New York Judge Determines SEC’s Case Against Gemini and Genesis Is Plausible for Alleged Securities Law Violations

March 14, 2024 Bitcoin.com

US Judge Backs SEC: Trading of Certain Cryptocurrencies on Secondary Markets Are Securities Transactions

March 7, 2024 Bitcoin.com

SEC urges court to grant Ripple Labs appeal citing ‘knotty legal problems’

September 9, 2023 Coin Telegraph

The SEC highlighted contradictory conclusions from similar cases, along with other pending decisions as some of the contentious legal issues.

The U.S. Securities and Exchange Commission has submitted a filing urging the court to grant its motion to appeal a ruling from the Ripple Labs lawsuit that deemed that XRP was not a security when sold to retail investors.

The agency argued that there are “knotty legal problems” surrounding the court's application of the law — specifically the Howey Test — that warrant a review.

#XRPCommunity #SECGov v. #Ripple #XRP BREAKING: The SEC has filed its Reply Memorandum in Further Support of its Motion to Certify Interlocutory Appeal.https://t.co/KE1MzYKbVD
— James K. Filan (@FilanLaw) September 8, 2023

As per a Sept. 8 filing, the SEC called for the U.S. District Court for the Southern District of New York to grant its motion for interlocutory appeal, and “stay further proceedings until the resolution of that appeal.”

“The SEC respectfully requests certification for appellate review now because the issues raised by the Court’s order on summary judgment (D.E. 874) (‘Order’) present precisely the kinds of ‘knotty legal problems’ that led Congress to provide for interlocutory review.”

Judge Analisa Torres ruled in July that XRP is generally not a security under SEC guidelines, particularly when distributed via programmatic sales (e.g. sold to retail via exchanges).

In the latest filing, the SEC argued that the rulings on programmatic sales and other distributions present “legal questions” that are significant enough for the agency’s interlocutory appeal to be approved by the court.

The SEC suggested that this is down to there being a legal gray area as to whether certain crypto assets fall under the classification of investment contracts via the Howey Test or not, as it highlighted court proceedings from other cases.

“At least two opinions within this District reach contradictory legal conclusions on these issues and many other courts are considering whether similar offers and sales [...] satisfy Howey,” the SEC stated, adding that:

“While interlocutory appeal should be the exception, not the rule, this is the unusual case where the Defendants themselves say that the issues have industry-wide significance and are of special consequence, and thus is precisely the type of case as to which the Second Circuit has invited interlocutory appeal.”

These sentiments however, seemingly contradict previous statements from the agency and its chairman Gary Gensler.

On multiple occasions, Gensler has staunchly shot down the need for new crypto regulation, as he has asserted that the SEC already has clear guidelines that adequately cover the full scope of the crypto market.

Such a view includes the notion that the most of the crypto on the market falls under the definition of a security.

In a Sept. 8 tweet, Ripple’s chief legal officer Stuart Alderoty called the filing “hypocritical” as he noted that: “After years of its chairman saying the ‘rules are clear and must be obeyed’ the SEC now cries that an appeal is urgently needed to resolve these ‘knotty legal problems’."

Another SEC filing, another hypocritical pivot…

After years of its chairman saying the “rules are clear and must be obeyed” the SEC now cries that an appeal is urgently needed to resolve these “knotty legal problems." https://t.co/ige4neIWRD
— Stuart Alderoty (@s_alderoty) September 8, 2023

Coinbase’s chief legal officer Paul Grewal also chimed in by questioning how crypto firms can be on “fair notice” if there are knotty legal questions that need to be considered in court.

The SEC initially moved to appeal and stay the decision from Torres in August, arguing that there was “substantial ground for differences of opinion.”

On Sept. 1, Ripple Labs fired back by filing a memorandum of law in opposition, arguing that the SEC had unsubstantial grounds to request an appeal.

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

Senator Lummis files Amicus Brief supporting Coinbase’s dismissal motion against SEC

August 12, 2023 Coin Telegraph

Coin Telegraph

Senator Lummis argued that the SEC is attempting to “circumvent the political process” by establishing itself as the main authority on crypto.

Crypto-friendly Senator Cynthia Lummis has filed an Amicus Brief supporting Coinbase’s motion to dismiss the U.S. Securities and Exchange Commission's lawsuit against the firm.

An Amicus Brief is a document filed in court by a party that is not directly involved with the related case. They are generally used to add supporting arguments to one side of the lawsuit, and emphasize how the case will have a broader impact beyond the involved parties.

As per the Aug. 11 filing with the U.S. District Court for the Southern District of New York, Lummis stressed that “this is no run-of-the-mill enforcement case.”

The Senator asserted that with its lawsuit against Coinbase over alleged securities violations, the SEC is pushing to obtain “primary influence” over the crypto sector at a time in which regulation and other factors are still “under active consideration by Congress and multiple agencies.”

“The SEC brings this enforcement action in the midst of debates in the halls of Congress and around the world about how crypto assets should be regulated. The Constitution empowers Congress—not the SEC—to legislate in such an area of profound economic and political significance.”

“Although the SEC seeks broad authority over crypto asset markets, most legislative proposals in Congress would instead grant much of that authority to other agencies. Unsatisfied, the SEC seeks to circumvent the political process to commandeer that authority for itself,” she added.

Senator Cynthia Lummis (R. WY) just filed an Amicus Brief supporting @Coinbase's motion to dismiss the SEC's complaint.@SenLummis is Co-Sponsor of the Lummis-Gillibrand crypto regulation bill.

Sen. Lummis' brief argues that:

1. Congress has not granted the SEC authority to…
— MetaLawMan (@MetaLawMan) August 11, 2023

Coinbase filed a motion to dismiss on Aug. 4, arguing that the SEC had “violated due process, abused its discretion, and abandoned its own earlier interpretations of the securities laws,” by asserting authority over the exchange.

In the court filing, Lummis went on to argue that the SEC has been overstepping its authority by claiming that nearly all crypto assets are securities, as she questioned the agency's supposed regulation-by-enforcement approach, or what she described as an attempt to “legislate by enforcement.”

“The SEC’s attempt to shoehorn an entire new class of assets into the existing definition of a ‘security,’ and thereby add to the definition enumerated by Congress, exceeds the SEC’s authority, encroaches on Congress’s lawmaking, and contravenes the separation of powers. The SEC cannot legislate by enforcement.”

Lummis is not alone in filing an Amicus Brief supporting Coinbase’s motion to dismiss.

On Aug. 11, crypto advocacy groups including the Blockchain Association, Crypto Council for Innovation, Chamber of Progress and Consumer Tech Association also submitted a joint filing.

In an X (Twitter) thread announcing the move, the Blockchain Association’s senior counsel Marisa Tashman echoed Lummis’ comments that the “SEC's regulatory authority extends only to what Congress granted it,” as she highlighted the risks of the SEC’s approach to the sector:

“The SEC's interpretation threatens to sweep in many non-security assets - this can't be what Congress intended when it granted the SEC authority to regulate securities.”

“The SEC takes the position that nearly all digital assets sold on the secondary market are investment contracts under the federal securities laws. But, these transactions involve no ongoing contractual obligations. The SEC's position is wrong,” she added.

1/ @BlockchainAssn and @crypto_council filed a brief with @ProgressChamber and @CTATech supporting @coinbase against the SEC.

We explain why the major questions doctrine precludes @SECGov from enforcing their interpretation of "investment contract." https://t.co/3JohzZK2lW pic.twitter.com/SrghLHpfmA
— Marisa Tashman Coppel (@MTCoppel) August 11, 2023

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

sec lawsuit