"Sorry, All of Securities Regulation is Wrong, We’ve Got to Scrap It"

The SEC is Busy

A somewhat exaggerated model you could have for the US Securities and Exchange Commission under its current chair, Gary Gensler, is that Gensler wants to remake all of securities regulation all at once….

You could imagine the SEC’s staff loving this. “Finally, after years of not remaking securities regulation, we’ve got something exciting to do!” But it is easier, for me, to imagine most of the staff finding this very annoying. For one thing, they have worked there for a while, and they presumably have a certain fondness for existing securities regulation, a certain investment in it. When the new boss comes in and says “sorry, all of securities regulation is wrong, we’ve got to scrap it and start over,” it is hard for the staff not to hear that as an insult. That securities regulation is, in some sense, their securities regulation; they interpreted and enforced and defended those rules for years, and they wrote some of them. They took some pride in the system of securities regulation that they worked on every day. And now their boss says they were wasting their time.

Grayscale’s Bitcoin Case Gets Support From View Of Capricious SEC

The friend-of-the-court brief, signed by former U.S. regulatory officials, points out that the SEC is fine with ETFs based on a futures index that has an almost perfect correlation with a gauge based on spot prices. The SEC has based its opposition to spot-based ETFs on their vulnerability to fraud and manipulation, but the evidence indicates that they are no more at risk than futures.

Grayscale, which is getting support from crypto and traditional finance in its court battle, sued the SEC in June after the regulator rebuffed Grayscale’s attempt to convert its $12 billion bitcoin trust (GBTC) into a spot bitcoin ETF. Before the suit, more than 11,000 letters of support for Grayscale were received by the agency.

The five amicus curiae briefs, were filed with the Court of Appeals for the District of Columbia Wednesday. Grayscale supporters include crypto exchange Coinbase; industry advocates the Blockchain Association and Coin Center; the Chamber of Digital Commerce; NYSE Arca, the exchange that had sought permission to list Grayscale trust’s shares; and a group of academics and former regulators.

CFPB Appellate Ruling Portends ‘Chaos’ in Financial System

A Fifth Circuit ruling that the Consumer Financial Protection Bureau’s funding stream is unconstitutional has left companies under its oversight in limbo about whether its actions still have teeth.

The US Court of Appeals for the Fifth Circuit’s Wednesday decision—which said the CFPB’s funding mechanism runs afoul of the US Constitution—is seen as a case that’ll likely end up in the US Supreme Court. But an eventual high court ruling could take more than a year. If the Supreme Court agrees with the Fifth Circuit, it will spark a political fight in Congress over how to fund the agency directly.

The uncertainty will likely throw the financial services sector into chaos, with companies left guessing about how to contend with the agency until its funding is resolved. A drawn-out fight over funding then could ultimately leave the agency weakened.

“The chaos is going to happen now, no matter what,” said Kathleen Engel, a professor at Suffolk University Law School.

Crypto Companies FTX, Kraken See C-Suite Resignations in Face of Meltdown

The convulsions that set the cryptocurrency market tumbling earlier this year and delivered shock waves through the industry have subsided. Now comes the shakeup in the C-suite.

More than two dozen high-ranking executives — from Alex Mashinsky, the charismatic and controversial co-founder of now-bankrupt crypto lender Celsius Network to Brett Harrison of digital-asset exchange FTX US and Jesse Powell, the outspoken head of FTX’s rival Kraken — have vacated their posts in the past two months alone.

A Text Scam Called ‘Pig Butchering’ Cost Her More Than $1.6 Million

The text message on Jane Yan’s mobile phone came from a number she didn’t recognize. “Are we going to the salon tonight?” It looked like the kind of mistake that can happen any day.

In fact, it was part of a continuing scam that cost U.S. victims more than $429 million in losses last year, according to the Internet Crime Complaint Center, the Federal Bureau of Investigation’s clearinghouse for consumer complaints about online crime.

Three months after beginning a conversation with the person who texted her, Ms. Yan had lost more than $1.6 million, the victim of a wave of messages that have flooded onto mobile devices this year via text message and social media, according to law-enforcement officials.

THE Memes Won’t DIE: Crypto Hopefuls Seek Value in Joke Tokens After Vitalik Buterin’s Tweets

One of the most-traded tokens on the decentralized exchange Uniswap is called THE, which has seen some $10 million in on-chain trading volume and counts over 5,000 holders as of Friday afternoon.

THE was created after Ethereum co-creator Vitalik Buterin, presumably jokingly, said on the bird app last week: “Someone should make a project called “THE Protocol”, so that their shills can say “Look, soandso mentioned THE!” pretty much any time anyone says anything.”

Twitter users rightfully pointed out that such tokens were probably on their way, shortly after Buterin’s tweet. And the predictions didn’t disappoint: someone issued and floated THE tokens on Uniswap.

This was then followed by other articles, such as THIS, THEY and THAT, all of which today have dozens of iterations on blockchains like Ethereum, BNB Chain, Solana and others.

SPAC liquidations top $12 billion this year as sponsors grapple with tough market, new buyback tax

A new buyback tax has motivated more and more SPAC sponsors to close up shop before the year-end, adding another headwind to the blank-check space already roiled by a tough market environment.

A total of 27 SPAC deals, worth $12.8 billion, have been liquidated this year, according to data from SPAC Research. Under the new provision in the Inflation Reduction Act, SPAC sponsors could face a 1% exercise tax if they return cash to investors starting in 2023.