Brad Garlinghouse Is 2023’s Comeback King With XRP’s Win Over SEC

By Jeff Wilser. (CoinDesk) December 5, 2023.

On a rainy Friday night in September, a crowd of thousands filed into Hammerstein Ballroom, the legendary New York concert venue. It’s a place that has hosted the Grateful Dead, Jane’s Addiction and everyone from David Bowie to Taylor Swift.

But the crowd wasn’t here for Taylor Swift. They were here for something far more important. They came for “The Proper Party.” The party’s raison d’être? Months earlier, the CEO of Ripple, Brad Garlinghouse, had promised that if they emerged victorious from the SEC’s lawsuit, he would throw a “proper party” to honor and thank the XRP community.

Again, the crowd roared. Garlinghouse pointed to a tall, bald, muscular, goateed lawyer, John Deaton, who in many ways embodies the heart and soul and brains of the XRP Army.

Deaton raised a fist in solidarity. Pumped the fist. The crowd cheered like he’s a rock star, and to them he is. It was Deaton (with the help of XRP champions like Brad Kimes and “Digital Asset Investor“) who rallied the XRP community to petition the judge that, actually, they were buying XRP (not Ripple) and had never even heard of Ripple, thus (they argue) weakening the SEC’s argument. We’ll never know to what extent this factored in Judge Torres’ decision, but it’s possible that the XRP community saved the day.

So you could make the case that this 2023 Most Influential award should be given not just to Garlinghouse, but also the entire XRP Army.

Read the full article here: CoinDesk

Judge scolds SEC for apparent deception in crypto case, threatens to sanction agency

By Leo Schwartz and Jeff John Roberts. (Fortune). December 1, 2023.

A federal judge has rebuked the Securities and Exchange Commission over its treatment of a crypto firm, expressing concern the agency had made “materially false and misleading representations” in order to freeze millions of dollars in assets belonging to the project.

The case, filed in Utah federal court, concerns a firm called Digital Licensing Inc., or DEBT Box. In its complaint, filed this summer, the SEC alleged the project had defrauded investors out of nearly $50 million by selling unregistered securities called “node licenses.”

As part of the initial process, the SEC successfully obtained a temporary restraining order and asset seizure through a so-called ex parte application—meaning the crypto firm was not informed of the proceedings and was not able to challenge them in court at the time.

These types of one-sided proceedings are uncommon and typically take place when a government agency fears that notifying the defendant will result in their destroying evidence or whisking assets overseas. Meanwhile, a temporary restraining order requires a party to show a high likelihood of “irreparable harm”—a high bar to clear.

Read the full article here: Fortune

Danger for U.S. Crypto Markets Rises As SEC’s Credibility Falls

By Hassan Tyler. (RealClear Markets). November 30, 2023.

The conviction of Sam Bankman-Fried for the fraud that destroyed the once mighty digital asset exchange FTX may have been a low point for public opinion on the cryptocurrency industry. But a potentially game-changing upside event for crypto could be coming soon which could bring trillions of dollars in reliable capital into the emerging industry. Bloomberg’s James Seyffart reports a high likelihood that the first spot exchange-traded fund (ETF) for cryptocurrencies in the United States could be approved by January.

This story of two extremes is reflexive of the federal agency tasked with regulating it and calls into question whether the Securities and Exchange Commission (SEC) can act appropriately and carry out its mission under current leadership.

SEC Chairman Gary Gensler, according to his public schedule, met with Bankman-Fried and his top brass several times to discuss regulation. Rep. Tom Emmer (R-MN), a senior Republican on the House Financial Services Committee, said his office has received reports that Gensler “was helping SBF and FTX work on legal loopholes to obtain a regulatory monopoly.” According to the court record, Bankman-Fried’s fraud and theft of customer funds was in full bloom at the time of those meetings. But Gensler was too busy at the time waging an all-out war on crypto companies like LBRY, Ripple, and Coinbase, none of whom are accused of fraud.

Gensler inherited an SEC that was covered in doubts on its crypto regulation in the previous administration. The agency under his predecessor, Jay Clayton, put out guidance on crypto trading that gave a free regulatory pass for the trading of Ethereum’s native token, ether. William Hinman, Clayton’s director of corporation finance, gave a high-profile speech in 2018 laying out the SEC’s reasoning why “we believe that current offers and sales of ether are not securities transactions”. But on his last day in office, Clayton filed the Ripple lawsuit despite Hinman’s guidance applying to XRP as well as ether. Instead of clarity, it caused confusion and fear.

Read the full piece by Hassan Tyler here: RealClear Markets.

Gary Gensler and the SEC Lose Again

By Editorial Board. (The Wall Street Journal). November 1, 2023.

Is Gary Gensler ever going to win a case? On Tuesday the Fifth Circuit Court of Appeals handed the Securities and Exchange Commission Chairman another legal defeat by scuttling the agency’s stock-buyback rule (U.S. Chamber of Commerce v. SEC.)

The SEC in May finalized a rule requiring public companies to disclose their daily share repurchases and the reason for buying back their stock. Mr. Gensler claimed companies might buy back their stock to boost executive compensation, which is sometimes tied to accounting metrics such as earnings per share.

A 2020 SEC staff study found scant evidence for Mr. Gensler’s suspicion, explaining that repurchases help issuers “maintain optimal levels of cash holdings and minimize their cost of capital” and “on average” have “a positive effect on firm value.” Nonetheless, Mr. Gensler claimed that investors would benefit from knowing why and when shares were being repurchased.

His real motivation appears to have been to shame companies and help his friends in the securities litigation bar sue companies over their buybacks. Companies faced potentially hefty legal bills defending against lawsuits challenging the motivation and timing of their share buybacks, especially if they resulted in higher executive compensation.

Read the full piece from the Wall Street Journal here: Gary Gensler and the SEC Lose Again.

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

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

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

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

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.

Crypto Has ‘No Innate or Inherent Value’, SEC Argues in Coinbase Case

By Nicholas Morgan. (Decrypt). October 8, 2023.

The Securities and Exchange Commission is arguing that cryptocurrencies lack any “innate or inherent value” as part of their case against Coinbase in federal court—prompting eye rolls from Coinbase and crypto watchers.

In response to a motion to throw out the agency’s lawsuit filed over the summer, the SEC petitioned a judge to reject Coinbase’s stance that cryptocurrency trading does not count as an investment contract between parties. It justified its position by repeating its position that federal securities laws are designed to be interpreted flexibly through the legal doctrine known as the “Howey Test.”

Read the full piece from Decrypt here: “Crypto Has ‘No Innate or Inherent Value’, SEC Argues in Coinbase Case

SEC’s Motion to Appeal Loss in Ripple Case Is Denied

By Nikhilesh De. (CoinDesk). October 4, 2023.

A federal judge has rejected the U.S. Securities and Exchange Commission’s bid to appeal its ground-shaking loss against Ripple, the crypto company associated with the XRP token.

XRP’s price rallied about 5% on the news.

District Judge Analisa Torres said in a brief ruling Tuesday that the SEC had failed to meet its burden under the law to show that there were controlling questions of law or that there are substantial grounds for differences of opinion.

Read the full piece from CoinDesk here: “SEC’s Motion to Appeal Loss in Ripple Case Is Denied

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