Gary Gensler’s PR stunts can’t hide how he botched crypto regulation

It’s only a guess, but the unusual timing of the email was likely an effort to preempt the Justice Department, which had announced it would unveil criminal charges against Bankman-Fried on Tuesday morning. By getting his agency’s complaint out first, Gensler was presumably hoping he could soak up credit on a day when SBF was being brought to justice.

Such behavior is par for the course for Gensler, who in October took the unusual step of making a Twitter video to announce an SEC fine against Kim Kardashian, releasing it early on a Monday morning for maximum publicity. The Kardashian fine involved a relatively minor crypto boondoggle from June of 2021, but it did involve an A-list celebrity, so Gensler was all over it.

This media grandstanding is tiresome but especially so given how Gensler claims to ride herd over the crypto markets yet has repeatedly missed a series of colossal frauds, including the Terra stablecoin and the lenders Voyager and Celsius, costing investors billions of dollars in the process. And then there is FTX. The SEC’s complaint says Bankman-Fried’s crypto exchange was a scam from the time it launched three years ago—raising the question of why Gensler didn’t pick up on that and warn people to stay away.

As criticism of Gensler mounts, the image-conscious SEC chair is pushing back hard. He has finagled softball interviews with sympathetic press outlets like the New York Times and Politico in a bid to recast his incompetence as success. But it’s starting to feel like the jig is finally up. Rep. Tom Emmer (R-Minn.), a member of GOP leadership, has said he will force Gensler to testify before Congress when his party takes the gavel in 2023. Ordinarily, Gensler might spin this as a partisan witch hunt and get Democrats to draw ranks to protect him, but a fast-rising young Democrat from the Bronx, Rep. Ritchie Torres (D-N.Y.), is also fed up with his antics.

“The operating principle of the SEC must be protection for the investing public, rather than publicity for the political appointee in charge,” Torres wrote in a public letter last week. The letter labeled Gensler as “singularly responsible” for the FTX catastrophe.

Members of both parties are onto his game, but it’s too soon to count Gensler out. He has the support of the powerful Sen. Elizabeth Warren (D-Mass.) and her progressive acolytes, and high-placed connections from his days at Goldman Sachs and as the CFO for Hillary Clinton’s presidential campaign. Still, it feels like just a matter of time until Gensler is forced out and the White House appoints someone to do the job he was supposed to do: create a regulatory framework that, in the case of crypto, protects retail investors and allows good actors to build innovative crypto and blockchain companies on American shores.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

Binance pointed to recent financial disclosures as it sought to reassure investors of its stability following a week of record outflows. (Bloomberg)

The wildcat stablecoin issuer Tether said it would stop lending its own coins to customers amid concerns it could become undercollateralized. (WSJ)

Congress held its hearing on FTX, sans SBF, revealing a divide between pro- and anti-crypto members, and that the once-$30 billion company used Slack and QuickBooks. (Fortune)

A judge in the Bahamas refused bail to SBF, deeming him a flight risk, and ordered him remanded to jail until February. (CNBC)

An account of the SBF bail hearing depicts a jittery defendant, agitated parents, and a declaration by the judge that she needed a drink. (CoinDesk)

MEME O' THE MOMENT

Images of Bahamas Department of Corrections courtesy of Crypto Twitter: