Today: Binance and SEC Square Off in TRO Hearing that Could "Effectively End" Binance US

SEC’s Temporary Restraining Order Would ‘Effectively End’ Binance.US Business, Crypto Exchange Claims

A Securities and Exchange Commission (SEC) Monday effort to freeze Binance US’s funds is a “draconian and unduly burdensome” move, the U.S. affiliate of the global crypto exchange argued Monday.

“If the Court does address the merits of the SEC’s motion, it should deny that motion. The SEC seeks unnecessary and unjustified relief. Far from requesting relief that is ‘carefully calibrated’ to ‘maintain[] the status quo’ … the SEC’s proposed remedies would effectively end BAM’s business,” Binance. US’s motion argued.

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Binance and Binance. US had already denied the claims in blog posts and tweets last week, but Monday marked a court-ordered deadline for a formal response. The U.S. District Court for the District of D.C. will hold a hearing on the motion on Tuesday, June 13 at 2:00 p.m. ET.

Big Law Bets on Crypto as Industry Faces More Regulatory Heat

The Securities and Exchange Commission’s recent lawsuits against crypto companies—and the Big Law firms defending them—is the latest indication that the industry will be a growing source of work and revenue for Big Law.

Attorneys in law firm cryptocurrency and securities investigations practices have reported a growing volume of work in advising crypto companies in litigation, enforcement, restructuring, bankruptcy work and lobbying.

“We continue to see robust demand from clients in the crypto industry for regulatory compliance across a variety of disciplines, litigation, and public policy counseling,” said Coy Garrison, a partner in Steptoe & Johnson’s blockchain and cryptocurrency and financial services practices. “We are confident that this industry will not go away and that the implementation of new regulations for this industry will help foster its growth over time.”

Binance US Hires Ex-SEC Enforcement Co-Director Canellos as It Fights Charges

Binance.US added four lawyers from Milbank LLP, including a former co-director of the Securities and Exchange Commission’s enforcement division, George Canellos, as the beleaguered crypto platform prepares its defense against US allegations of operating an illegal securities exchange.

Canellos, who is global head of the litigation and arbitration group at Milbank, previously supervised about 1,300 attorneys at the SEC on investigations including the insider trading actions against Raj Rajaratnam and hedge fund managers associated with S.A.C. Capital. Before then, he was chief of the major crimes unit at the US Attorney’s Office in the Southern District of New York.

Republicans take shot at SEC’s Gensler with proposal to oust him

Republican lawmakers took a shot at the U.S. Securities and Exchange Commission Chair Gary Gensler on Monday, announcing proposed legislation that would seek to remove him. But they’d need bi-partisan support for it to pass the Senate.

House Majority Whip Tom Emmer, R-Minn., a longtime proponent of digital assets, joined the introduction of Rep. Warren Davidson’s so-called “SEC Stabilization Act” that aims to restructure the Securities and Exchange Commission and remove Gary Gensler as Chair.

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The proposed legislation would adjust the commission to include a sixth commissioner, and a single political party would not be able to hold more than three commissioner seats at a given time.

Three Arrows Had a Fun Bubble

If you spotted a gigantic crypto bubble in the late 2010s and early 2020s, how would you play it? Two obvious wrong answers:

–Short crypto. You’d have gotten carried out, multiple times.

–Long crypto. This is better — the George Soros “When I see a bubble forming, I rush in to buy” approach — but still risky (the bubble did pop) and sort of analytically unsatisfying.

And a pretty good answer:

–Take out absolutely bajillions of dollars of non-recourse loans to buy as much crypto as you can, selling enough along the way — and putting the proceeds somewhere your creditors can’t get them — to make yourself dynastically wealthy. Borrow $1 billion to buy $1 billion worth of crypto. If that turns into $2 billion of crypto, pay off your loans, take the extra $1 billion and bury it in your backyard, and do it again. If you do it again and it turns into $0 of crypto, walk away from your debts, dig up your backyard and buy yachts.

The SEC has spoken: The future of finance is not in America

Of the alleged securities violations against Coinbase, the list of assets deemed to be securities reveals the broad nature of its classification. The SEC’s claims that its self-custodied wallet is a broker-dealer because it helps “route” a transaction doesn’t hold much merit either. And alleging that Coinbase is behaving like a clearing agency also seems far-fetched.

These actions are likely to attract fines for Coinbase and possibly the closure of its staking business. But there is a distinct difference between this and the SEC’s legal action against Binance, which faces an outright ban from operating in the U.S. The silver lining to this is that Coinbase now has the opportunity to fight the SEC in court — and fight it will. Armstrong has already said he’ll do what it takes to “get the job done.” The outcome of this case will likely determine the future of crypto in America.

Galaxy Digital’s Termination of $1.2B Acquisition of Crypto Custodian BitGo Upheld by Federal Judge

A federal judge has sided with Galaxy Digital (GLXY.TO) – the crypto merchant bank led by Mike Novogratz – in its decision to terminate its $1.2 billion acquisition of crypto custodian BitGo.

Delaware Chancery Court Vice Cchancellor James Laster ruled last week that Galaxy had a “valid basis” to end the deal because BitGo provided Galaxy with “non-compliant” documents pertaining to its financial health.

“There are no facts alleged that could make it reasonably conceivable that the exercise of the termination right was inconsistent with the implied covenant of good faith and fair dealing,” Judge Laster said in the ruling.

Ex-Goldman Sachs banker stole merger details, prosecutor tells jury

A former Goldman Sachs banker leaked details of potential corporate mergers to a friend who traded on the information, a prosecutor told a New York jury during opening arguments of a trial on Monday.

Former Goldman Sachs Vice President Brijesh Goel faces securities fraud, conspiracy and obstruction of justice charges for allegedly tipping his friend Akshay Niranjan to deals the bank was considering funding in 2017 and 2018.

Prosecutors say Goel gleaned the information on at least six occasions about potential transactions – including Japanese chemical manufacturer Kuraray’s $1.1 billion acquisition of Calgon Carbon Corp – from internal Goldman emails, and then tipped Niranjan over games of squash.

XRP Jumps as Hinman Speech Released in Ripple Labs Filing

XRP prices jumped 7.4% in the past 24 hours to buck nominal gains in the broader crypto market as traders likely bet on a favorable outcome for payments company Ripple Labs in its ongoing Ripple vs SEC lawsuit.

These gains came as documents tied to William Hinman, the former director of the U.S. Securities and Exchange Commission (SEC)’s Division of Corporation Finance from 2017 to 2020, were released to the public in connection with the SEC’s lawsuit against Ripple Labs.