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Stuart Alderoty - GG should be held accountable!


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3/ When it comes to digital assets, Chair Gensler is far from a neutral arbiter. Since his appointment, he has repeatedly stated his view that all digital assets other than bitcoin are securities, end of story. We list many of these statements in our paper.

4/ For example, in February 2023, he said: “Everything other than bitcoin, you can find a website, you can find a group of entrepreneurs . . . . But at the core, these tokens are securities because there's a group in the middle . . . ."


5/ Chair Gensler is wrong. It is well-settled that determining if a particular transaction falls within the scope of the securities laws requires careful analysis of the “facts and circumstances” surrounding that transaction. Chair Gensler refuses to engage in that analysis.

6/ When an SEC Commissioner “has in some measure adjudged the facts as well as the law of a particular case in advance of hearing it,” the law demands recusal. Chair Gensler has clearly prejudged the facts and law in every case involving digital assets. He must recuse himself.

7/ Without recusal, his bias taints the entire enforcement action. The law says “[l]itigants are entitled to an impartial tribunal whether it consists of one man or twenty and there is no way [to] know [how] the influence of one upon the others can be quantitatively measured.”

8/ Chair Gensler has already voted on many enforcement actions involving digital assets. He should have recused himself then. Since he didn’t, those enforcement actions should be invalidated now, and he should be disqualified from voting on any more in the future.

9/ Our paper is not and should not be considered legal advice, but anyone dealing with an SEC investigation or enforcement action may want to discuss this with their counsel. We outline several ways to raise the issue of Chair Gensler’s recusal with the SEC or a federal court.

10/ Preserving the fairness and impartiality of the SEC’s enforcement function is crucial to the agency’s mission and to the protections afforded by the Wells process. We hope this paper helps to achieve the just and equitable administration of the securities laws.

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