SEC - Page 54

Ripple CEO Brad Garlinghouse expressed his belief that the United States Securities and Exchange Commission (SEC) will face a lengthy process before having the opportunity to appeal the ruling in its case against Ripple Labs.

On July 13, Judge Analisa Torres of the U.S. district court delivered a partial ruling in favor of Ripple, stating that the XRP token is not a security when sold on retail digital asset exchanges, but ruled it as a security when sold to institutional investors based on the Howey test.

In an interview with Bloomberg on July 15, Garlinghouse downplayed the significance of the institutional sales decision, considering it to be the least significant aspect of the lawsuit.

He believes that if the SEC were to appeal the ruling on retail sales, it would further solidify Judge Torres’ decision.

Garlinghouse emphasized that the current legal stance is that XRP is not a security, and he expressed optimism while noting that the SEC’s appeal process would likely take years.

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Garlinghouse pointed out that this case marks the first time the SEC has lost a crypto-related lawsuit. He criticized the SEC for targeting players in the crypto industry who lacked the resources to mount a robust defense, describing the agency as a “bully.”

When the case was initially filed against Ripple, many U.S. crypto exchanges adopted a wait-and-see approach due to the resulting uncertainty.

Consequently, exchanges like Coinbase and Kraken completely delisted XRP.

According to Garlinghouse, the SEC’s actions created confusion in the market. He accused the agency of intentionally causing more confusion while having full knowledge of the existing confusion.

This deliberate confusion, in Garlinghouse’s view, allowed the SEC to assert power and hinder innovation within the United States.

Garlinghouse argued that the SEC prioritizes power and politics over sound policy and clear regulatory guidelines.

This approach, he asserted, has made it challenging for entrepreneurs and investors to participate in the U.S. crypto market and blockchain industry, hindering growth and innovation in the country.

Overall, Garlinghouse’s outlook is positive, considering the court ruling a significant milestone for Ripple and suggesting that the SEC’s appeal process would be protracted.

He called for a shift towards clear and supportive regulations to foster a thriving crypto ecosystem within the United States.

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SEC Stresses Crucial Clarification Amid Coinbase Battle

The United States Securities and Exchange Commission (SEC) has clarified its stance on approving firms’ S-1 applications to go public.

According to court documents from the SEC vs. Coinbase case on July 13, the SEC argued that granting approval for a company to go public does not imply that the agency endorses or verifies the business’s compliance with regulations.

During the pre-motion hearing, SEC trial counsel Peter Mancuso emphasized that the approval of an S-1 filing does not constitute a blessing of the company’s entire business or its underlying structure.

Mancuso further stated that there was no evidence to suggest that the SEC examined specific assets or made determinations regarding their classification as securities, thereby providing Coinbase with assurances against future regulatory issues.

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This statement by the SEC raised questions among individuals on Crypto Twitter, including Gemini co-founder Cameron Winklevoss.

It challenged the SEC’s role in allowing a potentially noncompliant business to proceed with a public listing, considering its responsibility to safeguard American consumers.

In the United States, companies must submit an S-1 filing to the SEC before listing shares on a national stock exchange.

This filing requires a comprehensive disclosure of the business structure and the planned utilization of funds from the initial public offering.

U.S. District Judge Katherine Polk Failia expressed skepticism and raised concerns about the SEC’s position during the hearing.

She expected the SEC to conduct due diligence on Coinbase’s activities and potentially warn against any securities law violations or uncharted territories regarding the assets on Coinbase’s platform.

Mancuso clarified that the SEC’s focus in approving S-1 filings is primarily on reviewing company disclosures rather than providing endorsement or approval of the business structure itself.

Judge Failia then questioned whether the SEC had the power to instruct Coinbase to register as a securities exchange. Mancuso responded that he couldn’t comment on that matter.

The SEC had initially charged Coinbase for allegedly conducting unregistered securities offerings dating back to 2019.

Coinbase is seeking an early dismissal of the case based on various arguments, one of which asserts that the SEC is charging the company despite having received detailed descriptions of its business structure and planned activities prior to the public offering.

In summary, the recent court documents shed light on the SEC’s position that approving an S-1 filing does not indicate endorsement of a company’s business structure or regulatory compliance.

The case involving Coinbase highlights the complexities surrounding regulatory oversight of cryptocurrency-related businesses.

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Former FTX CEO Sam Bankman-Fried has made a request to the New York District Court Judge Lewis Kaplan, seeking permission for his “close friends” to visit him at his parent’s home without undergoing the security checks mandated by his bail conditions.

Bankman-Fried’s lawyers submitted a letter on July 13, urging the judge to extend the exemption from security measures to individuals on a pre-approved list.

At present, only Bankman-Fried’s legal representatives and employees from his contracted law firm are exempt from these checks.

The lawyers have requested that this privilege be extended to the visitors authorized by the court.

The list submitted by Bankman-Fried’s lawyers, which has been reviewed by the prosecutors without objection, includes “close friends and colleagues of Bankman-Fried’s parents and household help who regularly visit the house.”

To ensure the privacy and safety of the individuals mentioned in the list, the document was filed under seal, with the lawyers arguing that the importance of protecting the mentioned individuals far outweighs any presumption of public access to the list.

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As part of the bail conditions set by Judge Kaplan, Bankman-Fried is currently limited to using a laptop solely for accessing court-approved websites, including specific news sites and YouTube. He is also in possession of a phone that has no internet access, allowing him only to make and receive calls and texts.

The lawyers representing Bankman-Fried assured that those on the approved visitor list are fully aware of his bail conditions and are committed to complying with them, which includes refraining from sharing any electronic devices with him.

Since being granted bail in December 2022, Bankman-Fried has been residing at his parent’s residence in Palo Alto, California.

It is important to note that the same property has been put up as collateral for his substantial $250 million bail bond.

While Bankman-Fried was originally scheduled to stand trial on October 2, a subsequent decision split five of the charges into a separate trial set to commence on March 11, 2024.

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Ripple Labs’ recent victory against the U.S. Securities and Exchange Commission (SEC) has been seen as a blow to the regulator’s efforts to regulate the crypto industry.

However, experts caution that this ruling may not be a definitive victory for the industry as a whole.

In a groundbreaking decision on July 13, U.S. district court Judge Analisa Torres ruled that XRP, Ripple’s cryptocurrency, is not a security when sold to the general public.

This ruling was met with excitement from XRP tokenholders and led to a significant surge in the token’s price.

Industry leaders, including those from crypto exchanges Coinbase and Binance, hailed the decision as a positive development for their ongoing lawsuits.

Luke Martin, the founder of crypto investment firm Venture Coinist, believes that this ruling deals a substantial blow to the SEC and its Chair, Gary Gensler.

He sees it as a positive sign for the industry and its fight against allegations of offering unregistered securities.

While many celebrated the ruling, several digital asset lawyers urge caution.

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They highlight that the summary judgment is only partial and does not establish a binding precedent.

It may serve as persuasive commentary for future courts but does not guarantee consistent rulings.

Furthermore, there is a possibility that the SEC may appeal the decision, and a higher court could overturn the ruling made by Judge Torres.

Despite these warnings, some experts believe that the SEC may face challenges if it decides to appeal.

Justin Slaughter, Paradigm policy director and former SEC adviser, suggests that the Supreme Court has recently been critical of government agencies and may not miss the opportunity to scrutinize the SEC’s actions.

Ripple still faces the SEC’s claim that its CEO, Brad Garlinghouse, and co-founder, Chris Larsen, “aided and abetted” the institutional sale of XRP.

The SEC alleges that $728 million worth of XRP was sold through institutional sales. This claim was set aside by Judge Torres and will likely be contested at trial.

In conclusion, while Ripple’s victory in the XRP case is seen as a setback for the SEC’s regulatory efforts, it is not a definitive win for the entire crypto industry.

The ruling may be subject to appeal, and future courts may not necessarily follow Judge Torres’ decision.

The legal battle between Ripple and the SEC is far from over, and there are still significant challenges to overcome.

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Ripple’s XRP cryptocurrency has experienced a significant surge, becoming the fourth largest cryptocurrency by market capitalization.

This came after Ripple Labs achieved a partial victory over the Securities and Exchange Commission (SEC) on July 13.

Following the court ruling, XRP’s market cap skyrocketed by an impressive $21.2 billion, reaching a new yearly high of $46.1 billion.

This surge propelled XRP from the seventh position to surpass Circle’s USD Coin (USDC) and Binance’s BNB token, securing its place as the fourth largest cryptocurrency.

However, as of now, Ripple’s market capitalization has settled at $42.5 billion.

The substantial growth in Ripple’s market capitalization can be attributed to the favorable court ruling. The District Court for the Southern District of New York determined that the sale and offer of XRP on digital asset exchanges did not constitute the sale of investment contracts.

This legal case involved Ripple Labs and the SEC.

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Simultaneously, the price of XRP experienced a sharp increase of up to 98% immediately following the court decision, with prices reaching as high as $0.93 according to TradingView data.

The sudden surge in demand for XRP was so intense that it caused disruptions for Uphold, a U.S.-based cryptocurrency exchange.

Uphold faced technical difficulties and went down temporarily due to an unprecedented spike in trading volume.

Uphold was among the few larger U.S. exchanges that continued to offer XRP sales, as others chose to delist the cryptocurrency.

In response to the court ruling, major U.S. exchanges such as Coinbase, Kraken, and iTrustCapital have initiated the process of re-listing XRP, allowing users to trade the cryptocurrency on their platforms.

Additionally, Gemini, a crypto exchange owned by the Winklevoss twins, has hinted at relisting XRP in the near future.

Overall, Ripple’s XRP has experienced a significant boost in market capitalization and price following the recent court ruling in its favor.

This outcome has not only solidified its position as the fourth largest cryptocurrency but has also prompted a renewed interest from prominent U.S. exchanges to list XRP on their platforms.

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In a significant court ruling, Ripple Labs emerged victorious as the United States District Court for the Southern District of New York declared that XRP, the digital token associated with Ripple, is not a security.

This decision has reignited the excitement and enthusiasm surrounding the Ripple ecosystem. However, with the surge in XRP’s value, Ripple’s Chief Technology Officer, David Schwartz, felt compelled to issue a warning to potential investors.

The legal battle between Ripple and the United States Securities and Exchange Commission, which had been ongoing for two years, took a notable turn on July 13.

The court’s ruling, which removed the “security” label from XRP, had an immediate impact on the token’s market price.

Within a single day, XRP experienced a remarkable rally, surging over 70% and elevating its value from $0.47 to $0.82.

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This spike represents the most significant price increase for XRP in the past year.

Such hype surrounding cryptocurrencies and crypto ecosystems often attracts the attention of scammers seeking to exploit unsuspecting investors.

Schwartz, therefore, took to Twitter to caution against the surge in XRP-related scams.

He emphasized that there were no airdrops, giveaways, or special offers associated with the recent court ruling.

Due to Ripple’s widespread popularity and growing community, scammers frequently mimic the official Ripple website to promote fraudulent giveaways and airdrops.

Their intention is to deceive victims and gain access to their crypto wallets, enabling them to steal funds either immediately or at a later time.

In a related incident back in April 2023, a prominent YouTube creator, DidYouKnowGaming, faced a hacking attack that resulted in the promotion of XRP scams on their channel.

The hackers were able to exploit YouTube’s platform and gain control over the account, which had approximately 2.4 million subscribers.

Fortunately, with swift action from YouTube, the channel owner regained access and recovered the deleted videos.

However, the precise method employed by the hackers to breach YouTube’s security remains unknown.

As the court ruling on XRP’s security status brings renewed attention and value to the token, it is crucial for investors to remain vigilant and exercise caution.

The cryptocurrency ecosystem has unfortunately become a target for scammers seeking to take advantage of unsuspecting individuals.

It is essential to verify the authenticity of any promotional offers and be wary of suspicious activities to ensure the safety of one’s investments.

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Binance’s BNB Beacon Chain mainnet is gearing up for a critical hard fork, which introduces a novel feature that enables the blockchain to stop new block production under specific conditions.

The impending upgrade, called “ZhangHeng,” is slated to take place at block height 328,088,888, expected to happen on July 19, as revealed in a statement from BNB Chain on July 12.

This significant hard fork will implement the Binance Evolution Proposal BEP-255, aimed at introducing on-chain asset reconciliation.

The addition comes in light of cross-chain bridge exploits such as the BNB Smart Chain breach in October 2022, which Binance believes can be mitigated by this strategy.

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Despite security enhancements like BEP171, Binance affirms the need for asset security on the BNB Beacon Chain, especially following bridge exploitation.

The BEP-255 implementation allows tracking of user balance changes per block, and reconciliation to spot potential anomalies.

Binance points out that if any reconciliation errors are detected, block production will cease. This move may affect bridges, deposits, and withdrawals on exchanges but is deemed crucial for the chain and user protection.

Restarting the blockchain will necessitate a hard fork and resolution of the detected reconciliation error. In case of an exploit, the related accounts will need to be corrected or blacklisted.

The blockchain’s resumption will also restore downstream services.

The upcoming hard fork also involves other upgrades, such as fixing a bug that curbs rogue key attacks. Existing vote addresses will be cleared when the hard fork reaches its height, and validators will have to re-add vote addresses.

The update is also designed to enable the chain to handle complex business rules and logic more effectively.

Binance highlights the need for two-thirds of validators to upgrade to software version v0.10.16 prior to the hard fork to avoid complications. Failing to upgrade would prevent full nodes from executing further blocks post-hard fork.

BNB Chain has provided comprehensive instructions for node operators to conform to the hard fork upgrade. BNB token holders using Binance.com, other centralized exchanges, or cold wallets, however, need not take any action presently.

On June 19, BNB Chain introduced opBNB, a new Ethereum Virtual Machine-compatible layer-2 scaling solution based on Optimism’s OP Stack.

A former security engineer employed by an international technology firm has been apprehended and accused of exploiting a smart contract bug to steal approximately $9 million in cryptocurrency from a decentralized crypto exchange based on the Solana blockchain.

Damian Williams, the United States Attorney for the Southern District of New York, recently announced the “first-ever criminal case” involving an attack on a decentralized exchange’s smart contract.

According to Williams, Shakeeb Ahmed, the accused individual, utilized his expertise to defraud the exchange and its users, pilfering the substantial sum of cryptocurrency.

The attack transpired in July 2022 and targeted a decentralized exchange operating on the Solana blockchain.

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The assailant exploited a vulnerability in the exchange’s smart contracts, resulting in the generation of inflated fees through flash loans.

Subsequently, these funds were withdrawn and laundered through intricate transfers on the blockchain, involving the swapping of cryptocurrencies, navigation across various crypto blockchains, and utilization of overseas crypto exchanges.

Although the specific decentralized exchange that fell victim to the attack in July was not disclosed by Williams, previous reports from Cointelegraph unveiled that an unidentified hacker exploited Crema Finance, a Solana-based liquidity protocol, on July 2, 2022, resulting in the theft of $9.6 million in cryptocurrency.

The attacker eventually returned most of the funds but was allowed to retain $1.6 million as a white hat bounty.

Williams stated that Ahmed, in an attempt to evade legal repercussions, returned the majority of the stolen funds, withholding $1.5 million.

However, these actions failed to conceal the defendant’s tracks or deceive law enforcement agencies.

Ahmed was subsequently arrested in New York and now faces charges of wire fraud and money laundering relating to the attack on the Solana-based decentralized exchange in July 2022.

Crema Finance was contacted by Cointelegraph for further clarification but had not responded at the time of reporting.

Commenting on this recent development, Orlando.btc, a lawyer specializing in cryptocurrencies and startups, expressed the belief that such actions could benefit the decentralized finance ecosystem as a whole.

The indictment suggests that the U.S. Department of Justice is prepared to pursue criminal charges against individuals who intentionally exploit protocols in manners inconsistent with their intended use.