SEC: Is the Crypto Industry Getting Back at the Regulator?

The cryptocurrency industry has endured a wide array of regulatory clampdowns from the Securities and Exchange Commission (SEC). However, a pro-crypto Trump administration is giving the industry the confidence to challenge the industry’s transparency. Meanwhile, experts think the backlash is only a part of a generally hostile reality befalling federal agencies in the US.

Cardano Founder Vows the Industry “Will Never Forgive” the SEC

Crypto industry executives and backers heavily contributed to the Republican Party’s campaigns during the November 2024 elections. A few months into Trump’s administration, big names in the industry wield their newly found political status by demanding accountability from the regulator who has previously dealt with a heavy hand, crypto news website Blockfinix reported.

Charles Hoskinson, co-founder of blockchain firm IOHK and the Cardano network, thinks the backlash against SEC employees is deserved. Commenting on the status of involved federal employees on X, Hoskinson wrote, “This is the evil of unelected, career federal employees. They take no accountability for the profound harm they inflict upon others and then play the victim when they get stung from the fallout.” 

“When someone asks you to do something wrong, you resign. You don’t blindly follow orders. You’re not getting jobs now because you lack moral character. We will never forget or forgive as an industry because we know what would have happened if the other side won.”

Coinbase CEO Brian Armstrong and Ripple’s top lawyer, Stuart Alderoty, have sponsored industry campaigns to avoid law firms that employ SEC employees who were involved in the heavy regulations, stifling the job market for involved staff. The cryptocurrency exchange also canvasses for the SEC to provide public records on how much it spent investigating crypto firms under former Chair Gary Gensler. 

Elsewhere, Cameron and Tyler Winklevoss, the twin billionaires behind crypto firm Gemini, want the SEC to sack all investigators who worked on their case and publicly expose their identities. “Crypto needs rules, not because investors lack protection but because builders and companies lack protection – we need a firewall against federal regulatory attacks,” Cameron Winklevoss penned on X. 

If the pushback continues, it could advance legislative efforts to create new boundaries around the SEC’s authority over the virtual assets industry. Per the legislature’s view on the situation, Rep. Bryan Steil (R-Wis), leader of the House Financial Services Committee’s digital assets panel, said a more regulated SEC will prevent “some of the enforcement abuses we saw during the previous administration.”

Federal Executives Endure Hostile Environment

However, the crypto industry’s campaigns against the SEC mirror a broader, hostile environment for federal agencies. Employees at various agencies, like the Consumer Financial Protection Bureau and the Department of Justice, are similarly under fire for being “weaponized agencies.”

Many crypto actors and SEC officials are concerned for SEC staff and want the backlash to stop, while other crypto leaders maintain that they have no ill will towards the SEC or its employees. Instead, crypto leaders like Ripple’s Alderoty and Coinbase’s Chief Legal Officer Paul Grewal, are canvassing to prevent future situations of what they tagged a misguided enforcement campaign by the SEC in subsequent administrations.

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