The SEC failed to appeal the court’s initial ruling in favor of Grayscale.
SEC has 3%–14% chance of success in Ripple appeal, lawyers predict
The SEC has already dismissed charges against Ripple CEO Brad Garlinghouse and executive chair Chris Larsen, while the retail XRP sale ruling also went against the regulator.
Blockchain Company LBRY Shuts Down After Legal Battle With SEC
LBRY Inc., a cryptocurrency platform, announced its closure due to a court failure against the Securities and Exchange Commission (SEC). The SEC charged LBRY with making an unregistered securities offering by selling its native LBC tokens.
The fallout from this legal fight has prompted worries about unequal access to justice and regulatory overreach in the crypto business, which has disproportionately impacted smaller startups with minimal financial resources.
LBRY Inc. reported that the company was compelled to discontinue operations because of obligations owed to the SEC, legal team, and private creditors totaling several million dollars.
LBRY Inc. is winding down.
The LBRY network is unaffected.
Odysee and other assets will undergo a legal process to satisfy debts, but Odysee has a bright future ahead.
Thank you to everyone who fought with us for online freedom.
A final goodbye post is in the first reply.
— LBRY (@LBRYcom) October 19, 2023
LBRY’s Financial Struggles
The SEC first sought a $22 million penalties, which was later lowered to $111,614. This lowered fine was a major financial blow for LBRY, making it impossible for the company to continue operations.
The scenario exemplifies the difficulties that crypto businesses can face when they are pursued by regulatory agencies, particularly smaller startups with minimal financial resources.
The SEC has been accused of regulatory overreach in pursuing LBRY, with critics suggesting that the agency should focus on big issues in the crypto business rather than minor instances of securities noncompliance.
However, this case highlights the SEC’s ability to control the cryptocurrency market through enforcement proceedings.
Ripple’s Contrasting Legal Victory
The downfall of LBRY contrasts sharply with Ripple’s recent court success in its ongoing struggle with the SEC. Ripple acquired funding from a multibillion-dollar corporation, allowing it to continue its legal battle.
While LBRY Inc.’s controlled operations are ending, the LBRY blockchain, an open-source initiative, may continue to exist if sufficient user engagement is obtained. However, the business stated that decentralization may only succeed if active development and user participation are present.
With millions of registered users and a large volume of published material, the LBRY blockchain acted as a decentralized file-sharing network. Odysee, a decentralized social networking platform built on the LBRY blockchain, has a substantial user base. However, its future is now in doubt.
In a broader sense, the legal disputes in the crypto business are altering the securities law landscape. Both LBRY and Ripple have been accused with selling unregistered securities, but their outcomes have set developing precedents.
These results have prompted concerns about the SEC’s capacity to win legal battles against other crypto businesses.
As LBRY succumbs to regulatory pressure, it represents the obstacles encountered by smaller crypto businesses, as well as the broader issue of unequal access to justice in the cryptocurrency industry’s growing regulatory context.
Featured image from Conseils Crypto
Ripple Is on a Winning Streak (but the Game Isn’t Yet Won)
Coinbase’s Grewal Is ‘Quite Hopeful’ That Bitcoin Spot ETFs Will be Approved
Grewal said in a CNBC interview that he is “confident” that after SEC will fulfill its responsibilities in making a decision about the approval of the ETF applications.
Chamber of Digital Commerce opposes SEC’s overreach in Binance lawsuit
United States-based advocacy group, the Chamber of Digital Commerce, claims the SEC employs the enforcement-based method to classify digital assets as securities and impose penalties on cryptocurrency businesses.
SEC wins default judgment against Thor Technologies and founder
Thor Technologies has been instructed to pay a sum of $903,193.06, which encompasses a disgorgement of $744,555, and prejudgment interest amounting to $158,638.06.
Community reacts to SEC dropping XRP case and LBRY shutdown
While celebrating a new court win in Ripple’s legal battle with the SEC, the community mourns the demise of LBRY, which some say was “regulated to oblivion.”
SEC Likely to Approve Spot Bitcoin ETF in Next Few Months: JPMorgan
Approval is likely before Jan. 10, which is the final deadline for the Ark 21Shares applications, the report said.
SEC Scores Default Win Against Thor Token Company and Founder David Chin
The U.S. Securities and Exchange Commission (SEC) has been awarded a default judgement against Thor Technologies and its founder David Chin.
SEC moves to dismiss lawsuit against Ripple’s Brad Garlinghouse and Chris Larsen
The civil lawsuit against the Ripple executives had been ongoing since December 2020.
SEC Drops Charges Against Ripple CEO Garlinghouse, Chairman Larsen
The regulator had included them as defendants in securities violation case, and the agency now says it’s just pursuing Ripple for damages.
Elon Musk, Mark Cuban team up to contest SEC trial strategies
The context of the legal challenge centers around the SEC vs. Jarkesy case, in which George Jarkesy contends that his Seventh Amendment rights were violated.
Do Kwon’s SEC Case May Hinge on Role of Jump Trading, Court Documents Show
Kwon has been accused of misleading investors about the terraUSD stablecoin, whose 2022 collapse ricocheted around the crypto world.
Pro-XRP Lawyer Reacts To Elon Musk And Mark Cuban’s Amicus Brief To SEC
In a pivotal moment backed by pro-XRP lawyer John E Deaton’s sentiments, high-profile entrepreneurs Elon Musk and Mark Cuban, along with a consortium of prominent investors, have raised objections against the US Securities and Exchange Commission (SEC). This challenge comes in the form of an amicus curiae brief addressing the SEC’s litigation procedures.
Elon Musk and Mark Cuban’s Amicus Brief
Musk, Cuban, and other amici such as Phillip Goldstein, Nelson Obus, Manouch Moshayedi, and the Investor Choice Advocates Network (ICAN) collectively argue against the SEC’s predominant use of administrative proceedings over jury trials. The brief highlights that this method raises questions about the constitutionality of the SEC’s practices.
The amicus brief was composed for the SEC v. Jarkesy case. Here, George Jarkesy, the complainant, alleges that his Seventh Amendment privileges were infringed upon. He argues that the SEC’s internal adjudication method, which lacks a jury and is overseen by a commission-designated administrative law judge, violates these privileges.
Drawing attention to the Seventh Amendment, which upholds a defendant’s right to a jury trial for cases mirroring “suits at common law,” the amici underline the SEC’s inconsistency. They cite the SEC v. Seghers case as an example, where the SEC opted for a jury trial, resulting in a liability verdict against Seghers for fraud.
The amici also address concerns of “forum shopping” by the SEC, suggesting that the agency might prosecute two identical defendants differently. This approach could result in one party benefiting from full constitutional rights, while the other might not, leading to a disparate legal outcome.
The document reads:
Forum shopping by itself may not be impermissible. But forum shopping by the federal government to pursue the same claims and penalties against similarly situated individuals, so that one individual has access to a jury and the other does not, violates the Equal Protection Clause of the Constitution.
The document further contends that such practices damage the SEC’s credibility at a time when public trust in such institutions is waning, intensified by revelations of the SEC’s “improper access to privileged memoranda.”
The amici conclude that the SEC’s practices deprive the public of critical information that might come to light during a jury trial, which contradicts the SEC’s core mission. This shared stance by Musk, Cuban, and their associates emphasizes the need for a reassessment of the SEC’s litigation approach, hinting at a potentially groundbreaking legal tussle on the horizon.
Pro-XRP Lawyer Deaton Reacts
Renowned pro-XRP lawyer, John E Deaton, aired his views on X, expressing his support for Musk and Cuban’s stance. Deaton said, “I’m thrilled to see Mark & Elon take this path, even if they disagree on certain issues.” He reflected on past decisions, stating, “Three years ago I filed suit against the SEC, and encouraged companies in the crypto space to do the same.”
Deaton further challenges the narratives that discourage companies or executives from contesting the SEC or its chairmanship. “Just because they state something doesn’t make it true. Almost every court case involving the SEC is proving that very point,” he contends.
He highlights concerns about potential conflicts of interest within the SEC, suggesting that both parties, Republican and Democrat, are tainted. In a particularly revealing statement, he mentions, “These temporary bureaucrats are often conflicted, implementing agendas that favor their friends and the companies they go work for immediately following their tenure at the SEC.”
Detailing alleged past conflicts, the pro-XRP lawyer critically remarks, “Look at Jay Clayton. He helped Apollo Group after they gave Kushner a huge loan and Clayton becomes a top advisor and Board Member at Apollo… Speaking of Hinman, he’s made partner at A16z, and they, along with Joseph Lubin, Vitalik Buterin, asked Hinman to give ETH a free pass. Hell, a16z lawyers actually helped Hinman write his famous speech.”
Bringing attention to the broader issue, Deaton’s concerns are not only with individual transgressions but with systemic flaws. “The SEC MUST be completely restructured. It’s a broken and failed agency,” he unequivocally asserts.
Deaton concludes with a strong call to action, emphasizing the urgent need for reform. “We need term limits in Congress and we need to pass legislation forbidding a regulator from immediately working for companies they were just regulating.”
In his final, resounding statement, he warns, “Now it’s no longer only a revolving problem. It’s gotten so out of hand, they blatantly violate conflict laws because they know no one will do anything about it. The next regulator simply takes the attitude: ‘Now it’s my turn.’”
At press time, XRP traded at $0.4804.
Binance France director resigns, adding to list of exits from crypto exchange
Stéphanie Cabossioras is at least the 10th senior executive to depart the crypto exchange this year.
Bitcoin price holds $28K range as institutional investor maneuvering boosts sentiment
Comments from institutional investors and amendments to the spot Bitcoin ETF applications could be behind the recent improvement in investor sentiment.
Why Binance, Coinbase, Ripple and Other Crypto Firms Cite the ‘Major Questions’ Doctrine During Legal Imbroglios
Binance, Coinbase and Ripple are just some of the firms that have tried to apply an ill-defined legal doctrine meant to curb overzealous regulators.
The explosive revelations of Caroline Ellison: Law Decoded
SBF’s former girlfriend admits to fraud during her time as CEO of Alameda Research.
Federal judge gives Genesis 5 days to comply with Terraform Labs subpoena
The order was unclear as to the nature of the documents under subpoena, but stated Genesis had failed to provide the information by Oct. 9.