This Week on Crypto Twitter: The SEC Registration Hallucination

Illustration by Mitchell Preffer for Decrypt

Crypto markets recovered a tad this week on news that U.S. inflation appears to have cooled off. General clamor continued on Twitter over the Securities and Exchange Commission’s (SEC) crackdown of the sector, in which the regulator filed two high-profile lawsuits against exchange titans Coinbase and Binance last week.

On Monday, Fox journalist Eleanor Terrett shared a transcription of remarks by SEC Chair Gary Gensler, who maintains that cryptocurrencies can be regulated under existing securities laws.

Many in the industry say Gensler is disingenuous for implying that it’s easy to register with the SEC. Gemini co-founder Cameron Winklevoss says Gensler is full of hot air.

Monday kicked off a critical 36 hours for crypto, according to Web3 law expert MetaLawMan.

The next 36 hrs will be critical for crypto.

Today 5 pm: @Binance files its opposition to SEC’s motion for order freezing assets of @BinanceUS

Tomorrow 2 pm: Hearing on SEC’s motion to freeze assets

Tomorrow (sometime): Release of summary judgment exhibits (including Hinman…

— MetaLawMan (@MetaLawMan) June 12, 2023

That morning, Rep. Warren Davidson (R-Ohio) tweeted about a new SEC reform bill that he’d created with Rep. Tom Emmer (R-MN)—the pro-crypto House Majority Whip who has often blasted Gensler for driving the industry offshore through heavy handed enforcement actions.

@GOPMajorityWhip Tom Emmer joined me in this critical fight to protect our markets: “American investors and industry deserve clear and consistent oversight, not political gamesmanship. The SEC Stabilization Act will make common-sense changes to ensure that the SEC’s priorities…

— Warren Davidson 🇺🇸 (@WarrenDavidson) June 12, 2023

U.S. regulators are getting stablecoins so wrong, tweeted venture capitalist and Bitcoin fan Nic Carter.

US crypto policy in one chart:

Since Jan 1 2023, USDT supply is up $16.7b, USDC supply is down $14b.

US policymakers have successfully pushed investors out of onshore, regulated stables, into offshore, unregulated stables.

Biggest self-own in recent memory. pic.twitter.com/DEKb050DuQ

— nic 🌠 carter (@nic__carter) June 12, 2023

That day, Messari founder and CEO Ryan Selkis shared some incriminating footage of Gary Gensler.

Chair Gensler in 2018 at a Bloomberg conference in NYC:

“Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities.”

What’s Goldman Gary going to say about this one? Deep fake? pic.twitter.com/p7DJlYkJIt

— Ryan Selkis 🪳 (@twobitidiot) June 12, 2023

On Tuesday, blockchain publishing protocol LBRY appeared to throw Ethereum under the bus.

Really regretting that we didn’t bribe the SEC like Ethereum did.

If you get the chance to bribe government officials, please do it. It’s worth every penny.

— LBRY 🚀 (@LBRYcom) June 13, 2023

Crypto researcher Molly White spent the morning fending off some incompetent Bitcoin maxis.

out of the two bitcoiners who tried to attack me this morning, one of them couldn’t figure out who pays me even though i disclose it everywhere, and the other somehow mistook me for a “web3 shitcoin scamm[er]” pic.twitter.com/bZtXWuJZk3

— Molly White (@molly0xFFF) June 13, 2023

Coinbase’s Chief Legal Officer Paul Grewal vented his disappointment with the SEC’s intransigence during a recent courtroom skirmish in which the exchange appealed to the court to (again) ask the regulator to clarify its rules on crypto.

4) they ignore the clear statements of the Chair that confirm they have no intent to issue new rules, and instead conflate the evidence of a decision those statements provide with an argument that the statements are themselves a decision. 3/5

— paulgrewal.eth (@iampaulgrewal) June 13, 2023

Former Twitter co-founder and now Block CEO Jack Dorsey believes Bitcoin has a place in Apple’s App Store.

Facts. Apple building on and with bitcoin would benefit their company immensely.

Apple has been so great at taking early technologies and protocols and making them easy for everyone. I hope they are considering this one deeply. I imagine they are. https://t.co/vS664iySYv

— jack (@jack) June 13, 2023

By midweek heat was coming at the SEC from all angles. The Republicans of the U.S. House Committee on Financial Services issued a sharp letter opposing the SEC’s proposal to amend the definition of “exchange.”

#NEW: All Republicans on the House Financial Services Committee sent a letter to @SECGov demanding it rescind its proposed amendments to the definition of “exchange,” which would stifle innovation and harm digital asset market participants.

👇Read more 🔗https://t.co/qcu1OK6Tkk pic.twitter.com/AQFpMWDPaD

— Financial Services GOP (@FinancialCmte) June 13, 2023

The Prometheum subplot

One of the strange subplots running through the news this week was the emergence of Prometheum, a company with obscure origins that few had ever heard about before, but that now has the ear of Congress, where it is apparently listened to as the voice of sensible [read: SEC–flattering] compliance. Venture capitalist Matt Walsh wrote a brilliant and lengthy thread covering the main points.

Last month, in the midst of the SEC bringing cases on Coinbase + Gemini, and giving the stiff arm to Robinhood and others, Prometheum gets approval for a first of its kind Special Purpose Broker-Dealer (SPBD) for digital asset securities…

— Matt Walsh (@MattWalshInBos) June 14, 2023

Ripple’s Chief Legal Officer Stuart Alderoty thought he saw a Percy Bysshe Shelly reference in the name. However, the nineteenth century poem he refers to here is called Prometheus Unbound, and the mythic subtext he summarizes is actually from the Greek myth of Prometheus, the titan that stole fire from the gods to give to humanity.

If I remember correctly, the moral of the 19th century opus – – Prometheu[m] Unbound – – is that it’s more heroic to actively support justice for all, and suffer the punishment, than strike a deal with a corrupt authority for the sake of personal comfort and gain.

— Stuart Alderoty (@s_alderoty) June 15, 2023

Cameron Winkevoss’s twin and fellow Gemini co founder Tyler Winklevoss says that Prometheum offers a model for getting on Gensler’s good side.