U.S. Representative Warren Davidson (R-OH) has renewed his call for Congress to pass the SEC Stabilization Act and fire Securities and Exchange Commission (SEC) Chairman Gary Gensler, after the regulator filed its second lawsuit against crypto exchange Kraken in less than a year. The latest action, announced on November 22, accuses Kraken of operating an unregistered securities exchange, broker, dealer, and clearing agency.
SEC's Back-to-Back Enforcement
In February, Kraken settled the SEC's first lawsuit over its staking program by paying $30 million and discontinuing the service. Now, just 10 months later, the SEC has brought a new case. Davidson tweeted: "Now would be a great time to pass my SEC Stabilization Act and fire Gary Gensler."
Industry Voices Outrage
Kraken co-founder and former CEO Jesse Powell reacted on X: "USA's top decel is back with another assault on America… I thought we settled all their concerns for $30M in Feb. Now they're back for seconds?" He warned: "Message is clear: $30M buys you about 10 months before the SEC comes around to extort you again. If you can't afford it, get your crypto company out of the U.S. warzone."
Attorney John Deaton, representing crypto interests, commented: "Gary Gensler is a despicable and dishonorable regulator. He knew that Kraken believed it was buying peace for the $30M." Deaton noted that in litigation, "$30M takes you only so far—maybe only 1/3 of the way if you're lucky. Ask Ripple and Brad Garlinghouse who spent $150M plus so far."
The SEC Stabilization Act
Davidson introduced the bill in June to remove Gensler and restructure the SEC. The legislation would abolish the chairman role, add a sixth commissioner, and limit any political party to three commissioners. While the bill has not advanced, the repeated targeting of Kraken strengthens Davidson's argument that Gensler's SEC is harming U.S. capital markets and driving crypto firms overseas.
The outcome of the second Kraken lawsuit and the legislative push will be closely watched by the cryptocurrency industry, which faces an increasingly hostile SEC under Gensler's leadership.