Senator Cynthia Lummis Says 'SEC Cannot Continue Ruling By Enforcement' Following Kraken Lawsuit

Senator Cynthia Lummis (R-Wyo.), on Tuesday, criticized the Securities and Exchange Commission for its current approach to crypto regulation, arguing that the agency often resorts to “ruling by enforcement”.

What Happened: Lummis expressed her disapproval on X, formerly Twitter, arguing that crypto asset companies seeking guidance from the SEC are instead faced with enforcement actions that not only lack a clear basis but also harm consumers. 

“The SEC cannot continue ruling by enforcement. Crypto asset companies have repeatedly tried to get guidance from the SEC only to be hit with enforcement actions, causing unnecessary harm to consumers,” stated Lummis. She believes that it's Congress' responsibility to establish a regulatory framework that clarifies what constitutes a security and what is considered a commodity.

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Why It Matters: The SEC launched a lawsuit against crypto exchange Kraken, alleging the commingling of customer and corporate funds. The suit claims that Kraken, while operating as an unregistered broker, clearing agency, and dealer, violated federal securities laws.

According to the SEC, Kraken’s actions have put customers at “significant risk” by mixing up to $33 billion in customer crypto assets with its corporate funds. This information was bolstered by a statement from Kraken’s independent auditor, as cited by the federal regulator.

Photo Courtesy: Wikimedia Commons

Price Action: At the time of writing, Bitcoin BTC/USD was trading at $37,600, up 1% in the last 24 hours according to Benzinga Pro.

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