Cameron Winklevoss@cameron
On Monday, the SEC informed our litigation counsel @JackBaughman27 that it has closed its investigation into @Gemini and will not be pursuing an enforcement action against us. This comes 699 days after the start of their investigation and 277 days after they sent us a Wells Notice.
While this marks another milestone to the end of the war on crypto, which already includes the SEC’s withdrawal of the Coinbase lawsuit and the closing of investigations into OpenSea, Robinhood, and UniSwap, it does little to make up for the damage this agency has done to us, our industry, and America.
The SEC cost us tens of millions of dollars in legal bills alone and hundreds of millions in lost productivity, creativity, and innovation. Of course Gemini is not alone. The SEC’s behavior in aggregate towards other crypto companies and projects cost orders of magnitude more and caused unquantifiable loss in economic growth for America.
How many engineers left crypto or avoided it altogether because of these regulatory attacks? How many projects were never started or got off the ground because founders and engineers decided they would rather build a startup in their dorm room than inside the boardroom of a law firm trying to navigate the Kafkaesque crypto regulatory hellscape? How many engineers chose to go into other industries instead of building a permissionless, open financial system? How many years of innovation were kicked down the road at the expense of Americans? We will never know.
So where do we go from here? It’s wholly unacceptable for an agency like the SEC to bully, harass, and attack a lawful industry and then decide one day to simply say we’re good and walk away. Unless there is a cost and price to be paid for this behavior, it will happen again. Thoughtful legislation will form a shield of protection, but we also need strong deterrence inside the agencies themselves. Here are a few ideas:
Reimbursement
If an agency refuses to write rules before it opens an investigation or brings an enforcement action, the agency should have to reimburse you for 3x your legal costs. This would make you financially whole for the time and money you spent defending yourself against sham investigations and baseless enforcement actions that were only able to be brought because the agency didn’t write rules in the first place. Even better, they should be required to advance you your legal costs so you don’t have to come out of pocket while you defend yourself.
Dishonorable Discharge
Everyone involved in these actions should be fired immediately and in a public way. Their names, roles, and the actions they participated in should be posted on the SEC website.
How many SEC enforcement lawyers have resigned in protest since the SEC top brass instructed them to withdraw crypto cases and close investigations? Zero. Which means they never believed in these cases to begin with. Which begs the question, why didn’t these lawyers resign at the outset when they were told to bring these unjust cases?
It should not be acceptable to bring the full might of the US government to bear against fledgling companies in a nascent industry and then hide behind a faceless agency or say you were “just doing your job” or “following orders.” These individuals had a choice. They could have asked to be reassigned or resigned. Nobody was forcing them to work at the SEC. Nonetheless, they chose to violate their oath and the agency’s mission to “make a positive impact on the U.S. economy, our capital markets, and people’s lives” and instead aided and abetted an unlawful war against a lawful industry.
Imagine if even one SEC enforcement lawyer had resigned in protest and stood up for our industry — what a heroic act this would have been. But it never happened.
Agency Ban
Just like the SEC bars individuals from trading securities if they break the law, there should be a process that bars those like Gary Gensler who weaponize the law, as well those who participate in the weaponization, from ever being appointed to or hired by an agency again. Lifetime ban in this case.
Going Forward
We will not rebuild trust and integrity in federal agencies unless there are serious consequences for bad faith actors. Operation Chokepoint didn’t stop at 1.0. It continued to 2.0 because not enough was done to hold bureaucrats accountable for their actions during 1.0. And there will be a 3.0 unless there is a real, public reckoning for 2.0.
I’m glad to be turning the page here as an industry, but this is not the end, rather the beginning towards ensuring this never happens again to the crypto industry or any other exciting, new frontier industry in the future. Here’s to continuing to reform our government and fighting the good fight. Amazing awaits
