Former President Donald Trump has made a promise to end President Biden's "war on crypto" if he gets re-elected. Trump believes Biden's approach to crypto is excessively harsh. Meanwhile, billionaire Mark Cuban recently warned that SEC Chair Gary Gensler's actions could jeopardize Biden's re-election. In response to these concerns, President Biden has reportedly started talks with crypto industry insiders about the possibility of accepting crypto donations for his campaign. The SEC vs Ripple case is also heating up again, this time over penalties.
Trump’s Bold Crypto Promises
Former United States President Donald Trump pledged to end President Joe Biden's "war on crypto" if he is elected in the upcoming 2024 presidential race. During a special address in West Palm Beach, Florida, on Jun. 14, Trump once again talked about his commitment to making sure that the future of crypto and Bitcoin remains in America, particularly in Florida.
This promise comes amid his ongoing criticism of Biden's approach to cryptocurrency, which he believes is excessively harsh. On May 26, Trump reiterated his belief that the U.S. has to strive to lead in the crypto industry. He then also criticized Biden as the "worst president in the history of our country."
Trump plans to capitalize on Florida's more favorable crypto environment, which was recently named the best state for crypto taxes by CoinLedger because of its lack of state income tax and supportive regulatory policies. In contrast, New York was ranked the worst state for crypto taxes.
Additionally, on Jun. 12, Trump pledged his support for the Bitcoin mining industry. The former President now wants all remaining Bitcoin to be mined in the United States.
Trump will face Biden on Nov. 5, 2024, in a bid to reclaim the presidency. So far, cryptocurrency policy has emerged as a major point of contention between the two candidates. It seems like the crypto community will certainly have its voice heard in this election.
Gensler Could Derail Biden's Reelection
Billionaire investor and crypto advocate Mark Cuban recently shared some of his concerns about the potential negative impact of Gary Gensler's actions as head of the Securities and Exchange Commission (SEC) on President Joe Biden's re-election campaign. Speaking at Coinbase’s State of Crypto Summit, Cuban suggested that Gensler could "literally cost Joe Biden the election."
Cuban has previously criticized Gensler and the SEC, and has been actively advocating for regulatory clarity. He also believes that the United States Commodity Futures Trading Commission (CFTC) should take over cryptocurrency regulation. Additionally, in May 2024, Cuban warned that Biden's potential loss could be attributed to Gensler and the New York SEC.
In response to these concerns, President Biden has reportedly started talks with crypto industry insiders about the possibility of accepting crypto donations for his campaign. However, this move may be seen as too little too late, especially when considering his administration's relatively negative stance on the industry in general. It is still unclear exactly how Biden plans to address the issue throughout the rest of his campaign, although it may come up in the upcoming presidential debates.
SEC vs CFTC
The CFTC is an independent federal agency regulating the derivatives markets in the United States, including futures contracts, options, and swaps. It was established by the Commodity Futures Trading Commission Act of 1974, and promotes competitive and efficient markets to protect investors from manipulation, abusive trade practices, and fraud. The agency operates under the Commodity Exchange Act, which provides its statutory framework and publishes its regulations in Title 17, Chapter I, of the Code of Federal Regulations.
The CFTC is led by five commissioners who are appointed by the president and confirmed by the Senate, and they then serve five-year terms. The president chooses one commissioner as the chair, and no more than three commissioners can belong to the same political party.
These commissioners oversee various committees focused on different market sectors, including agriculture, energy, and technology, and represent a very wide range of stakeholders like industries, traders, exchanges, consumers, and environmental groups.
The SEC is another independent federal regulatory agency that was established by Congress in 1934 to regulate the securities markets. The SEC's mission is to protect investors, maintain fair and orderly markets, and facilitate capital formation. It also ensures public disclosure, prevents market fraud and manipulation, and oversees corporate takeovers.
The SEC requires securities offered in interstate commerce to be registered before sale and requires that financial services firms register to conduct business.
The SEC is also led by five commissioners appointed by the president, with one designated as chair. Commissioners serve five-year terms, with an allowance for an additional 18 months if needed until a replacement is appointed. The current SEC chair is Gary Gensler, who took office on Apr. 17 of 2021. As is the case with the CFTC, no more than three commissioners can belong to the same political party.
The SEC oversees exchanges, brokerage firms, dealers, investment advisors, and funds, promoting transparency, fair dealing, and fraud protection through established rules and regulations. It provides investors with access to crucial market information via its EDGAR database.
SEC Pushes Back Against Ripple
Meanwhile, the SEC recently criticized Ripple Labs’ plea for a reduced penalty. The regulator argued that the proposed amount is insufficient.
Last week, Ripple referred to the SEC’s settlement with Terraform Labs in requesting New York District Court Judge Analisa Torres to impose a penalty of “no more than $10 million.” This figure was much lower than the SEC’s proposed $876.3 million civil penalty.
In a letter dated Jun. 14, the SEC contested Ripple's argument, and pointed out that its $4.5 billion settlement with Terraform and co-founder Do Kwon included a $420 million civil penalty due to the firm’s bankruptcy, commitment to returning funds to investors, and the dismissal of its leadership involved in the violations. Ripple has not agreed to any comparable relief measures.
The SEC also argued that Ripple’s comparison of Terraform’s $420 million civil penalty to its “$33 billion gross sales” was not appropriate at all, and stated that it assessed Terraform’s penalty against the “gross profit of the violative conduct,” estimated at over $3.5 billion, representing a nearly 12% ratio. If the same ratio were applied to Ripple’s gross profits of $876.3 million, the civil penalty would be $102.6 million, which the SEC claims would not fulfill the objectives of civil penalty statutes.
The SEC’s proposed penalties for Ripple amount to almost $2 billion, including $198.2 million in prejudgment interest, $876.3 million in civil penalties, and another $876.3 million in disgorgement.
The legal battle between the SEC and Ripple has been ongoing since 2020, after the SEC accused Ripple of selling unregistered securities. This claim was partially upheld by Judge Torres, who ruled that the sales were unregistered only when made to institutional investors.
Additionally, the SEC has also objected to Ripple’s request to seal some of its financial records. The regulator insists that the firm should disclose the revenue generated from XRP sales deemed unregistered by Judge Torres.
