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Jumping the Ship: SEC’s Top Attorney Joins a Pro-Crypto Legal Firm

High-profile departure from SEC to the private sector

Ladan Stewart, an important figure in the United States Securities and Exchange Commission’s (SEC) legal framework, has transitioned from her role within the agency to a new challenge in the private sector. Stewart, who has been at the forefront of the SEC's Crypto Assets and Cyber Unit as Regional Trial Counsel since September 2022, made headlines with her decision to join White & Case as a partner, aiming to spearhead a specialized crypto and cyber defense practice.

Her departure, reported by Bloomberg Law on February 21, comes at a moment when the regulatory environment surrounding cryptocurrencies is notably turbulent, highlighted by the recent initiation of a lawsuit in Texas against the SEC. Stewart’s move is not just a career shift but signals a deeper alignment with the crypto sector, which continues to assert its permanence and complexity in the financial sector.

Stewart remarked:

"Crypto is here to stay — that’s become very clear with the launch of a slew of Bitcoin exchange-traded funds… Given the complexity and the turbulent enforcement arena, legal questions surrounding crypto are going to be at the forefront for some time," 

Her tenure at the SEC, beginning in 2015, was marked by notable engagements, including a significant role in the regulator’s case against Ripple and leading the ongoing lawsuit against Coinbase.

SEC grapples with new legal challenges

A lawsuit filed in Texas by crypto company Lejilex and the Crypto Freedom Alliance of Texas (CFAT) marks a significant challenge to the SEC's authority over digital assets. Filed on February 21, the lawsuit is a direct challenge to the SEC's classification of digital tokens as securities, a contentious stance that has been at the center of the regulator's actions against leading exchanges like Coinbase and Binance.

Lejilex, poised to launch its own crypto exchange, alongside CFAT, disputes the SEC's sweeping interpretation of digital assets as "investment contracts." This legal action seeks to invoke the "major questions" doctrine, advocating for a limitation on significant regulatory measures absent explicit Congressional authorization. The plaintiffs argue for a reevaluation of the SEC's regulatory reach, suggesting a misalignment with the evolving nature of digital currencies and the broader financial ecosystem.

This lawsuit emerges against a backdrop of the SEC's reported struggles to attract crypto experts to its ranks, exacerbated by restrictions on cryptocurrency holdings for its employees. The regulatory body's challenges are further compounded by a November 2023 report, hinting at an enforcement strategy that may be losing its grip amidst the rapid evolution and adoption of crypto technologies.