SEC v. Binance Kicks Off in D.C. Federal Court: "Where is the Boundary?"

Binance, SEC face off over regulator’s crypto oversight

Much of the SEC’s case hinges on whether crypto assets traded on Binance’s trading platform are securities that fall under the SEC’s oversight.

“The SEC to this day has been talking out of both sides of its mouth when it comes to crypto tokens,” said Matthew Gregory, a lawyer for Binance, at the hearing.

“They’re telling the industry (to) come in and register, while simultaneously with their other hand holding the door closed and preventing any viable path to do that.”

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During the hearing, Judge Jackson appeared to echo the sector’s question over where the regulator’s jurisdiction ends.

“It seems like you are trying to say that all digital assets, at the end of the day, have the earmark of securities,” the judge said to SEC’s lawyers. “If you are not, where is the boundary of what you are saying?”

Statement by an SEC Spokesperson to the Media Regarding X Account

Two days after the incident, in consultation with the SEC’s telecom carrier, the SEC determined that the unauthorized party obtained control of the SEC cell phone number associated with the account in an apparent “SIM swap” attack. SIM swapping is a technique used to transfer a person’s phone number to another device without authorization, allowing the unauthorized party to begin receiving voice and SMS communications associated with the number. Access to the phone number occurred via the telecom carrier, not via SEC systems. SEC staff have not identified any evidence that the unauthorized party gained access to SEC systems, data, devices, or other social media accounts.

Once in control of the phone number, the unauthorized party reset the password for the @SECGov account. Among other things, law enforcement is currently investigating how the unauthorized party got the carrier to change the SIM for the account and how the party knew which phone number was associated with the account.

While multi-factor authentication (MFA) had previously been enabled on the @SECGov X account, it was disabled by X Support, at the staff’s request, in July 2023 due to issues accessing the account. Once access was reestablished, MFA remained disabled until staff reenabled it after the account was compromised on January 9. MFA currently is enabled for all SEC social media accounts that offer it.

Some Common Sense in the FTX Bankruptcy: Hallelujah

A federal appeals court on Friday ordered the appointment of an independent bankruptcy examiner to investigate the Nov. 2022 collapse of FTX.

Reversing a lower ruling, the 3rd U.S. Circuit Court of Appeals in Philadelphia agreed with a government watchdog that appointing an examiner was mandatory under the U.S. Bankruptcy Code.

The independence of an examiner is relevant, the circuit panel said, given the law firm Sullivan & Cromwell’s work for FTX prior to the bankruptcy and the conflict of interest issues that have been raised over it. The US Trustee has also pushed for an outside investigation to determine whether any employees or officers of FTX who engaged in wrongdoing are still with the company.

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Given these circumstances, there should exist no opposition to granting an independent team of investigators 24-7 backstage access to FTX to seek truth and then requiring the team publish their findings to the world. Just like in Enron, Lehman Brothers and so many others, whether to appoint an independent examiner is a no-brainer.”

Bitcoin Has Fallen About 20% Since US Spot ETFs Began Trading

Bitcoin has fallen over 20% since the Jan. 11 launch of the first exchange-traded funds investing directly in the token as speculators become more cautious about the potential impact of the products.

The digital asset spiked to $49,021 on the day the ETFs from issuers including BlackRock Inc. and Fidelity Investments went live. Bitcoin traded at $38,860 as of 6:20 a.m. Tuesday in New York, a 20.7% drop from that intraday peak.

ICBC Fined $32 Million by New York’s Financial Regulator and Fed for Compliance Failures

Industrial & Commercial Bank of China will pay about $32 million to resolve investigations into alleged compliance problems at the bank’s New York branch.

ICBC, the world’s largest bank by assets, entered into settlements with the Federal Reserve and the New York State Department of Financial Services, the regulators said Friday.

ICBC will pay $30 million in connection with an NYDFS investigation that found deficiencies in the anti-money-laundering and Bank Secrecy Act compliance programs at ICBC’s New York branch between 2018 and 2022. The Federal Reserve fined the bank another $2.4 million for alleged unauthorized use and disclosure of confidential supervisory information.

Biotech Hit with Securities Suit After Pandemic Impact on Clinical Trials

A few days ago when I published a post discussing a new COVID-19-related securities lawsuit I expressed my surprise that pandemic-related suits were still being filed in 2024, particularly after the pace of new coronavirus-related suits tailed off completely in the latter half of 2023. Well, it appears that the recent new case filing not just a single anomaly, as this past week yet another new pandemic-related securities lawsuit was filed.

On January 19, 2024, a plaintiff shareholder filed a securities suit against BioVie, a developmental stage biotech company, after the company reported that clinical trials for its Phase 3 drug candidate produced results the company concluded deviated from protocols and Good Clinical Practice (GCP) because the pandemic had limited patient access to clinical trial sites. A copy of the new complaint can be found here.