Tag: Gary Gensler

After Mounting Court Defeats, the SEC Needs to Change Course on Crypto

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By Todd Tiahrt. (RealClear Policy). October 27, 2023.

There is a strong, bipartisan desire in Washington to adopt a clear set of rules for regulating cryptocurrencies and blockchain technology. Unfortunately, the Securities and Exchange Commission (SEC) and its allies in the Biden administration have been fighting to halt it in its tracks, arguing that the SEC is “the cop on the beat” and already has full authority over digital assets. But after years of legal wrangling, this game of regulatory domination is now hitting a wall in the courts, leaving SEC Chairman Gary Gensler increasingly isolated.

Gensler has repeatedly claimed that the SEC’s authority over what he calls “digital asset securities” is total, that the rules are “clear,” and that every crypto company is non-compliant. But when pressed before Congress to explain those rules, he can’t answer the most basic questions. Gensler has further told companies they have to register their products or digital tokens, but he and the SEC staff are incapable of explaining the process when asked. Court filings by crypto companies show ample evidence of years of frantic attempts by companies to “come in” and understand how to comply with these allegedly clear rules to little avail.

Read former member of Congress, Todd Tiahrt’s piece here: RealClear Policy

How Ripple Execs’ Grit & Litigation Forced SEC To Back Down

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By Aislinn Keely. (Law360). October 27, 2023.

The U.S. Securities and Exchange Commission called off a looming trial against executives of blockchain firm Ripple this month after counsel at Cleary and Paul Weiss made clear their clients were eager to have their day in court and intended to force the SEC to face a record of evidence that didn’t support the claim the defendants knowingly violated securities laws when they sold Ripple’s crypto token.

It’s rare for the SEC to drop a case once it has brought a complaint, and the regulator made headlines when it did just that, dismissing claims that Ripple co-founder Christian Larsen and company CEO Brad Garlinghouse “aided and abetted” sales of Ripple’s digital token XRP to institutions.

Martin Flumenbaum of Paul Weiss Rifkind Wharton & Garrison LLP, who represented Larsen, called the Oct. 19 dismissal an “unprecedented victory.”

Read more on the unprecedented victory here: Law360

National Security In Question: SEC’s Crypto Approach Sparks Concern in Congress

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By Elena R. (CoinPedia). October 25, 2023.

In a recent interview, Ron Hammond of the Blockchain Association shed light on the bustling crypto-related developments in Washington, D.C. Hammond highlighted two significant hearings this week, one involving the Securities and Exchange Commission (SEC) and the other addressing digital assets more broadly.

Speaking to Thinking Crypto, Hammond emphasized a central concern shared by several members of Congress – the SEC’s approach to cryptocurrency and private equity. Recent rules implemented by the SEC have stirred industry-wide concerns, leading to an increased focus on these issues within the Financial Services Committee. Patrick McHenry, the committee’s leader, has been a vocal opponent of the SEC’s stance.

The National Security Subcommittee is set to host another critical hearing, with the primary focus being on the funding mechanisms employed by Hamas for their activities. The objective is to investigate the sources of these funds and whether cryptocurrencies play a role in supporting their actions. Given the pressing nature of national security, this issue has raised concern among policymakers from both sides of the aisle.

Read the full article, with Ron Hammond’s interview included, here: CoinPedia

In Landmark SEC Surrender, Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen Are Cleared Of All Baseless Allegations

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Business Wire. October 19, 2023.

Ripple, the leader in enterprise blockchain and crypto solutions, announced today that CEO Brad Garlinghouse and Executive Chairman Chris Larsen were cleared of all claims brought against them by the U.S. Securities and Exchange Commission (SEC). The SEC voted to dismiss charges with prejudice – a stunning capitulation by the government.

This victory is the third consecutive triumph for Garlinghouse, Larsen, and Ripple, coming on the heels of the July 2023 ruling that declared “XRP is not, in and of itself a security” and a subsequent October decision to deny the SEC’s request for an interlocutory appeal.

“For nearly three years, Chris and I have been the subject of baseless allegations from a rogue regulator with a political agenda,” said Ripple CEO Brad Garlinghouse. “Instead of looking for the criminals stealing customer funds on offshore exchanges that were courting political favor, the SEC went after the good guys – along with our entire company of innovators and entrepreneurs – who are building a regulated business based in the U.S. We look forward to the day this chapter is closed once and for all, now that the SEC has dropped the curtain on their absurd theatrics against Chris and me.”

Read the full article here.

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.

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.

The SEC Fought the Law and the Law Won

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By Roslyn Layton. July 27, 2023. (DC Journal).

After three years, the cryptocurrency case of the century — SEC v. Ripple — ended victoriously for the people the U.S. government is supposed to protect: consumers and small investors. 

The case pitted the Securities and Exchange Commission against a leading U.S. crypto innovator. It also tested America’s leading financial regulator against 90 years of federal law and jurisprudence.

Fortunately, the law won. The ruling by Judge Analisa Torres of the Southern District of New York schooled the SEC in the law that created the agency and leaned into the 1946 Howey Supreme Court decision that defines the SEC authority. A security under the Howey test exists only when there is “an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.” Hence, most of the purchases of XRP cryptocurrency were not securities trades.

Unfazed by the enormous public attention on the case, Torres focused specifically on the SEC’s accusations against Ripple and its two senior executives about their sales of the XRP cryptocurrency dating back a decade and strictly applied the law.

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.

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.

To Read the Full Article, click here.

Analisa Torres: The US District Judge at the Helm of the Crypto Market’s Future

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By Bary Rahma. June 9, 2023. (Be In Crypto)

Analisa Torres: The Judge Deciding Crypto’s Fate

From humble beginnings in the law offices of New York City to the high-stakes courtroom of the US District Court, Judge Analisa Torres has built an illustrious legal career defined by rigor, integrity, and an unerring commitment to justice.

Born into a family deeply rooted in the justice system, Torres was no stranger to the inner workings of US law. Her father, Frank Torres, served as a New York Supreme Court justice, while her grandfather, Felipe N. Torres, was a Family Court judge.

Torres’ own journey in law began in earnest with her education at Harvard College and Columbia Law School. After graduation, she served as a real estate associate at various law firms in New York City. Her tenure as a judge began with the New York City Criminal Court. She then served as an acting justice of the New York Supreme Court in the Bronx.

The pinnacle of her career came in 2013 when President Barack Obama nominated her as a US District Judge for the Southern District of New York.

Read the full article here.