SEC Brings Action Against RSE for Operating Unregistered Securities Exchange

SEC Charges RSE Markets Inc. for Operating an Unregistered Securities Exchange

The Securities and Exchange Commission today announced settled charges against RSE Markets Inc. for operating as an unregistered exchange by maintaining and providing a marketplace and facilities that brought together purchasers and sellers of securities, specifically equity interests in “collectible assets” such as valuable cars and watches.

The SEC’s order finds that, between July 1, 2018, and November 20, 2021, RSE operated the Rally Platform, consisting of the RallyRd .com website, the Rally App, and trading functionality, for retail investors based in the United States to purchase and sell securities. Secondary market trading for these securities occurred exclusively on the Rally Platform within trading windows provided by RSE. RSE used an algorithm to match orders based on price and time priority, calculated a final clearing price at which matched orders would execute, and required matched buyers and sellers to provide confirmation of their willingness to transact at the final clearing price. According to the SEC’s order, the trading interests that RSE accepted were firm orders, as demonstrated by representative data showing that almost all matched trading interests were confirmed and executed. Despite these facts, and RSE marketing the Rally Platform as a stock exchange, the company neither registered the Rally Platform as a national securities exchange nor operated it pursuant to an exemption from such registration.

SEC Awards Whistleblower More Than $9 Million

The Securities and Exchange Commission today announced an award of more than $9 million to a whistleblower whose significant and detailed information and assistance led to a successful SEC enforcement action.

After repeatedly internally reporting the concerns, the whistleblower alerted SEC’s Enforcement Division to the conduct, prompting the opening of the investigation. In addition, the whistleblower provided substantial and ongoing cooperation.

“­Th­­­­­­­­­e whistleblower in this case provided critical information and continuing assistance that helped the agency recover millions of dollars for harmed investors,” said Creola Kelly, Chief of the SEC’s Office of the Whistleblower.

New Hampshire Issuer of Crypto Asset Securities That Violated Registration Requirements Enjoined and Ordered to Pay Penalty

On July 11, 2023, Judge Peter Barbadoro of the United States District Court for the District of New Hampshire ordered LBRY, Inc., a New Hampshire software company that issued crypto asset securities called “LBRY Credits” or “LBC,” to pay a civil penalty of $111,614. The Court also permanently enjoined LBRY from further violations of the registration provisions of the federal securities laws and from participating in unregistered offerings of crypto asset securities in the future.

The SEC’s complaint alleged that, from at least July 2016 to February 2021, LBRY, which provides a video sharing application, sold crypto asset securities called “LBRY Credits” to numerous investors, including investors based in the United States. LBRY’s failure to file a registration statement denied prospective investors the information required for such an offering to the public…

Biden Student Loans Ruling Aids COIN Defense Against SEC Lawsuit, Lawyers Say

A recent U.S. Supreme Court judgment on student debt cancellation aids Coinbase’s fight against charges of operating an unregistered securities venue, lawyers for the crypto exchange argued in a Wednesday legal filing.

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Coinbase says that “closely analogous” case, cited as Biden v. Nebraska, will have a bearing on its own, because lawmakers still haven’t set out clear rules for crypto.

“Far from granting the ‘clear congressional authorization’ required for the SEC to exercise such authority, Congress has expressly recognized that it has not yet delegated such regulatory authority and is actively considering regulatory structures for the digital asset industry,” said Coinbase’s filing.

Lummis, Gillibrand Revamp US Crypto Bill to Strengthen Consumer Protection

Now, the senators are revamping their prior effort by including measures they say will help prevent another FTX, whose founder Sam Bankman-Fried has since been criminally charged and faces accusations that he mishandled billions of dollars of customer funds. The bill would require firms to segregate client assets and impose third-party custody requirements, according to a document detailing the updates to the legislative proposal. It would also create new advertising standards for marketing crypto and require exchanges to show proof that they have enough assets to cover customer balances.

The effort is ambitious, creating a framework to give the Commodity Futures Trading Commission more authority to oversee certain tokens and addressing everything from sanctions compliance and taxes to stablecoin regulation.

Why some companies are quietly hiding their climate commitments

Greenhushing is the opposite of a better-known practice called greenwashing, in which companies overstate their sustainability in an attempt to market to environmentally conscious consumers. The rise of hushing reflects the fear that many corporate executives face when weighing whether to speak out on climate change, said Renat Heuberger, the co-founder and CEO of South Pole.

“If you’re a CEO who has all the right intentions, you might get sued from both sides — from the left and from the right,” Heuberger said. “And that is not good news if you want to convince more CEOs to get active on climate.”

SEC Chair Gensler dismisses industry calls for recusal on crypto decisions

Securities and Exchange Commission Chair Gary Gensler has no plans to recuse himself from decisions related to cryptocurrencies, despite accusations of bias from the industry.

“I am well aware of my ethical responsibilities,” Gensler told reporters at a Wednesday press conference. “I’m fully compliant.”

Trade and Export Control Enforcement Leads to Securities Class Action Suit

The latest example of a civil action following in the wake of a trade regulation enforcement action is the lawsuit filed earlier this week against data storage company Seagate Technology Holdings plc, after the company was hit with a U.S. Department of Commerce administrative penalty for violation of Export Administration Regulations (EAR) pertaining to the Chinese technology company, Huawei Technologies Co. Ltd. The recently filed securities suit shows how international trade regulation and enforcement can translate into corporate and securities litigation. A copy of the July 10, 2023, Seagate complaint can be found here.

Want a Spot Market Bitcoin ETF? Then Deal With the Consequences

In honesty though, that’s probably not where the issue of the SEC’s approval will lie.

Instead, the SEC will likely approve or deny the recent ETF applications based on its understanding of Coinbase being “regulated.” I’m sure the SEC will be over the moon to find that a firm it’s bickering with in court is the proposed market surveillance provider for the likes of Wall Street giants like BlackRock and Fidelity. The court squabble has nothing to do with the bitcoin market, but still, it’s a consideration.

The thing is: Coinbase’s fit for this role is all a bit unclear.