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Securities and Exchange Commission [SEC]

XRP lawsuit: Amicus brief request approved

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In the XRP Lawsuit, the two sides had fought one another once more. The legal counsel for Ripple had taken issue with the SEC’s interpretation of the Chamber of Digital Commerce amicus papers. Ripple criticized the SEC’s actions in asking the Court for more time or pages so that more amici curiae may submit briefs.

This incident was caused by the Chamber of Digital Commerce asking for amici status. In this motion, the SEC chose not to “take a position.” However, if more amicus papers are permitted, the SEC has asked the Court to allot extra time and/or pages.

The Chamber of Digital Commerce submitted copies of their amicus brief motion, memorandum of law, and a statement from Lilya Tessler, the group’s amicus brief attorney, to Judge Analisa Torres in response to a request.

According to Ripple, the SEC should use the space allotted in its opposition and reply briefs to respond to points made by amici. Ripple also said that the SEC should do so in the already set briefing schedule while speaking before Judge Torres.

John Deaton, the creator of CryptoLaw, also offered his thoughts on the subject in a recent tweet. Deaton slammed the SEC’s most recent action as “pathetic and embarrassing” and expressed his outrage at it.

He considers the call for a postponement to be “mean and cruel” because it targets XRP investors. The XRP Lawsuit’s main focus has been on John Deaton’s issues with the SEC.

So, with Ripple’s most recent response, the question is: Where does the case go from here? The Court will probably prolong the SEC’s delays, but this will do absolutely nothing to bring the matter to a successful conclusion.

In his tweet regarding the SEC’s plans to target XRP holders’ “fear,” Deaton seems to have had a point. However, it is now up to the SEC to show whether he is correct or not.

Could XRP’s request approval be a boon for regulatory clarity?

The court has granted the Chamber of Digital Commerce’s request to submit an amicus brief. CEO Perianne Boring argues that the high-stakes case offers the client a chance to establish the legal guidelines for the cryptocurrency sector. The outcome of this case, in Boring’s opinion, will have a substantial impact on the cryptocurrency market in the United States.

A clear and uniform set of regulations are required for the developing sector, according to the head of the Chamber of Digital Commerce. The Chamber of Digital Commerce stated in its brief that it had no opinion about whether or not the token is an unregistered security. It does, however, want to make sure that the legal framework is “clear and consistent” for digital assets.

Furthermore, to expedite the case, Ripple and the SEC both filed requests for summary judgment last week. There is no need for a trial because, according to the parties, the court has access to sufficient information to render a decision.

Ethereum transactions monitored by US Government?

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With significant enhancements like the Merge taking center stage, Ethereum [ETH] has surely been the buzz of the crypto town. In addition, the network’s switch to proof-of-stake [PoS] has fueled rumors that ETH will be classified as a security. Now, the SEC asserted in a lawsuit against crypto influencer Ian Balina that ETH transactions that took place in the United States immediately fell under the government’s radar, further bolstering this case.

Balina was accused of selling unregistered tokens, for which it was sued. Before launching an initial coin offering [ICO] in 2018, he failed to register his project as a security. The crypto influencer flat-out refuted these allegations. The crypto community is presently making assumptions about the SEC’s extensive statement in the case, though. The lawsuit claimed that it had the power to prosecute Balina since the SEC has authority over the Ethereum network in the 69th paragraph.

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Source: Twitter

The Balina-curated investment pool reportedly included a range of investors situated in the United States. Additional ETH contributions were validated by a network of Ethereum blockchain nodes. As a result, the SEC claimed,

“ETH contributors were validated by a network of nodes on the Ethereum blockchain, which are clustered more densely in the United States than in any other country. As a result, those transactions took place in the United States.”

Furthermore, it should be noted that 3340 out of the 7819 Ethereum nodes, or 42.56 percent, are currently located in the US.

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Ethereum’s stance

Following the Merge, there has been a significant backlash against the Ethereum network. As was already indicated, some were speculating that since the network would now be regarded as a security, the SEC would have jurisdiction over it. Others, though, were criticizing ETH’s degree of decentralization.

In the midst of all of this, the network would suffer from the SEC’s most recent pronouncement. Several legal experts pointed out that the wording of the complaint would be observed even if it would not have any legal relevance.

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Source: Twitter

Furthermore, at the time of writing, Ethereum (ETH) was priced at $ 1,361.54 and had taken a plunge of 0.50% over the last 24 hours.

Will Ethereum attract SEC scrutiny? Here’s why it seems like it

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The Merge wasn’t a significant occurrence just for the Ethereum network. One of history’s most eagerly awaited events had happened, and the whole crypto sector rejoiced. The network’s switch to Proof-of-Stake [PoS] from Proof-of-Work [PoW] is viewed as revolutionary by some and harmful by others. The majority of the cryptocurrency community was excited to see how this initiative plays out for the network, despite the fact that Bitcoin maximalists and ETH miners weren’t on board with this shift.

Vitalik Buterin and Joseph Lubin, the creators of the world’s second-largest cryptocurrency, were busy celebrating and thanking everyone involved in the process. While doing so, several of them praised the smooth conversion of the ETH network to PoS. Eli Ben-Sasson, the president of StarkWare, compared the Webb Telescope to the Merge on Twitter.

Along with all the compliments, there was also criticism. As was already indicated, many have noted that ETH was breaking the rules of the cryptocurrency market by allowing the Merge.

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Source: Twitter

Samson Mow poked fun at Ethereum’s seamless conversion to PoS and commented,

“ETH fanboys watching the Merge with anticipation is funny. There can be no technical failures in Ethereum because Ethereum’s existence isn’t predicated on any technology – it already failed in 2016 with the DAO fork. What exists today is a database run by a marketing company.”

SEC to get involved post-Ethereum Merge

Amidst this historic event, Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC), reiterated his support for monitoring on Thursday by stating that staked cryptocurrencies may be governed by federal securities laws. This comes after Ethereum switched to a similar system.

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SEC chairman Gary Gensler

The Wall Street Journal quotes Gensler as saying that proof-of-stake (PoS) blockchains, which create new coins for creators who pool their holdings, take on characteristics similar to investment contracts and may fall within his agency’s jurisdiction. The Journal reported that the man claimed he wasn’t referring to a specific coin.

However, the remarks, which came hours after Ethereum successfully completed its PoS shift through the Merge, suggest that the significant technological improvement may have more effects on the second-most popular blockchain than only reducing its energy consumption. Its native ether currency was one of only two cryptos, along with bitcoin, that was explicitly classified as commodities by federal regulators as a proof-of-work chain.

XRP-Daubert challenge to bring new news to light

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The XRP lawsuit has gained more traction than it should have since its beginning.

Now, it’s safe to say that those involved in the cryptocurrency industry are accustomed to a volatile market. Even legal proceedings continue to experience weekly new innovations in addition to cryptocurrency tokens. In this instance, the Daubert challenge edition of the ongoing legal dispute between the SEC and Ripple.

In a document, the SEC submitted its request to seal a record related to the Daubert challenge. This action follows the evidence of Patrick B. Doody, an expert SEC witness, who discussed the data that “reasonable” XRP holders used to support their purchase of the cryptocurrency.

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Source: Twitter

Naturally, as the story goes, Defendant disagreed with the majority of the SEC’s suggested revisions. Plaintiff wanted to impose an “unprecedented level of secrecy on these proceedings by sealing all identifying information in the Daubert Motions regarding its five proffered expert witnesses,” which Ripple and other defendants opposed.

In a tweet today, attorney James Filan noted this development.

“They would completely obscure the identity, educational background, employment history, publications, and professional affiliations of all of the SEC’s proffered experts from public view despite such information being central to the resolution of the parties’ Dauber Motions, and despite some of that information already being public.”

The SEC provided no examples. In actuality, according to the petition, “Defendants are aware of none, where a court sealed the identity and qualifications of an expert witness in the context of deciding a Daubert motion.” Therefore, the Court should decline the offer to make history.

Apart from Plaintiff’s conjectures, the evidence at hand, according to XRP’s executives, suggested that disclosing the experts’ identities would not have the previously mentioned effect.

Instead, the SEC’s argument for the motion, according to Ripple, opposed three of Judge Netburn’s rulings in a single brief.

SEC’s objection to XRP’s motion to seal

As much as XRP supporters praised this legal dispute, the plaintiff was prompt to recognize it and answer. In connection with the expert challenges, the SEC filed a response opposing the Ripple Defendants’ motion to seal the document.

Source: Twitter

Five kinds of information presented in connection with the parties’ motions were targeted for sealing by the defendant. This includes financial information about Ripple and the conditions of a few agreements the company has with other parties. Identity of third parties, information on former Ripple employees, and certain personally identifying data.

The crowd appeared to be angry and annoyed by SEC’s constant responses. However, Jeremy Hogan, another lawyer, supported one of the important Defendant’s representatives.

Ripple to face ‘omnibus’ motion; here comes an SEC wave

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The Ripple-SEC litigation hasn’t advanced particularly recently. Undoubtedly, the judge has made decisions on a few motions, but most of them have only resulted in approval or denial for the parties concerned. There have also been a number of pile-ups.

One member of the community highlighted:

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SEC and Ripple war

In order to limit or omit the testimony of 10 experts who were hired by Ripple Labs and their CEOs, Garlinghouse and Larsen, the SEC requested permission to file a “omnibus” petition on Wednesday.

They want permission to write up to 120 pages. The same is not a problem for Ripple. They have, however, requested that they be granted the same privilege when it comes to registering their opposition. The SEC, once more, has no issues with the defendants’ counter-request.

The experts have provided findings and rebuttals covering several topics pertaining to the ongoing case, according to the SEC. With exhibits excluded, the same is longer than 500 pages. Therefore, the plaintiffs have suggested to “combine” and file one lengthy brief instead of 10 individual motions in order to save judicial and SEC resources.

The filing further stated,

“The proposed 120-page limit is less than the total number of combined pages under the Order’s 15-page limit per expert and is sufficient to adequately inform the Court of the applicable facts and law in support of the SEC’s positions.”

Will Ripple have an easy win post last hearing?

The SEC lawyers have received criticism for their conduct on numerous occasions. Listeners felt that the SEC attorney in one of the most recent court decisions had no idea what was being argued. The SEC argued its position in an essentially “embarrassing” manner.

John Deaton has really consistently raised warning signs and said that the plaintiff’s attorneys lack a coherent plan of attack. He claims that their most recent request exemplifies their continued “wet noodle strategy,” in which they throw everything at the wall and wait to see what sticks.

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John Deaton has really consistently raised warning signs and said that the plaintiff’s attorneys lack a coherent plan of attack. He claims that their most recent request exemplifies their continued “wet noodle strategy,” in which they throw everything at the wall and wait to see what sticks.

Grayscale sues SEC; how the tables have turned

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Grayscale submitted documents to the Securities and Exchange Commission (SEC) in October of last year in order to turn its Bitcoin Trust into an ETF. Following several extensions, the regulatory agency on Wednesday issued a rejection decision. Likewise, Grayscale’s application did not address the regulator’s concerns regarding how it would guard against market manipulation and safeguard the interests of investors and the general public.

As a result, the SEC has not yet given the go-ahead for a spot Bitcoin ETF. However, it has already approved a few products based on futures. In November of last year, the crypto asset management firm wrote to the SEC with the same justification. They had argued that it was “arbitrary and capricious” for the SEC to approve futures products but not spot ones. Additionally, the firm underlined that the bias in question might constitute a breach of the Administrative Procedure Act.

Donald B. Verrilli, Jr., senior legal strategist at the firm, reiterated the same by saying,

“As Grayscale and the team at Davis Polk & Wardwell have outlined, the SEC is failing to apply consistent treatment to similar investment vehicles and is therefore acting arbitrarily and capriciously in violation of the Administrative Procedure Act and Securities Exchange Act of 1934.”

Recall that Grayscale strengthened its legal staff by hiring Donald Verrilli, a top attorney from the Obama administration, at the beginning of June. The company was already considering the risk that the decision might not be in its favour at the time. Notably, Verrilli served as US solicitor general under the Obama administration from 2011 to 2016. He had acted as the government’s attorney in numerous Supreme Court matters.

Grayscale treads on legal waters

Grayscale made the decision to quickly traverse legal waters when the rejection order was issued. The CEO of Grayscale, Michael Sonnenshein, announced on Twitter that a lawsuit had been filed to contest the SEC’s judgement.

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In his final statement, Sonnenshein said that Grayscale will keep using its “full resources” to fight for its shareholders’ rights and the “equitable regulatory treatment” of Bitcoin investment vehicles.

SEC commissioner rebels against hike of crypto enforcement staff

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Hester Peirce, a member of the Securities and Exchange Commission (SEC), took to Twitter on Tuesday to express her displeasure with the establishment of 20 additional employees to the regulatory agency’s crypto enforcement unit.

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Earlier on Tuesday, the commission announced plans to raise the number of people working in its newly renamed Crypto Assets and Cyber Unit, which was originally known as the Cyber Unit, from 30 to 50. The team, which is part of the Division of Enforcement, is in charge of “protecting investors in crypto markets and from cyber-related threats,” according to the agency.

Furthermore, Gary Gensler, the chairman of the said Commission, previously stated in September that he intended to expand the unit’s employees.

Peirce, nicknamed “Crypto Mom” by many in the industry for her crypto knowledge, has long been a critic of Gensler’s enforcement-heavy regulatory strategy. Gensler has remained tight-lipped about how crypto firms can adhere to regulations, preferring to regulate using enforcement measures instead.

Peirce also said she wasn’t a part of the cross-government group established by US President Joe Biden’s executive order on crypto in March, in response to an inquiry on Twitter.

SEC tries to curb crypto fraud through additional employment

The Securities and Exchange Commission of the United States plans to hire another 20 staff to oversee coin offerings, non-fungible tokens, and decentralised finance.

With the increases, the commission now has 50 employees committed to investigating law infractions in areas like as coin offers, loans, non-fungible tokens (NFTs), and decentralised finance (DeFi). However, since 2017, the unit has brought over 80 enforcement cases for false and unregistered offerings, resulting in more than $2 billion in monetary relief.

Earlier, Gary Gensler had chastised exchanges like Coinbase (COIN) for failing to register with regulators when offering security-like tokens. He had also stated in September that the expanded area of duty would necessitate “a lot more employees” at the agency.

The latest SEC proposals suggest that enforcement action against DeFi could be expanded, posing significant regulatory dangers. According to sources, the agency is looking into whether or not NFTs should be under its jurisdiction.

DeFi being defied through SEC’s new proposal

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The SEC’s new proposal leaves us wondering if Decentralized Finance (DeFi) businesses going to have a hard time in the near future. In light of recent events, it has come to our notice that the Securities and Exchange Commission (SEC) has proposed revising what it means to be a securities dealer, a move that industry insiders believe will damage the decentralized finance business.

The proposal would broaden the definition of “dealer” to include individuals and firms who execute deals and supply market liquidity using automated and algorithmic trading technology.

While the proposal is purportedly intended at electronic dealers of US Treasurys — an issue the SEC has been grappling with since at least 2014 – a clause buried in the 200-page text states that the new rule would also extend to digital assets that have been considered securities.

Using Twitter, cryptocurrency attorneys raised the alarm, calling the proposal an “all-out shadow attack on decentralized finance (DeFi).”

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The proposal could very well generate all automated market makers (AMMs) and liquidity providers with total assets under management of more than $50 million under the SEC’s regulatory umbrella, making them subject to the SEC’s registration requirements – something that many, if not all, decentralized exchanges would be unable to do.

Any decentralized exchange that meets the proposal’s new standards but does not register with the SEC, Shapiro argues, will be labeled as unregistered dealer, which is a felony under securities law.

Going stealth mode on DeFi

Some lawyers have seen the inclusion of crypto as a single remark in the huge plan as an intentional attempt to cause confusion and doubt in the crypto markets.

Efforts to bring regulatory certainty to the market have faltered, leaving the SEC to rely on enforcement to govern the industry.

Many industry participants, including large exchanges like Coinbase, have attempted to remain compliant but have been faced with ambiguous requests from SEC Chairman Gary Gensler and his staff to “come in and register” with the SEC.

However, Monday’s proposal is being slammed as proof that the SEC’s offer was never serious.

SEC plays hardball with BTC ETF approval

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The US Securities and Exchange Commission (SEC) has so far rejected multiple bids to create a spot Bitcoin (BTC) exchange-traded fund (ETF), including those from Fidelity and SkyBridge. However, the lack of investor protection safeguards in the division has been mentioned by the agency as a major cause for the agency’s continued denials.

According to a Monday article by London-based financial publication Financial News, Michael Sonnenshein, CEO of asset management firm Grayscale, has stated that acquiring a spot Bitcoin ETF is the firm’s “number one” goal at the present.

Grayscale applied to convert its Bitcoin trust, which presently manages around $25 billion in the largest cryptocurrency, into a spot ETF last October, as reported by Tron Weekly Journal (TWJ).

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In light of recent events, Grayscale’s proposed rule change is presently up for public comment at the commission. According to Bloomberg’s Eric Balchunas, the vast majority of opinions (approximately 95 percent) were in support of approving the product in February. The overall view seems to be that the commission has already approved multiple futures-based Bitcoin ETFs, so approving a product that follows the value of actual Bitcoin rather than derivatives makes it reasonable.

However, by refusing to authorize a Bitcoin ETF, Grayscale claims the SEC is creating an “unfair playing field.” Sonnenshein, on the other hand, believes the regulator will change its mind in the future.

SEC propels two BTC ETF proposals

The Securities and Exchange Commission (SEC) has approved two more spot bitcoin exchange-traded fund (ETF) proposals, this time from WisdomTree and One River, respectively.

WisdomTree filed a fresh proposal in February, and the 45th day after publication in the federal register, the first window for the commission decision, is March 31. This order gives the new plan an extra 45 days to be considered, pushing the deadline back to May 15. the order read,

“The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and any comments received.”

As for the digital asset fund One River, which is funded by billionaire investor Alan Howard, filed for its One River Carbon Neutral Bitcoin Trust in May 2021. The product would store bitcoin and value its shares, with an additional adjustment to account for the cost of carbon offsets. In October, the proposed rule change was published in the Federal Register for public comment, putting the commission on notice.

The SEC has repeatedly booted the can on this decision, as it has done with other spot bitcoin products. The Commission was supposed to make a decision on April 3, 180 days after the October 5 publication, but the order gives the Commission a further 60 days to make a conclusion on June 2.

Marathon invests in Bitcoin Miners worth $879M

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The Nasdaq (global market) listed firm, based in Las Vegas, Marathon Digital Holdings Inc., has made a ‘Record Breaking’ purchase of Bitcoin mining machines that are worth $879 million.

The purchase of Antminer S19 XP (Bitcoin mining machine) has been made from Bitmain, a company that makes hardware for blockchain and artificial intelligence applications. Marathon Holdings made this announcement in a Securities and Exchange Commission(SEC) filing on 28, December 2021. The deal is expected to increase the firm’s hash rate to 23.3 EH/s by early 2023.

The order was announced last week on 23 December 2021, but its purchase price had not been disclosed. The disclosure of the price of the investment was out in the open only yesterday, 28 December 2021. The order expresses the delivery of 78,000 units of Bitmain’s Antminer S19 XP mining machines, all through 2022.

Marathon to pay Bitmain in batches

The machines are set to be dispatched in six batches, each consisting of 13,000 units, which will be delivered each month starting from July 2022 till the end of the year. The payments by Marathon to Bitmain will also be made in respective segments.

Marathon said,

“35% of the total amount within two days of execution of the purchase contract, 35% of each single shipment price at least six months prior to each such shipment, and the remaining 30% of each single shipment price at least one month prior to each such shipment.”

Marathon Digital Holds Inc. is expected to have 199,000 operational miners generating 23.3 exahashes per second(EH/s) by early 2023 and a 600% increase from current levels, as per reports.

In 2021, Marathon Digital made large purchases of miners, and in October obtained a $100 million revolving lines of credit with Silvergate Bank in bitcoin and U.S. dollars to go toward its mining operations and buy new equipment.

After China’s ban on Bitcoin mining in October, the share of U.S.- based BItcoin mining has increased significantly. The U.S. is leading the Bitcoin mining market with an over 35% hash rate.