Brad Sherman, a congressman who has previously called for a ban on cryptocurrencies in the United States, has criticized the Securities and Exchange Commission (SEC) approach to enforcement among major crypto exchanges.

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In a hearing Tuesday before the House Financial Services Committee, Sherman said SEC Director of Enforcement Gurbir Grewal needed to show “strength and courage” in dealing with securities cases against cryptocurrency exchanges in the United States. The lawmaker added that the SEC law enforcement agency was “pursuing” XRP as a security, but not the crypto exchanges that processed “tens of thousands” of token transactions.

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“If XRP is a security — which you think so, and I think so, then why aren’t these crypto exchanges breaking the law and is it enough that crypto exchanges said, “Well, having committed tens of thousands of violations in the past, we promise nothing more do in the future?” Sherman asked. Is that enough to get you off the hook?

Representative Brad Sherman speaks before the House Financial Services Committee on Tuesday.
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Grewal responded that he could not specify whether the SEC’s law enforcement arm had investigated any cryptocurrency exchanges, but referred to a case filed against Poloniex in August 2021 for trading cryptocurrencies considered securities to US investors on its platform between July 2017 year to November 2019. Sherman objected. that the cryptocurrency trading platform was a “little fish” among other major exchanges, probably referring to Kraken, Coinbase and Binance US:

“The big fish that run the big exchanges have done many, many tens of thousands of XRP transactions. You know it’s a security – which means they were illegally running the stock exchange. They know it’s illegal because they stopped doing it, even though it was profitable. […] I hope you focus on that.”

Both SEC Chairman Gary Gensler and Grewal expressed concerns about crypto compliance in the government agency’s fiscal year 2023 budget request. In a written statement for the hearing, Grewal said The cryptocurrency market has become “increasingly complex, and related misconduct has become increasingly difficult to detect and has become increasingly complex and international in nature.”

SEC doubles down on crypto regulation by expanding division

In May, President Joe Biden requested more than $2.1 billion for the SEC in fiscal 2023, allowing the regulator to increase its enforcement division by 50 people, with 20 new hires expected in the regulator’s cyber division, which includes crypto assets and the cyber team. Senators Cynthia Lummis and Kirsten Gillibrand also introduced legislation in June proposing that the Commodity Futures Trading Commission, unlike the SEC, have powers in digital asset spot markets.