US SEC asks judge to deny Coinbase motion to dismiss its lawsuit

By Hannah Lang and Chris Prentice. (Reuters). October 3, 2023.

The U.S. Securities and Exchange Commission (SEC) on Tuesday asked a federal judge to deny a motion from Coinbase Global (COIN.O) to dismiss the regulator’s lawsuit against the cryptocurrency exchange.

The agency said Coinbase was wrong to rely on a recent court ruling that found cryptocurrency developer Ripple Labs Inc did not violate federal securities law by selling its XRP token on public exchanges, citing a subsequent ruling in the case of Terraform Labs that rejected the court’s reasoning.

Tuesday’s filing showed that the SEC is seizing on the Terraform Labs ruling to raise questions about the ruling in the Ripple case, which the crypto industry had hailed as a victory.

Read the full piece from Reuters here: “US SEC asks judge to deny Coinbase motion to dismiss its lawsuit

The SEC Is Not the King

By Frank Francone. (RealClear Policy). September 28, 2023.

In late 2020, the U.S. Securities and Exchange Commission (SEC) sued Ripple Labs, Inc. (Ripple), and two of its top executives, Brad Garlinghouse and Chris Larsen, alleging that the cryptocurrency XRP which is used by the company in its financial services products is a “security” under the Securities and Exchange Act of 1934. 

Dubbed “the cryptocurrency case of the century” by Forbes, the SEC sought billions of dollars from Ripple and its founders for seven years of XRP sales without registering the token with their agency. The civil filing, based on a sweeping legal theory that a digital asset itself is a security, immediately destroyed more than $15 billion dollars in wealth of innocent holders of XRP who had acquired the token on the secondary markets.

On July 13, 2023, Judge Analisa Torres rejected the SEC’s argument that sales of XRP on exchanges is the sale of a security. Torres ruled that sales by Garlinghouse, Larsen and the hundreds of thousands of secondary market traders of XRP on crypto exchanges were blind-bid transactions, where the parties do not know each other nor the provenance of the assets being traded. Therefore, they couldn’t have been securities. 

Read the full piece by Frank Francone in RealClear Policy here: “The SEC Is Not the King”

Grayscale, Ripple court rulings ‘big black eyes’ to the SEC: Cato Institute’s Jennifer Schulp

By CNBC. September 27, 2023.

Jennifer Schulp, the director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, who testified before lawmakers a few weeks after FTX filed for bankruptcy, weighs in on crypto regulatory developments in the U.S. She also discusses the impact of the recent Grayscale and Ripple rulings on the industry.

Watch the video here: “Grayscale, Ripple court rulings ‘big black eyes’ to the SEC: Cato Institute’s Jennifer Schulp

Ripple Retort: Legal Team Opposes SEC Request for Ruling Appeal

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.

When tackling crypto, the SEC should be wary of overreach

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.

The SEC Fought the Law and the Law Won

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

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

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.

Coinbase Will Relist XRP Following Ripple Summary Judgment

By Katherine Ross. July 13, 2023. (Blockworks).

Coinbase will re-enable trading for XRP following a Thursday court ruling. 

A U.S. District Judge, Analisa Torres, ruled that Ripple’s XRP is not a security when traded on secondary exchanges, even if its institutional sales do meet that definition — handing Ripple partial victory in a case that dates back to 2020. 

Following the ruling’s release, Coinbase chief legal officer Paul Grewal tweeted that “it’s time to relist” XRP.

Read the Full Article Here.

The Hinman Documents Reveal a Deceitful SEC

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.

To Read the Full Article, click here.

Since Chairman Patrick McHenry threatened to SUBPOENA Gary Gensler for NON-COMPLIANCE with Congressional oversight.

ACT NOW!