The U.S. Securities and Exchange Commission (SEC) is seeing a major shake-up as Gurbir S. Grewal, the agency’s Enforcement Director, is set to leave on October 11, 2024. His sudden resignation has sparked speculation about SEC Chair Gary Gensler’s future, with many crypto pundits questioning if he could be the next to step down amid growing pressure from the crypto industry.
Grewal’s Departure: A Blow to SEC’s Crypto Enforcement
Grewal, who has been at the SEC for over two decades, has led the charge in over 100 enforcement actions against crypto companies since 2021. He was instrumental in shaping the SEC’s controversial “regulation by enforcement” strategy, a tough approach to the crypto sector that has drawn significant criticism from industry insiders.
Jake Chervinsky, chief legal officer at Variant, a crypto venture capital firm, commented on the unusual nature of Grewal’s sudden departure. “It’s not normal for an SEC Enforcement Director to leave on nine days’ notice without a replacement,” he said, suggesting it may signal deeper issues within the agency’s crypto enforcement strategy.
Sanjay Wadhwa, the deputy director of the Enforcement Division, will serve as acting director, but no permanent replacement has been named.
Crypto Legal Defeats and Political Pressure
Grewal’s resignation follows a series of legal defeats for the SEC, most notably its losses in high-profile cases involving Grayscale and Ripple. In 2023, a U.S. court of appeals ruled that the SEC had wrongly denied Grayscale permission to launch a spot Bitcoin ETF. More recently, in August 2024, the SEC’s long-standing claim that Ripple Labs’ XRP token sales violated securities laws was largely unsuccessful.
These defeats, combined with growing political pressure, have led some to speculate that Gensler’s position may also be in jeopardy. Crypto investor Adam Cochran remarked on X (formerly Twitter) that the lack of a replacement for Grewal suggests senior SEC staff are “jumping ship.”
Gensler’s Future: A Question of Time?
With the U.S. election looming, questions are swirling around Gensler’s future as SEC Chair. Former President Donald Trump has openly stated that he would fire Gensler immediately if re-elected. While Vice President Kamala Harris has remained silent on the matter, other Democratic figures, like billionaire investor Mark Cuban, have voiced their dissatisfaction with Gensler’s leadership. Cuban even joked that firing Gensler could boost GDP growth by one point, and has hinted at his willingness to take over the role should Harris win.
In addition to Grewal, David Hirsch, the head of the SEC’s cyber and crypto enforcement unit, also left the agency recently, joining a Washington, D.C. law firm.
