In a recent interview with CoinDesk, Don Wilson criticized the SEC’s approach to regulating crypto, drawing parallels to his previous legal battle with the CFTC under Gary Gensler’s leadership. Wilson believes that the lack of clarity provided by the SEC for crypto companies is intentional rather than accidental.
The SEC recently sued Cumberland DRW, a division of DRW, Wilson’s Chicago-based trading firm, for trading billions of dollars in cryptocurrencies like Solana’s SOL and Polygon’s POL without authorization. This case revolves around the SEC categorizing these assets as securities, which imposes strict requirements on traders like DRW.
This is not the first time DRW has faced off against a regulatory agency. Back in 2013, when Gensler headed the CFTC, the agency filed a lawsuit against DRW and Wilson for allegedly manipulating the market for an interest-rate swap. However, after a trial, the judge dismissed the case in 2018, siding with Wilson and DRW.
Wilson believes that the SEC’s enforcement actions under Gensler are similar to the CFTC’s actions he faced earlier. He suspects that the lack of clear regulations from the SEC allows them to selectively prosecute companies in the crypto space.
According to some legal experts, regulatory agency heads like Gensler tend to resort to regulation by enforcement when they face limitations in rule-making. The SEC’s broad interpretation of the broker-dealer definition in the crypto market aims to ensure that customer protection laws apply, even in situations where entities may not be acting as broker-dealers.
Wilson speculates that the SEC’s lack of clarity in regulating crypto could be a deliberate strategy to retain power. By keeping rules vague and ambiguous, the SEC can target specific entities for enforcement actions as they see fit.
Despite facing legal challenges from the SEC, Wilson and Cumberland DRW are prepared to defend themselves against regulatory overreach. Their primary goal is to seek clarity and fair treatment for themselves and other market participants in the crypto space.
Wilson hopes that the courts will dismiss the SEC’s case against Cumberland DRW, similar to the favorable ruling he received in the past. He emphasizes the need for regulatory clarity to allow innovative and productive engagement in the crypto market.
While Wilson acknowledges that there are bad actors in the crypto space that the SEC should pursue, he believes that entities like DRW and Coinbase, who attempted to register but were turned away, should not be unfairly targeted. He hopes that the ongoing legal battle will lead to a positive outcome that benefits the entire crypto industry.
