SEC Director Who Helped Lead Crypto Crackdown Is Departing

The Securities and Exchange Commission (SEC) announced Wednesday that Gurbir S. Grewal, the agency’s director of the division of enforcement, will soon step aside from his role.

The agency said in a press release that Grewal, who has spearheaded dozens of enforcement actions against crypto firms, will hand the division’s reins over next Friday to Sanjay Wadha, who will serve as the unit’s acting director. 

Meanwhile, SEC Chair Gary Gensler praised Grewal’s three-year stint, stating that the agency is “incredibly fortunate” for his public service. “Every day, he has thought about how to best protect investors,” Gensler said in a statement.

Critics of the SEC’s enforcement approach toward digital assets, however, expressed a sense of relief at Grewal’s slated departure. House Majority Whip Tom Emmer (R-MN), a Gensler critic, said that Grewal “encouraged lawlessness and chaos” at America’s securities regulator.

“Good to see him packing his bags,” the lawmaker wrote on Twitter.

With Grewal in the driver seat of the SEC’s enforcement unit, the agency embarked on an aggressive string of enforcement actions against crypto firms following the collapse of FTX in 2022. Those actions included lawsuits filed against America’s leading crypto exchange, Coinbase, as well as Binance, the biggest exchange in the world by trading volume.

The SEC’s press release highlighted Grewal’s work in combating noncompliance with securities law in the crypto field, which Gensler has said is “rampant.” In total, the SEC authorized more than 100 enforcement actions against crypto firms during Grewal’s tenure, the agency said.

Earlier this year, Grewal commented on the nature of crypto-related enforcement actions his unit has pursued, describing some as “nothing but straight rips, Ponzi schemes, affinity frauds, or other types of scams.”

At the same time, Grewal’s work has sought to address conduct surrounding decentralized finance protocols, stablecoins, cybersecurity risks, and misappropriated funds.

In its lawsuit against Terraform Labs, the SEC notched a major victory when a New York court found that the company’s collapsed stablecoin was offered as an unregistered security. At the same time, a New York judge’s ruling in the SEC’s case against Ripple Labs represented a loss, as the judge found that the token XRP “is not necessarily a security on its face.”

Recounting 784 total enforcement actions filed by the SEC in 2023, Grewal said that he was “extremely proud of the division’s efforts,” adding that the unit routinely “stood up for the investing public.”

The announcement generated speculation that Grewal’s departure was tied to the agency’s crypto moves.

“It’s not normal for an SEC Enforcement Director to get disappeared like this—gone on nine days’ notice with no replacement lined up,” tweeted Variant Fund Chief Legal Officer Jake Chervinsky. “Perhaps the inevitable end to a campaign of unlawful harassment and misrepresentation resulting in many embarrassing defeats in court.”

But while Grewal’s departure was viewed as positive development among some crypto advocates, others posited that the unit leader’s departure was not influenced by bipartisan scrutiny toward the agency’s stance on crypto regulation.

“He’s served for a couple of years now in a demanding job,” Bill Hughes, senior counsel and director of global regulatory matters at Ethereum software giant Consensys (one of 22 investors in an editorially independent Decrypt) wrote on Twitter. “It probably has precisely nothing to do with crypto.”

Edited by Andrew Hayward