Crypto critic laments ‘SEC funeral’ as Gensler’s enforcement unit closes and major cases stop

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It turns out all the crypto industry had to do to overcome the Securities and Exchange Commission’s crackdown was wait.

Under acting Chairman Mark Uyeda, the SEC, has quietly halted at least five crypto-related lawsuits, a major reversal from the “regulation by enforcement” approach taken by the former chair, Gary Gensler.

The turnabout includes delaying its cases against Binance and Coinbase and gutting its crypto enforcement unit.

The agency also ended its effort to get platforms that enable the trading of cryptocurrencies to register as dealers.

“Buckle up, get the popcorn, and get ready for the SEC funeral,” John Reed Stark, the former chief of the SEC’s Office of Internet Enforcement and crypto critic, wrote on Thursday.

Pausing litigation

The agency’s decision to delay multiple lawsuits targeting major crypto firms is an extraordinary development.

Financial regulators rarely hit the pause button on enforcement actions because the suits have been brought to protect investors from market risks or losses.

The SEC’s case against Binance, for instance, accuses the exchange of operating as an unregistered securities platform and permitting investors to trade unregulated cryptocurrencies that could lead to losses with no recourse.

It’s now on hold for at least 60 days.

Similar delays have been requested in lawsuits against Coinbase and Lejilex.

The SEC says the delays are prudent because a newly formed crypto task force led by Commissioner Hester Peirce is reviewing rules for the asset class that could affect the cases.

Yet critics suspect the agency is waving the white flag after President Donald Trump embraced crypto, and then launched his own digital assets businesses with his family.

“This is the beginning of the end of all crypto enforcement,” Reed Stark told Bloomberg News

The SEC also dropped its appeal over the dealer rule, which aimed to classify more firms that trade securities — including crypto companies — as regulated “dealers” requiring SEC registration.

The legal challenge, brought by the Blockchain Association and Crypto Freedom Alliance of Texas, pushed back against the SEC’s attempt to expand the definition of securities dealers, arguing it was an “unlawful power grab.”

Crypto unit disbanded

The SEC has also dismantled its Crypto Assets and Cyber Unit, reassigned key personnel, and replaced the division with a Cyber and Emerging Technologies Unit.

The new group, led by SEC lawyer Laura D’Allaird, will focus on cybersecurity-related fraud, artificial intelligence scams, and retail investor protections rather than crypto-specific enforcement.

The flurry of actions, reinforced by the likely confirmation of pro-crypto lawyer Paul Atkins as SEC chair, — is the clearest sign yet that industry engagement has replaced enforcement.