Appeals court rejects Sam Bankman-Fried’s bid for release

November 22, 2023 Coin Telegraph

Appeal

The court cited Sam Bankman-Fried’s alleged witness tampering as the main grounds for rejecting his release bid.

FTX founder and convicted fraudster Sam Bankman-Fried will stay jailed after failing to convince a United States appellate court that he should be freed while his legal team appeals his conviction.

In a Nov. 21 mandate, the U.S. Court of Appeals for the Second Circuit said Bankman-Fried’s previous attempts to tamper with two witnesses while on pretrial release was a major reason behind rejecting his request.

“We have reviewed the Defendant-Appellant’s additional arguments and find them unpersuasive,” the court said.

*Bankman-Fried’s release motion was rejected by a U.S. appeals court. Source: Courtlistener*

Government prosecutors accused Bankman-Fried of leaking Caroline Ellison’s diaries to The New York Times in July, which caused his bail to be revoked by a New York District Court.

Bankman-Fried argued the New York court failed to consider that he was engaged in activity considered freedom of speech protected under the First Amendment.

The appellate court, however, said the New York District Court ruled correctly and that witness tampering “falls outside the zone of constitutional protection.”

The 2nd Circuit has — rather belatedly — denied Sam Bankman-Fried's appeal of his pretrial detention.

"The record supports the district court’s conclusion that there was probable cause to believe
that the Defendant-Appellant attempted to tamper with two witnesses".
— Molly White (@molly0xFFF) November 21, 2023

Bankman-Fried’s legal team also argued that the District Court failed to consider a less restrictive alternative to detention.

That argument was struck down, with the court stating that the District Court “thoroughly considered” all relevant factors, including Bankman-Fried while he was on pretrial release.

Bankman-Fried was found guilty of seven fraud and money laundering-related charges on Nov. 2.

The former FTX CEO will remain behind bars while he awaits his sentencing on March 28 next year.

Magazine: Deposit risk: What do crypto exchanges really do with your money?

What happens if SEC doesn’t appeal Grayscale spot Bitcoin ETF ruling?

October 13, 2023 Coin Telegraph

Appeal

The SEC must appeal Grayscale’s win in a D.C. Appeals Court on Oct. 13, or it will have to approve — or try to delay — the firm’s Bitcoin ETF bid.

The United States Securities and Exchange Commission will soon reach its deadline to appeal the court decision that ruled in favor of Grayscale Investments, forcing the regulator to review the fund manager’s application for a spot Bitcoin (BTC) fund.

While many observers don’t believe the securities regulator will attempt to appeal the court’s decision, analysts say there could still be ways for the SEC to delay approval of Grayscale’s spot Bitcoin ETF conversion.

On Oct. 13, the SEC must either appeal the D.C. Circuit Court of Appeals decision to the U.S. Supreme Court, request the Appeals Court revisit its ruling, or follow the court’s August order and review Grayscale’s bid to change its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF.

In an Oct. 12 post responding to an X user's question, Bloomberg ETF analyst Eric Balcunas said an appeal was unlikely, though there could still be other hurdles happening.

“We think [an] appeal is a longshot [...] But there’s always a chance of something else happening.”

Meanwhile, in a separate post, fellow Bloomberg ETF analyst James Seyffart said that an SEC attempt to deny on new grounds was unlikely and a “very difficult needle to thread” but it could “find ways to keep delaying.”

Not officially. SEC could attempt to deny on new grounds but as @EricBalchunas, myself, @NYCStein, @SGJohnsson, @NateGeraci and many others have said. It would be a very difficult needle to thread and we view as unlikely. They can find ways to keep delaying though IMO.
— James Seyffart (@JSeyff) October 12, 2023

A September note from law firm Ropes & Gray warned the GBTC application could be sent back for review to the SEC, giving the regulator another chance to reject it on a different basis.

“In this scenario, the new denial could itself then be subject to another appeal by GBTC to the D.C. Circuit,” wrote the firm.

Another delay scenario, according to Ropes & Gray, would be if the New York Stock Exchange has to make a new filing to list GBTC — then it is possible the SEC could take up to eight months to reach a decision on the ETF.

Currently, at least seven spot Bitcoin ETF applications are before the regulator for approval.

Despite all being filed with the regulator earlier in 2023, all have faced delays and pushbacks from the SEC leaving the final approval deadlines for most around March 2024 or later.

However, most eyes are on Grayscale’s spot Bitcoin ETF conversion application because if the SEC approves it — the regulator could struggle to find reasons to knock back other applications.

The likelihood of an approved spot Bitcoin ETF this year is 75%, according to Bloomberg analysts who updated the odds after Grayscale’s court win. The odds jump to a 95% likelihood of approval by the end of 2024.

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Ripple’s Top Lawyer Calls SEC’s Latest Argument for Appeal in Landmark XRP Ruling a ‘Hypocritical Pivot’

September 10, 2023 The Daily Hodl

LBRY decides to fight: Blockchain firm files notice of appeal against SEC

September 8, 2023 Coin Telegraph

Appeal

Blockchain-based file-sharing and payment network LBRY is planning to pick up the fight against the federal regulator again after losing the battle in November last year.

Blockchain-based file-sharing and payment network LBRY may be reversing course on an earlier decision to wind down, filing a notice of appeal against a federal judge ruling in July that sided with the Securities and Exchange Commission.

On Sept. 7, LBRY filed a notice of appeal to the United States Court of Appeals for the First Circuit, seeking to appeal the final judgment entered on July 11, 2023, where LBRY was ordered to pay a civil penalty and barred from participating in unregistered offerings of crypto asset securities in the future.

“Defendant LBRY, Inc. now appeals to the United States Court of Appeals for the First Circuit this Court’s final judgment entered on July 11, 2023,” it read.

LBRY has filed a Notice of Appeal against the SEC. pic.twitter.com/Zp9S0TP0Qw
— LBRY (@LBRYcom) September 7, 2023

The SEC first sued developer LBRY, Inc. in March 2021, claiming that its LBRY Credit token (LBC) was sold as a security under the 1933 Securities Act.

The U.S. District Court for the District of New Hampshire granted the SEC’s motion for summary judgment against LBRY on Nov. 7, which barred the platform from offering “unregistered crypto asset securities” and ordered it to pay a $111,614 civil penalty to the SEC.

The regulator originally sought a punishment of $22 million but revised it after conceding the defunct firm couldn’t pay.

In January, founder and CEO of LBRY Jeremy Kauffman told Cointelegraph “LBRY as a company is almost certainly dead.”

Following the final judgment in July, the firm seemed to admit the same, tweeting:

“In accordance with the court's order and our promises, we expect to spend the next several months winding LBRY Inc. down entirely.”

However, LBRY’s most recent move appears to be a possible change icourse. It also comes amid a number of high-profile crypto industry victories against the federal regulator including Ripple and Grayscale.

Cointelegraph contacted LBRY for further comments but had not received a response at the time of publication.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Ripple Files Motion To Oppose SEC Appeal Over Landmark XRP Ruling

September 3, 2023 The Daily Hodl

SEC’s first deadlines to approve 7 Bitcoin ETFs coming over the next week

August 30, 2023 Coin Telegraph

Appeal

Analysts say the best-case scenario is the SEC approves the batch of spot Bitcoin ETFs but it may also exercise its right to an appeal.

The United States Securities and Exchange Commission is facing its first deadlines to decide on seven new Bitcoin (BTC) spot exchange-traded fund applications with the latest being Sept. 4 amid its defeat to Grayscale Investments in a U.S. federal appeals court.

Investment firm Bitwise will learn if its ETF will win the SEC’s approval on Sept. 1 while BlackRock, VanEck, Fidelity, Invesco and Wisdomtree will all be awaiting the SEC’s decision for their funds by Sept. 2, according to several SEC filings.

Meanwhile, Valkyrie is set to hear back from the SEC on Sept. 4.

*List of recent Bitcoin spot ETF applicant filing dates and deadlines. Source: Bloomberg*

The U.S. Court of Appeals ruled on Aug. 29 that the SEC’s rejection of Grayscale’s application to convert its Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF was “arbitrary and capricious” — but it doesn’t mean the SEC must approve Grayscale’s application or others in the future, says Bloomberg ETF analyst James Seyffart.

In an Aug. 29 Bloomberg interview, Seyffart explained Grayscale’s win “definitely” increases the odds of a successful outcome for the next wave of applicants.

He isn’t sure when that day may come though, as the SEC can delay its decisions and has two more proposed deadlines for each fund before being forced to make a final decision on the 240th day post-filing.

For the awaiting applicants, the final deadlines for the SEC are al mid-March next year.

99.99999% of the world doesn't know that the SEC has to decide on 7 BTC ETFs within the next 3 days:

-blackrock
-bitwise
-vaneck
-wisdomtree
-invesco
-fidelity
-valkyrie

the suits at our doorstep
— odin free (@odin_free) August 29, 2023

What are the SEC’s options post-Grayscale decision?

After today’s ruling in favor of Grayscale, the regulator has 90 days to file an appeal with the U.S. Supreme Court or apply for an En banc review — where a full circuit court can overturn a ruling made by a three-judge panel.

However, the SEC hasn’t made clear what its next move will be.

If the SEC doesn’t appeal the court will need to specify how its ruling is executed which could include instructing the SEC to approve Grayscale’s application, or at the very least revisit it.

Either way, Seyffart only saw two viable options for the regulator.

The first is for it to concede defeat and approve Grayscale’s conversion of its GBTC to a Bitcoin spot ETF.

Alternatively, the SEC would need to revoke the listing of Bitcoin futures ETFs entirely or deny Grayscale’s application based on a new argument, said Seyffart.

The second potential avenue is to deny on reasons not used before/yet... which i have been saying for months could have to do with Custody or settlement of #Bitcoin which is not something that futures ETFs have to worry about. SEC has made a lot of noise around custodians
— James Seyffart (@JSeyff) August 29, 2023

However, fellow Bloomberg ETF analyst Eric Balchunas considered the odds of the SEC revoking the Bitcoin futures ETFs as “highly unlikely” because of the SEC's reported openness to Ethereum futures ETFs.

Lol, this guy turned the last paragraph of Judge Rao's legal smackdown today into an MGMT-esque sythe banger. Really captures the mood rn, well done.. https://t.co/BBJZR5O6To
— Eric Balchunas (@EricBalchunas) August 29, 2023

Magazine: Hall of Flame: Wolf Of All Streets worries about a world where Bitcoin hits $1M

Ripple Labs bites back against SEC’s request to file appeal

August 16, 2023 Coin Telegraph

Analisa Torres

Ripple’s chief legal officer said no “extraordinary circumstance” in the case exists which warrants the Court to accept the SEC’s request for leave.

Ripple Labs has voiced its opposition towards the United States securities regulator’s move towards filing an interlocutory appeal relating to the summary judgment laid down by U.S. District Court Analisa Torres on Jul. 13.

In an Aug. 16 letter to Torres of the Southern District of New York, Ripple’s lawyers explained that because the Securities and Exchange Commission failed to satisfy elements of the Howey test relating to Ripple’s distribution of XRP — a “legal question” — the Court should reject the SEC’s motion for leave to file an interlocutory appeal.

An interlocutory appeal occurs when a ruling by a trial court is appealed while other aspects of the case are still proceeding and are only allowed under specific circumstances.

Ripple’s lawyers believe it is more appropriate for the SEC to appeal the Court’s ruling after a final judgement with a full record.

*Ripple Labs officially opposes the SEC’s move to file an appeal in a letter to U.S. Judge Analisa Torres. Source: Court Listener*

Stuart Alderoty, Ripple’s chief legal officer, explained that no “extraordinary circumstance” exists in the matter that warrants the Court to depart from normal legal procedure:

“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.”

We oppose the SEC’s request for an interlocutory appeal. 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. https://t.co/hjNIwEZkSt
— Stuart Alderoty (@s_alderoty) August 16, 2023

On Jul. 13, Ripple scored a partial victory over the securities regulator regarding the securities status of XRP.

Torres ruled that the XRP token was not in itself a security. She said, however, that sales of XRP tokens can be securities in certain circumstances, such as when sold to institutional investors but not when sold on exchanges to retail traders.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

Robinhood beats investors’ appeal in GameStop meme stock case

August 11, 2023 Coin Telegraph

Appeal

The appeals court judge said Robinhood “had the right” to impose restrictions on meme trade purchases.

A United States federal appeals court has upheld a decision to dismiss an investor class action lawsuit against online brokerage firm Robinhood Markets over its meme stock trading debacle in early 2021.

A total of 16 investors took part in a class action lawsuit against the trading platform in September 2021, alleging the firm restricted them from purchasing 13 “meme stocks” when hedge funds were being short squeezed in January 2021.

This stopped them reaping the profits and also caused the share prices of these stocks to plummet, they alleged.

Robinhood won a motion to dismiss the complaint in January 2022, citing the plaintiff's failure to state a claim, plaintiffs then went on to argue the decision in the U.S. appeals court in March 2023.

However, it appears the investors have hit another setback as the appeals judge has upheld the decision to dismiss the lawsuit, with U.S. Appellate Court Judge Britt Grant saying the arguments lacked legal merit.

She explained that Robinhood “had the right to do exactly what they did” because they were not legally obligated to protect these investors from pure economic loss.

This is because Robinhood was, and still is legally permitted to restrict its customers’ ability to trade securities and to refuse to accept any of their transactions, Judge Grant added.

*The U.S. Appellate Court’s concluding remarks, affirming the lower court’s decision to dismiss the plaintiff’s case.*

If the investors decide to pursue the matter further, their next and final route will be through the U.S. Supreme Court — the highest court in the U.S. However, they will need to file a petition for a "writ of certiorari," which is a document asking the Supreme Court to review the case.

The Supreme Court takes on about 100-150 cases from over 7,000 reviews, so the plaintiff’s chances of having its case heard once more are likely slim.

The GameStop short squeeze happened in January 2021, which was initially triggered by users of the /wallstreetbets subreddit.

The strategy of the short squeeze was to cause big losses for Wall Street firms shorting these particular stocks, and by doing so, profiting themselves.

Another 12 stocks became part of the frenzy, including AMC Entertainment, American Airlines Group, Blackberry, Bed, Bath & Beyond, and Trivago.

GameStop stocks were however one of the largest gainers of the Reddit-fueled price pump, increasing over 9,900% from $0.86 to over $86 between Apr. 2020 and Jan. 2021, according to Macrotrends.net.

Magazine: Blockchain games aren’t really decentralized… but that’s about to change

SEC to seek interlocutory appeal in Ripple case

August 9, 2023 Coin Telegraph

XRP ruling a ‘watershed moment’ but we’re not out of the woods yet — Lawyers

July 14, 2023 Coin Telegraph

Appeal

The crypto community has gathered to celebrate the recent ruling on XRP's securities status, but lawyers warn there's more to it than meets the eye.

Ripple Labs’ split-decision victory against the United States securities regulator is being seen as a significant blow to the regulator’s “war on crypto,” however, crypto lawyers warn it isn't a definitive victory for the industry or the firm y

In a landmark ruling on July 13, Judge Torres determined that XRP (XRP) is not a security — at least when sold to the general public.

The decision was met with a joyous uproar from XRP token holders and came with a massive surge in the token's price, with industry heavyweights lauding the decision as likely to aid crypto exchanges Coinbase and Binance in their respective lawsuits.

Luke Martin, the founder of crypto investment firm Venture Coinist noted that the “core component” of the United States Securities and Exchange Commission's (SEC) claim in its suits against Binance and Coinbase is that they offered the sale of unregistered securities on their platforms.

After losing on this matter in the case of XRP, Martin believes this will serve as a substantial blow to the SEC and its chair, Gary Gensler.

He called the decision “inconceivably bullish” for the industry:

This Ripple news is larger than XRP...

Remember when the SEC went on an all-out attack versus crypto a few months ago?

•Suing Binance for breaking securities rules
•Suing Coinbase for breaking securities rules
•Targeting 10-15 large altcoins as securities

Classifying tokens…
— Luke Martin (@VentureCoinist) July 13, 2023

Pro-XRP lawyer John Deaton shared a similar sentiment, stating that Coinbase was the other “winner” from the ruling and that altcoins would stand to benefit.

Similarly, Tyler Winklevoss, the CEO of cryptocurrency exchange Gemini, said the ruling “decimates” the SEC’s case against Coinbase. His twin brother, Cameron Winklevoss referred to the ruling as a “watershed moment” that will make it difficult for the SEC to claim authority over cryptocurrencies.

The Ripple ruling today decimates the @SECGov's case against @coinbase. Have fun with that one @GaryGensler. https://t.co/2lfFXxX2Xf
— Tyler Winklevoss (@tyler) July 13, 2023

Coinbase, Kraken and iTrustShares have already relisted XRP on their respective platforms following the decision.

Words of caution

Despite the positive outcome for XRP, several digital asset lawyers warned against celebrating too soon.

Law firm partner Stephen Palley of Brown Rudnick noted that the summary judgement is only “partial” and that the ruling by Judge Torres isn’t legally binding — instead, it may only serve as persuasive commentary for future courts to follow if they so choose.

A word of caution: that order in the Ripple case is a partial summary judgment from a single district court judge.

While persuasive, it's not binding precedent on other courts and will likely be appealed and could be reversed

don't yolo into anything based on that decision
— Palley (@stephendpalley) July 13, 2023

Palley and others noted that there’s also the chance the SEC may appeal the decision, which presents the possibility that a higher court overturns the rulings made by Judge Torres.

Ripple will also need to deal with the SEC’s claim that Ripple CEO Brad Garlinghouse and co-founder Chris Larsen “aided and abetted” the institutional sale of XRP, says U.S. lawyer James “MetaLawMan” Murphy.

Based on my quick read through, it looks like the only thing left for trial would be the claim that Larsen and Garlinghouse "aided and abetted" Ripple's Institutional Sales of XRP--which were the only sales the court found to violate the law. https://t.co/mi7i4Diy9j
— MetaLawMan (@MetaLawMan) July 13, 2023

The SEC alleged $728 million worth of XRP was sold from institutional sales.

United States-based commercial litigator Joe Carlasare ripped Garlinghouse on this point, asserting that Ripple “made $700 million in unlawful profit.”

No, the most important part of the ruling is the Court found that your company broke the law and made illegal institutional sales.

Your company made $700 million in unlawful profit. Good luck at trial claiming ignorance of Howey https://t.co/qSWEt34yFD
— Joe Carlasare (@JoeCarlasare) July 13, 2023

This claim was set aside by Judge Torres, and will likely be contested at trial.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

Appeal

What are the SEC’s options post-Grayscale decision?

Words of caution

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