The US Securities and Exchange Commission (SEC) suffered a significant setback in its ongoing battle with the US crypto industry. This blow came in the form of an assessment by the US Government Accountability Office (US GAO) regarding Staff Accounting Bulletin No. 121 (SAB 121) and criticism from attorney John E. Deaton, who accused the SEC of protocol breaches and possible corruption.

The Chief Policy Officer at Blockchain Association, Jake Chervinsky, was among the first to raise concerns. He pointed out that the GAO reviewed SAB 121, an illogical anti-crypto accounting bulletin issued by the SEC in March. The GAO determined that it is a “rule” under the CRA (Congressional Review Act) and the APA (Administrative Procedure Act), both of which the SEC failed to comply with. This signifies that the SEC has broken the law, according to Chervinsky.

The US GAO is an independent, nonpartisan government agency that provides fact-based, nonpartisan information to Congress, executive agency heads, and the public. It is known as the “congressional watchdog” and plays a crucial role in the US government.

Chervinsky expanded on the impact of SAB 121, stating that it has severely hindered the crypto industry’s progress and innovation. He also noted that the bulletin was not approved by the US Congress.

One of the most critical voices in this growing dissent is attorney John E. Deaton. He echoed Chervinsky’s statements and highlighted the SEC’s history, particularly in the Ripple lawsuit. Deaton emphasized that the SEC has consistently failed to follow the law, even receiving criticism from a federal judge who accused the SEC’s enforcement lawyers and leadership of lacking allegiance to the law. Deaton suggested that the US GAO’s assessment is further evidence of corruption within the SEC, going so far as to call the agency “inept and corrupt.”

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Stuart Alderoty, Ripple‘s Chief Legal Officer, also joined the conversation, criticizing SEC Chair Gary Gensler for making light of the situation while the agency is being criticized for ignoring the law.

Cody Carbone, Vice President of Policy at Digital Chamber, analyzed the implications of the GAO’s findings on SAB 121. He criticized the SEC for downplaying the significance of the bulletin by labeling it as merely an “agency statement.” Carbone explained the procedures outlined by the CRA, which requires all agency rules to undergo a 60-day review phase by Congress. If a resolution of disapproval is passed by both Houses of Congress and signed by the President, the rule is nullified, preventing the agency from reissuing a similar regulation without explicit congressional authorization.

The spotlight is now on the SEC as everyone waits to see their next move. Chervinsky concluded that if the SEC does not withdraw SAB 121, it opens the door for a lawsuit alleging a violation of the APA’s notice-and-comment requirement.

As of now, XRP is trading at $0.6006.

Overall, it is clear that the SEC’s battle against the US crypto industry has faced significant obstacles, with the US GAO’s assessment and accusations of corruption raising serious concerns.

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By Team