Tag: Cryptocurrency Regulation

Ripple Retort: Legal Team Opposes SEC Request for Ruling Appeal

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By Martin Young. (Be In Crypto). August 17, 2023.

Ripple Refutes SEC Review 

Ripple chief legal officer Stuart Alderoty said: 

“There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”

An interlocutory appeal occurs when a ruling by a trial court is appealed while other aspects of the case are still proceeding. Moreover, they are only permitted under specific circumstances, which are laid down by federal and state courts.

On Aug. 9, the SEC sent a letter to Judge Torres claiming an “Interlocutory review is warranted here.”

It requested the judge put the case on hold during the appeal. The reasons it gave were that multiple other pending court cases that could be affected depending on the appeal’s outcome.

On July 13, the court ruled that XRP was not a security when sold to the public on an exchange but was a security contract when sold to institutional investors.

Read the full article here.

Coinbase wins approval to offer crypto futures trading in US

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By Reuters Staff. (Reuters). August 16, 2023.

Coinbase Global (COIN.O) said on Wednesday it had secured approval to offer cryptocurrency futures to U.S. retail customers, scoring a major regulatory win even as the crypto exchange battles a lawsuit from the Securities and Exchange Commission (SEC).

Shares of the company climbed 5.5% to $83.52 in premarket trading. The approval was granted by the National Futures Association (NFA), a self-regulatory organization designated by the Commodity Futures Trading Commission (CFTC).

“This is a critical milestone that reaffirms our commitment to operate a regulated and compliant business,” Coinbase said.

The company has openly criticized the SEC, which in a June lawsuit accused Coinbase of operating illegally because it had failed to register as an exchange.

CEO Brian Armstrong has also said more U.S. crypto companies could move offshore due to a hostile regulatory environment and that SEC Chair Gary Gensler’s enforcement-first approach could stifle innovation in the industry.

Read the full article here.

When tackling crypto, the SEC should be wary of overreach

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By Brooke Masters. (Financial Times). August 15, 2023.

For more than a century now, US watchdogs have policed the financial landscape, seeking to protect investors from potential fraud and the consequences of their own blind optimism.

Most of their efforts to ensure that investors get accurate information about what is happening to their money are focused on familiar products, such as stocks and bonds. But every so often an explosion of interest in new investments forces a debate about the regulatory perimeter and whether to expand it. This is one of those moments.

Right now, the US Securities and Exchange is fighting on multiple fronts to bring enforcement cases involving cryptocurrencies, while a completely separate lawsuit is seeking to upend more than 30 years of practice in the leveraged loan market.

The laudable goal is investor protection. The volatility of bitcoin and other tokens and the implosion of the FTX crypto exchange have cost investors billions; and a bankruptcy trustee is seeking to recover money for loan investors left holding the bag when a drug testing firm went belly up after being investigated for fraud.

Read the full article here.

How The SEC’s Charge That Cryptos Are Securities Could Face An Uphill Battle

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By Maria Gracia Santillana Linares. (Forbes). August 14, 2023.

As the smoke clears from the first exchange of volleys between the Securities and Exchange Commission and the world’s two largest cryptocurrency exchanges, Binance and Coinbase appear to have run out high-caliber legal arguments in their defense.

The U.S. regulator sued the two companies in June, alleging they were operating as unregistered securities exchanges and facilitating trading in cryptocurrencies that should have been registered as securities. The agency has been staunch in its contention that most digital assets–except for bitcoin and possibly ether–are securities and subject to its oversight as are exchanges on which cryptocurrencies trade.

Binance and Coinbase beg to differ, and they offer several arguments. The most potent, according to lawyers following the case, has to do with whether cryptocurrencies are meant to provide their owners with profit derived from the labors of others. If they do not meet that definition, then they are not securities. That might be enough to torpedo the government’s civil suits against the exchanges or at least narrow the scope of which of the 19 tokens it cited in the actions really are any of the SEC’s business.

Read the full article here.

Ripple Proves the SEC Must Reevaluate Its Regulatory Approach

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By John Deaton. July 17, 2023. (Bloomberg Law).

The SEC should take a federal judge’s rejection of its claim that all XRP sales are unregistered securities transactions as evidence it needs to change its regulatory approach to cryptocurrencies, says attorney John Deaton.

US District Judge Analisa Torres of the Southern District of New York issued a landmark ruling in SEC v. Ripple Labs Inc. on July 13, delivering a critical and hard-fought legal win to digital asset holders and crypto developers in the US. On the most important legal questions at stake, it was a total victory for them—and a devastating blow to the SEC’s ambition to bring an entire asset class under its thumb.

The SEC had alleged that all sales of Ripple’s XRP cryptocurrency are unregistered securities transactions in violation of Section 5 of the Securities Act. The regulator based this on a grossly overbroad legal theory that anyone who buys XRP in the world, by whatever means, is investing in the company Ripple.

“The XRP traded, even in the secondary market, is the embodiment of those facts, circumstances, promises, and expectations and today represents that investment contract,” the SEC told the court, in a breathtaking grab at regulatory turf over crypto via lawsuits rather than through rulemaking or legislation.

In the end, Judge Analisa Torres rejected the SEC’s theory, citing the generally accepted understanding of securities law established in the 1946 Howey decision, which defined a security as an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”

Read the full article here.

Ripple notches landmark win in SEC case over XRP cryptocurrency

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By Jody Godoy. July 13, 2023. (Reuters).

Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges, a U.S. judge ruled on Thursday, delivering a landmark legal victory for the cryptocurrency industry that sent the value of XRP soaring.

XRP was up 25% after the ruling, according to Refinitiv Eikon data.

But the ruling was also a partial win for the U.S. Securities and Exchange Commission, which has brought scores of cases against crypto developers, although Ripple Labs is by the far the largest to be decided by a judge. U.S. District Judge Analisa Torres ruled that Ripple violated federal securities law by selling the cryptocurrency XRP directly to sophisticated investors.

Read the Full Article Here.

SEC’s regulations on dangerous crypto are an uneven mess

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By Charles Gasparino. June 17, 2023. (New York Post).

Securities and Exchange Commission Chair Gary Gensler’s regulation of crypto is an uneven mess; digital-coin exchanges get approved by the commission to go public, only to be sanctioned later for selling crypto the agency doesn’t like. The securities laws aren’t clear if he has necessary legal authority to weigh in as he has done, but that hasn’t stopped Gensler from bringing a slew of cases.

There is a decent case to be made Gensler’s regulatory agenda is dangerous as well, and not just for the usual reasons involving aggressive enforcement that could crimp crypto’s possibly revolutionary blockchain technology. It’s also because the SEC, known as Wall Street’s top cop, has been looking lately like a band of keystone cops.

Consider the strange case of a company called Prometheum that critics allege appears to have slipped through some very large SEC cracks to become a thing in the $1 trillion crypto business.

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The Hinman Documents Reveal a Deceitful SEC

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By Roslyn Layton, PhD. June 13, 2023. (DC Journal).

In February, I filed a motion to intervene in SEC v. Ripple Labs, the first big crypto enforcement action filed in December 2020 by the Securities and Exchange Commission (SEC). I have written two dozen stories about the serious implications of the case, particularly on the sweeping regulatory overreach at the heart of the SEC’s arguments and the naked power grab it represents.

The agency spent most of the last two years fighting Ripple’s attempts to obtain internal SEC emails and documents on the drafting of a 2018 speech given by then-Director of Corporation Finance William Hinman where he introduced a long list of “what we look at” when determining whether a digital asset is a security.

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Why the XRP Army Keeps Fighting

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By Jeff Wilser. June 13, 2023. (CoinDesk).

XRP’s uber-passionate supporters believe the SEC unfairly targeted Ripple for securities violations while mysteriously giving Ethereum a free pass. Do they have a point?

Brad Kimes is a professional drummer. For 30 years he played in various bands — rock, funk, blues, R&B, you name it. Between gigs, he worked as an aspiring entrepreneur, and he invented a baby playpen that you could use on the beach. He found suppliers in China. Kimes soon became a global importer, and to make cross-border payments, he was forced to use the clunky international banking system called “SWIFT.”

SWIFT was not swift. It was slow and costly. “There’s no tracking ID,” says Kimes. “And when the payment gets there six days later, you find out there’s a currency manipulation that had taken place. And you have to pay the difference.”

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The Crypto Market of the Future Needs a Flexible Legal Framework

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By Jason Gottlieb. June 13, 2023. (Bloomberg Law).

As Congress once again takes up the question of legislating digital assets and the Securities and Exchange Commission launches new broadsides against major industry players, remember what’s at stake in the fight over digital assets.

This fight isn’t just about cryptocurrency. It’s a much larger battle for the right to your digital life, and whether you actually own or control any part of it.

Everything is becoming digitized. Your emails, texts, tweets, photos, and videos are all a stream of digital encodings. Your phone calls are broken into digital pieces and conveyed in ones and zeroes. Your public persona is digital—your Facebook, Twitter, online dating profile, company webpage. Your entertainment is digital. Your Google searches. Your interactions with AI chatbots.

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