Tag: SEC v. Crypto

The SEC Chooses to ‘Regulate’ Cryptocurrencies Via Lawsuit

Posted on

By Hassan Tyler. RealClear Markets. (September 5, 2023).

Over the last two Administrations, successive chairmen of the Securities and Exchange Commission (SEC), from both political parties, have led the agency through an erratic and confusing approach to regulating cryptocurrencies. What both chairmen had in common was a decision to not use rulemaking and public engagement to write a clear playbook for market participants, but to aim discretionary lawsuits at specific crypto companies and crypto trading exchanges to regulate the market instead.

Unfortunately, one of the SEC’s highest profile crypto lawsuits has backfired by pulling back the curtain to show several officials ignoring the law and apparent conflicts of interest as they picked winners and losers in the nascent industry.

Last month, Ripple Labs notched a landmark legal victory against a December 2020 SEC enforcement action where the agency alleged the cryptocurrency XRP qualifies as an investment contract in Ripple and that all sales, including on the secondary markets, are unregistered securities. Judge Analisa Torres ruled that only early institutional sales of the XRP token that were specifically packaged as investment contracts fall under the SEC’s jurisdiction. 

Read the full piece by Hassan Tyler here: Real Clear Markets: “The SEC Chooses to ‘Regulate’ Cryptocurrencies Via Lawsuit”

Ripple Retort: Legal Team Opposes SEC Request for Ruling Appeal

Posted on

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

Posted on

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

Posted on

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

Posted on

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

Posted on

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

Posted on

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.

The Crypto Market of the Future Needs a Flexible Legal Framework

Posted on

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.

To Read the Full Article, Click Here.

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

Posted on

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.

From Ripple and XRP to Filecoin: The SEC is Simply Illogical

Posted on

By John Deaton. May 26, 2023. (Blockworks).

If the crypto industry hadn’t yet appreciated the scale of the danger posed by the SEC’s legal theory at the heart of its long-running lawsuit against Ripple and the XRP token, it seems to have finally hit home for many when news broke about Grayscale’s attempted SEC registration of its Filecoin Trust. 

When you consider the Grayscale news, the SEC’s recent claim that Algorand constitutes an unregistered security, and the Coinbase Wells notice, the SEC’s war on crypto becomes clear.

As amicus counsel for 75,000 plus XRP holders, I’ve spent more than two years warning anyone who would listen about the outrageous arguments being made by the SEC. 

The SEC’s central theory in the Ripple case is that the XRP token itself is a security. The allegations are not limited to transactions offered by Ripple or its executives. The SEC is arguing all sales of XRP, regardless of the seller or the circumstances surrounding the sale, constitute the transfer of securities. From the very first one in 2013, onward into perpetuity — including on the secondary markets between parties who have nothing to do with nor even knowledge of a company called Ripple.

The SEC based this on the allegation that the “very nature” of a digital asset is to be a security and nothing else, making XRP “the embodiment” of an investment contract with Ripple no matter who holds it, uses it or sells it. 

Read the full article here.