New York congressman blasts SEC for cryptocurrency ‘crusade’

(The Center Square) — A New York congressman is urging federal securities regulators to end its "crusade" against cryptocurrency in the wake of a recent federal court defeat.

In a scathing letter to the Securities and Exchange Commission Chairman Gary Gensler, Rep. Ritchie Torres, D-NY, cited a U.S. District Court ruling out of the Southern District of New York that largely rejected the federal agency's efforts to regulate the cryptocurrency industry.

Torres said the court's ruling in the Ripple case establishes a clear rule that cryptocurrency assets are not securities and can be sold as part of investment contracts. He suggested that the rule be named after Judge Torres — no relation to himself — whom he said has "brought long overdue legal clarity to the chaos of crypto regulation."

"The SEC has chosen to communicate and regulate not by clear rule or guidance but by enforcement actions, often politically timed," Torres wrote. "The endless stream of contradiction and confusion, as well as the arbitrariness of the enforcement actions themselves, is the opposite of fair notice."

In 2020, the SEC sued Ripple Labs, accusing the San Francisco-based firm of failing to register roughly $1.4 billion worth of its XRP cryptocurrency as securities.

But in her July 13 ruling, U.S. District Court Judge Analisa Torres held that only crypto sales to institutional buyers could be considered securities, meaning about half of Ripple Labs' sales of cryptocurrency XRP didn’t violate investor-protection laws. The SEC has vowed to appeal the ruling arguing that Torres erred in her decision.

Julio Barrios, founder and CEO of BronxCrypto, said the federal government "needs a national crypto policy framework that inspires innovation, entrepreneurship, and unlocks the promise for all that blockchain can do."

"Regulation through enforcement is not the way forward," he said in a statement. "Consumers must be protected but not excluded from participating in this emerging market and the industry needs guidelines for how to thrive and realize its potential."

The company's court win is seen as a victory for the cryptocurrency market, with several other companies still battling it out with the SEC over cryptocurrency sales.

It's also viewed as a blow to Gensler, a former Obama administration official appointed SEC chair by President Joe Biden in 2021. The Democrat has described the cryptocurrency market as a "Wild West" riddled with fraud and abuse.

But in his letter, Torres urged the SEC to focus its cryptocurrency enforcement "where it belongs: on the bonafide bad actors who perpetrate serious transgressions like fraud, market manipulation and the misappropriation of customer funds."