Two lead attorneys for the U.S. Securities and Exchange Commission (SEC) in the case against crypto firm Debt Box have reportedly resigned. This followed a federal judge sanctioning the SEC for its “gross abuse of power” after the agency made “materially false and misleading representations” in its lawsuit against the cryptocurrency firm. Lead Attorneys in […]
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SEC Chair Gary Gensler Issues Crypto Investing Advice — Lawyers See as Prelude to Spot Bitcoin ETF Approval
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has advised investors to be cautious when considering crypto investments. His advice followed a series of warnings he issued the day before regarding the risks of crypto investing. The SEC is expected to green-light multiple spot bitcoin exchange-traded funds (ETFs) on Wednesday.
Gary Gensler’s Advice to Crypto Investors
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, released another statement regarding crypto investing Tuesday, amid market expectations of imminent approval for spot bitcoin exchange-traded funds (ETFs).
In a post on social media platform X, Gensler urged investors to be cautious if they are considering an investment involving crypto assets. He warned: “Crypto asset securities may be marketed as new investment opportunities but there are serious risks involved.”
The SEC chairman posted a link to an article by Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy, titled “Thinking About Buying the Latest New Cryptocurrency or Token?”
The article highlights various risks associated with crypto investing, along with offering advice on what investors should do. One piece of advice is “Don’t fall for high-pressure sales tactics, the promise of guaranteed returns or too good to be true claims.” The director noted:
Cryptocurrencies may be today’s shiny, new opportunity but there are serious risks involved. Proceed with caution, do your research, evaluate your financial goals and most importantly, don’t flip a coin when you’re making investment decisions.
Gensler’s statements about crypto investing on Tuesday mark the second consecutive day of addressing the matter. On Monday, he warned about various risks associated with crypto investing, and over the weekend, the SEC cautioned investors against succumbing to the fear of missing out (FOMO).
A Prelude to Imminent Spot Bitcoin ETF Approval?
Gensler issuing statements on crypto twice this week has fueled optimism surrounding the imminent approval of spot bitcoin ETFs by the SEC. A decision is anticipated on Wednesday, the deadline for the joint proposal by Cathie Wood’s Ark Invest and 21shares.
Fox Business reporter Charles Gasparino shared on social media platform X on Tuesday:
Top securities lawyers who deal with the SEC believe Gary Gensler’s recent crypto warnings are a prelude to the imminent ‘spot’ BTC ETF approval.
One lawyer reportedly explained to the reporter: “There are no more SEC impediments to approval — SEC is a disclosure-based and process-based regulator — risks are now known and trading processes are adequate but you are warned — risks are super high and processes outside [the] U.S. cannot be policed.”
On Tuesday evening, the official SEC account on X announced that the securities regulator has approved spot bitcoin ETFs. However, a moment later, Gensler posted on X that the ETF approval post was unauthorized, stating that the agency’s social media account was compromised.
What do you think about Gensler making statements about crypto twice this week ahead of the spot bitcoin ETF decision deadline? Let us know in the comments section below.
Bankman-Fried’s Lawyers Challenge Core of Fraud Case, Questioning Fiduciary Ties Under English Law
Lawyers for Sam Bankman-Fried are seeking to instruct the jury that no trust or fiduciary relationship existed between the crypto exchange and its customers, a key part of the prosecution’s fraud case.
Bankman-Fried’s Attorneys Question Trust Ties
In an addendum to earlier requests, Sam Bankman-Fried‘s attorneys argue that under English law, which governs FTX’s terms of service, no trust relationship arose between FTX and users. “The Terms of Service do not use the words ‘trust,’ ‘trust property,’ or ‘beneficial interest,’” the filing states. It adds that any language about fiduciary duties expressly disclaims such a relationship.
The defense aims to counter the government’s claim that Bankman-Fried “engaged in a scheme to defraud customers” by misappropriating deposits. Prosecutors allege FTX customer funds were improperly diverted to Bankman-Fried’s trading firm Alameda Research.
However, according to the defense, “subjective intentions are irrelevant” in determining if a trust exists under English law. They contend it is based solely on interpreting the contractual terms objectively. Representations outside the contract also cannot establish a trust relationship retroactively.
“Briefly stated, a formal trust, called an express trust in England, is the legal relationship created when assets are placed by someone under one party’s control for the benefit of another or for a special purpose,” Bankman-Fried’s lawyers contend. The attorneys noted:
The mere fact that a person subjectively expected, understood or believed that a trust, fiduciary relationship, or similar relationship existed does not create such a relationship.
The jury instructions follow Bankman-Fried’s recent day on the witness stand on Monday where he had a difficult time recollecting statements and specific decisions. The former FTX CEO faces more than 100 years in prison for the charges levied against him, and he has pleaded not guilty to all of the charges.
What do you think about the jury requests from Sam Bankman-Fried’s lawyers? Share your thoughts and opinions about this subject in the comments section below.
Bankman-Fried Lawyers Claim He’s Not Getting Enough Adderall
Attorneys for FTX founder Sam Bankman-Fried say he’s having trouble focusing during his criminal trial because he’s not getting his prescribed dose of Adderall each day. In a letter to the judge Sunday, lawyers said Bankman-Fried has gone without his medication most of the day, leaving him unable to concentrate as the defense prepares to make its case.
FTX Founder’s Defense Claims Inadequate Adderall Dosing Hinders Trial Participation; Pleads for Medication Adjustment
Sam Bankman-Fried’s attorneys asked the judge to delay Tuesday’s proceedings to resolve the medication issue. If that’s not possible, they requested the court allow them to provide Bankman-Fried his Adderall doses each day.
Lawyer Mark Cohen said Bankman-Fried gets one dose of Adderall before 6 a.m. each morning before being brought to court. But that wears off well before proceedings begin at 9:30 a.m., according to the filing. Bankman-Fried doesn’t get another dose until returning to jail between 8 p.m. and 9 p.m.
Cohen noted the dilemma directly impacts the pivotal choice of whether Bankman-Fried will take the stand. Due to Bankman-Fried’s restricted access to Adderall, there’s mounting apprehension. He’s struggling to focus at his usual level, and this hampers his ability to actively engage in the defense’s presentation, Cohen emphasized.
Prosecutors and the judge proposed giving Bankman-Fried an extended-release dose Monday morning to see if that helps. But his lawyers worry that the plan won’t work, either because jail staff won’t provide the medication or because it’s ineffective. Cohen wrote:
Even if this occurs, there is no way of knowing at present whether the extended-release dose will be effective for Mr. Bankman-Fried.
Bankman-Fried has attempted to take his prescribed regimen of Adderall XR but has been prevented from doing so by jail medical staff, according to his lawyers. They say they’ve tried unsuccessfully to resolve the issue with the Bureau of Prisons.
The 30-year-old founder of failed cryptocurrency exchange FTX faces charges of bank fraud, and wire fraud. He was arrested in the Bahamas in December and had his bail revoked in August after disseminating Caroline Ellison’s diary excerpts to the media.
Bankman-Fried has pleaded not guilty, arguing that he did not intend to defraud anyone. His lawyer says any misstatements were mistakes due to chaotic management of the company amid its November collapse.
What do you think about Bankman-Fried’s need for Adderall? Share your thoughts and opinions about this subject in the comments section below.
Bankman-Fried’s Lawyers Seek Another Attempt at Temporary Release
Lawyers for Sam Bankman-Fried are making another attempt to have the disgraced FTX founder temporarily released from jail before his October trial, claiming he needs better access to prepare his defense properly.
Lawyers Cite Bankman-Fried’s Indispensable Knowledge for Complex Trial Preparation
In a letter to U.S. judge Lewis Kaplan filed Monday, Sam Bankman-Fried’s attorneys argued that the current restrictions on meeting with their client at Manhattan’s Metropolitan Detention Center (MDC) are “not workable” for a case this complex.
“This case is highly technical and complex, and we need our client to help us understand the facts and explain many of the issues,” lawyers state in the letter. “He alone knows the facts which are also critical in preparing his defense. Unfortunately, his knowledge and insight cannot be replicated by third-party experts as they are not familiar with the underlying facts and cannot provide the necessary help.”
Bankman-Fried’s lawyers say they need more time with him outside of jail in the evenings and weekends to go over each day’s testimony and exhibits. They claim that Bankman-Fried has indispensable knowledge of the facts that outside experts lack.
The lawyers further proposed strict conditions for Bankman-Fried’s release, including private security, no computers or phones, and a gag order prohibiting him from speaking with anyone but his lawyers and family. Bankman-Fried’s legal council says:
[A] security guard will remain with Mr. Bankman-Fried in the temporary residence throughout the evening and will ensure that Mr. Bankman-Fried does not have access to any computers, cell phones, the Internet, television, or any electronic devices. Mr. Bankman-Fried will not be permitted any visitors in his temporary residence.
This marks the third attempt to have Bankman-Fried released after Kaplan revoked his 0 million bail in December over concerns he could still access funds and flee. Kaplan has repeatedly denied requests for release, while acknowledging the challenges of preparing for a complex trial.
In their latest letter, the defense team notes this does not prevent them from applying again. They argue having insufficient access to Bankman-Fried could raise appellate issues. The lawyers say detaining Bankman-Fried during the trial will leave them little opportunity to confer outside of mornings.
If found guilty of fraud and money laundering, Bankman-Fried could serve a staggering 115 years behind bars. The jury selection kicks off on October 3, and the trial is anticipated to span anywhere from six weeks to several months.
What do you think about Bankman-Fried’s lawyers requesting that he be released before trial? Share your thoughts and opinions about this subject in the comments section below.
Lawyers Push SEC to Approve Grayscale Bitcoin ETF ‘Expeditiously’
Lawyers representing crypto asset manager Grayscale Investments urged the Securities and Exchange Commission (SEC) to “expeditiously” approve a spot bitcoin exchange-traded fund (ETF) in a letter sent to the agency. Grayscale’s letter follows a unanimous ruling by a panel of the U.S. Court of Appeals for the D.C. Circuit Court on August 29 that vacated the SEC’s June denial of Grayscale’s application to convert its Grayscale Bitcoin Trust into an ETF.
Grayscale Pushes SEC for Spot Bitcoin ETF Approval, Citing Court Ruling and Investor Interests
In the letter, Grayscale’s lawyers state that there is no reason to differentiate between bitcoin futures ETFs, which the SEC has approved, and spot bitcoin ETFs like Grayscale’s proposed product. The law firms of Davis Polk and Munger Tolles & Olson penned the letter to the securities regulator.
The attorneys note that the SEC has rejected spot bitcoin ETF applications in 15 orders since approving bitcoin futures ETFs without articulating a rationale for treating the products differently. Following the reasoning of the D.C. Circuit Court, they say the SEC cannot now impose additional surveillance requirements on spot bitcoin ETFs beyond what is required for bitcoin futures ETFs.
The letter states:
Now that the Court of Appeals has spoken, there is no available rationale that would distinguish a bitcoin futures ETP from a spot bitcoin ETP under the legal analysis previously adopted by the Commission in rejecting spot bitcoin ETPs.
The letter points out that Grayscale’s ETF application has been pending for nearly three times the maximum period allotted for SEC action under securities laws. It questions whether the SEC’s June disapproval order, which the court vacated, fulfilled the agency’s obligation to act within required timeframes. The lawyers urge the SEC to approve the ETF application promptly in light of the latest court ruling.
Delaying approval, the letter argues, continues to unjustifiably harm Grayscale’s existing investors by causing its Bitcoin Trust shares to trade at a substantial discount to net asset value. It also imposes competitive harm by limiting investor choice. The lawyers contend that U.S. investors are being “forced into less efficient and more complicated product structures” by the lack of approved spot bitcoin ETFs.
What do you think about Grayscale’s letter to the SEC? Share your thoughts and opinions about this subject in the comments section below.
Bankman-Fried Lawyers Seek Client’s Temporary Release for Trial Prep
Sam Bankman-Fried’s high-powered legal team is pushing for the FTX founder’s temporary release from jail ahead of his October trial on fraud charges. In a motion filed Thursday, lawyers Mark Cohen and Christian Everdell claim Bankman-Fried’s Sixth Amendment rights are being violated by inadequate access to discovery documents needed to help prepare his defense against allegations he misled investors and misused FTX client funds.
Letter Claims FTX Founder’s Rights Breached: Lawyers Demand Expanded Trial Prep Access
The lawyers argue Bankman-Fried needs “constant access” to an internet-connected laptop so he can review millions of pages of documents, conduct online research for context, draft analysis of evidence, and share information with his legal team.
Under the current plan allowing Bankman-Fried just 12 hours per week at a courthouse computer with no internet, the lawyers say he is deprived of the 80-100 hours he spent prepping pre-jail.
They also object to the government dumping 4 million more pages of discovery documents on them this week, calling it “fundamentally unfair” so close to the October trial start. The lawyers want Bankman-Fried temporarily released, or at minimum granted expanded computer access at jail, so he can adequately help build his defense.
Bankman-Fried’s lawyers state:
Even if Mr. Bankman-Fried were out on bail and had unlimited time to review these documents, it would likely be impossible for him to finish reviewing them by the time of trial. This is yet another example of the government dumping a huge volume of discovery on the defense months after the discovery deadlines that the government represented to the court.
Judge Lewis Kaplan, who revoked Bankman-Fried’s 0 million bail last month, had previously indicated the founder would have liberal jail access for trial prep. But Bankman-Fried’s lawyers say what’s been provided so far is inadequate compared to his previous prep while out on bail.
“The government’s solution, such as it is, is unacceptable and violates Mr. Bankman-Fried’s Sixth Amendment rights,” Everdell’s missive opines. “Nor does it satisfy the Court’s expectation that Mr. Bankman-Fried would have ‘very liberal’ access to discovery ‘nine, ten, eleven, twelve hours a day,’” the lawyer concluded.
What do you think about Bankman-Fried’s motion to get temporary release ahead of his upcoming trial in October? Share your thoughts and opinions about this subject in the comments section below.
Bankman-Fried Wants to See His Lawyers Outside Jail Five Days a Week
FTX founder Sam Bankman-Fried (SBF) is asking to be released from jail five days a week to work on his defense for the fraud trial against him set to begin in October. On Friday, Bankman-Fried’s lawyers complained to a judge in Manhattan that the currently proposed preparation time and regime for his case is “inadequate.”
SBF Seeks Daily Meetings With Lawyers at Courthouse and Laptop With Internet
Disgraced crypto mogul Sam Bankman-Fried is asking to be allowed to leave the Metropolitan Detention Center (MDC) in Brooklyn, New York, five days a week in order to meet with the members of his defense team at the federal courthouse in Manhattan.
The request comes just days after the 31-year-old founder and former chief executive of the failed cryptocurrency exchange FTX was jailed in the MDC based on allegations of witness tampering ahead of his trial scheduled to begin Oct. 2, Bloomberg and Reuters reported.
Prior to that, the former billionaire, who was arrested in the Bahamas and extradited to the U.S. about a month after FTX filed for bankruptcy protection in mid-November, had been living under house arrest at his parents’ home in California on a 0 million bond which was revoked.
In a letter to U.S. District Judge Lewis Kaplan, his lawyers described as “entirely inadequate” the conditions under which SBF is expected to prepare for his trial. They said that giving him just two days a week to review the large volume of evidence violated his right to effective counsel and pointed he has no dedicated computer or way to share materials with them online.
Federal prosecutors had offered to load documents onto hard drives that Bankman-Fried could use on computers at the MDC. According to the government, however, it’s not feasible to load all the documents onto an internet-enabled laptop. In a letter to Kaplan, the prosecutors also insisted that SBF had been offered “extraordinary accommodations” at the Brooklyn jail.
Sam Bankman-Fried has been accused of misappropriating funds of FTX customers worth billions of U.S. dollars. He allegedly used the stolen money to finance his Alameda Research hedge fund, buy expensive property and make political donations. He has pleaded not guilty. Next week, he will be arraigned on an amended indictment with seven fraud and conspiracy charges.
Do you think Bankman-Fried will be allowed to leave jail five days a week? Tell us in the comments section below.
FTX Finds $7.3 Billion in Liquid Assets; Lawyers Consider Rebooting Shuttered Crypto Exchange
FTX debtors revealed during a hearing on April 12th that the restructuring team has collected .3 billion in liquid assets. The exchange is currently considering a relaunch, according to a lawyer representing the defunct cryptocurrency exchange. Following the announcement, the exchange’s token, FTT, increased by over 70%, rising from .30 to .35 per unit.
Lawyers Say FTX Is Considering a Reboot
Lawyers representing FTX debtors recently told the U.S. bankruptcy judge that they have been discussing the possibility of relaunching the exchange. Andrew Dietderich of Sullivan & Cromwell stated that there are various opinions being deliberated regarding the matter. The law firm has been investigating tax implications and “long-term options.” Additionally, the restructuring team has discovered .3 billion in liquid assets, and chief restructuring officer John J. Ray III and his team have published a 43-page interim report.
The report outlines several control failures in the areas of finance and accounting, digital asset management, and management and governance. In particular, “a handful of employees had, among them, virtually limitless power to direct transfers of fiat currency and crypto assets and to hire and fire employees, with no effective oversight or controls to act as checks on how they exercised those powers.” The report also notes FTX failed to implement basic, widely accepted security controls to protect cryptocurrency assets.
During the search for information, FTX debtors had to scrutinize Quickbooks records, senior officials’ laptops, and Slack conversations. The report notes that certain entities in the FTX Group used Quickbooks as their general ledgers. It also points out that senior FTX officials “commingled and misused corporate and customer funds” and “lied to third parties.” This idea of rebooting the exchange was first mentioned in January when Ray confirmed that he was open to the possibility of reviving FTX.
After news of a possible relaunch was made public, FTX’s crypto token, FTT, rose 70% against the U.S. dollar from .30 before the court hearing to the current .44 per unit. A large number of FTT was illicitly released from FTT’s main deployer address last year. While the bankrupt exchange holds FTT, it is highly consolidated, with the top ten wallets holding 94.19% of the circulating supply.
What do you think about the possibility of FTX relaunching? Should the exchange be given a second chance or is it time to move on from FTX? Share your thoughts in the comments section below.
XRP To $1? Summary Judgment Is Very Close, Lawyers Predict
The legal battle between Ripple Labs and the U.S. Securities and Exchange Commission (SEC) is picking up steam again, and now things could move really fast. Several attorneys at once predict that summary judgment could appear at any time, within the next few days. As Bitcoinist reported, the judge in charge ruled on the “Daubert” motions yesterday.
One of the attorneys is John E. Deaton, who is representing the XRP community as amicus in the case. When asked if the publication of the judge’s decision on the Daubert motions gives any indication of the timing of the summary judgment decision, Deaton said that he believes the decision is imminent.
The attorney stated that the judge could release her decision as early as tonight or in a couple of weeks:
I seriously doubt that we see a significant delay from here. Could be tonight or in a couple of weeks.
The theory that Judge Analisa Torres will decide all the motions together, or within a very short time, stems from defense attorney and former federal prosecutor James K. Filan’s examination of Torres’ ruling history a few months ago. Filan noted that Torres likes to make her decisions in one go.
In that vein, Fred Rispoli, senior managing partner at Hodl Law, also wrote that he expects summary judgment soon: “This is not the SJ ruling, but this means the SJ ruling is very, very close.”
However, Rispoli also wrote that after partially reviewing the Daubert motions ruling, he believes neither the SEC nor Ripple will get a full summary judgment victory and parts of the case will go to trial. “At the same time, I think I’ll be correct in my prediction on secondary sales of XRP,” Rispoli commented.
What Could A Summary Judgement Mean For The XRP Price?
If Ripple succeeds in winning the lawsuit against SEC, a massive price rally is very likely in store, as also shown by the recent partial success of LBRY. Unlike in December 2020, when the lawsuit was filed by the SEC, there could be a reverse effect.
Within a week, the XRP price crashed by a staggering -72%. The price plummeted from .60 to .17. Compared to Bitcoin and Ethereum, XRP still exhibits a huge undervaluation since this event.
XRP bulls may want to make up for this deficit, driven by several factors, including the re-listing of XRP on US exchanges. How high the price could rise is difficult to predict, but an analysis using Fibonacci retracement levels can provide some clues.
The Fibonacci retracement is a method of finding potential resistance and support zones. Traditionally, the most common retracement levels are 38.2%, 50% and 61.8%. These levels are noted by most analysts because they represent potential reversal points for the markets.
First, however, XRP is likely to find a first hurdle at the price of .68 (23.6%). If this mark is crushed, the retracement level at .93 (38.2%) could become the key hurdle to break through the mark.
A rise to .93 would already mean a price rally of 150% from the current price. The LBC token has risen 154% after LBRY’s partial victory in late January – when the SEC admitted that LBC token sales on the secondary market are not securities. Hence, a similar scenario could be on the table, even if the XRP market is much more liquid.
If, contrary to expectations, XRP is also able to break the 38.2% Fibonacci level, resistance at .13 (50%) would be the main target to climb above .
However, as Rispoli pointed out, the judge could hand out partial victories, so it will be a matter of paying attention to the nuances of a soon to come ruling.