Crypto Firms Team Up With Top Appellate Lawyers in Fifth Circuit Strategy

Crypto Firms Take SEC Fight to Texas, With Eye on Supreme Court

The cryptocurrency industry, feeling the squeeze from securities regulators suing in New York, is going on offense in Texas, with backing from venture capital giants and US Supreme Court veterans.

At least twice in recent weeks, small crypto businesses wary of enforcement actions have teamed up with well-connected trade groups to sue the Securities and Exchange Commission, challenging how the agency polices their industry.

The lawsuits—filed in a circuit with a reputation for doubting agency powers, and piloted by the likes of former US Solicitor General Paul Clement—represent the crypto industry’s evolving legal strategy in response to the SEC’s crackdown.

To legal observers, the playbook seems clear: create a split among circuit courts and get the attention of the nation’s highest court.

Accounting-Related Securities Class Action Filings Rose in 2023

A new report released today by Cornerstone Research shows an increase of nearly 10% in the number of securities class action filings involving accounting allegations in 2023 compared to 2022. This growth occurred even though cases took longer to be filed, with the median filing lag reaching 43 days, the longest in a decade. The report, Accounting Class Action Filings and Settlements—2023 Review and Analysis, also found that the total value of settlements increased 11% year-over-year despite a decrease in the number of settlements.

The number of accounting-related securities class action filings grew to 56 in 2023. Despite three years of consecutive increases, the number of cases filed remained below the historical average of 62.

SEC Accepts Pause on Its Climate Rule

The Securities and Exchange Commission said Thursday it would pause the implementation of its new climate disclosure rule while it fights in court over the measure’s legality.

The SEC will stay the rule, in part to avoid regulatory uncertainty as litigation proceeds, the agency said in a filing with the U.S. Court of Appeals for the Eighth Circuit.

An appeals court last month ordered a temporary stay blocking the rule’s enforcement, though the SEC could have fought that stay.

Sam Bankman-Fried Is Going to Prison, but the Fight Over Money at FTX Drags On

Spring has brought a measure of justice for FTX’s victims: Sam Bankman-Fried, the crypto exchange’s founder, was sentenced last month to 25 years in prison for what prosecutors called one of the largest financial frauds in U.S. history.

But for many onetime FTX customers, the exchange’s collapse is still a source of anger and frustration. Some are fighting to recover what they can from bankruptcy trustees who are preparing to distribute billions of dollars as soon as this year. Others are regretting their decisions to sell the claims to their FTX accounts to savvy hedge funds for pennies on the dollar. Some of these hedge funds stand to double their investment or more when the distributions take place.

NFTs aren’t totally dead as crypto ‘Goblins’ swarm to NYC this week

A handful of investors claim the notoriously battered NFT sector is showing fresh signs of life after a spectacular fall – and hordes of so-called crypto “goblins” are swarming to events across New York City this week to tout their non-fungible tokens.

NFT.NYC which began Tuesday at the Javits Center and ends Friday, has played host to more than 800 speakers and 100 events for the closely-knit investors in NFTs — pieces of collectible, authenticated digital art that has included the “Bored Ape” and “CryptoPunks” series.

Despite becoming a punchline among crypto skeptics over a major boom-and-bust in 2022, NFTs are still drawing steady interest, according to Alex Taub, co-founder of Goblintown, an NFT collection whose name refers to so-called “goblin” investors who have blown their cash on failed crypto purchases.

British Billionaire Joe Lewis Avoids Prison Time in U.S. Insider-Trading Case

Lewis, 87 years old, pleaded guilty in January to securities-fraud charges for tipping off a romantic partner, a poker buddy and the pilots of his private jet to confidential information about companies he was invested in. Federal prosecutors said while Lewis—one of the 500 richest people in the world—didn’t profit from the scheme, his associates collectively made millions of dollars by trading on the information.

At Lewis’s sentencing hearing, U.S. District Judge Jessica Clarke ordered him to serve three years probation and pay a fine of $5 million. Federal sentencing guidelines recommended Lewis serve between 18 months and two years in prison. While Clarke called Lewis’s crimes serious, she said she chose not to put him behind bars because of his medical needs and that he was far older than the vast majority of inmates in the federal prison system.

“Mr. Lewis’s life would be at serious risk if he were to be incarcerated,” Clarke said.