses like LBRY.
The inability of his office to produce anything resembling guidelines for what constitutes a security in crypto and what doesn’t despite repeated requests from within the community is baffling. His unwillingness to approve a spot market Bitcoin ETF despite allowing a futures-based Bitcoin ETF is legally dubious. The fact that Jay Clayton’s SEC said on record that Ethereum (ETH-USD) is not a security in 2018 and now Gary Gensler’s SEC is insinuating that Ethereum actually might be a security without making a concrete decision as to why even when pressed is astonishing.
And this doesn’t even get into his apparent relationship with Sam Bankman-Fried and FTX. Which could be another whole article. The dude is an absolute train wreck and it’s time for him to go.
End rant.
