‘italian Vendetta’: Sec Targeted By Triumphant Crypto Industry

The cryptocurrency industry endured a legal onslaught from the Securities and Exchange Commission — and won.

Now, some of its biggest names are firing back at the Wall Street regulator.

In the wake of President Donald Trump’s election with the aid of hefty contributions from crypto, industry executives and backers have begun testing their new political power by pushing for accountability from the SEC — and in some cases payback — as the regulatory landscape shifts in their favor.

Coinbase CEO Brian Armstrong and Ripple’s top lawyer, Stuart Alderoty, are calling on the industry to shun law firms that hire SEC employees who were involved in the crackdown, chilling the job market for staff exiting the agency. Coinbase also pressed the SEC for information on how much money it spent investigating crypto companies under former Chair Gary Gensler. And billionaires Cameron and Tyler Winklevoss — the Trump-supporting twins behind crypto company Gemini — want the agency to fire the investigators who worked on their case and to call them out on its website.

“Crypto needs rules, not because investors lack protection but because builders and companies lack protection — we need a firewall against federal regulatory attacks,” Cameron Winklevoss wrote on X. “[The] enemy is inside the system.”

The pushback could give a boost to legislative efforts to set up new boundaries around the SEC’s authority over crypto, which lawmakers say is a priority this year. Rep. Bryan Steil (R-Wis.), who leads the House Financial Services Committee’s digital assets panel, said demarcating who should police the market will prevent “some of the enforcement abuses we saw during the previous administration.”

But the industry backlash also reflects the new and hostile reality facing federal agencies today — one that Trump has openly welcomed since taking back power in Washington.

Across the government — at the Justice Department, the Consumer Financial Protection Bureau and the SEC — career staffers are coming under fire amid a rush of accusations about “weaponized” agencies. The administration is also championing a major cost-cutting initiative that has already led to thousands of layoffs. And federal employees are being thrown onto their back feet against industries whose allies now sit in agencies’ leadership posts.

For crypto, the outcry is an unusual opening to what is supposed to be a new chapter in its historically contentious relationship with the SEC. The Republican-controlled agency is expected to be far more open to crypto’s wishes. But it is still the chief authority over much of the market — and its signoff will be a necessity for crypto firms looking for friendlier rules, to go public or to launch novel investment products.

Many longtime SEC officials are growing concerned for the staff. SEC Commissioners Hester Peirce, a Republican, and Caroline Crenshaw, a Democrat, recently defended the staff’s work, noting that they operate at the direction of SEC leadership.

But staff are already feeling the fallout: One former SEC employee, who was granted anonymity over concerns of retaliation from the industry, said they are aware of at least one instance where a law firm declined to move forward with interviewing an individual at the agency, because of the firm's work in crypto. In another case, the former employee said, a law firm pulled an offer.

“You’re penalizing people who were basically doing their jobs,” said William McLucas, a former enforcement director at the SEC who called the attacks on staff “totally inappropriate.” “If they want to rail about the prior commission and its leadership, go ahead. But singling out lawyers and saying, ‘We want their names out there, we want them labeled as pariahs’ — I’ve never seen anything like it.”

Even some in crypto are calling for the backlash to stop.

“Where’s the goddamn offramp? You got Gary Gensler’s scalp. There’s not that many other people you can go after,” said an industry official, who was granted anonymity to speak freely about the attacks. “It’s an Italian vendetta, and I don’t know what to do. Because in most vendettas, nobody actually wins. Everybody keeps dying.”

Not all of the SEC criticisms are the same, of course. While some have directly taken aim at the agency’s staff, other crypto leaders say they have no ill will toward the SEC or its employees. Rather, they are looking to prevent future instances of what they claim was a misguided enforcement push by the agency.

“We’re only three years and some change from the next SEC, potentially,” Coinbase Chief Legal Officer Paul Grewal said. “And I like to remind my industry colleagues as often as I can, who knows — we not only could swing back to an era of Gensler-like enforcement, it could be even worse.”

Ripple’s Alderoty said in a statement: “Accountability — not retribution — is critical to ensure we do not see a repeat of the SEC’s overreach in the future.” Gemini declined to comment.

With Trump in office, the SEC, which is currently led by acting Chair Mark Uyeda, has been pulling back from its enforcement crusade as the agency begins work on crypto rules. So far, the agency has dropped or halted at least 10 lawsuits and investigations against crypto firms including Coinbase, Robinhood and Gemini. Uyeda is running the SEC until Trump's pick for chair, Paul Atkins, is confirmed.

Yet crypto believers are still fuming over the now-bygone crackdown.

J.W. Verret, a law professor at George Mason University and a former House aide, said the lingering frustration is understandable. Companies, he said, spent millions of dollars defending themselves only to see their cases dropped in a matter of weeks. In an interview, Steil, of Wisconsin, said lawmakers have "a role to continue our oversight" and that he has "not reached a conclusion" as to whether SEC staff who were involved in the crackdown should be fired.

Coinbase’s recent Freedom of Information Act request is intended to give the industry an understanding of how the SEC’s enforcement campaign came to be and whether it was worth it. That, Grewal said, will be critical as new rules are drafted at the agency. (While the crackdown took on new speed under Gensler, the SEC began its strict enforcement of crypto during the first Trump administration.)

As for Coinbase’s refusal to work with law firms that hire senior SEC staff who worked on crypto issues, Grewal said the company is entitled to hire whomever it wants.

“People have a right to earn a living. They have a right to take their talents wherever they want to take them,” he said. “But we too have a right to decide who we’ll work with.”

Still, Corey Frayer, a former senior adviser to Gensler on crypto issues, sees the industry’s moves as part of a broader effort to cement its power — and avoid regulatory scrutiny in the future.

“They’re using this opportunity to gut the SEC of anybody, even career staff, who they felt were unfavorable to their desire not to be regulated,” he said. “It’s very telling that crypto leaders who are very wealthy and already very influential in Washington are still so insecure that they need to punch down at agency staff who can’t defend themselves.”

Others say the public outcry is unnecessary. A former SEC official, who was granted anonymity to speak freely, said the industry is getting what it asked for in the agency's pullback on enforcement and commitment to crypto-specific rules. The official called the attacks "grave dancing."

“The advice you would hope the crypto firms take is: Get over it,” McLucas said. “Go ahead, do business. What are you gaining by trying to personally make these people unemployable or to harass them?”

Jasper Goodman contributed to this report.