Robert Cohen said the SEC’s selective enforcement is having “real impacts on real people and real businesses.”
The U.S. Securities and Exchange Commission (SEC), led by Gary Gensler, has been cracking down on the cryptocurrency industry. This week, it filed charges against two of the largest cryptocurrency exchanges, Coinbase and Binance, for violating U.S. securities laws, claiming that some cryptocurrencies are unregistered securities while others were inexplicably not mentioned.
In fact, among the countless cryptocurrencies on the market, only a dozen are called securities. Why is that?
Robert Cohen, former cyber chief at the SEC, spoke with Laura Shin about this disparity on the Unchained Podcast.
“It seems like a combination of real bad luck and randomness to be singled out as one of 10 or 12 tokens when there could have been hundreds,” Cohen told the reporter and podcast host. “Think about the actions taken by the government, that kind of randomness seems pretty unfair.”
He added, "If the SEC passes the rule, it affects everyone in the same way and people with a voice have a chance to comment."
Cohen, now an attorney at Davis Polk & Wardwell LLP, also said the SEC’s actions are raising a cloud of suspicion, some of which may be unnecessary.
“When the SEC says a token is a security and it’s not registered, they seem to be implying that something went wrong,” he said. “It’s casting a negative light on the people who were involved with the token in the first place.”
He noted, “It has real impacts on real people and real businesses.”
Gary Gensler has not been particularly forthcoming about the state of various tokens. He has dodged questions from Congress about Ethereum, “chewed” others, and none of the current enforcement actions, including recent ones against Coinbase and Binance, involve proof-of-work assets.
"And by the way, this may never get decided, these complaints may never actually go to trial, they may get settled, they may get dismissed for other reasons," Cohen said.
This would leave the crypto industry in roughly the same position as it started.
He said it may “never actually be decided whether a token is a security.”