SEC Steps Back from Aggressive Crypto Approach of the Gensler Era

The U.S. Securities and Exchange Commission (SEC) appears to be moving away from the hardline enforcement approach that characterized the era of Gary Gensler. After a 699-day investigation into Gemini Trust, the regulator announced on Wednesday that it would not take any further action against the crypto exchange. According to co-founder Cameron Winklevoss, this investigation cost his company “tens of millions in legal fees“.

A Wider Pattern

Winklevoss sees this as part of a larger shift at the SEC. He points to the recent withdrawal of cases against Coinbase, OpenSea, Robinhood, and Uniswap. Yet, he does not spare his criticism: according to him, the SEC has caused enormous damage to the crypto industry, both financially and economically. “This policy has stifled innovation and chased away talent,” he states. He calls for drastic reforms, such as financial compensation for companies that had to fight unjust legal battles, the dismissal of involved SEC officials, and even lifetime exclusion for those who have abused the law as a weapon. Without accountability, he warns, these kinds of practices remain a risk.

Justin Sun and Tron

At the same time, the SEC has filed a joint motion in the case against Justin Sun and the Tron Foundation to pause the proceedings and explore a “possible resolution”. A document filed on Wednesday states that a settlement “would save judicial resources and is in the interest of both the court and the public”. Representatives of Sun have not yet responded to requests for comment. This move aligns with a series of recent suspensions and withdrawals of cases against other crypto companies, with the SEC seeming to hint at a more conciliatory stance.

The SEC sued Sun in March 2023, accusing his companies of conducting more than 600,000 ‘wash trades’ to artificially inflate the trading volume of the TRX token. This would be accompanied by fraud and violations of securities laws. According to the SEC, this earned Sun about $32 million through unregistered sales. Sun, who recently bought $30 million in tokens from the Trump-affiliated World Liberty Financial and became an advisor there, now seems potentially able to strike a deal.

A Crypto-Friendly Future?

These developments fit seamlessly with President Donald Trump’s vision to build the U.S. into a global crypto hub. With the appointment of ‘crypto-friendly’ officials in his administration, it seems an end is coming to what many in the sector have long called “regulation by enforcement”. For the crypto community, this feels like the beginning of a new phase, where the rules could finally change in their favor.