SEC - Page 48

The United States may be poised for a resurgence in the cryptocurrency sector, as recent court rulings appear to be reining in the Securities and Exchange Commission (SEC), according to a digital asset attorney from K&L Gates.

Jeremy McLaughlin, a partner at the international law firm, highlighted the trend during his participation in the Intersekt23 conference in Melbourne on August 31.

McLaughlin noted that a series of U.S. court cases have challenged SEC Chair Gary Gensler’s stance that nearly all digital assets should be classified as securities.

He explained that while initial crypto regulations were primarily established at the state level and relatively straightforward, the involvement of federal bodies like the SEC and the Commodity Futures Trading Commission led to increased market restrictions.

The attorney pointed out that due to the SEC’s aggressive approach, many tokens were delisted, and some companies even exited the U.S. market.

However, recent court decisions have begun to curtail the SEC’s assertiveness, rekindling optimism within the industry.

Recent examples of the SEC facing setbacks include its loss in a lawsuit brought by a crypto firm and a separate case where a crypto firm prevailed against the SEC.

A noteworthy instance occurred on August 29 when a U.S. District Court judge ruled against the SEC’s denial of Grayscale Investments’ application to convert its flagship Bitcoin fund into an exchange-traded fund.

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Similarly, a judge ruled in July that Ripple Labs’ XRP was not a security when sold to retail traders, leading to a partial loss for the SEC.

Despite these developments, McLaughlin acknowledged the challenges of providing legal advice in such a rapidly evolving landscape and lamented the lack of clear guidance for clients.

However, he expressed optimism that the chaos in crypto regulation was subsiding as court decisions increasingly favored the digital asset industry.

Regarding Australia’s crypto legislation, panelists at the conference discussed its comparative state.

Effie Dimitropoulos, Chief of payment services firm Novatti, described Australia’s regulations as “lagging” in comparison to new frameworks in Hong Kong and the European Union.

She highlighted the uncertainty faced by local crypto businesses due to the evolving legal landscape, resulting in the potential obsolescence of legal advice.

Dimitropoulos further emphasized the need for clear resolutions from regulatory bodies such as the Australian Securities and Investments Commission and the Treasurer to alleviate the ongoing uncertainty.

In conclusion, the U.S. crypto industry is showing signs of renewal as court rulings moderate the SEC’s regulatory zeal, while Australia’s crypto regulations are criticized for falling behind international standards.

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Singapore-based cryptocurrency exchange Vauld, which has been embroiled in bankruptcy proceedings since August 2022, has announced a pivotal development in its journey towards recovery.

The company recently received court approval to initiate a comprehensive restructuring of its board, signifying a significant step forward in its efforts to stabilize and rejuvenate its operations.

Co-founder of Vauld, Darshan Bathija, took to social media platform X (formerly known as Twitter) on August 24th to reveal that the company’s proposed scheme of arrangement had successfully gained judicial endorsement within a Singaporean court.

As per the approved scheme, Vauld’s current board is set to undergo a transformative overhaul.

The restructured leadership will include a fresh Chief Executive Officer (CEO), a representative chosen by the creditors, and a capable scheme manager.

In a demonstration of its commitment to regulatory compliance and operational integrity, Vauld has reinitiated the Know Your Customer (KYC) verification process for its existing clientele.

These clients are now required to resubmit their verification documents, marking a concerted effort to enhance transparency and security within the platform’s operations.

The company’s plight was catalyzed in August 2022 when Indian law enforcement seized a substantial sum of $46.4 million from Vauld’s Indian subsidiary, Flipvolt Technologies.

This action was spurred by allegations of money laundering, further exacerbating the exchange’s financial challenges.

Vauld faced an array of obstacles, including the temporary suspension of customer withdrawals in July 2022.

This measure was attributed to both unfavorable market conditions and a significant withdrawal surge, amounting to $200 million.

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The company’s financial turmoil was exacerbated by losses linked to the declining values of major cryptocurrencies, as well as its exposure to the beleaguered stablecoin TerraUSD (UST), which suffered a collapse in May 2022.

Following these setbacks, Vauld was granted a three-month moratorium in August 2022 to devise a viable restructuring strategy.

An initial proposal suggested an acquisition by Swiss crypto lending entity Nexo, though negotiations with Nexo were terminated in January 2023.

Amidst these ongoing challenges, Vauld obtained successive periods of creditor protection from Singaporean courts.

The company’s outstanding debts, totaling around $400 million, primarily encompass funds owed to individual depositors.

With the court’s approval of its restructuring plan, Vauld is poised to embark on a transformative journey under new leadership.

This pivotal juncture could potentially pave the way for the exchange’s resurgence and the restoration of trust among its stakeholders.

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Blockchain technology continues its forward march with the imminent public unveiling of Shibarium’s eagerly awaited layer-2 version.

The Shiba Inu team has eagerly announced that the platform is in seamless operation and merely awaits its public debut.

Behind Shibarium, an Ethereum layer-2 network, stands a team that has signaled the platform’s current live status in its private mode.

Following a two-day test that demonstrated its smooth functionality, the platform teeters on the edge of accessibility to the wider public.

In a recent blog post, the Shibarium team assured users that their funds remain secure, and an enhanced experience awaits once the platform opens its doors to all.

The early beneficiaries of this update are already celebrating as bridged BONE tokens make their entry.

Responding to this development, the Shibarium community, affectionately known as the Shib Army, has been expressing their excitement on X (previously known as Twitter).

The team proudly expressed its contentment with the progress achieved, asserting that the network has reached a “ready” state after meticulous testing and parameter adjustments.

Notably, block generation remains consistently glitch-free.

Recent updates to the platform encompass significant safety augmentations and a robust monitoring system.

These enhancements encompass the introduction of rate limitations at the remote procedure call (RPC) level and an automatic server reset mechanism.

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These proactive measures aim to preclude potential issues stemming from abrupt traffic spikes, ensuring users a reliable and uninterrupted experience.

During its testing phase, the network garnered substantial attention, with millions of wallets engaging in over 22 million transactions spanning a four-month period.

However, the initial launch wasn’t devoid of challenges.

An overwhelming surge in activity temporarily overwhelmed the network, causing a halt in transactions for several hours.

This occurrence led to millions of dollars becoming stuck on a bridge tool and subsequently triggered a 10% decline in the value of Shiba Inu.

Subsequently, the development team swiftly addressed these challenges, attributing the server overload to an unforeseen spike in transaction volume.

With the lessons learned, the team is now confident in the success of the forthcoming reopening, undeterred by the initial stumbling blocks.

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The United States Securities and Exchange Commission (SEC) is reportedly poised to greenlight a series of applications for Ether futures exchange-traded funds (ETFs) concurrently, sources familiar with the matter have informed The Wall Street Journal.

Numerous investment firms have inundated the regulator with applications since July, encompassing proposals that combine futures strategies for both Bitcoin (BTC) and Ether (ETH).

Unlike in 2021, when similar applications were met with directives to withdraw, the SEC has refrained from instructing firms to retract their current submissions.

This divergence suggests that the regulatory body is unlikely to impede the imminent launch of these funds, as insiders have shared with WSJ.

A trove of at least 16 applications for Ether or Bitcoin-Ether futures ETFs is currently awaiting regulatory clearance.

Ether, the indigenous token of the Ethereum blockchain, serves as the medium for peer-to-peer transactions within the decentralized network.

A cryptocurrency futures ETF shadows the progress of cryptocurrency futures contracts.

For instance, rather than directly investing in Bitcoin or Ethereum, a cryptocurrency futures ETF invests in futures contracts pegged to the valuation of these digital assets.

Recent developments reveal an ongoing scramble to obtain approval for crypto futures.

Valkyrie, an asset management entity, is emblematic of this trend, having recently filed for an Ether futures ETF and a preexisting application integrating a Bitcoin-Ether futures approach.

As the frontrunner in this competitive endeavor, Valkyrie stands poised to introduce its BTC-ETH ETF to the market as early as October.

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Within the ETF sector, pioneering status carries significant weight.

Data from Morningstar, as cited by WSJ, accentuates this point, illustrating that the inaugural futures Bitcoin ETF, sanctioned by ProShares in October 2021, has amassed $1 billion in assets under management.

In a similar vein, Valkyrie’s analogous product, launched shortly thereafter, has garnered nearly $28 million in assets under management.

Meanwhile, the crypto industry remains on tenterhooks, awaiting the SEC’s verdict on a prospective spot Bitcoin ETF in the United States.

Notable industry giants like Fidelity and BlackRock are among the hopefuls.

The application timeline stipulates that the SEC has until January to render a final decision that will reverberate across the financial landscape.

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Cryptocurrency exchange Gemini has taken a step in its bid to counter the lawsuit brought against it by the United States Securities and Exchange Commission (SEC), by submitting a reply brief.

The lawsuit revolves around allegations that Gemini Earn, a service enabling customers to lend cryptocurrencies such as Bitcoin to Genesis, violated securities regulations by offering unregistered securities.

Gemini’s recent court documents, dated August 18 and filed in the U.S. District Court for the Southern District of New York, strongly contest the SEC’s claims.

The exchange asserts that the SEC has failed to make a clear and solid case, indicating that “Section 5 of the securities act is not hard to understand.”

Gemini contends that the SEC’s inability to precisely define the security in question underscores the fragility of its position.

The exchange further posits that the court should not wade through the convoluted analyses presented by the SEC.

Instead, it suggests that the agency should ask direct and uncomplicated questions to ascertain whether the alleged breach qualifies as a security.

Key queries include the timing of the supposed security sale, the identity of the buyer and seller, as well as the offered or charged price.

Gemini argues that the SEC’s responsibility lies in pinpointing the unregistered security before identifying the sale or offer associated with it.

According to Gemini, the SEC has failed to fulfill this basic requirement.

The exchange’s filing asserts that the SEC’s opposition “avoids the question before the court.”

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In earlier court filings on May 27, Gemini contended that transactions conducted within the Gemini Earn program were akin to loans.

The exchange requested the SEC to dismiss the complaint.

In a statement made on August 19, Jack Baugham, a founding partner of JFB Legal representing Gemini, highlighted the changing stance of the SEC as the lawsuit progresses.

Baugham expressed that the SEC’s inability to determine the nature of the security being referred to muddles their argument.

The regulator’s contradictory positions, such as labeling the Loan Agreement a security while simultaneously claiming the entire Gemini Earn program to be a security, are deemed absurd by Baugham.

In summary, Gemini’s reply brief contests the SEC’s lawsuit, emphasizing that the agency has not clearly established its case regarding the alleged breach of securities regulations by the Gemini Earn service.

The exchange argues that the SEC’s confusion about the nature of the security and its inconsistent claims undermine the legitimacy of the lawsuit.

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