Court Ends SEC's Case Over Allen Stanford Fraud After 16 Years

Plus a poll: Will Trump pardon Sam Bankman-Fried?

Author

Bruce Carton
January 31, 2025

Good morning! Here’s what’s up.

Highlights from Securities Enforcement Forum New York 2025

We will post highlights from this week’s Securities Enforcement Forum New York here over the next week or so, starting with this terrific Q&A discussion between Keynote speaker Gurbir Grewal and moderator Bill McLucas.

People

Gregory Lawrence, former Senior Counsel in the SEC’s Division of Enforcement, has joined Womble Bond Dickinson as a Partner in the firm’s Baltimore office.

Clips ✂️

US SEC case over massive Allen Stanford fraud ends, judge orders fines

A federal judge ordered an end to the U.S. Securities and Exchange Commission’s 16-year-old lawsuit over Allen Stanford’s $7.2 billion Ponzi scheme, directing the financier and two former colleagues to pay sums that will go largely uncollected.

In a decision on Wednesday, Chief Judge David Godbey of the Dallas federal court imposed a $5.9 billion civil fine on Stanford, who is serving a 110-year prison sentence after being convicted in 2012 of defrauding about 18,000 investors.

Godbey ordered Stanford Financial Group’s former chief financial officer James Davis to pay $17.66 million, including a $5 million fine, and former chief accounting officer Gilberto Lopez to pay $3.42 million over their roles in the fraud.

by Reuters

👉 16 years! Here’s a post I wrote in 2009 about the then-new case when Allen Stanford was trying to make bail:

“We thought it was interesting that golfer Vijay Singh defiantly continued to sport his Stanford Financial hat, but his headwear choices are nothing compared to the latest news that Singh was one of just three people who offered to sign for a portion of Allen Stanford’s’s bail. CNBC reports that Singh agreed to be responsible for $500,000 if Stanford fled, but Singh was not allowed to help with bail because he is not a citizen of the United States.”

Sam Bankman-Fried’s Parents Explore Seeking Trump Pardon for Son

The parents of FTX co-founder Sam Bankman-Fried are exploring ways to secure a pardon for the onetime crypto billionaire from President Donald Trump, according to a person familiar with the matter.

Stanford Law School Professors Joseph Bankman and Barbara Fried had meetings in recent weeks with lawyers and other figures considered to be in Trump’s orbit about clemency for their 32-year-old son, who was sentenced to 25 years in prison for fraud, the person said. It’s unclear if outreach has been made to the White House.[…]

The president’s swift use of his pardon power, including for Silk Road founder Ross Ulbricht, has encouraged a rush among white-collar defendants eager to put their case before Trump.

by Bloomberg

👉 Poll:

Will President Trump pardon Sam Bankman-Fried by December 31, 2025?

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Memecoins Can Stay Fun With Caution and Tempered Regulation

Despite these risks, memecoins are thriving as cultural exemplars, leveraging humor, nostalgia, and collective action to redefine value in the digital age.

Market manipulators use pump-and-dump and rug-pull schemes to inflate coin prices. As volume and empty promises grow, the team or insiders exploit new members as exit liquidity—selling their holdings to new members at inflated prices before abandoning the project. Platforms such as Pump.Fun, Pump/s token platform, designed to help newcomers launch tokens, have become hubs for these schemes.

With fewer than 2% of tokens achieving sustainable market caps, most projects on Pump.Fun leave members with significant losses. Thousands of tokens claim strong communities but often fail to deliver, further eroding trust.

by Bloomberg Law

👉 Some people who don’t want memecoins to “stay fun“ include the plaintiffs in a class action against Pump.fun who accuse the the company “of raking in nearly $500 million in fees while violating U.S. securities laws.” As discussed in this Coinbase article,

“The suit, filed in the Southern District of New York (SDNY), hinges on the crypto industry’s biggest lingering question — when is a token a security? Though the suit alleges that every token created using Pump.fun’s platform is a security, and thus subject to U.S. securities laws, that’s far from a matter of settled law….”

ECB’s Lagarde Is Confident EU Central Banks Will Shun Bitcoin Reserves

European Central Bank President Christine Lagarde predicted that no European Union country will choose to add Bitcoin to its monetary reserves.

Responding to comments by her Czech counterpart, Ales Michl, that his institution will look into the matter, she cast doubt on such prospects, saying the cryptocurrency doesn’t meet criteria required by policymakers either of the ECB or any other nation in the bloc.

“I’m confident” that “Bitcoins will not enter the reserves of any of the central banks of the General Council” of the ECB, Lagarde told reporters in Frankfurt.

by Bloomberg

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