'So, why does the SEC keep failing us? One reason could be that they're too focused on small, insignificant cases,' says Bitcoin․com's General Counsel Joseph Collement.
When Gary Gensler was announced as the new head of the Securities and Exchange Commission in February 2021, the crypto industry saw a glimpse of hope. After all, the man in charge of regulating the industry was a “crypto native,” having taught a
Take the collapse of Enron in 2001 as an example. The SEC did not formally review the company’s cooked financial statements for at least three years prior to its downfall. Six years later, the SEC’s complete laissez-faire approach toward Wall Street led to the biggest financial crisis since the Great Depression. In the years leading up to the 07-08 collapse, experts and whistleblowers were warning about the dangers of subprime mortgages and the risky practices of lenders.
And now, we have the collapse of FTX and Alameda, which left hundreds of thousands of customers out of pocket. Despite clear signs, the SEC had the chance to intervene, but they didn’t. Instead, they met with SBF behind closed doors for private discussions. This is especially noteworthy considering that Alameda’s CEO’s dad, Glen Ellison, was Gary’s boss at MIT.
A different rationale could be that the SEC is not properly equipped or staffed to handle these complex cases. The SEC’s budget and staffing levels have remained relatively stagnant in recent years when compared to the exponential growth of crypto markets since 2017. This may have left them struggling to keep up with the rapid pace of change.
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