Image source: Reuters
In 2023, the Department of Justice (DOJ) emerged as a leading force in defining the boundaries of the cryptocurrency industry through high-profile criminal prosecutions.
While the Securities and Exchange Commission (SEC) filed civil lawsuits against major players in the sector, it was the DOJ that garnered attention with its rapid resolutions.
Within a year, the DOJ secured the conviction of FTX’s Sam Bankman-Fried and dethroned Changpeng Zhao, the former head of Binance.
These criminal prosecutions brought a sense of reality to the industry and highlighted the DOJ’s role in shaping its boundaries.
Former federal prosecutors and legal experts have acknowledged the DOJ’s proactive stance in defining the crypto industry.
“It is a lot more real than whether something is a security or not,” Widge Devaney, a former federal prosecutor, stated, highlighting the DOJ’s impact compared to the ongoing battles of the SEC in court.
However, some have seen this as a missed opportunity for the SEC to assert its authority.
Many of the DOJ’s high-profile crypto indictments have been accompanied by parallel complaints from the SEC.
Both agencies have brought cases against prominent figures in the crypto world, including Alex Mashinsky and Do Kwon.
While the SEC has faced legal challenges and uncertainty over jurisdiction, the DOJ’s criminal prosecutions have seen notable success.
The SEC’s ongoing cases against Binance and Coinbase have faced opposition from the defendants, leading to a series of pre-trial motions.
The SEC chose not to join a settlement between the DOJ and Binance, indicating its intention to continue fighting for the classification of tokens traded on the exchange as securities.
The final verdict on this matter is likely to be appealed to higher courts.
SEC’s Main Enforcement Actions Remain Unsolved
While the SEC has reached settlements with several defendants, including cryptocurrency exchanges Kraken and Bittrex, as well as celebrities involved in digital assets, some of its flagship enforcement actions remain entangled in legal complexities.
Competing rulings by judges in the same New York federal court have created uncertainty over the classification of various crypto assets as securities.
SEC Chair Gary Gensler has taken a tough stance against the crypto sector since assuming office in 2021.
The SEC has brought a wide range of cases, alleging fraud, failure to register as an exchange, and non-disclosure of payments received for promoting crypto.
Gensler believes that existing securities laws are clear enough to regulate digital assets and that new rules specifically focused on crypto are unnecessary.
However, the SEC is now facing challenges in its enforcement actions, with recent court decisions favoring crypto companies.
A judge ruled that XRP, offered by Ripple, was not a security when sold to retail investors, but subject to SEC registration requirements when bought by institutional investors.
The SEC’s attempt to prevent the launch of a US-listed spot-bitcoin fund by Grayscale was also rejected by an appeals court, calling the SEC’s action “arbitrary and capricious.”
The post The DOJ “Led the Way” in Defining Boundaries for the Crypto Industry in 2023: Former US Prosecutor appeared first on Cryptonews.
