What’s Uniting the SEC’s Crypto Cases

Earlier
this
week,
a
federal
judge
asked
attorneys
with
the
U.S.
Securities
and
Exchange
Commission
why
–
“big
picture”
–
there
wasn’t
any
sort
of
uniting
regulation
addressing
crypto.

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We
may
not
get
a
consensus
on
how
the
federal
judiciary
looks
at
crypto,
and
judges
are
increasingly
raising
the
question
of
where
such
a
consensus
could
come
from.

Whether
the
U.S.
Securities
and
Exchange
Commission’s
view
of
how
securities
law
applies
to
crypto
is
valid
in
the
eyes
of
the
federal
judiciary
is
an
open
question.
We’ve
seen
rulings
from
various
district
courts
that
suggest
it’s
not
a
straightforward
answer;
now,
judges
themselves
are
saying
more
and
more
that
something
other
than
just
public
statements
may
be
needed.

Over
the
past
week,
we’ve
heard
from
two
different
judges
question
lawyers
with
the
SEC
and
crypto
exchanges
(Coinbase
and
Binance)
about
whether
the
federal
agency
has
any
sort
of
case
against
either
crypto
trading
platform.
Last
week’s
newsletter
focused
on
the
hearings
held
that
week
(of
course)
but
this
week’s
rescheduled
hearing
in
the
SEC’s
case
against
Binance
also
had
some
interesting
comments
from
District
Judge
Amy
Berman
Jackson.

“Where’s
the
SEC
been?
Does
that
matter
…
why
is
it
that
if
they’re
trying
to
achieve
legislation,
is
that
some
suggestion
there’s
something
missing
in
the
statute
to
cover
this?
Why
are
we
doing
this
on
a
coin-by-coin,
case-by-case,
judge-by-judge
litigation
which
depends
on
the
…
vagaries
of
the
individual
districts
…
as
opposed
to
issuing
a
reg
that
tells
everybody
‘this
is
it?'”
she
asked.

And
to
be
clear,
the
judge
said
at
the
beginning
of
this
line
of
questioning
that
it
was
a
“big
picture”
line
of
inquiry,
but
it
was
still
a
point
she
repeated
during
the
course
of
the
hearing.

“Much
of
Binance’s
brief
has
been
focused
on
what
I
would
call
loose-leaf
policy
arguments:
Congress
is
working
on
this,
the
SEC
has
taken
contrary
positions
in
the
past.
And
you
could
certainly
have
a
legitimate
discussion
about
fairness,
using
litigation
to
regulate
the
cryptocurrency
industry
after
years
of
inaction,
or
whether
it
makes
sense
as
a
policy
matter
to
go
token-by-token,
court-by-court
and
risk,
as
we
already
gotten,
some
conflicting
decisions
on
different
important
points,
but
how
does
any
of
that
bear
on
a
motion
to
dismiss?”
she
asked.

The
SEC
attorney
answering
her
questions
said
he
disagreed
with
the
premise
of
these
statements

“I
would
disagree
with
the
premise
that
the
SEC
has
contradicted
itself,”
the
agency
attorney
said.

The
SEC
has
had
a
fairly
straightforward
view
on
cryptos
since
2017
and
the
DAO
Report
–
namely,
that
most
cryptocurrencies
seem
to
be
securities
(in
the
words
of
both
former
Chair
Jay
Clayton
and
current
Chair
Gary
Gensler).
The
industry,
for
obvious
reasons,
really
wants
this
to
not
be
the
case
and
has
presented
arguments
in
multiple
lawsuits
as
to
why
most
cryptos
aren’t
or
shouldn’t
be
deemed
securities.

And
this
brings
us
back
to
consensus.

While
Judge
Jackson
did
not
go
so
far
as
to
say
Congress
needed
to
get
involved,
her
questions
and
comments
on
Monday
seemed
to
raise
a
similar
basic
point
that
Judge
Katherine
Polk
Failla
–
who’s
coincidentally
overseeing
the
SEC’s
case
against
Coinbase
–
raised
last
fall
when
ruling
on
a
putative
class
action
suit
against
Uniswap.

Neither
Congress
nor
the
federal
courts
have
made
any
“definitive
determinations”
on
whether
certain
cryptos
are
securities
or
commodities
(or
some
third
thing),
Judge
Failla
wrote
in
an
order
last
September.

There’s
some
obvious
differences
of
course
–
the
actual
conduct
and
legal
violations
alleged
being
the
biggest
one
–
but
the
refrain
we’re
hearing
from
judges
that
is
there’s
no
consensus
yet,
and
that
may
need
to
change.

It
could
change
later
this
year,
if
an
appeals
court
decides
to
take
up
the
SEC’s
bound-to-happen
appeal
of
Judge
Analisa
Torres’
ruling
in
the
agency’s
case
against
Ripple
(though
I
imagine
that
may
still
take
a
while).

Congress
may
actually
pass
some
legislation
addressing
crypto
and
redefining
the
SEC’s
jurisdiction
in
the
industry
as
well,
theoretically.

Many
of
Judge
Jackson’s
other
questions
seemed
fairly
straightforward,
addressing
different
parts
of
the
various
briefs.
At
times,
she
sounded
frustrated
by
what
she
heard
from
the
attorneys
arguing
before
her.

We
now
wait
to
see
how
Judges
Jackson
and
Failla
will
rule
on
the
motions
to
dismiss
the
case
–
though
generally
these
cases
aren’t
dismissed
at
this
stage.

If
you’ve
got
thoughts
or
questions
on
what
I
should
discuss
next
week
or
any
other
feedback
you’d
like
to
share,
feel
free
to
email
me
at

nik@coindesk.com
or
find
me
on
Twitter

@nikhileshde.

You
can
also
join
the
group
conversation
on

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See
ya’ll
next
week!