The resolution of the ongoing SEC crypto lawsuits is expected to be a long process that could span several years. Mark Yusko, a registered investment advisor, underscores the significance of differentiating between allegations in a civil lawsuit and formal criminal charges.
In the report, he likened the current situation to the untamed days of the wild west, where swift judgment prevailed. While acknowledging the sensitivity of criticizing the regulatory authorities who oversee him, Yusko cannot help but express his disbelief at the unfolding events.
Furthermore, the advisor alludes to an unnamed figure, potentially SEC Chair Gary Gensler, who made an unprecedented “emergency” request to freeze and repatriate Binance’s assets, regardless of their location. This decision, in Yusko’s view, demonstrates a departure from the principles of due process.
During his appearance on the Margin podcast with Blockworks, available on platforms like Spotify and Apple, Yusko adamantly upholds the principle of “innocent until proven guilty.” He reiterates that the allegations made in these lawsuits are part of a civil process and should not be treated as definitive evidence.
Accused Crypto Platforms Are Innocent Until Proven Guilty
Yusko emphasizes the importance of following a proper legal procedure, which includes establishing the veracity of claims through concrete proof and a fair adjudication process.
Regarding the two lawsuits, Yusko and podcast host Mike Ippolito recognize their distinct nature. The accusations against Binance encompass many issues, such as the commingling of user funds and wash trading.
Conversely, the lawsuit against Coinbase centers on classifying cryptocurrencies as securities and whether they fit the regulatory definition. Yusko stresses the need for consistency in applying due process, highlighting that these assets were never considered securities before they were sold.
In addition, he questions the logic behind declaring cryptocurrencies as securities and suggests that such a broad interpretation could inadvertently extend to other assets like bank deposits and money market accounts.
Yusko argues against the potential “bastardization” of the Howey test, which would classify anything with the potential for value growth as security. He believes this precedent would have unintended far-reaching consequences.
He likened it to labeling every piece of real estate as a security since no one purchases property with the expectation of its value decreasing. Reflecting on historical parallels, Yusko recalls past attempts to stifle the growth of the internet, which ultimately failed.
SEC Targets Major Players In The Crypto Industry
Yusko drew attention to a time when a bill was introduced to dismantle the Internet, causing widespread concern about the future of Internet-based businesses. However, these efforts were unsuccessful, and Yusko points out that the current regulatory fervor differs from those past attempts.
In addition, he described the SEC’s approach as an attempt to enforce regulation through the courts, potentially prolonging the legal proceedings. Ippolito agreed with Yusko’s assessment, noting that the SEC had typically pursued targeted battles they believed they could win.
However, in the current climate, the SEC seems to be aiming for a more comprehensive approach, targeting major players in the industry with significant resources. Ippolito suggests this broad-scale strategy may strain the SEC’s capacity and resources.
Furthermore, Ippolito posits that the current regulatory climate represents a brief window of opportunity for the agency. As political dynamics may change soon, the SEC may be motivated to initiate multiple lawsuits while the political will exists to pursue such battles. Both Yusko and Ippolito concur that these lawsuits are likely to be protracted, potentially taking years to reach a resolution.
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