NY AG Sues Sues Coinbase and Gemini for Running "Illegal Gambling Platforms"

Attorney General James Sues Coinbase and Gemini for Running Illegal Gambling Platforms in New York

New York Attorney General Letitia James today sued Coinbase Financial Markets, Inc. (Coinbase) and Gemini, Titan LLC (Gemini) for illegally running gambling operations in New York through their so-called “prediction market” platforms. Both Coinbase and Gemini offer users the ability to bet on events, including sports, entertainment, and elections, in violation of New York laws. An investigation by the Office of the Attorney General (OAG) found that Coinbase and Gemini are running prediction markets that constitute illegal, unlicensed gambling operations. These illegal operations expose New Yorkers – including those under the legal gambling age of 21 – to serious financial and personal risk. Attorney General James is seeking court orders requiring Coinbase and Gemini to pay fines, forfeit illegal profits, and pay restitution to customers.

Insider Trading Convictions Tossed on Appeal Due to Juror Bias

A Los Angeles man convicted of six counts of insider trading is getting a new trial after the Ninth Circuit said the district court judge failed to independently investigate the jury foreman’s admitted bias.

The government claimed that Shahriyar Bolandian’s lawyer waived the argument by failing to object to the juror’s service. But defense counsel couldn’t have made a knowing waiver of juror bias in the absence of an independent investigation by the district court, the US Court of Appeals for the Ninth Circuit said Tuesday in a published opinion.

Litigation Against the SEC has Spiked in Recent Years. Why?

The Securities and Exchange Commission is an enormously powerful regulator. The agency’s power stems, in large part, from its traditional response to a problem endemic in the securities laws. The problem is that broad and vague statutory prohibitions, backed up by onerous liability, risk chilling market behavior in profoundly undesirable ways. The SEC’s traditional response to this problem has not been to more clearly delineate what the law affirmatively prohibits, or to reduce liability, but rather to bless certain practices that it deems lawful using a variety of regulatory techniques that tend to elide traditional APA-based accountability mechanisms—e.g., safe harbors, no-action letters, guidance, exemptive relief, the strategic exercise of enforcement discretion. These techniques allow the SEC to effectively micromanage the capital markets in a manner that (to put it mildly) sits in tension with the Brandeisian vision of the SEC as a hands-off regulator focused primarily on disclosure and fraud prevention. And for most of its existence, the SEC exercised its vast power with very little legal pushback from market participants. That has changed—dramatically—in recent years. Empirical research shows litigation against the SEC jumping significantly in the 2010s and then skyrocketing in the 2020s. In Suing the SEC, forthcoming in the Texas Law Review, I explore why.

SpaceX super-voting

One risk factor the company notes in the SpaceX prospectus is that shareholders may not be able to pursue certain legal claims because of a “requirement for mandatory arbitration.”

We talked about this idea last year: Now companies can basically forbid shareholders from suing them, by requiring all shareholder claims to be brought in mandatory arbitration. As far as I can tell, no one has done it yet. Now SpaceX might. SpaceX is sort of obviously the best company to do it: Elon Musk is going to do a bunch of wild stuff that does not meet traditional standards of corporate governance, and that’s what shareholders are signing up for, and if they don’t like it they shouldn’t buy the stock. SpaceX is a gamble that the entirety of Musk — the visions of space data centers and Mars colonies, the energy, the wild flouting of governance norms — will pay off for shareholders, as it mostly has in the past. Quibbling about the governance norms is stupid.

But if SpaceX does it and it works, then 100 companies that are not run by Elon Musk are going to try.