Despite President-elect Trump’s promise to make the United States the “world capital of crypto,” Gary Gensler, the notoriously anti-crypto, and thankfully outgoing, Chairman of the Securities and Exchange Commission (SEC), is seemingly doubling down on his anti-crypto crusade.
Speaking before the crypto industry in Nashville this summer, Trump promised, “We will have regulations, but from now on, the rules will be written by people who love [the crypto] industry … people that want to see your industry thrive, not dive.”
To fulfill that pledge, Trump announced that Paul Atkins, the CEO of Patomak Partners and himself a former SEC Commissioner, will be the new SEC Chairman.
Trump says Atkins is a “proven leader for common sense regulations” who “believes in the promise of robust, innovative capital markets that are responsive to the needs of investors.”
The New York Times reports that Atkins has been playing an active role in helping to draft “best practices” for crypto trading platforms in his role as co-chair of the Token Alliance, part of the Digital Chamber of Commerce. He is also an advisory board member for Securitize, a digital asset firm that promotes the use of digital tokens.
Clearly, learning that his lengthy crusade against currencies is coming to an abrupt end has incensed Gensler.
However, like a cornered lion, he has opted not to go down without one final swipe of his paw.
This week, the SEC’s Crypto Enforcement Unit issued a notice of intent to sue Unicoin, arguably one of the most compliant cryptocurrency companies in the country. Like some others in the cryptocurrency field, Unicoin’s mission is to democratize access to wealth. Unicoin, which also produces the popular “Unicorn Hunters” investment showseries, has been a publicly reporting company with five years of its audited reporting available on the SEC’s website. The company has spent millions of dollars on compliance and has passed two exhaustive SEC investigations, with flying colors.
However now Gensler’s SEC wants to sue Unicoin for giving away free “unicoins” in what has been called an “airdrop” promotion similar to the type done by hundreds of other companies seeking to promote awareness of a web3 project, and to increase adoption of a cryptocurrency.
Let’s be clear - The airdrop is the crypto equivalent of handing out free samples of products at grocery stores.
However, the SEC takes an absurd position that gifting coins constitutes sales and thus must be limited to millionaire investors who can provide evidence of “accredited investor” status.
The horror that people exposed to cryptocurrencies might actually want to start using them!
Prior SEC attempts to equate gifts to sales were seen as so ridiculous that they gave rise to multiple lawsuits against the SEC.
But Gensler’s defense? In July, the SEC argued in court that the industry challenge was “premised on a phantom, a supposed policy that the Commission never adopted and does not actually exist” [a.k.a, “the dog ate my homework” defense.]
Yet now, half a year later, the SEC is angling to crush Unicoin for violating that very same supposedly non-existent policy.
Weird? Maybe, but the SEC lawsuit threat is fully consistent with Gary Gensler’s ignominious war on crypto, which led to President-elect Trump’s promise to fire him on Inauguration Day.
Gensler nonetheless promised to stay in office right until the day he’d be fired and started to stack the deck against crypto, preparing for what John Reed Stark, a former Chief of the SEC’s Office of Internet Enforcement, has called a “Saturday Night Massacre.”
But what made Gensler and his SEC crypto crusaders select Unicoin as their likely final pre-Inauguration target?
Maybe it was Unicoin’s high level of brand visibility in New York and other markets globally. Or might it have been that investors have committed over $3 billion in cash and real-world assets to Unicoin?
Unicoin must be becoming too consequential and thus served as a major threat to Gensler’s determination to drive the crypto business out writ large of the country.
Alex Konanykhin, co-founder and CEO of Unicoin, told me that he is appalled at Gensler’s parting shot. In a statement, Konanykhin said, “I consider the SEC allegations not just false but utterly ridiculous.”
Konanykhin added, “I’m hopeful that the new Commission won’t continue Gary Gensler’s fight against progress; the same fight which led to his inglorious resignation. We are well-positioned to help facilitate President Trump’s mission of making America the Capital of Crypto and contribute to the increased prosperity of the country.”
Konanykhin has experienced a great deal of adversity in his long entrepreneurial career. Like Vitalik Buterin, co-founder of Etherium, and Sergey Brin, co-founder of Google, he was born in the Soviet Union.
By his 25th birthday, he created the largest bank in Russia and traveled to Washington with Russian President Boris Yeltsin to meet with U.S. President George H. W. Bush. He was later kidnapped by the Soviet KGB in Budapest in 1992, but fled his captors and settled in New York, where he was granted political asylum for opposing the KGB takeover of Russia.
In granting Konanykhin asylum, Immigration Judge John Milos Bryant said, “Based on the testimony and evidence .., the Court now finds that [the Russian government] engineered the case against [Konanykhin] in order to secure his return to Russia. The Russian government wanted [Konanykhin] returned to Russia in order to punish him for exposing corruption amongst Russian government and business officials."
In America, Konanykhin has received acclaim as an Internet entrepreneur, and in 2022, together with Silvina Moschini, he launched Unicoin to provide a more scalable and efficient cryptocurrency than the aging Bitcoin.
But now, after three decades in America, Konanykhin, like many other blockchain innovators, has been driven out of the country by Gary Gensler's crusade against cryptocurrencies.
In my view, the election of the crypto-friendly Donald Trump will likely enable Konanykhin to return to the United States, his adoptive country.
And as the U.S. regulatory environment is soon “changing from aggressively anti-crypto to enthusiastically pro-crypto,” Konanykhin told me, he hopes “to turn Unicoin into one of the major success stories in the American crypto industry.”
With Gensler indeed leaving in January, the future of the SEC’s case against Unicoin, and its larger fight against cryptocurrencies, is, at worst, uncertain, given that many of Gensler’s true believers will still be working at the Commission.
But there is hope that Atkins will oversee the writing of a new regulatory framework for crypto that encourages innovation.
And then, Unicoin will have the potential to thrive in America, and America will truly become the new Crypto Capital of the World.
