Author: Alison Frankell
(Reuters) - As the U.S. Securities and Exchange Commission reported in its lawsuit against cryptocurrency targets, the industry criticized the commission for simultaneously taking enforcement actions to implement cryptocurrency regulatory policy or for changing securities laws by Congress rather than working on formal rules. Instead of waiting for US laws that clarify what applies to digital assets to pass, they apply.
In the latest example, a former Coinbase Global Inc. official who was indicted by the US Department of Justice and the SEC last year for insider trading decided to dismiss the SEC's complaint this week, citing, among other things, things, things he didn't do. . Know The Ethereum-based cryptocurrencies you trade will be defined as securities by the SEC. Former Coinbase employee Ishan Wahi pleaded guilty to conspiracy to defraud on Tuesday, but even during the hearing, Wahi insisted that the tokens in question were not headlines.
“The only sign of the SEC's approach to regulating digital assets is uncertainty,” said defense attorneys for Vahi, Jones Day, Greenberg Traurig and Harris St. Laurent & Wechsler announced the SEC's lawsuit against Revelation on Monday and purported to Finish with them.
Coinbase specifically said that the tokens Wahik and his brothers traded were not securities, the lawyers said, adding that Congress did not tell crypto investors which digital currencies the SEC might regulate. At this point, Wahi argued, cryptocurrency users should be confused about their exposure to the SEC's untenable enforcement.
"At some point," the report said, "Delphic's strategy to detect securities early through SEC enforcement actions must violate fundamental safeguards of the legal system."
The SEC disagrees. The SEC appears to be in no rush to change its “Delphic strategy,” according to a committee ruling filed this week by cryptocurrency law firms seeking a ruling that the Ethereum blockchain network and its native cryptocurrency Ether are not securities under American law. This is what makes crypto defendants so angry.
Hodl Law, which focuses on "legal services for digital assets and cryptocurrency," was sued by the SEC last November in federal court in San Diego, citing "years of delay and uncertainty" for "accuracy." expand the regulatory scope of cryptocurrencies. In accordance with Hodl's Law, this strategy did not alert token holders whether their coins were securities or not.
Hodl Law cited the SEC's Wahi case as the SEC's refusal to provide "strong evidence" that millions of Ethereum users, including law firms, require a serious trial to declare Ether non-security and trade Ethereum. . They are not corporate actions. Otherwise, Hodl Law said that Ethereum users had no idea that the SEC would step in with enforcement actions.
In a brief statement Monday, the SEC made technical arguments to dismiss the lawsuit, telling U.S. District Judge James Lorenz that the law firm's submission was unconstitutional and that the court lacked jurisdiction because there was no direct case or controversy between the Hodl Law and the commission. By virtue of the Law of the Court of Determination.
But that was not all. The SEC also said that it is not required to warn cryptocurrency users when interpreting securities laws.
"The Hodl Act did not assert that the SEC should explain Hodl Act's rights under federal securities laws or bar it from future litigation, nor did it cite any statute imposing such an obligation." with the SEC. “Essentially, the complaint demonstrates that Hodl Law is ready to enforce SEC rules on crypto/digital assets.”
SEC, "Law firm's general concern regarding the SEC investigation and general speculation regarding the SEC's views on crypto/digital assets" is not a move. Simply put, according to the commission, Hodl Law and all other Ethereum users will have to wait for the SEC to issue the commission's decision.
This position will anger the crypto industry, regardless of the strength of the SEC's other arguments for dismissing the Hodl Act case.
The SEC declined to comment on the Wahi or Hodl case. Jones Day adviser Wahiko James Burnham declined to comment.
Frederick Rispoli, a partner at Hodl Law, said in an email that the SEC's proposed dismissal was "unacceptable" in light of "the commission's subsequent enforcement actions directed at users of digital assets." These cases, including the Wahi case, show the imminent threat facing Ethereum users, according to Rispoli.
You may recall that several of the SEC's targets tried to convince federal judges that the cryptocurrencies at issue in their cases did not meet the court's definition of a security under the 1946 test. As far as I know, there are no judges in against the SEC in WJ Howey Co., including the New Hampshire federal judge who awarded the commission a landmark victory last November upholding the theory that the SEC is a receiver of digital currency values. use cryptographic issuers. Collect coins to increase the total value of the coin.
The next big test of the SEC's crypto regulatory power is closely watched by Ripple Labs Inc. In the case, both sides will file motions for summary judgment before U.S. District Judge Analisia Torres in Manhattan.
Wahi's resignation letter filed on Monday contains the same arguments as Ripple's decision file. However, it does provide a reasonable first explanation for an argument I expect to see more often in SEC cryptocurrency cases: SEC enforcement, Wahi says, is barred by the Supreme Court's recently formulated Central Issues Doctrine.
Vahi says last June against West Virginia. New Environmental Protection Agency doctrine states that the SEC cannot crack down on regulating the unregulated cryptocurrency industry without direction from Congress.
I doubt this argument will change the SEC's mind. It will be necessary to see if the judges understand it.
More details:
Former Coinbase CEO Pleads Guilty to Insider Trading
Until Ripple's Decision, the Cryptocurrency Industry Will Not Know the Impact of LBRY's Regulatory Victory
The US Supreme Court has only given cause for concern to federal authorities
(Reporting by Alison Frankel; Editing by Leigh Jones)