REGULATION

SEC revolving door in action, with multiple high-ranking officials moving to law firms.

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SEC revolving door in action, with multiple high-ranking officials moving to law firms.

FOX reporter Eleanor Terrett recently tweeted a compilation of several executives who have left the U.S. Securities and Exchange Commission (SEC) to join the cryptocurrency industry, including former enforcement officials, lawyers who led cases for Coinbase and Ripple, and even long-time employees who served for over 8 years.

From Hindering Bitcoin ETFs to Advising Crypto Institutions, the Past and Present of Former SEC Chairmen on the Line between Politics and Business

SEC Officials Join Private Sector Successively

There have been a series of high-level personnel changes within the SEC this year, particularly involving key personnel from the cryptocurrency assets and cybersecurity departments, officials who have been involved in crypto-related enforcement cases, leaving the SEC to join private law firms specializing in crypto and financial areas.

Carolyn Welshhans

Former acting head of the SEC's cryptocurrency assets and cybersecurity unit, joined Morgan Lewis in October, focusing on securities enforcement issues.

Gurbir Grewal

Former SEC enforcement chief joined Milbank law firm, which currently represents clients in lawsuits involving Binance and the SEC, with the SEC accusing Binance of violations during Gurbir Grewal's tenure.

David Hirsch

Former head of the SEC's cryptocurrency assets and cybersecurity unit joined McGuireWoods law firm, providing advice on crypto-related matters and cybersecurity regulations.

Ladan Stewart

Former assistant director in the enforcement division of the SEC joined White & Case law firm, assisting clients with regulatory advice on cryptocurrency and other financial matters, having led the SEC's lawsuits against Telegram and Ripple.

Ladan Stewart served at the SEC for over 8 years and shared some views in an interview with Forbes:

  1. The SEC is indeed technology-neutral and does not have a systematic plan to eliminate cryptocurrencies.

  2. Industry players are reluctant to engage with the SEC out of fear of becoming enforcement targets.

  3. She believes the Howey test is limited in determining whether cryptocurrencies are securities.

  4. Meme coins can be considered securities in certain circumstances.

  5. The SEC is currently not allocating substantial resources to NFTs due to other priorities.

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Revolving Door Phenomenon Between Government and Private Sector

The movement of SEC senior officials to the private sector has raised concerns and criticisms within the industry and community about the "revolving door" phenomenon, citing potential conflicts of interest between enforcement and the private sector. This is not the first time this has happened; former SEC Chairman Jay Clayton immediately became an advisor to the cryptocurrency asset management firm One River after stepping down, assisting in the advancement of related crypto funds. He had mentioned in an interview earlier this year that approving a Bitcoin spot ETF was an inevitable development.

However, given the apparent increase in SEC officials moving to the private sector this year, FOX reporter Eleanor Terrett also emphasized that the personnel changes at the SEC this year seem particularly frequent.

Blurring Lines Between Government and Business? From Hindering Bitcoin ETFs to Advising Crypto Institutions, Former SEC Chairman's Past and Present