So, About That Stock Trading Ban for Congress.... 🤷‍♂️

Lawmakers Unlikely to Be Banned From Trading Stocks, at Least for Now

Despite months of talk in the US Senate and an aborted September vote in the US House, it’s increasingly likely that this congressional session will end without a vote in either chamber on banning members of Congress from trading stocks.

Before Republicans take control of the House in January, Democrats are scrambling to keep the government funded, raise the debt limit, and reform the Electoral Count Act, among other priorities.

Bankman-Fried, Ellison tap attorneys as FTX probes ramp up

FTX founder and former chief executive Sam Bankman-Fried and Caroline Ellison, head of its now-defunct trading affiliate, have tapped defense attorneys as U.S. authorities probe the crypto exchange’s collapse, according to a spokesperson for Bankman-Fried and a source familiar with Ellison’s selection.

Bankman-Fried has retained Mark S. Cohen, of Cohen & Gresser, Bankman-Fried’s spokesperson Mark Botnick said in an emailed statement. Cohen could not be reached for comment.

Ellison, who ran trading firm Alameda Research, has hired Washington-based law firm Wilmer Cutler Pickering Hale and Dorr to represent her, a source familiar with the matter told Reuters. Neither Ellison nor spokespeople for the firm responded to requests for comment.

Abandon cryptocurrency, CNBC’s Jim Cramer tells investors

CNBC personality Jim Cramer told investors to dump their cryptocurrency investments during a scathing segment in the wake of FTX’s catastrophic bankruptcy.

Cramer, a frequent critic of the cryptocurrency sector, likened current conditions within the cryptocurrency sector to those investors experienced when the dotcom bubble burst in 2000. The polarizing CNBC fixture said investors should cut their losses during a period of upheaval in digital currencies.

“You can’t just beat yourself up and say, ‘hey, it’s too late to sell.’ The truth is, it’s never too late to sell an awful position, and that’s what you have if you own these so-called digital assets,” Cramer said Monday on CNBC’s “Mad Money.”

More Crypto Exchanges Verify Reserves, But Questions About Assets RemainCryptocurrency exchanges are setting up systems to verify certain assets and liabilities intended to reassure investors and customers in the wake of FTX’s collapse last month, but these measures give limited insight into the companies’ finances.

Several crypto exchanges, including Binance Holdings Ltd. and Crypto.com, in recent months have hired outside auditors to provide a proof of reserves report, an increasingly popular type of attestation that can show the business is solvent and has enough assets to cover its liabilities. Most crypto exchanges are privately held, meaning they don’t have to file financial statements with the Securities and Exchange Commission or get them audited.

The process aims to give investors certainty that their tokens are covered by reserves and their funds are safe, but the reports aren’t as thorough as an audited financial statement.

Psychos in the C-SuiteA peculiarity of subtle psychopaths is that while they don’t seem to feel shame, they are preoccupied with being thought of as highly moral. Ms. Holmes was simply trying to help sick people get their blood tested more easily. This was part of her origin myth—a relative’s illness made her sensitive to the needs of the suffering. Mr. Bankman-Fried gave away millions and became the public face of a movement called effective altruism. He was just trying to help the less fortunate live better lives! And he was so modest about it, eschewing material things, clad in rough sandals, a thin T-shirt, shorts. Like the young St. Francis, stripping himself naked that his robes might be sold for the poor.

Elizabeth Warren’s tough-on-crypto bill is taking shape

Sen. Elizabeth Warren, D-Mass. is working on a sweeping cryptocurrency bill that would hand the Securities and Exchange Commission most regulatory authority over the market, according to two people familiar with her efforts.

While discussions are still early and details could change, Warren’s office is looking at a range of crypto-related issues, including regulations, taxation, climate, and national security. The senator has recently stepped up her criticism for the industry and demanded “comprehensive” new rules to govern it following the massive collapse of the crypto exchange FTX. (FTX founder Sam-Bankman Fried is an investor in Semafor.)

Why Cryptoassets Are Not Securities

The Securities and Exchange Commission’s primary theory on whether a cryptoasset is a security appears to be based upon whether the blockchain project associated with a cryptoasset is, at any point in time, “sufficiently decentralized.”[2] If so, the cryptoasset is not a security. This theory was first proposed by the SEC staff in 2018 to address ICOs, which were then all the rage, and was followed by more detailed staff guidance in 2019. But the theory has not aged well. It is impractical—if not impossible—to apply to today’s real life blockchain projects. It is not supported by existing judicial precedent, including the now crypto-famous Howey Supreme Court case.[3] And it has resulted in market distortions that harm both market participants and long-term innovation in the crypto industry.

An intriguing new paper, The Ineluctable Modality of Securities Law: Why Fungible Crypto Assets Are Not Securities,[4] points us to the right path. The paper analyzes the relevant caselaw and concludes there is scant legal basis to treat fungible cryptoassets as securities, and it sets out analytical approach that is far more satisfying. The paper separates capital raising transactions by blockchain project sponsors or other insiders in which a cryptoasset may be sold—which are typically securities transactions—from the treatment of the cryptoasset, which is not a security. This analytical framework addresses the now apparent challenges created by the SEC staff’s approach and appropriately focuses the SEC’s regulatory jurisdiction on capital raising transactions.

Investors Gain Traction Overseas in Securities Fraud Litigation

Investors suing multinational companies for securities fraud are finding their footing in the Netherlands and other courts outside the US.

US courts are the epicenter of securities fraud litigation. But legal procedures in other countries’ courts are maturing, and litigation funders are flowing money into these jurisdictions, helping to remove obstacles.

Chamath Palihapitiya, The ‘SPAC King,’ Is Over It

In recent months, some of the stocks of Mr. Palihapitiya’s SPACs have dropped nearly 90 percent from when they listed. By selling most of his shares early, he roughly doubled the $750 million he put in, mostly into the entities he backed. But many small investors who followed his advice may not fare so well.

Mr. Palihapitiya — once known as the “SPAC king” — said that he was promoting SPACs at a time when investors were embracing all kinds of risky trades, and that he wasn’t responsible for the cratering stock prices of the companies he took public.

Instead, he blames the Fed’s policies.

“Nobody forced anybody to invest in anything,” Mr. Palihapitiya, 46, said in an October interview.