With well-publicized criminal cases, the Department of Justice (DOJ) became a dominant player in 2023 in establishing the parameters of the bitcoin business. The Department of Justice (DOJ) attracted notice for its prompt resolutions even while the Securities and Exchange Commission (SEC) brought civil litigation against significant participants in the industry.
The former head of Binance, Changpeng Zhao, was overthrown by the DOJ within a year of FTX’s Sam Bankman-Fried being found guilty.
The industry was made more realistic by these criminal charges, which also attracted attention to the DOJ’s influence over industry policies. Acknowledging the DOJ’s aggressive approach to defining the crypto business are former federal prosecutors and legal experts.
Former federal prosecutor Widge Devaney emphasised the DOJ’s influence over the SEC’s ongoing legal battles, saying, “It is a lot more real than whether something is a security or not.” Some, meanwhile, feel that the SEC lost this chance to make an official statement. The SEC has filed duplicate complaints in response to some of the DOJ’s well-publicized crypto indictments. Cases have been made by both authorities against well-known personalities in the cryptocurrency space, such as Alex Mashinsky and Do Kwon.
The DOJ’s criminal cases have experienced remarkable success, despite the SEC facing legal hurdles and doubt regarding jurisdiction. Defendants in the SEC’s ongoing actions against Binance and Coinbase have objected, resulting in a number of pre-trial motions.
The SEC signalled its determination to keep battling for the designation of tokens traded on the exchange as securities by declining to participate in a settlement between the DOJ and Binance. Higher courts are expected to hear an appeal of the ultimate decision in this case.
Even though the SEC has reached settlements with a number of defendants, such as Bittrex and Kraken, cryptocurrency exchanges, and celebrities involved in digital assets, some of its most well-known enforcement actions are still mired in legal disputes.
Uncertainty has arisen about the designation of different cryptocurrency assets as securities due to conflicting decisions made by judges in the same federal court in New York.
Since taking office in 2021, SEC Chair Gary Gensler has adopted a harsh stance against the cryptocurrency industry. Allegations made by the SEC in a number of cases include fraud, failure to register as an exchange, and failing to disclose funds received for cryptocurrency promotion.
According to Gensler, there is no need for additional regulations aimed exclusively at cryptocurrencies because the current securities laws are sufficiently explicit to govern digital assets. The SEC is currently up against obstacles in its enforcement efforts, meanwhile, since recent court rulings have favoured cryptocurrency businesses.
A judge decided that although institutional investors purchasing XRP from Ripple were required to register with the SEC, ordinary investors were not subject to this obligation.
An appeals court dismissed the SEC’s attempt to stop Grayscale from launching a spot-bitcoin fund that would have been listed in the US, labelling the agency’s actions as “arbitrary and capricious.”