What is the SEC's Next Move Following Defeat on Grayscale Bitcoin ETF?

Crypto vs SEC: What Grayscale’s court victory means for bitcoin ETFs

The SEC has 45 days to decide whether to abide by the decision, ask the full federal appeals court in Washington to review it, or take an appeal straight to the Supreme Court. It said on Tuesday that it was reviewing the decision.

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Financial reform group Better Markets suggested that the agency could address the court’s concerns another way — by cancelling bitcoin futures ETFs rather than approving new spot products. The ruling “does not change the fact that the bitcoin market is subject to fraud and manipulation or that an ETF would be a serious threat to investors”, said Dennis Kelleher, its chief executive.

SEC Could Issue New Arguments to Reject Spot Bitcoin ETF: Berenberg

It is quite possible that the U.S. Securities and Exchange Commission (SEC) will prepare alternative arguments to justify continued rejections of spot bitcoin (BTC) exchange-traded-fund (ETF) applications based on concerns about the spot bitcoin market, German investment bank Berenberg said in a research report Wednesday.

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The panel did not compel the SEC to approve a spot bitcoin ETF, but said the regulator needed to revisit the arguments it used to support its rejection of Grayscale’s application, the analysts wrote.

The SEC also has the option to appeal the panel’s ruling, the report said.

SEC launches artificial intelligence sweep

In at least two cases, regulators have asked private funds 15 sets of questions about how they’re using AI, including a description of their “models and techniques,” a “list of algorithmic trading signals and associated models,” the source and providers of their data, and internal reports of “any incidents where AI use raised any regulatory, ethical, or legal issues,” according to a document request letter obtained by RCW.

At least one of the request letters came from an examiner on the SEC’s national exam team based in New York….

Crypto Scam Token Case Yields Novel Win for Andreessen Horowitz

Venture firm Andreessen Horowitz and other backers of the Uniswap Protocol—a cryptocurrency exchange that runs on self-executing “smart contracts”—won a novel court ruling Wednesday absolving them of federal securities liability to platform users victimized by “scam tokens.”

Judge Katherine Polk Failla dismissed the proposed class action, which also targeted exchange founder Hayden Adams, several affiliates, and two other investment firms—Paradigm Operations LP and Union Square Ventures LLC. The judge, writing for a federal court in Manhattan, said a crypto exchange’s developers and investors aren’t covered by laws that apply to brokers issuing or promoting the sale of securities.

Disgorgement Accounting After Liu v. SEC in Securities Enforcement Cases

In Liu v. the Securities and Exchange Commission (SEC), the Supreme Court determined that disgorgement remedies for SEC civil penalties shall be limited to the defendant’s “net profits.” This holding changes the calculus for award determinations in billions worth of corporate and individual defendant settlements with the SEC every year.

Much of the back and forth in those negotiations has been felt in private settlement conferences with the SEC, where many defendants make individual arguments about the limits on a disgorgement penalty using accounting expertise. This is the first article to systematically link the precedent and guidance available in the remedies treatises cited by the Supreme Court in Liu v. SEC and related lower court opinions expanding on Liu and to then link those concepts to fundamental accounting and finance principles.

Guest Post: New SEC PE and Hedge Fund Disclosure Rules Winners? The Lawyers

On Monday, August 23, 2023 the Securities and Exchange Commission (SEC) voted to approve Private Fund Adviser amendments to the Investment Advisers Act of 1940, updating existing compliance rules for Private Equity Firms and Hedge Funds.

The initial proposal was floated in February 2022, so the SEC did provide the market with a heads up that there would be increased scrutiny over an industry that regulars have often referred to as opaque. Certainly, Big Law’s perspective that the new rules—which will take effect in 60 days—will likely create more work for law firm regulatory partners, as well as increase demand for recent public sector lawyers with regulatory agency experience,[i] seems the most realist forecasted impact.