First GOP Senator Joins the Crypto Skeptics

The Republican senator on a crusade against crypto

Sen. Roger Marshall, R-Kan., isn’t graded yet on the cryptocurrency industry’s big scorecard. But at this point, he’d be happy to flunk it.

“Even when you talk to the crypto people, people who support it readily admit that more than half of the cryptocurrencies out there are bad actors that take advantage of people,” Marshall told Semafor in a recent interview.

“The deeper I dive into this rabbit hole, the more concerns I have,” he added.

Comments like those have set Marshall apart from the rest of his party when it comes to the issue of crypto. While several Democrats have taken to openly savaging the industry in the wake of its recent scandals, the deeply conservative Kansan is the first GOP senator to have openly joined the ranks of crypto skeptics.

12 Crypto-Predictions for 2023

Prediction #11: Gary Gensler Will Remain at the SEC and Begin to Receive the Respect and Admiration That He Rightfully Deserves

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So just to review: First, in March, 2022, Emmer leads the war on Gensler, scolding him for the SEC’s aggressive investigations of crypto firms and alleging that the SEC was violating the Paperwork Reduction Act because its subpoenas for documents are too broad. Now, in November, 2022, after the FTX disaster, Emmer leads a second war on Gensler, this time scolding him for the SEC’s failure to investigate crypto firms. Yes, Emmer’s hypocrisy knows no bounds, but it also bleakly underscores Gensler’s conundrum – no matter what Gensler does regarding crypto, the Big Crypto cartel will condemn him.

But that will change in 2023. Yes, there will always be Gensler naysayers and haters. However, during 2023, people will begin to understand that Gensler’s SEC crypto-enforcement program and crypto-track record stands out above all others. Moreover, despite the SEC’s function as a mere civil agency, with no criminal authority of any kind, commentators will begin to see that Gensler’s SEC has been remarkably effective in its crypto-enforcement efforts.

By the Numbers: 17 Top DC Attorney Hires by Big Law Firms

Here are the top DC lateral moves from government in 2022, in reverse chronological order.

From SEC to Quinn

C. Dabney O’Riordan in November joined Quinn Emanuel Urquhart & Sullivan after nearly two decades at the SEC, the last six years of which she spent as the head of the Asset Management Division.

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Cravath Lands in DC

Cravath, unlike rival Wachtell, Lipton, Rosen & Katz, ended its long run as a leading Wall Street-focused firm that avoided planting a flag in Washington. The firm in June opened a DC office with three high-ranking, former federal regulators, including two from the SEC and one from FDIC.

Jelena McWilliams, former chairman of the FDIC, is managing partner of Cravath’s new DC office. The new trio also include partners Elad Roisman and Jennifer Leete. Roisman is a former commissioner and acting chairman of the SEC, while Leete used to be associate director of enforcement at the agency….

Second Circuit Questions Use of Criminal Insider-Trading Statute Without Proof of Receipt of Personal BenefitThe Second Circuit held yesterday that a government agency’s nonpublic, pre-decisional regulatory information does not constitute “property” for purposes of the federal insider-trading and wire-fraud statutes. The decision in United States v. Blaszczak (2d Cir. Dec. 27, 2022) (“Blaszczak II”) effectively vacated convictions under those statutes for defendants who had traded on nonpublic, market-moving information that had been obtained from a government agency.

In a separate “concurrence” having potentially broader legal ramifications, two members of the panel also expressed concerns (in dicta) about the government’s use of the criminal insider-trading statute to prosecute tipper-tippee insider trading without needing to prove that the tipper received a “personal benefit,” as required under the federal securities laws.

The majority’s ruling on the use of nonpublic governmental information under insider-trading and wire-fraud statutes will likely not affect most insider-trading cases, which generally involve material nonpublic information (“MNPI”) obtained from nongovernmental sources. But the views expressed in the concurrence, if ultimately adopted by the courts or Congress, could shut down an approach that the government has been using to avoid the potentially complicated “personal benefit” issue, which has generated much litigation in recent years.

Crypto Crackdown Will Help Shape 2023 Securities Law Storylines

US securities regulators’ expected crackdown on crypto firms and potential shakeups in insider trading cases are among the closely watched investor issues for the coming year.

Securities litigation involving companies’ environmental, social and governance (ESG) disclosures and practices will also keep court dockets busy. A slowdown in dealmaking likely means fewer lawsuits related to mergers and acquisitions, but a market downturn could spur more fraud cases.

Targets of Securities and Exchange Commission enforcement actions could also soon have a new avenue to fight off the agency’s complaints, as the US Supreme Court is expected deliver a decision in a closely watched case, SEC v. Cochran, by the end of June.

Crypto Trader’s Fraud Charges in Mango Exploit Show DeFi Not Above Law

Criminal charges against a crypto trader who claimed to have walked away with about $50 million worth of digital assets after exploiting a decentralized finance platform show that even as DeFi remains mostly unregulated, it offers no shield against the legal consequences of alleged fraud.

“There’s a difference between what’s regulated and what’s legal,” Neal Kumar, partner at Willkie Farr & Gallagher LLP, said in a phone interview. “Just because it’s not regulated doesn’t mean that you could do any activity you want,” he added, and “government can still pursue fraud and manipulation.”