A key member of the US Securities and Exchange Commission’s (SEC) legal team, Ladan Stewart, stepped down from her role at the agency to join a pro-crypto law firm, Bloomberg Law reported on Feb. 21.
Stewart, who served as Regional Trial Counsel in the SEC’s Crypto Assets and Cyber Unit since September 2022, has joined White & Case as a partner to establish a crypto and cyber defense practice.
In a statement to Bloomberg, she said:
“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.”
Stewart joined the SEC in 2015 and was part of the SEC lawyer team in the regulator’s case against Ripple, which concerned the securities status of the associated XRP token.
Stewart also led the SEC’s ongoing lawsuit against Coinbase, and recent legal filings indicate that she will withdraw from that case.
According to the report, Stewart’s new law firm has represented various high-profile clients, including Microsoft, GoldenTree Asset Management, and the pharmaceutical company Abbvie Inc.
Bloomberg ETF analyst Eric Balchunas noted elsewhere that White & Case advised Fidelity as it created its spot Bitcoin ETF (FBTC), which gained approval in January. The law firm was also involved in Celsius’ now-complete bankruptcy case.
White & Case member Joel Cohen praised Stewart and said her experience is “a significant asset given the heightened regulatory scrutiny of the crypto industry in recent years.”
SEC facing a new lawsuit
It is unclear whether this development supports the notion that the SEC’s ability to regulate by enforcement is weakening. The news comes months after a November 2023 report suggesting that the SEC struggles to hire crypto experts, partly because of its prohibition on holding crypto.
Meanwhile, the regulator faces a fresh lawsuit filed in Texas by crypto company Lejilex and the Crypto Freedom Alliance of Texas (CFAT). The lawsuit accuses the SEC of exceeding its authority in regulating digital assets, Reuters reported on Feb. 21.
Lejilex aims to launch a crypto exchange and disputes the SEC’s classification of digital tokens as securities, a stance that conflicts with the SEC’s actions against prominent exchanges like Coinbase and Binance.
The plaintiffs challenge the SEC’s interpretation of digital assets as “investment contracts” and advocate for the application of the “major questions” doctrine, which restricts significant regulatory actions without explicit Congressional authorization.