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Individual Defendants file letter and Peirce & Roisman statement as supporting Motions to Dismiss amid "significant regulatory uncertainty regarding when digital assets may be classified as securities by the SEC


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https://www.forbes.com/sites/roslynlayton/2021/07/19/the-secs-fair-notice-farce-starring-william-hinman/amp/?__twitter_impression=true

"... Last Thursday, Judge Netburn ordered Hinman to sit for the deposition and drilled down on Hinman’s 2018 speech. “This is not a run-of-the-mill SEC enforcement case,” she said, but a case that “involves significant policy decisions in our markets, the amount of controversy is substantial and the public’s interest in this case is significant.” The judge’s tone and statement suggests that she and possibly Judge Analisa Torres, who will preside over the trial, are heading towards admitting the fair notice defense, effectively putting the SEC on trial in what could be a precedent setting verdict.

Another portent of doom for the SEC’s legal team is a recent missive on a settlement with crypto exchange Coinschedule from SEC commissioners Peirce and Roisman, two Republicans who likely voted against the Ripple case driven by former Republication SEC Chair Jay Clayton. The Commissioners were essentially whistleblowers from inside the agency’s top leadership, attesting that the SEC fails to provide clear guidance and fair notice on digital assets... "

Edited by VanHasen
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3 hours ago, RobertHarpool said:

"What a gift for Ripple and it was handed to them for free by two ... SEC people calling it how they see it."

This is why the SEC, prior to the Ripple case, sought unanimous consent of their Commissioners before pursuing enforcement. 

I am unaware of this practice, but it seems to make all the sense in the world.

I used to have a great deal of respect for the SEC, but this case has been one blunder, after another bullsh!t, sandwiched between a few more blunders, and some floundering for any standing or logical arguments. Honestly it's been a sh!t show since the midnight hour filing by clayton.

Extremely disappointing. I'd prefer a serious and forthright SEC. We need/deserve a quality regulator in the securities markets. 

Edited by KarmaCoverage
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3 hours ago, RobertHarpool said:

This is why the SEC, prior to the Ripple case, sought unanimous consent of their Commissioners before pursuing enforcement. 

Any idea when the change occurred regarding unanimous consent?  And is it now a simple majority of the 5 or does the Chair have to agree?  If you know, thanks.  

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I don't think we truly get how weird this is. Imagine for a moment if it were reversed. In a different timeline, several senior lawyers who have advised Ripple and Brad and Chis since 2014 or whatever write a letter to the judge saying yes the SEC is right, we advised Ripple that XRP was probably a security but they ignored our advice, here's our communication with the SEC on this matter.

I mean my god. I looked at the xrp price expecting to see a jump. There really, really doesn't seem to be anyway for Ripple to 'lose' this now. 

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@Alluvial It is my understanding that the decision is "often unanimous", but that a simple majority is all that is required. The Chair is simply first among his peers. 

It would be interesting to know the SEC's success rate in court relative to the % of commissioners voting for enforcement measures. 

To me, the fact that there were (likely two) dissidents in the vote to file this complaint against Ripple fits the hypothesis that Clayton had a personal agenda ... an agenda with such an imperative that it forced him to override both common sense and common practice. 

 

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14 hours ago, KarmaCoverage said:

I am unaware of this practice, but it seems to make all the sense in the world.

I used to have a great deal of respect for the SEC, but this case has been one blunder, after another bullsh!t, sandwiched between a few more blunders, and some floundering for any standing or logical arguments. Honestly it's been a sh!t show since the midnight hour filing by clayton.

Extremely disappointing. I'd prefer a serious and forthright SEC. We need/deserve a quality regulator in the securities markets. 

I've said this before, only half joking. It's so shambolic that it's almost as if it's staged. If it's not staged, you'd genuinely worry about the competence of the SEC.

It almost makes more sense that it's all elaborately staged. A court case introduced on the last day of office of the SEC chairman, in order to rush through regulatory clarity, knowing full well that they'd lose. I'm not sure why they'd have to do it that way, but part of me is starting to believe some bizarre kamikaze court case conspiracy theory lol.

I suppose the other explanation is that it's not staged but there are huge rifts inside the SEC. The last chairman decided to screw over everyone opposed to him by dumping the case on everyone's lap at the last minute. And now internal tensions at the SEC are coming out, perhaps orchestrated by Gensler. So this is all an expression of internal politics at the SEC, with Ripple as the unlucky recipients.

Anyway, I think Pierce and Roisman just came off a lot of people's xmas card list.

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4 hours ago, djdhrubs said:

Can't resist asking @Pablo's opinion about this now. Does this not change your views significantly, in terms of a successful resolution in every way for Ripple and XRP? You bought back in?!

Commissioner Peirce's Safe Harbour proposal has been floating around for a very long time - over 2 years and counting - all she has done is reinforce the message with a public letter. She has been making repeated comments about the lack of clarity all the way back to 2017 so she has stayed on brand.

Meanwhile, Gary Gensler has been called in by Elizabeth Warren to set out a roadmap for regulation in the space. Great! But don't expect real progress for a while (as in many months). Then we have the FATF guidance going live this year too. Things are slowly turning but not necessarily in crypto's favor. That's the reason why UNI forked out $40m to builld a lobbying group in Washington to push for better regulations.

I provided input into the Commissioner's proposal as one of several crypto lawyers who was invited to comment so I have a detailed knowledge of the proposal. It won't apply to Ripple today and even if we could take a time machine back to 2013, Ripple would have failed the safe harbour requirements because it expects projects to be much more open about their business plan, tokenomics, lock-ups and decentralisation strategy.

The general view amongst most folks in the space is that regulation by prosecution hasn't worked. But that's a long way from saying that prosecutions aren't warranted. The SEC felt that prosecuting Ripple was so. And with Gary Gensler comfortably settled into his new role, I see no change in that view from the top people at the SEC.

I warned at the beginning of the year that Gensler would be unlikely to pull the rug under the case given what it would mean for SEC and the staff working this case. Commissioner Peirce's safe harbour doesn't change that at all.

Lots of folks completely mis-read the political environment too. I guess it doesn't help having so few true lefties in this space but if you really understand what the Democrats (and other left-leaning parties) represent, their platform and ambitions, the idea that they would offer Brad and Chris a free pass here is beyond preposterous. Remember, the investigation started in 2019, while Republicans were in control of WH and Senate. So this case now has bipartisan support.

It doesn't change my conclusions in the slightest because the open letter changes nothing about the legal status of XRP or have anything to do with the SEC case. It won't affect the judges in the slightest and if the case makes it to trial, the jury will be expected to ignore all public commentary.

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