SEC Critics Look to U.S. Supreme Court for Answers on ALJs, Crypto

U.S. Supreme Court Takes Up Case Concerning the SEC’s Use of In-House Court

The Supreme Court’s decision to take up the case sets up the court’s consideration of a host of interesting legal issues. From my perspective, the Seventh Amendment question – that is, whether the agency’s use of the administrative tribunals violates the constitutional right to a jury trial – is particularly interesting. The other issues, about delegated authority and separation of powers, are more intricate and technical, but could equally resulting in the Court restricting the agency’s ability to seek financial penalties through its in-house courts.

It remains to be seen how this case will unfold; the case will be argued sometime in the Fall, and it will be decided some time before the end of the Court’s next term, in June 2024. While the case has not even been briefed, much less argued, the betting line has to be, at least for now, that the Court will strike down the agency’s use of the in-house tribunals. The current Supreme Court has shown a willingness to confront the administrative state.

The Supreme Court could stop the SEC’s war on crypto

In recent landmark cases that curbed executive overreach in both the Obama and Biden administrations, the Supreme Court has underscored the importance of the major questions doctrine. This doctrine underlines the crucial point that when agencies attempt to regulate questions of significant national or political importance, they must have explicit authorization from Congress.

***

The Supreme Court’s decision striking down Biden’s student loan forgiveness program is the most recent invocation of the major questions doctrine. Coinbase general counsel Paul Grewal astutely observed that one could substitute crypto for student loans in the court’s ruling and envision a similar outcome.

How Tom Brady’s Crypto Ambitions Collided With Reality

His money was also at stake. As part of an endorsement agreement Mr. Brady signed in 2021, FTX had paid him $30 million, a deal that consisted almost entirely of FTX stock, three people with knowledge of the contract said. Mr. Brady’s wife at the time, the supermodel Gisele Bündchen, was paid $18 million in FTX stock, one of the people said.

Now FTX is bankrupt, and Mr. Bankman-Fried is facing criminal fraud charges. Mr. Brady, 45, and Ms. Bündchen, 42, have been sued by a group of FTX customers seeking compensation from the celebrities who endorsed the exchange. On top of it all, the terms of the deal would have required the former couple, who divorced last year, to pay taxes on at least some of their now worthless FTX stock, two people familiar with the endorsement deal said.

The First Step Act Shortens Federal Prison Sentences, Including Elizabeth Holmes’

Breaking down the numbers, Ms. Holmes’ 135-months will be reduced by 20 months for Good Conduct time. She could then receive 24 months off through the combination of First Step Act and RDAP credits, assuming she qualifies for RDAP. Additional home confinement credits under the First Step Act, 20 months (595 days), and Second Chance Act, 6 months, will mean that Holmes could potentially leave prison November 30, 2028. Her 135-months could be reduced to 66 months at FPC Bryan with the remainder of the shortened sentence served on home confinement. It is a significant reduction in time behind bars.

‘Vast swathes’ of XRP owners in Ripple case don’t believe the tokens are securities. They’re class members anyway.

“For these thousands of putative class members, the notion that their XRP — that they purchased and may still own — is a ‘security’ comes as an unwanted surprise,” the defendants said. XRP trading would be more complicated if the coins were found to be securities, Ripple’s lawyers said — and sellers might even face individual liability for trading unregistered securities. It would also be harder, according to Ripple, for businesses to accept and make payments using XRP if the tokens are securities.

Several XRP purchasers underlined that point in a proposed amicus brief in the class action. The brief was filed by John Deaton of The Deaton Law Firm, who said he represents the interests of nearly 76,000 XRP holders who do not believe XRP is a security. (Deaton was granted leave to file an amicus brief for XRP holders in the SEC case.) Like Ripple’s lawyers, Deaton argued that the lead plaintiff cannot represent the interests of class members who “totally disagree” with his claims.

The judge overseeing the class action was not convinced.

FINRA Action Against Adviser Halted While Challenge Proceeds

Alpine Securities Corp. is entitled to an order preventing the Financial Industry Regulatory Authority from continuing with its enforcement action against the investment adviser while it argues its challenge, a divided D.C. Circuit panel said Wednesday.

Alpine and another adviser fought back against the industry group’s power in a suit filed in October.

FINRA’s structure and operation violate the separation of powers, the appointments clause, and the delegation of powers, Scottsdale Capital Advisors Corp. and Alpine said.

Who is Daniel Friedberg? FTX Lawyer Is Caught Up in Crypto Firm’s Fallout

He was the ultimate crypto cleaner – a lawyer, fixer and more for Sam Bankman-Fried and his FTX business empire. Daniel Friedberg,

FTX’s former chief regulatory officer, now is being pulled even deeper into the intrigue surrounding his former boss Bankman-Fried, who’s hurtling toward one of the biggest white-collar criminal trials in US history. In a lawsuit filed last week, the new management of FTX accused Friedberg of enabling Bankman-Fried’s alleged crimes, and helping to orchestrate a “wide-ranging con game” to raid billions of customer dollars.

Binance Australia Offices Searched by Markets Regulator in Derivatives Probe

Binance’s offices in Australia were searched by the country’s financial markets regulator as governments around the world turn up the heat on the biggest cryptocurrency exchange.

The Australian Securities and Investments Commission conducted searches at several Binance Australia locations on Tuesday, people with knowledge of the matter said, asking not to be identified discussing private information. The action was part of an investigation into its now-defunct local derivatives business, according to the people.

If Kirkland & Ellis Can’t Avoid Cyberattacks, Who Can?

By exploiting a vulnerability in a widely used file transfer application, hackers were able to access the internal information of several large organizations, including three Am Law 50 law firms, highlighting the vulnerability of widespread use of one third-party application.

The incident has observers wondering: If some of the largest and most profitable law firms, like Kirkland & Ellis, K&L Gates and Proskauer Rose can’t protect their data from bad actors online, what does that say for the rest of the industry?