The SEC’s pivot on cryptocurrency enforcement after Donald Trump returned to office in January has sparked a heated debate between industry veterans and market observers.
SEC Drops Majority Of Inherited Crypto Cases
The New York Times on Sunday reported that the SEC inherited 23 active crypto enforcement matters and pulled back on 14 of them through dismissals, freezes or settlements.
The publication described the shift as unusual for a regulator historically reluctant to retreat from active litigation.
Former SEC trial counsel Christopher E. Martin, who led one of the dropped cases, called the retreat “a complete surrender,” arguing that investors were “thrown to the wolves”.
According to the report, internal resistance within the SEC grew during the presidential transition.
Enforcement chief Sanjay Wadhwa urged staff to continue pursuing crypto cases, but several senior officials allegedly disengaged.
The Times cited sources saying one senior crypto leader took an unannounced multiweek absence, while another declined to attach her name to a post-election crypto filing.
Other officials reportedly stopped working on crypto cases altogether.
No Evidence Of Political Pressure Found
Despite its framing, the Times acknowledged it found no evidence that Trump, the White House, or crypto firms pressured the SEC to ease enforcement.
The article also stated there was no indication that firms attempted to influence outcomes through donations or business ties.
That disclosure has become the focal point of criticism from the crypto industry.
Coinbase Pushes Back On NYT Narrative
Coinbase Inc. (NASDAQ:COIN) Chief Legal Officer Paul Grewal criticized the Times’ story, arguing it implied impropriety while conceding none existed.
Grewal said the article’s own reporting undercut its framing, calling the narrative “twisted” given the absence of political interference or favoritism.
Critics Say Rollback Was Predictable Policy Shift
Several analysts argued the enforcement pullback reflected a philosophical change at the SEC rather than political influence.
Galaxy Digital research head Alex Thorn said the prior administration’s crypto crackdown relied on novel and contested interpretations of securities law that faced bipartisan criticism and repeated court challenges.
When Republican commissioners Hester Peirce and Mark Uyeda moved into a controlling majority after former Chair Gary Gensler stepped down, Thorn said a reversal was inevitable.
“It’s not irregular at all for the SEC to drop these cases,” Thorn wrote. “If you overturn the premises, the cases fall away.”
Why It Matters
The dispute highlights a widening gap between traditional media framing and the crypto industry’s interpretation of regulatory change.
While critics see retreat, supporters view the shift as a correction away from regulation by enforcement toward clearer rulemaking.
For markets, the shift comes as Bitcoin (CRYPTO: BTC) and other major digital assets increasingly trade on expectations of regulatory clarity rather than courtroom outcomes.
Whether the SEC’s retreat is seen as abdication or recalibration will influence future enforcement credibility and the market’s long-term trust in U.S. crypto oversight.
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