Senator Kennedy Jr. questioned SEC Chairman Gary Gensler’s authority and the SEC’s competency in handling crypto fraud at a Senate Committee hearing on July 19.
The focus of the debate was FTX, a crypto exchange founded by Sam Bankman-Fried. Senator Robert F. Kennedy Jr. described him as over-haired and underdressed.
The senator expressed disbelief that the SEC had not taken proactive steps to investigate FTX, considering its founder’s high-profile activities and ambitions.
Kennedy Jr. argued that the SEC’s regulatory machinery was designed to ensure transparency and combat fraud. However, it appeared to have fallen short in this disruptive new industry. He criticized the agency for not sending investigators to probe FTX and halting its operations until essential questions were answered.
During the exchange, senator Kennedy Jr. further questioned why the SEC hadn’t been curious about the source of Bankman-Fried’s wealth. He humorously stated that the former FTX CEO seemed to have done everything except buying Mount Rushmore.
Chairman Gensler defends SEC’s efforts
In response, SEC’s chairman Gensler acknowledged the complexities of the crypto industry, citing the prevalence of abuses and fraud often intertwined with offshore services.
Gensler defended the SEC’s efforts, stating that they have been actively investigating and acting against many companies. However, Gensler also highlighted the challenges posed by the vast number of tokens and actors within the crypto industry.
Despite Gensler’s explanations, senator Kennedy remained unsatisfied, asserting that the SEC could have swiftly shut down FTX through a court injunction if they had taken prompt action.
Echoes in Congress
The contentious exchange between senator Kennedy and сhairman Gensler sparked reactions in Congress.
Senator Richard Durbin expressed suspicion towards the crypto industry in general, questioning Gensler whether the SEC had sufficient funds to police it effectively.
On the opposite side, Sen. Bill Hagerty presented statistics on stablecoin market share and the number of blockchain developers in the US, expressing concern that the SEC’s “regulation by enforcement” and unclear rules pushed businesses and innovation offshore.
Meanwhile, Congressman Dusty Johnson took to Twitter to condemn the SEC’s approach of regulating by enforcement, arguing that multiple lawsuits against digital asset firms stifled innovation and growth without adequately protecting the public.
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