Happy Friday in the SEC's Trial Unit as Agency Prevails in Panuwat and Terraform Jury Trials

Statement on Jury’s Verdict in Trial of Matthew Panuwat

Today, after an eight day trial and only several hours of deliberation, a jury in the United States District Court for the Northern District of California found Matthew Panuwat liable for insider trading in violation of the federal securities laws.

Statement of SEC Division of Enforcement Director Gurbir S. Grewal:

“As we’ve said all along, there was nothing novel about this matter, and the jury agreed: this was insider trading, pure and simple. Defendant used highly confidential information about an impending announcement of the acquisition of biopharmaceutical company Medivation, Inc., the company where he worked, by Pfizer Inc. to trade ahead of the news for his own enrichment. Rather than buying the securities of Medivation, however, Panuwat used his employer’s confidential information to acquire a large stake in call options of another comparable public company, Incyte Corporation, whose share price increased materially on the important news.”

Terraform founder Do Kwon found liable in SEC’s crypto fraud trial

A jury in Manhattan found Singapore-based Terraform Labs and its founder Do Kwon liable on civil fraud charges on Friday, agreeing with the Securities and Exchange Commission that they misled investors before their stablecoin’s 2022 collapse shocked cryptocurrency markets.

The jury delivered the verdict in federal court after a two-week trial after hearing closing arguments earlier in the day.

The SEC accused the company and Kwon of misleading investors in 2021 about the stability of TerraUSD, a stablecoin designed to maintain a value of $1. The regulator also accused them of falsely claiming Terraform’s blockchain was used in a popular Korean mobile payment app.

SEC attorney Laura Meehan said during closing arguments that the platform’s success story was “built on lies.”

SEC Climate Rule Pause Creates Path for Faster Court Decision

The Securities and Exchange Commission’s decision to unilaterally pause the implementation of its climate reporting rules places the agency on a faster track for a decision on the rules’ legality.

The SEC on April 4 told the US Court of Appeals for the Eighth Circuit it would stay the requirements for public companies to report their greenhouse gas emissions and disclose climate-related risks to their business, pending the court’s review.

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By issuing the stay on its own, the SEC is eliminating back-and-forth over various requests from plaintiffs to pause the rule, attorneys said.

“The SEC’s agreement to a voluntary stay means that the litigation will proceed much more speedily and efficiently on the merits of the challenges,” said Jacob Hupart, co-chair of the ESG practice group at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

Joe Lewis Joins Ranks of Billionaire Felons After Sentencing

Joe Lewis, sentenced to three years probation for insider trading, joins the ranks of billionaires who’ve been convicted of a crime yet managed to hold onto their fortunes.

The Tavistock Group founder, 87, was spared jail time Thursday by a federal judge in New York who cited his age and health issues. In his plea deal, Lewis waived his right to appeal unless he was sentenced to prison. He was also fined $5 million.

Bitcoin ETF IBIT Adds Goldman, Citi, Citadel as Authorized Participants

APs are an integral part of the ETF process as they help create liquidity by changing the supply of shares when there’s a shortage or a surplus. Large ETFs typically have dozens of APs, and in less than three months of existence, IBIT has become fairly sizable with nearly $18 billion in assets under management as of the close yesterday.

The participation of Goldman Sachs is particularly notable as its wealth management chief investment officer just this week said the bank believes that crypto has “no value” and feels no pressure to participate in the space even as other TradFi giants are taking major steps.

The Goldman news recalls that of JPMorgan, whose CEO Jamie Dimon publicly bashed cryptocurrencies for years, but became one of the original APs for BlackRock’s IBIT when the fund launched in January.

Binance exec Tigran Gambaryan pleads not guilty as judge sends him to Nigerian prison

It took six weeks, but Tigran Gambaryan finally got to proclaim his innocence in a Nigerian courtoom.

Gambaryan, a senior US Binance executive, pleaded not guilty Monday to money laundering charges and was remanded to prison to await trial.

Gambaryan’s lawyer argued that his client should not be held responsible for Binance’s activities in the African nation because he does not have decision-making authority in the company’s business operations.

Gambaryan is the head of the crypto exchange’s financial crime compliance unit, according to his LinkedIn profile.

Crypto Scam Criminal Trial Tests ‘Code Is Law’ Claim by Trader

A jailed trader accused of stealing $110 million on the Mango Markets exchange faces a criminal trial this week that will test the reach of a US crackdown on cryptocurrencies.

Prosecutors charged Avraham Eisenberg with manipulating Mango Markets futures contracts on Oct. 11, 2022, to boost the price of swaps by 1,300% in 20 minutes. He then “borrowed” from the exchange against the inflated value of those contracts, a move the government claims was a theft.

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Eisenberg, a self-described “applied game theorist,” claims his actions weren’t theft at all. Rather, he says, he legally exploited a weakness in the decentralized finance application. The trial will apparently be the first time a US criminal jury will weigh what type of “DeFi” transactions are legal.