SEC Denies Whistleblower Award in $1 Billion Settlement

Whistleblowers Who Exposed $1 Billion Fraud Denied SEC Windfall

Three whistleblowers who exposed a massive insurance fraud and helped secure a $1 billion bankruptcy court settlement aren’t entitled to any of that money, according to an SEC decision being challenged in two federal lawsuits.

The whistleblowers worked with the Securities and Exchange Commission for years and provided information that “significantly contributed” to the successful sanctioning of a Texas viatical company, the SEC wrote in a March 27 final order. But because the money was recovered through a bankruptcy proceeding, the law as written means the whistleblowers can’t be paid, the commission ruled.

Coinbase Taps Scalia, Top Former Federal Enforcers in SEC Fight

Coinbase Global Inc., which pledged Thursday to “exhaust all avenues” in countering the SEC, is staffing up legally with an ex-Trump Cabinet member and two former federal enforcers.

Coinbase’s outside legal team includes former US Labor Secretary Eugene Scalia, who is a Gibson Dunn partner, and two former enforcement directors—Steven Peikin of the Securities and Exchange Commission and James McDonald of the Commodity Futures Trading Commission. Both are Sullivan & Cromwell partners.

The crypto exchange “is coming out of the gates swinging—it’s really because it has the depth of the resources that it can afford,” said Carol Goforth, a University of Arkansas law professor. “If Coinbase did not feel comfortable, it would not have been so public in its response.”

U.S. House Will Have Crypto Bill in 2 Months, Says Rep. Patrick McHenry

The U.S. House Financial Services Committee and House Agriculture Committee will put together legislation to oversee the crypto sector in the “next two months” after holding joint public hearings starting May, said Rep. Patrick McHenry (R–N.C.), chair of the House Financial Services Committee.

When asked whether such a bill could be signed by President Joe Biden in the next 12 months, McHenry told a crowd at CoinDesk’s Consensus 2023 event, “yes.” The key lawmaker was quick to provide a rider that it’s always a challenge to legislate something new into existence.

“What we plan to do over the next two months is report a deal out,” McHenry said, adding that the bill will address both securities and commodities regimes and issues that are hard to fix on either side.

SEC Charges CEO and Subsidiary of Seattle-Based Company with Securities Fraud

The Securities and Exchange Commission today announced settled charges against Seattle-based company Coinme Inc., its subsidiary Up, Global SEZC, and the Chief Executive Officer of both entities, Neil Bergquist, for conducting unregistered offers and sales of securities in the form of a crypto asset called “UpToken,” and against Bergquist and Up Global for making false and misleading statements concerning the demand for UpToken and the amount raised in the offering.

According to the order, from October 16, 2017 to December 15, 2017, Coinme, Up Global, and Bergquist engaged in unregistered offers and sales of crypto asset securities during which, among other things, they marketed the financial benefit that UpToken investors would reap from Coinme purchasing UpToken in the secondary market after the ICO. The order also finds that, unbeknownst to UpToken investors, Bergquist and Up Global took steps before and throughout the ICO to obtain an UpToken supply that would substantially reduce Coinme’s need to purchase UpToken after the ICO, and also knowingly or recklessly publicly inflated amounts raised in the ICO.

Crypto Industry Is ‘Absolutely’ at War Against Gensler, Warren, Blockchain Association CEO Smith Says

The crypto industry is “absolutely at war” against policy and lawmakers in the U.S., particularly against Securities and Exchange (SEC) Chairman Gary Gensler and Senator Elizabeth Warren (D-Mass.), Blockchain Association CEO Kristin Smith said during a panel Friday at Consensus 2023.

“Elizabeth Warren has an anti crypto army. She is advertising on Twitter for her campaign, that she has an anti crypto army,” Smith said during “Beltway Confidential: Inside the D.C. Crypto Scene.”.

Insider Trading Enforcement in 2022

Each year, the Department of Justice (“DOJ”), the Securities and Exchange Commission (“SEC”), and in recent years, the Commodity Futures Trading Commission (“CFTC”) dedicate substantial resources to investigating and prosecuting illegal insider trading across U.S. securities and commodities markets. This past year, we have observed significant developments and emerging trends in the enforcement of insider trading laws and regulations. For example:

—10b5-1 trading plans are under scrutiny and subject to new rules;

—The DOJ and the SEC are applying traditional insider trading concepts to digital assets;

—The Second Circuit Court of Appeals rejected the DOJ’s arguments in Blaszczak II; and

—The SEC is pursuing novel “shadow trading” legal theories of insider trading liability.

SEC ENFORCEMENT SWEEPS: IMPLICATIONS FOR AGENCY AND INDUSTRY

Those who practice before the SEC have seen a continued rise in its use of sweep investigations, and there is every indication that this practice will continue. In this Article, we will first discuss the differing purposes between sweeps initiated by the Division of Examinations as compared with the Division of Enforcement. Next, we will examine the SEC’s recent use of enforcement sweeps, as well as the SEC leadership’s explanation of its purposes in conducting them. Then, we will analyze some typical characteristics of recent enforcement sweeps. Finally, we will consider the benefits and risks that the SEC’s increased reliance on sweeps presents for both the SEC and potential respondents.

The secretary who helped uncover one of America’s strangest Ponzi schemes

The whole thing started because Robin H. Swanson wanted to send flowers.

***

Swanson ordered a standard bouquet from the closest florist she could find, a business called Floral Fantasies. The flowers plus delivery cost $23.95. Swanson used her Visa card. The boss’s wife was thankful for the gift. That was that.

Or so Swanson thought.

She realized a few weeks later she had been charged $601.11 for the order — the equivalent of ~$1.6k today.

“The bottom line is I got pissed,” Swanson told The Hustle. “I turned into an investigator.”

The coming months would take Swanson and her husband down a path that was anything but ordinary: phone calls with a charismatic young entrepreneur, a clandestine visit to a lavish gated community, a dust-up with hired goons.

Swanson was just trying to get her money, but she ended up doing far more. She helped set a foundation for the downfall of one of the biggest — and most bizarre — Ponzi schemes of the 1980s.

Top-Ten List of JRS Twitter-Rebuttals | LinkedIn

For those considering posting a Tweet offering criticism of any ilk relating to crypto, Web3, DeFi, NFTs, etc., the top ten list of streamlined rebuttals set forth below will prove immensely helpful to counter Tweets that fall into category 3 (Big Crypto Talking Points and Personal Attacks).

For example, going forward, when I tweet anything about an SEC crypto-related enforcement action and a Twitter user replies by saying “OK Boomer,” I merely have to reply by saying: “Please see #10, thanks and I wish you all the best.”