SEC’s Hester Peirce doesn’t know what her agency is trying to accomplish

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Hes­ter Peirce, com­mis­sion­er at the US Secu­ri­ties and Exchange Com­mis­sion, isn’t quite sure what her agency’s endgame appears to be. 

“There doesn’t seem to be a rhyme or rea­son for a lot of cas­es we bring,” Peirce said Thurs­day dur­ing a fire­side dis­cus­sion at the Blockchain Asso­ci­a­tion Pol­i­cy Sum­mit in Wash­ing­ton, DC. 

Peirce’s agency brought a total of 784 enforce­ment actions dur­ing the 2023 fis­cal year, a 3% increase from 2022, large­ly thanks to SEC Chair Gary Gensler’s esca­lat­ing inter­est in the cryp­tocur­ren­cy space. 

The SEC increased its enforce­ment actions involv­ing secu­ri­ties offer­ings by 48% in 2023, one of which was the agency’s case against NFT issuer Ston­er Cats 2 LLC.

“I don’t real­ly view it as my pri­ma­ry objec­tive” to stop peo­ple from pur­chas­ing Ston­er Cats, Pierce quipped. 

“We need to just also remem­ber that there’s a lot of tra­di­tion­al secu­ri­ties fraud going on, and resources that were spent going after Ston­er Cats are not being spent to go after [oth­er actors.],” she added. 

The trend of tak­ing its bat­tles to the courts is not new for the SEC, and Peirce has made her crit­i­cism of the strat­e­gy known. 

“I will say that lit­i­ga­tion is not the most effec­tive way to car­ry out reg­u­la­tions,” Peirce said dur­ing an appear­ance on Bloomberg TV last week. 

The SEC’s case against LBRY, a saga that even­tu­al­ly end­ed in the con­tent shar­ing plat­form shut­ting its doors last month, was a par­tic­u­lar­ly trou­bling instance, Peirce said. 

“I was real­ly heart­bro­ken that we were bring­ing the case,” she said Thurs­day. “Here was a project that had actu­al­ly built a func­tion­ing blockchain that was being used…and there had been efforts made to try to launch in a way that was con­sis­tent with the secu­ri­ties laws.” 

The SEC has a dif­fi­cult job deter­min­ing which enforce­ment actions to pur­sue, Peirce said, mak­ing the entire process some­what arbitrary. 

“We have to make resource allo­ca­tion deci­sions; where does it make sense to spend our resources?” she said. “[LBRY] is just a case where I would have made a dif­fer­ent call.” 

Look­ing ahead, when asked what she envi­sioned the SEC’s ‘endgame’ in terms of cryp­to to be, Peirce didn’t have an answer, but she did have an opinion. 

“I real­ly can’t tell you defin­i­tive­ly,” she said. “We need to stick to the man­date Con­gress gave us and not extend beyond that.”

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