SEC Chair Caught Praising Algorand, Now Calls It A Security

SEC Chair Gary Gensler has been called a hypocrite by critics after footage of him promoting Algorand and praising Silvio Micali emerged. 

Gary Gensler, the chairman of the Securities and Exchange Commission, has found himself in a tight spot after footage of him promoting and praising Algorand (ALGO) emerged. Gensler has been at the vanguard of a crippling regulatory crackdown on Bitcoin and several other cryptocurrencies. As a result, the footage has left him vulnerable to attack from critics. At one point in the clip, Gensler goes on to praise Silvio Micali, the founder of the Algorand project, stating, 

“Silvio Micali’s Alogrand, he’s a Turing Award winner at MIT I work with… Silvio’s got a great technology; it has performance; you could create Uber on top of it.”

Furthermore, Gensler has spoken highly of Algorand on a number of public occasions since 2019. Despite his public anti-crypto stance at the SEC, Gensler is listed as an instructor on an MIT Open Learning course called “Blockchain and Money.” 

The footage of Gensler’s high praise for Algorand emerged on the same day the Securities and Exchange Commission labeled Algorand’s ALGO and five other tokens as securities in its lawsuit against the Bittrex exchange. This action highlighted the tokens as pivotal assets in any potential enforcement action against the Seattle-based crypto firm. In its complaint against Bittrex, the SEC stated that the firm failed to register as an exchange, clearing agency, or broker-dealer with the regulatory authorities. All of these are required for companies offering securities to their customers. 

The SEC, on its part, needs to establish that one of the assets made available by Bittrex qualifies as a security. While the SEC under Gensler has claimed that the label of “Security” applies to all tokens except Bitcoin, the agency has zeroed in on six assets in the case of Bittrex. The tokens which the SEC has cited as “crypto asset securities” are Dash (DASH), Monolith (TKN), Naga (NGC), Omisego Network, Real Estate Protocol (IHT), and Algorand (ALGO). However, the agency has stated that more tokens could be added to the list. 

Out of all the tokens mentioned in the lawsuit, Algorand has the largest market capitalization, reaching a total value of $1.6 billion, according to data from CoinGecko. However, none of the tokens have been named as defendants in the Bittrex lawsuit. Furthermore, the SEC has yet to announce separate charges against them. According to JW Verret, Counsel at Lawrence Law, the tactic is similar to other lawsuits where the SEC has included other coins, 

“It strikes me as very similar to the Wahi case. They’re making claims that tokens are securities without suing the actual tokens themselves.”

While the tokens named in the Wahi case are entirely different from the ones named in the Bittrex lawsuit, the broad idea is that they fall under the definition of a security when using the Howey test. 

Gensler has been criticized for his position against cryptocurrencies and blockchain technology, even by his colleagues at the SEC. Commissioner Hester Peirce, in remarks made on the 14th of April, stated, 

“Rather than embracing the promise of new technology as we have done in the past, here we propose to embrace stagnation, force centralization, urge expatriation, and welcome extinction of new technology.”

The Securities and Exchange Commission (SEC) under Gensler has modeled itself on the lines of Gensler’s anti-crypto reputation. In the US, promotions of securities are governed by the Securities Act of 1933 and the Securities Exchange Act of 1934. Both acts seek to regulate the offering and sale of securities and require that platforms offering them register with the appropriate authority. They also prohibit the misrepresentation of facts, and those failing to do so could face civil and criminal penalties that range from fines to imprisonment. 

On Monday, the SEC announced the appointment of Inspector General Deborah J. Jeffrey. However, it remains to be seen if Gensler will be investigated for his promotion of Algorand as a security. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.