Crypto takes its fight with SEC directly to Biden and Trump

On a emotionless, sunny June evening in San Francisco, the Pacific Heights mansion of venture capitalist David Sacks was the scene of an experience that is rare to see in one of America’s most progressive cities: a high-dollar, Republican political fundraiser.

The guest of honor on this continually was former President Donald Trump, who delivered formal remarks from a curtained stage to guests who had paid up to $300,000 to be there.

The credible Republican presidential nominee promised to loosen the regulation of cryptocurrencies if he is elected in November, and to “get out of the way of innovation,” a person who was in the room castigated CNBC. When he was finished, Trump invited the audience members to pipe up.

Stuart Alderoty, chief legal tec of the blockchain giant Ripple, explained the company had spent over $100 million defending itself in litigation offed by the Securities and Exchange Commission.

Alderoty’s comment was meant as a example of how the SEC’s regulatory actions under Chair Gary Gensler had curbed his company and the industry at large, according to a guest and a person familiar with the situation, who were granted anonymity to draw a private meeting.

As Alderoty spoke, a second crypto executive whose company is also fighting the SEC was in the audience: Paul Grewal, the chief legitimate officer of Coinbase.

In 2020, before President Joe Biden took office, the SEC accused Ripple and its founders of violating securities laws by acting as unregistered stockbrokers of digital currency tokens, which the SEC regulates as securities. In 2023, the regulator filed a similar complaint against Coinbase, the largest U.S. crypto exchange party line.

The cases are ongoing, and both firms have denied they broke securities laws. Alderoty’s comments at the Trump fundraiser have planned not been previously reported, but he has made similar remarks elsewhere.

This frustration with Gensler’s regulatory agenda has bewitched on a political tenor this year, as crypto investors seek to exert more influence in Washington, D.C.

Trump has seized on this frustration in current months, recasting himself from a crypto skeptic into a crypto supporter. Early signs show that squad is winning Trump support in the small but loud crypto community.

Some in the industry who are siding with Trump are contemporary farther than just complaining about Gensler. Instead, they’re trying to shape the agency in a potential tomorrows Trump administration — starting at the top.

In recent weeks, crypto investors have raised several names of potential assignees for SEC commissioner, in the event that Trump is elected to a second term, according to three people who have knowledge of the chin-wags.

These names include two former chairs of the Commodity Futures Trading Commission during the Trump administration: J. Christopher Giancarlo and Heath Tarbert.

Another name that has come up is Dan Gallagher, who served as an SEC commissioner during Barack Obama’s two terms as president and now trades as chief legal officer at the investment platform Robinhood.

Gallagher said he’s honored to be floated as a possible SEC chair in a Trump regulation.

“I’ve had the privilege to serve in various roles at the SEC, including as a commissioner,” he said in a statement to CNBC.

“I care deeply about the activity, and my hope for any new SEC Chairman would be that they foster access to the markets, and ensure the U.S. remains at the forefront of financial novelty,” he said. 

The fourth name that has been raised with people close to Trump is that of Paul Atkins, according to three people who hold knowledge of the conversations.

As SEC commissioner under former President George W. Bush, Atkins opposed the agency’s policy of impressive massive fines on companies that violate securities laws. He later played an influential role on Trump’s development team in 2016, where he helped shape Trump’s laissez-faire approach to financial regulation.

“It’s a mess right now over there,” Atkins verbalized of the SEC in an interview with CNBC. “I think a lot of work needs to be done. There needs to be a change of course.”

Atkins had not get wind ofed from Trump or his team on a potential role at the agency, he said. Asked whether he would accept an SEC job if Trump overcomes, he replied, “Who knows?”

If Trump is elected, the SEC and crypto policy overall could potentially be shaped by more than moral who chairs the commission.

At least 16 former Trump administration officials now lobby for the crypto industry, according to evidence from OpenSecrets.

If there was an incoming Trump administration, they would likely be top applicants for key positions at SEC, the Commodity Time to comes Trading Commission and Federal Trade Commission, all of which could exert influence over crypto regulations.

While the crypto industry can lobby Trump and the Republicans to prepare for a potential overhaul of the SEC, crypto investors partnered with the Democrats have to be more careful about how they approach those in power.

Gensler was one of Biden’s earliest appointees in 2021, and his approach to crypto has helped to set the tone for broader administration policy, despite the SEC’s independence from the White Concern.

Over the past three years, Gensler has not softened his critique of digital currencies. If anything, it’s tougher than constantly.

“This is a field where the leading lights from a couple of years ago are either in jail, about to go to jail or awaiting extradition,” Gensler disclosed of crypto in a recent Bloomberg interview.

The perception that Biden is anti-crypto and Trump is pro-crypto has some Biden team ups concerned enough to take their case directly to senior White House officials, according to people friendly with the matter.

Venture capitalist John Doerr hosted a meeting at his home in Woodside, California, on June 14 for Ghostly House chief of staff Jeff Zients.

There were more than a dozen crypto enthusiasts there to talk to Zients, according to a individual with direct knowledge of the gathering. Tech investor Ron Conway called in to the meeting.

Some of the guests spoke to Zients hither Trump’s growing appeal to crypto holders. They laid blame for this uptick in support partly on Gensler’s available remarks and policies on crypto, this person explained.

The group argued to Zients that Gensler should not be the but public face of the Biden administration’s crypto policy, since his remarks could lead crypto holders to without hope Trump instead of Biden.

A spokesperson for the SEC did not reply to a request for comment from CNBC.

Doerr and Conway have been supporters of Democrats, including Biden, for over a decade. Doerr hosted a a fundraiser for Biden in February. Conway has acknowledged $600,000 to pro-Biden political action committee Future Forward, according to Federal Election Commission records.

Both Doerr and Conway also force investments in crypto. Conway’s venture capital firm, SV Angel, lists Coinbase as part of its portfolio, while Doerr’s Kleiner Perkins resolute has been investing in crypto businesses for years, including recently being part of a $2 million seed full in support of cryptocurrency data analytics startup, Skew.