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

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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?

Voyager’s $1B sale to Binance.US put on hold by US court

March 28, 2023 Coin Telegraph

<div>Voyager's B sale to Binance.US put on hold by US court</div>

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A federal judge has temporarily halted a proposed deal between Voyager and Binance.US in order to give the government more time to pursue appeals that challenge the deal.

Voyager Digital’s $1 billion sale to Binance.US has been temporarily halted by a federal judge after a request by the United States government for an emergency stay.

The request for an emergency stay was granted by Judge Jennifer Rearden of the U.S. District Court in New York on March 27, meaning the potential deal between Voyager and Binance.US will now need to wait until at least a decision is made on the Department of Justice’s appeal against the bankruptcy plan.

*District Court Judge Jennifer Rearden granted approval of the U.S. DOJ’s emergency motion. Source:* *Court Listener*

The DOJ filed the emergency application for a stay on March 17. This motion was promptly challenged by Voyager Digital and the Official Committee of Unsecured Creditors on March 20 and responded to again by the DOJ in a final “reply” motion on March 21.

In its latest order, Judge Rearden summarized:

“Upon consideration of all parties’ written submissions, as well as the conferences and oral argument held in this matter, the Government’s emergency motion is hereby GRANTED.”

The federal judge will soon release an opinion explaining the decision in more depth.

The cryptocurrency trading firm filed for Chapter 11 bankruptcy on July 5 and has been proactive in coordinating a plan to redistribute funds ever since.

The Binance.US acquisition of Voyager was granted by Judge Wiles on March 7. Part of that approval involved the issuance of bankruptcy tokens to impacted Voyager customers.

However, U.S. regulators have made multiple attempts have been made to halt the deal.

In addition to the DOJ, the U.S. Securities Exchange Commission argued in a March 15 motion that Voyager’s bankruptcy plan would give rise to fraud, theft or tax avoidance. However, this claim was later denied by Judge Michael Wiles.

The Voyager Official Committee of Unsecured Creditors explained in a March 27 Twitter post that they “will continue to aggressively oppose the Government’s efforts.”

3/ The Committee is still analyzing the situation and awaiting the district court's forthcoming written opinion. We will continue to aggressively oppose the Government’s efforts and will provide further updates as they become available.
— Voyager Official Committee of Unsecured Creditors (@VoyagerUCC) March 27, 2023

Over 97% of 61,300 Voyager account holders favor the restructuring plan, according to a poll released in a Feb 28 court filing. The plan is expected to pay out 73% of what Voyager customers are owed.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Report: Terra Co-Founder Do Kwon Plans to Appeal Detention Extension After Arrest in Montenegro

March 26, 2023 Bitcoin.com

Ripple Lawyer Argues SEC Chair Gensler Has Prejudged Crypto Asset Cases

March 1, 2023 Bitcoin.com

SBF’s lawyers move to block release of bail guarantors’ identities

February 8, 2023 Coin Telegraph

$250M

The appeal, filed on the last possible day, prevents the names of two bond guarantors for SBF from being revealed until at least Feb. 14.

The names of two guarantors who signed off on part of Sam Bankman-Fried’s $250 million bail bond will continue to remain a secret for now.

A judge has also rejected an agreement that would have permitted Bankman-Fried to use certain messaging apps.

Bankman Fried’s lawyers filed an appeal to block the release of the guarantors' names last-minute on Feb. 7. The appeal did not contain further arguments against the disclosure but it will prevent the order from being enforced until Feb. 14 to allow for an application for a further stay.

The appeal was expected after a Jan. 30 ruling in which United States District Judge Lewis Kaplan granted a joint petition from eight major media outlets seeking to unseal the guarantors' names.

*Sam Bankman-Fried in an interview during the Bitcoin 2021 conference. Source:* *Cointelegraph*

At the time, Kaplan noted his order was likely to be appealed given the novelty of the circumstances.

He stated arguments by Bankman-Fried’s lawyers that guarantors “would face similar intrusions” as Bankman-Fried’s parents lacked merit given the size of their individual bonds was much smaller, at $200,000 and $500,000.

Bankman Fried’s parents — Joseph Bankman and Barbara Fried — were the other two parties who signed off on the bond.

Additionally, the judge said the guarantors had voluntarily signed individual bonds in a “highly publicized criminal proceeding,” and had therefore opened themselves up to public scrutiny.

Meanwhile, on Feb. 7 Kaplan rejected a joint agreement between Bankman-Fried’s legal team and prosecutors that would have modified bail conditions and allowed Bankman-Fried to use certain messaging apps.

Kaplan did not provide a reason for denying the motion but added the subject would be further discussed in a Feb. 9 hearing.

Kaplan ruled on Feb. 1 that Bankman-Fried was barred from contacting FTX or Alameda Research employees citing a risk of “inappropriate contact with prospective witnesses” after it was revealed the former CEO had been contacting past and present staff.

Court to hear oral arguments in Grayscale’s lawsuit against the SEC in March

January 25, 2023 Coin Telegraph

Appeal

Grayscale had expected it wouldn’t be able to voice arguments until the second quarter, and is calling the quicker timeline “welcome news.”

A United States appeals court is set to hear the oral arguments relating to Grayscale Investment’s lawsuit against the Securities and Exchange Commission (SEC) over its decision to deny Grayscale’s Bitcoin (BTC) spot exchange-traded fund (ETF).

According to a court motion filed on Jan. 23, both sides will present their arguments at the District of Columbia Court of Appeals on March 7, at 9:30 am local time.

Oral arguments are spoken presentations delivered by attorneys summarizing why their clients should win the case. Each party in the case takes turns directly speaking and answering questions from the judge and is given equal amounts of time to do so.

Mark your calendars. Oral Arguments in our case challenging SEC decision to deny $GBTC conversion to a spot #bitcoin ETF was just scheduled for
*Tuesday, March 7, 2023 @ 930 AM EST*. pic.twitter.com/PMQVUsebMO
— Craig Salm (@CraigSalm) January 24, 2023

In a tweet on Jan. 24, Grayscale Chief Legal Officer Craig Salm said the newly filed motion was “welcome news” as they were previously anticipating oral arguments to be scheduled “as soon as Q2.”

The composition of the argument panel in the Grayscale case will be revealed on Feb. 6, 30 days prior to the date of the oral argument, while the amount of time for the argument will be set in a separate order, according to the motion.

Grayscale updates its appeals timeline with the date for the Oral Arguments motion Source: Grayscale

Grayscale initiated its lawsuit against the SEC in June after the regulator rejected its application to convert its $12 billion Grayscale Bitcoin Trust (GBTC) into a spot-based ETF.

Earlier this month, Grayscale filed a reply brief with the D.C. Court of Appeals, claiming the SEC acted arbitrarily in treating spot-traded ETFs differently from futures-traded products and that the SEC exceeded its authority when it denied Grayscale’s application for a Bitcoin ETF.

Grayscale CEO Michael Sonnenshein reiterated a similar point during an interview on CNBC’s Squawk Box on Jan. 24, stating:

“It’s important to remind the role that regulators like the SEC play when it comes to investors. They’re not here to tell investors what to or what not to invest in. They’re here to ensure all the proper disclosures are made [...] so [investors] are aware of all the risks associated.”

"Crypto is here to stay. Regulators are not here to tell investors what to and what not to invest in. They're here to ensure all the proper disclosures are made...so investors understand all the risks associated," says @Grayscale @sonnenshein. "That's really the role of the SEC." pic.twitter.com/k30y6DewBe
— Squawk Box (@SquawkCNBC) January 24, 2023

Sonnenshein said they were “certainly expecting” a decision from the courts regarding its case against the SEC in “Q2 or Q3 of this year.”

“The frustrating thing for investors and certainly the Grayscale team is that we’re actually a business that was born in the U.S., made use of existing U.S. regulatory frameworks to bring crypto to investors in a safe and compliant way.”

“Meeting with both houses yesterday and today, what we’re really hearing [...] is that had the SEC already approved this spot-Bitcoin ETF [...] a lot of the recent investor harm we’ve seen in crypto would’ve been prevented,” he added.

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