The U.S. Securities and Exchange Commission (SEC)’s former head of internet enforcement has defended SEC Chairman Gary Gensler’s approach to regulating the crypto industry. “It’s time to attack the facts and law on SEC positions and quit the personal attacks on the SEC Chair or the SEC staff,” he stressed. “It’s an anemic and flawed pivot that does not work in a courtroom and is a transparent and bush-league attempt to rally the mob.”
Stark Defends SEC Chair Gensler
Former U.S. Securities and Exchange Commission (SEC) official John Reed Stark has defended SEC Chairman Gary Gensler, calling on the crypto community to quit personal attacks on him. Stark is currently president of cybersecurity firm John Reed Stark Consulting. He founded and served as chief of the SEC Office of Internet Enforcement for 11 years. He was also an SEC enforcement attorney for 15 years.
Gensler has said several times that all crypto tokens, besides bitcoin (BTC), are securities. His stance has raised concerns among many who perceive it as a preconceived judgment. However, when questioned in April by Congressman Patrick McHenry regarding whether ether (ETH) is a security, Gensler evaded a direct answer, insisting he will not make any prejudgments on the matter.
Responding to some people calling for Gensler to recuse himself from enforcement actions concerning crypto, Stark cited Hester Peirce, a pro-crypto SEC commissioner widely recognized in the cryptocurrency community as “crypto mom” as an example. He asserted:
SEC Commissioner Hester Peirce has a clearly pro-crypto ethos but never in a million years would I expect her to recuse herself because of her beliefs. And the same goes for SEC Chair Gary Gensler.
He explained that “Commissioner Peirce has dissented from, or criticized, just about every SEC effort to stop crypto-madness.” In addition, she “blames the SEC for crypto’s massive collapse and impending doom,” which Stark likened to “the CEO of Marlboro blaming the FDA for lung cancer caused by cigarettes.”
Stark stated: “With all due respect to Hester, her pro-crypto antics not only place at risk the investors she is sworn to protect, but they also don’t pass the straight face test.” He advised:
It’s time for Commissioner Peirce to abdicate all ‘crypto mom’ duties and Big Crypto fealty and join the litany of expert computer scientists who believe that when it comes to crypto/defi/NFTs and other web3 nonsense, there is no there there. But recusal? Absolutely not.
Many crypto proponents have criticized Gensler for taking an enforcement-centric approach to regulating the crypto industry. The SEC chairman is also heavily scrutinized for meeting with executives of the collapsed crypto exchange FTX, including former CEO Sam Bankman-Fried, who is currently facing multiple criminal charges.
Stark believes that both Gensler and Peirce have earned the right to be a member of the SEC and both deserve to press their points of view whenever they please. Furthermore, they have the freedom to decide whether or not to hold meetings with cryptocurrency executives as frequently as they want. “That is not regulatory capture but is good communication and education,” Stark said.
Moreover, Stark stressed: “I have taught a cyber/securities regulation course at both Georgetown and Duke Law Schools for 20 years — and what I say in the classroom is irrelevant to how I served as an SEC enforcement lawyer. The same should go for Chair Gensler.”
Stark also shared that during his 11-year tenure as the chief of the SEC Office of Internet Enforcement, he actively engaged with various individuals from the securities industry. He noted that these interactions were essential for him to acquire knowledge, stay updated, and attentively listen to different perspectives. “This was not unethical, it was in my job description, and the same goes for Chair Gensler,” he emphasized, concluding:
It’s time to attack the facts and law on SEC positions and quit the personal attacks on the SEC Chair or the SEC staff. It’s an anemic and flawed pivot that does not work in a courtroom and is a transparent and bush-league attempt to rally the mob.
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