Crypto Freedom Alliance of Texas and Blockchain Association filed a motion on May 17 to vacate the U.S. Securities and Exchange Commission (SEC)’s new Dealer Rule. The plaintiffs’ counsel argues that the SEC’s expanded definition of “dealer” exceeds its statutory authority under the Securities Exchange Act, particularly affecting the digital asset industry. The brief asserts […]
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DOJ Counters Motion to Dismiss Charges Against Tornado Cash Developer
In a notable development, the U.S. Department of Justice (DOJ) has countered a motion to dismiss the criminal charges against Roman Semenov, a developer of the cryptocurrency mixing service Tornado Cash, highlighting the alleged strength of its case in a recent court submission. Prosecutors Assert Strong Evidence Is Coming in Tornado Cash Laundering Case The […]
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Former Binance CEO CZ Seeks to Dismiss Government’s Motion Blocking His Return to UAE Before Sentencing
Former Binance CEO Changpeng Zhao (CZ) is seeking to dismiss the U.S. government’s motion to prevent him from going home to the United Arab Emirates (UAE) before sentencing. Despite the judge determining that the ex-Binance boss poses no flight risk after he voluntarily appeared in court to plead guilty, the government is pushing for a restriction on his return home before sentencing.
CZ Wants Judge to Dismiss Government’s Motion
Former Binance CEO Changpeng Zhao (CZ) filed an opposition to the U.S. government’s “motion for review” of the judge’s ruling on his “presentencing travel restrictions.”
The U.S. government filed a single count of information on Nov. 14, charging Zhao with “failing to maintain an effective anti-money laundering program,” the document details. “The government also filed a parallel Information against Binance for failing to comply with provisions of the Bank Secrecy Act and U.S. sanctions law.”
After hearing from both the government and Zhao, Judge Brian Tsuchida issued a “release order” with a bail package that permits the former Binance chief to return home to the United Arab Emirates (UAE) pending sentencing. While agreeing that CZ is not a danger to the community and bail is appropriate, the government filed a motion seeking to prevent Zhao from being able to return home to the UAE before sentencing.
The legal team for CZ argued:
Judge Tsuchida concluded based on a complete record, Mr. Zhao presents no risk of flight, having voluntarily come before the court to accept responsibility and plead guilty, and the government’s motion should be denied.
The lawyers for CZ detailed that the ex-Binance boss “voluntarily flew” to the U.S. to appear before the court on Nov. 21 where he pleaded guilty. Zhao also stepped down as the CEO of Binance. “As part of this multi-agency resolution with the Department of Justice and the civil agencies, the company and Mr. Zhao will pay a historic sum of more than .3 billion, with Mr. Zhao paying a personal penalty of 0 million to the CFTC,” the legal team added. The government states in its motion that Mr. Zhao may “face up to 18 months in prison.”
After hearing from both sides, Judge Tsuchida ordered Zhao released and permitted to return home to the UAE based on bail conditions. The document describes:
Under the order, the bail conditions require that Mr. Zhao post a 5 million personal recognizance bond, secured by two guarantors with cash pledges of 0,000 and 0,000, respectively, and a third guarantor with real property located in Los Angeles, California, valued at more than million.
Do you think CZ should be able to return home to the UAE pending sentencing? Let us know in the comments section below.
Former FTX Law Firm Denies Role in Collapse; Challenges Allegations as ‘Fatally Deficient’ in Court Motion
San Francisco-based law firm Fenwick & West LLP is denying allegations from FTX founder Sam Bankman-Fried that the firm provided legal advice enabling the alleged fraud that led to the cryptocurrency exchange’s collapse. In a recent court filing, Fenwick & West asserts the allegations are “fatally deficient” and should be dismissed with prejudice.
Law Firm Challenges FTX Founder’s Claims
In a motion to dismiss filed Wednesday in Florida federal court, Fenwick & West argues the complaint fails to state viable claims for conspiracy, aiding and abetting fraud, negligence, or racketeering. The firm asserts the allegations improperly seek to hold it liable based on providing routine legal services to FTX within the scope of representation. Fenwick & West claims the complaint does not show it acted outside its role as legal counsel, an essential element for the asserted causes of action against a law firm.
“A lawyer’s representation of a client and knowledge of their employees does not make them omniscient as to the client’s inner workings,” the motion insists.
Additionally, Fenwick & West contends the complaint lacks plausible allegations the firm had actual knowledge of the alleged fraud by FTX founder Sam Bankman-Fried and other insiders. The firm states the claims fail to specify the purported misconduct with sufficient particularity, as required for fraud-based cases under court procedural rules. Fenwick & West further argue that the complaint does not establish the firm substantially assisted the alleged fraud or proximately caused claimed damages.
“Each of these claims against Fenwick is fatally deficient, and the Complaint should be dismissed in its entirety,” Fenwick & West wrote.
The law firm asserts the complaint is deficient in pleading a claim under the Racketeer Influenced and Corrupt Organizations Act, lacking allegations Fenwick & West agreed to participate in a criminal enterprise or that such an enterprise even existed. Fenwick & West maintain the alleged enterprise comprises only FTX and employees acting within their roles, which recent precedent indicates cannot sustain a RICO claim.
In contrast, attorneys for Bankman-Fried claimed in a separate filing he was assured his actions complied with the law, based on legal advice. The lawyers said Bankman-Fried understood lawyers had reviewed and approved FTX policies, refuting accusations he intended to defraud.
What do you think about Fenwick & West’s court motion? Share your thoughts and opinions about this subject in the comments section below.
Ripple Files Opposition to SEC’s Motion to Certify Interlocutory Appeal of XRP Ruling
Ripple Labs has filed its opposition to the U.S. Securities and Exchange Commission’s request for Judge Analisa Torres to certify an interlocutory appeal of her ruling regarding XRP. The crypto firm has argued that “the exceptional circumstances required for interlocutory appeal are absent.”
Ripple Says Court Should Deny SEC’s Motion
On Friday, Ripple Labs filed its response to the motion by the U.S. Securities and Exchange Commission (SEC) to certify an interlocutory appeal. The securities watchdog is seeking to appeal the ruling by District Judge Analisa Torres regarding the “programmatic” offers and sales of XRP over crypto trading platforms and Ripple’s “other distributions.” The regulator also seeks to stay the district court proceedings.
The Ripple legal team wrote:
The court should deny the SEC’s motion for certification. The court should also deny the SEC’s request for a stay pending appeal.
In Friday’s court filing, Ripple argued that “the exceptional circumstances required for interlocutory appeal are absent.” Firstly, the crypto firm’s lawyers claimed, contrary to the SEC’s assertion, that “the court’s summary judgment order does not present a controlling question of law suitable for interlocutory appeal.” Secondly, they argued that the “supposed substantial ground for disagreement is merely the SEC’s dissatisfaction with the court’s application of Howey to most of the defendants’ transactions in XRP.”
In addition, Ripple’s lawyers stated that the SEC “concedes that protracted litigation is necessary regardless of whether its requested interlocutory appeal succeeds.” They stressed that this means “certification has no chance of hastening the end of this litigation.”
This week, the SEC lost another legal battle against a crypto firm. The United States Court of Appeals for the District of Columbia Circuit ruled in favor of Grayscale Investments against the securities regulator on Tuesday regarding the crypto asset manager’s proposed bitcoin exchange-traded fund (ETF) conversion.
Do you think Judge Analisa Torres will certify the SEC’s motion for an interlocutory appeal in the Ripple-XRP case? Let us know in the comments section below.
SEC Files Motion to Certify Interlocutory Appeal of Ripple-XRP Ruling
The U.S. Securities and Exchange Commission (SEC) has filed a motion to certify an interlocutory appeal of two rulings in the Ripple case regarding XRP. According to the securities regulator, “Immediate appeal of these rulings is warranted … because they involve controlling questions of law.”
SEC v Ripple Case Update
On Friday, the U.S. Securities and Exchange Commission (SEC) filed a motion for the court to certify an interlocutory appeal of two Ripple rulings regarding XRP. The court document states:
The SEC respectfully requests that this court certify for interlocutory appeal two holdings in its July 13, 2023 order on summary judgment.
The first holding concerns the ruling that Ripple’s “‘programmatic’ offers and sales of XRP over crypto asset trading platforms could not lead investors to reasonably expect profits from the efforts of others,” the SEC detailed.
The second holding is “the ruling that Ripple’s ‘other distributions’ of XRP as a ‘form of payment for services’ was legally insufficient to constitute an ‘investment of money,’” the securities watchdog added.
The SEC claimed:
Immediate appeal of these rulings is warranted … because they involve controlling questions of law as to which there are substantial grounds for difference of opinion, and obtaining an appellate ruling on these issues now may materially advance the ultimate termination of this litigation.
According to the court’s order dated Aug. 17, Ripples has until Sept. 1 to file its response. The SEC must then file its reply, if any, by Sept. 8.
Ripple Labs, CEO Brad Garlinghouse, and co-founder Chris Larsen have opposed the SEC’s request for an interlocutory appeal. Ripple’s chief legal officer, Stuart Alderoty, tweeted last week: “There is no extraordinary circumstance here that would justify departing from the rule requiring all issues as to all parties to be resolved before an appeal.”
Do you think the SEC will successfully appeal the Ripple rulings regarding XRP? Let us know in the comments section below.
Digital Currency Group Strikes Back: Motion to Dismiss Gemini’s Lawsuit Filed
Digital Currency Group (DCG) has filed a motion to dismiss the lawsuit brought against them by Gemini Trust Company, LLC. The motion, filed in the Southern District of New York, argues that Gemini’s allegations of fraudulent misrepresentations related to the Gemini Earn program are without merit and inadequately substantiated. DCG’s legal team asserts that the lawsuit lacks actionable evidence and calls for the court to dismiss the complaint.
Digital Currency Group Seeks Dismissal of Gemini Lawsuit, Citing Lack of Evidence and Inadequate Allegations
In the preliminary statement of the motion, DCG outlines Gemini’s claims related to the Gemini Earn program, formerly operated by Gemini in coordination with Genesis Global Capital, LLC (Genesis). DCG argues that Gemini’s allegations, aimed at holding DCG and Barry Silbert responsible for Genesis’s actions, are unfounded.
DCG’s motion further points out that Gemini’s allegations fail to adequately allege fraud by the defendants. The argument section of the motion elaborates that none of the statements made by the defendants are actionable and that the defendants are not liable for alleged misrepresentations by Genesis.
“Gemini argues that defendants aided and abetted Genesis’s alleged fraud through various corporate transactions and paperwork. This effort fares no better,” the letter supporting the motion to dismiss filing published on August 10, 2023, explains. “There are no well-pled allegations that Defendants had actual knowledge of any alleged fraud, and Gemini does no more than rely on Defendants’ corporate relationship with Genesis to argue otherwise.”
In addition to the lack of evidence for fraudulent actions, DCG’s motion accuses Gemini of failing to plead knowledge of the alleged fraud. They further dismiss Gemini’s accusations as baseless, criticizing the lack of substantial support for the claims. “The rest of the complaint is a hodgepodge of conclusory allegations against non-defendant Genesis,” DCG’s attorneys insist. The motion continues:
Gemini tries in various ways to hold defendants responsible for alleged misrepresentations by Genesis, but Gemini’s efforts to impute them to defendants fail as a matter of law. It is a settled principle of law that parents are not liable for the conduct of their subsidiaries, and Gemini does not even try to allege any theory of alter ego. Instead, it asserts that defendants are liable for not affirmatively correcting the alleged misstatements of Genesis.
Digital Currency Group’s response to the lawsuit comes after Gemini co-founder Cameron Winklevoss publicly announced legal action against DCG and CEO Barry Silbert. Gemini’s lawsuit seeks to recover damages and losses incurred as a result of alleged false and misleading representations by DCG and Silbert. At the time, DCG stressed that the lawsuit was simply “another publicity stunt from Cameron Winklevoss to deflect blame.”
What do you think about DCG’s motion to dismiss? Share your thoughts and opinions about this subject in the comments section below.
Elon Musk’s Lawyer Files Second Motion To Dismiss Dogecoin Class Action Lawsuit
In a continued legal battle over a class action lawsuit alleging Dogecoin insider trading, attorney Alex Shapiro, representing Tesla CEO Elon Musk, has once again requested the dismissal of the case.
This motion marks the second attempt by Musk’s legal team to put an end to the ongoing litigation, and as the legal battle escalates, drawing attention to the intricate interplay between cryptocurrency, high-profile figures, and legal accountability.
Strategic Move Amid Escalating Battle
The decision to file a second motion for dismissal underscores the determination of Elon Musk’s legal team to swiftly put an end to the protracted litigation. The lawsuit was initiated by a group of Dogecoin investors who claim Musk orchestrated market manipulation and insider trading to inflate the value of the popular meme cryptocurrency.
Attorney Alex Shapiro’s response to the investors’ complaint was sharp and pointed. He framed the latest filing as an example of lawyers overstepping their boundaries and utilizing aggressive litigation tactics. So in the filing, he moved a motion to disqualify sanctions.
In one of his statements, Shapiro stated ” Enough is enough” as the case has been a long-standing one. Musk’s legal team also emphasized the legality of his crypto-related statements, while the case has delved into the nebulous realm of social media influence in financial markets.
Evan Spencer, the lead attorney for the class action lawsuit, has relentlessly pursued Musk and the allegations against him. Spencer has now made a total of three amendments to the lawsuit since its initial filing in June of the previous year, seeking a staggering 8 billion in damages for investors claiming to have been defrauded by the Tesla CEO with his Dogecoin Pyramid Schemes.
Musk’s Relationship With Dogecoin
Dogecoin was designed originally in 2013 as a joke to tease Bitcoin but went from a “meme” to a substantial valuable asset in the cryptocurrency space during 2020 and 2021 especially.
Most of the meme coin’s growth was driven by billionaire Elon Musk, who actively promoted the altcoin to his over 100 million Twitter (Now X) followers at the time.
His initial tweet in April 2019, playfully endorsing Dogecoin as a potential favorite cryptocurrency, ignited a chain reaction that saw subsequent tweets by Musk triggering substantial price fluctuations.
“Dogecoin might be my fav cryptocurrency. It’s pretty cool” Musk tweeted at the time. Musk’s many tweets following this would continuously push DOGE’s price high, reaching as high as .7 before the bear market hit.
Since then, DOGE’s price has fallen over 90%, and the class action lawsuit emerged as a result of investors who believed they had fallen victim to a pyramid scheme after buying for high prices.
The elongated legal struggle holds significant implications for the cryptocurrency community and the broader financial world. With Musk’s legal team emphasizing the dismissal of the lawsuit, the outcome could set a precedent for legal battles involving influential figures in the cryptocurrency domain.
Musk appears to be unmoved as he promotes his newly acquired innovation, Twitter, now rebranded as X.
US Court Dismisses Former Celsius Network CEO’s Motion to Block New York Attorney General’s Lawsuit
Former Celsius Network Alex Mashinsky will now have to defend himself against a lawsuit filed by New York Attorney General Letitia James after a New York County Supreme Court Justice rejected his attempts to have the suit dismissed. The court’s decision blocks the attempt by Mashinsky to stop James from seeking to preclude him from issuing securities or serving as a company officer in the state.
Mashinsky Misstatements Induced Investors to Deposit Assets on Celsius
A United States judge has rejected former Celsius Network CEO Alex Mashinsky’s attempt to have the court dismiss a lawsuit filed by New York Attorney General (NYAG) Letitia James, a report has said. The court’s decision blocks the attempt by Mashinsky to stop James from seeking to preclude him from issuing securities or serving as a company officer in the state.
In her judgment, New York County Supreme Court Justice Margaret Chan reportedly argued that James’ lawsuit should be allowed to stand because there are enough accusations to sustain the case against Mashinsky.
“There are sufficient allegations to support a plausible inference that Mashinsky’s alleged misstatements induced or promoted new investors to deposit assets in Celsius’ earned-interest accounts,” Justice Chan said in her ruling.
Mashinsky’s Misrepresentation of Celsius’ Financial Condition
As reported by Bitcoin.com News in January, James is said to have filed the lawsuit against Mashinsky after it became of the former CEO’s false and misleading statements about Celsius Network’s financial well-being. In addition, the former boss of the collapsed crypto lender is also accused of encouraging thousands of investors to deposit onto the platform digital assets worth billions of dollars.
In response to the NYAG’s lawsuit, Mashinsky filed a motion to dismiss the lawsuit on the basis that the alleged misleading statements were in fact “nonactionable puffery” and immaterial. However, according to the Bloomberg report, Justice Chan did not agree with Mashinsky’s characterization of his interactions with the crypto lender’s investors.
Instead, she suggested in her ruling that the allegations against Mashinsky depict an “individual actively misrepresenting the financial condition of his company to keep it afloat.”
What are your thoughts on this story? Let us know what you think in the comments section below.
Crypto Exchange Binance’s Motion to Restrain SEC’s Public Statements Denied
Binance’s attempt to prevent the U.S. Securities and Exchange Commission (SEC) from making public statements alleging that the crypto exchange mishandled U.S. customers’ assets has been denied by the judge overseeing its enforcement case. A former SEC head of internet enforcement warned that the motion may “prompt the criminal authorities to expedite whatever action, if any, they plan on taking with respect to Binance.”
Judge Denies Binance’s Motion Against SEC
Binance’s motion against the U.S. Securities and Exchange Commission (SEC) was denied by Judge Amy Berman Jackson on Monday. The motion was filed as part of the case in which the SEC charged Binance, CEO Changpeng Zhao (CZ), and Binance US with securities law violations.
The cryptocurrency exchange filed a motion asking Judge Jackson to prevent the securities regulator from making public statements alleging that Binance and Zhao mishandled the assets of U.S.-based customers. The cryptocurrency exchange argued that the SEC has not provided evidence of any commingling allegations and raised concerns that the regulator’s statements risk prejudicing the jury. Binance urged the judge to enforce a Washington, D.C., professional conduct rule which prohibits counsels from making misleading extrajudicial statements that could significantly impact court proceedings.
However, Judge Jackson denied the motion, stating in her order:
While all of the lawyers in this case should adhere to their ethical obligations at all times, it is not apparent that Court intervention to reiterate that point is needed at this time, or that it is necessary or appropriate for the Court to get involved in wordsmithing the parties’ press releases. Nor is it clear that the agency’s public relations efforts to date will materially affect proceedings in this case.
Former SEC official John Reed Stark, who called Binance’s motion “provocative,” commented on the judge’s decision Monday. Stark is currently president of cybersecurity firm John Reed Stark Consulting. He founded and served as chief of the SEC Office of Internet Enforcement for 11 years. He was also an SEC enforcement attorney for 15 years.
He stated that the judge’s decision to deny Binance’s motion was “lightning-fast,” stating that it was made “a mere 3 business days after Binance filed the motion and without ever even receiving any response/opposition from the SEC.” Deeming Binance’s motion filing to be unworthy, Stark opined: “I wonder how much Binance’s motion cost in legal fees and whether it was worth filing at all. It seemed so frivolous on its face and more akin to marketing theater than legal argument.” The former SEC internet enforcement chief concluded:
My view is that the motion may also prompt the criminal authorities to expedite whatever action, if any, they plan on taking with respect to Binance.
What do you think about the court denying Binance’s motion against the SEC? Let us know in the comments section below.