In the past week, the Supreme Court of the United States (SCOTUS) has delivered two landmark opinions that could significantly reshape the enforcement landscape for federal agencies, particularly the U.S. Securities and Exchange Commission (SEC). These rulings are poised to have far-reaching consequences for how the SEC pursues enforcement actions against companies, including those in the burgeoning cryptocurrency sector.

On June 27, in a 6-3 decision in SEC v. Jarksey, the Supreme Court ruled that defendants in SEC civil cases concerning securities fraud are entitled to a jury trial rather than solely adjudication by an administrative law judge. The court’s conservative majority emphasized the importance of “common law fraud principles when interpreting federal securities law,” effectively equating an SEC civil case involving securities fraud with a criminal fraud case.

The following day, on June 28, SCOTUS issued another significant ruling in Loper Bright Enterprises v. Raimondo. This decision overturned the 1984 Chevron deference, a doctrine that had required courts to defer to federal agencies’ interpretation of ambiguous statutes. The court’s opinion now mandates that lower courts exercise their independent judgment in determining whether an agency has acted within its statutory authority.

Sheila Warren, CEO of the Crypto Council for Innovation, underscored the direct implications of these rulings for the cryptocurrency industry. “The role and firepower of regulators, like the SEC, is in question if courts have the ability to step in,” Warren told Cointelegraph. She added, “Make no mistake, [the] Supreme Court decision imposes clear limits on the regulatory overreach that has hampered innovation in crypto in the United States.”

Justice Sonia Sotomayor, dissenting in the SEC v. Jarksey case, characterized the majority opinion as a “power grab” over policymaking, traditionally the domain of Congress. Similarly, Justice Elena Kagan, dissenting in the Loper decision, criticized the majority for reversing “settled law” and overhauling a fundamental aspect of administrative law.

The potential impact of these decisions on the SEC’s enforcement actions against crypto firms could be profound. Joseph Lynyak, a partner at international law firm Dorsey & Whitney, warned that the overturning of the Chevron doctrine could lead to an inundation of court cases. “Courts may now be inundated with private parties who may litigate and relitigate an agency interpretation, including creating conflicting decisions by lower courts,” Lynyak noted.

Representative Maxine Waters echoed these concerns, stating, “With these rulings, the Supreme Court has not only succeeded in upending half a century of important legal precedent, known as the Chevron doctrine, but has also made it much easier for big, wealthy corporations to benefit at the expense of ordinary people and escape civil penalties.”

These SCOTUS decisions were part of a series of opinions issued near the end of the court’s term, which could also have broader implications for the SEC and the U.S. presidency. In another 6-3 ruling on July 1, the justices asserted that former President Donald Trump had “at least presumptive immunity from prosecution for all his official acts” while in office. This ruling comes as Trump, who is running for reelection in 2024, faces legal challenges related to his actions during his presidency.

The timing of these SCOTUS decisions coincides with the SEC’s ongoing enforcement action against Consensys, the parent company of MetaMask. The SEC has accused Consensys of operating as an unregistered broker and engaging in the unregistered offer and sale of securities through MetaMask Swaps.

As the legal and regulatory landscape continues to evolve, these Supreme Court rulings are set to play a crucial role in shaping the future of the cryptocurrency industry and the extent of federal agencies’ power in enforcing laws.

Source: Cointelegraph