- SEC demands FTX repayments in stablecoins, sparking industry criticism.
- Gensler’s regulatory approach faces backlash amid concerns over future influence.
In its recent filing, the U.S. Securities and Exchange Commission (SEC) has issued a stern warning to the bankrupt crypto exchange FTX regarding the repayment of victims, insisting on the use of stablecoins or other crypto assets.
Coinbase CLO slams SEC
This move has sparked criticism from various execs including Paul Grewal, Chief Legal Officer of Coinbase, who has accused the SEC of deliberately fostering uncertainty in the crypto regulatory landscape.
Taking to X (formerly Twitter), Grewal noted,
Source: Paul Grewal/X
He also highlighted the agency’s refusal to clarify the legality of the transactions involved and said,
“Why provide clarity to the market when threats and aspersions will do?”
Expressing frustration on the matter, he further added,
“Investors, consumers and markets deserve better. Way better.”
What happened so far?
For context, in a filing dated the 30th of August with the United States Bankruptcy Court in Delaware, SEC lawyers stated that while repayments to creditors using stablecoins are not outright illegal.
However, the SEC retains the option to contest such payments if they involve US-dollar pegged crypto assets.
Source: U.S. SEC
Needless to say, following its collapse in November 2022, FTX has explored various strategies to address creditor claims, including a now-abandoned proposal to relaunch the exchange.
Despite many creditors advocating for repayments in kind, FTX’s latest liquidation plan has opted to settle claims with US dollars.
Crypto community against SEC?
As expected, Grewal wasn’t alone in his criticism, the broader crypto community has largely condemned the SEC’s stance.
Alex Thorn, Head of Research at Galaxy Digital, echoed Grewal’s concerns, adding that the SEC’s actions continue to create confusion and uncertainty in the industry.
“This is the height of jurisdictional overreach.”
He further added,
“The SEC doesn’t even make a case here. they are just unwilling to let it go. it’s a bludgeon they must keep sharp, lest any legitimate actors deign to wield these (boringly above-board) instruments.”
Gensler’s crypto approach in question
This situation highlights ongoing concerns about the SEC’s regulatory approach under Chairman Gary Gensler.
Known for his skeptical stance on cryptocurrency, Gensler’s tenure has been marked by aggressive regulatory actions that some view as overstepping.
However, recent reports suggest that if Vice President Kamala Harris wins the presidency this November, Gensler could be nominated as Treasury Secretary.
This potentially amplifies his influence over financial regulations, further impacting the crypto sector.
It remains to be seen whether the SEC will continue with Gensler amid rising crypto community criticism or opt for new leadership.
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