Regulation
XRP Lawyer Weaponizes X Community Notes Against SEC Crypto Scam Alert
A recent post by the U.S. Securities and Exchange Commission (SEC) on X (formerly Twitter) has sparked significant backlash from pro-XRP lawyer Fred Rispoli. The SEC reiterated its warning regarding crypto scams. However, Rispoli leveraged X community notes to counter the claim.
XRP Lawyer Thrashes SEC’s Crypto Scam Warning
The SEC warning on X stated, “Scammers often use innovations and emerging technologies like #crypto to perpetrate investment scams,” urging caution among investors. The SEC’s post aligns with a May Investor Alert issued by its Office of Investor Education and Advocacy.
The alert warned of increasing crypto scam cases, where scammers exploit the popularity of digital assets to lure investors. The alert outlined five common tactics used by fraudsters, including establishing trust through social media and directing victims to fake investment platforms.
“Fraudsters Connect With You on Social Media Platforms or Through a Supposedly Accidental Text Message, and Then Gain Your Trust,” the alert stated, emphasizing the dangers of relationship-based scams, often referred to as “pig butchering scams.”
However, Rispoli quickly responded, requesting a review of the SEC’s post via X community notes. He accused the agency of misleading investors. He said, “The OP has scammed hundreds of thousands of investors into purchasing crypto given the agency’s all clear only to be rugged by the agency at a later date.”
This criticism highlights ongoing tensions between the SEC and the crypto industry. For context, the American watchdog allowed Coinbase to go public in 2021 but later crackdown on the exchange for alleged sale of securities.
The XRP lawyer’s response on the crypto scams warning reflects a growing disappointment amid legal actions against major firms such as Binance, Kraken, and Uniswap. These companies have faced scrutiny over alleged violations of securities laws. In these cases, the agency claims that many digital assets and trading platforms qualify as securities and should be regulated as such.
OpenSea Wells Notice
In a recent high-profile case, the SEC issued a Wells Notice to OpenSea, a leading NFT marketplace. The regulatory body threatened to sue the platform for sale of NFTs, which it deems to be securities. This move has drawn parallels to past cases involving other crypto firms.
OpenSea CEO Devin Finzer expressed shock at the SEC’s stance, arguing that the regulator’s actions could stifle innovation in the digital collectibles space. Finzer pointed out that the SEC has now entered the “uncharted territory.” He also suggested that many artists and creators could be negatively impacted by these regulatory measures.
This aligns with Rispoli’s claim of the SEC being behind ‘crypto scams’ that affect investors owing to ambiguous regulation. Adding further complexity to the debate, Ripple CLO Stuart Alderoty referenced a 1976 SEC ruling. At the time, the agency clarified that art galleries promoting and selling artworks for “investment motive” were not required to register with the SEC.
Alderoty argued that this precedent could apply to NFTs, which, like traditional art, are traded as collectibles rather than securities. “Fun fact: In 1976, the SEC ruled that art galleries, even when promoting and selling to buyers that had investment motives, didn’t need to register with the SEC,” he noted.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
Texas Court Dismisses Consensys Suit Against SEC on Procedural Basis
The United States District Court for the Northern District of Texas dismissed Consensys Software Inc.‘s case against the Securities and Exchange Commission. This was after a long legal battle to determine the status of Ethereum and other similar software products.
Texas Court Ends Consensys Suit Against SEC
The U.S. District Court in Fort Worth has thrown out the allegations made by Consensys against the Securities and Exchange Commission in a recent legal move. The court, presided over by Judge Reed O’Connor, ruled on procedural grounds. The judge determined the claims concerning Ethereum classification and the regulatory approach to MetaMask were not ripe for judicial review. This decision effectively puts an end to the current litigation initiated by Consensys in April of this year.
The dismissal focused particularly on the lack of final agency action from the SEC, which the court noted was a requisite for a substantial legal challenge. This procedural dismissal indicates that despite the issues raised, the court decided not to proceed with evaluating the merits of the case.
Legal Battle Over Ethereum and MetaMask
Initially, Consensys challenged the SEC’s classification of Ethereum and its derivatives as securities. The complaint highlighted concerns over the SEC’s focus on MetaMask, a software service provided by Consensys that facilitates crypto transactions and staking.
Despite an earlier notification in June about the SEC dropping its investigation into Ethereum, the broader implications of this regulatory scrutiny remained a contentious issue.
Subsequent to the initial lawsuit, the SEC initiated a separate enforcement action in June, accusing Consensys of operating its MetaMask swaps service without proper registration.
In addition, according to Judge O’Connor, this case lacked the necessary finality from the Securities and Exchange Commission side to be considered ready for court adjudication.
Reactions and Future Regulatory Steps
The court’s decision to dismiss on procedural grounds does not conclude the legal issues surrounding the regulation of Ethereum and other blockchain technologies.
More so, Consensys has expressed its intention to continue advocating for blockchain developers and to challenge the SEC’s actions in other jurisdictions, indicating that the struggle over crypto regulation in the U.S. is far from over. The case’s dismissal in Texas does not preclude the blockchain company from pursuing other legal avenues to address their grievances.
In addition, most recently, a US Bankruptcy judge Brendan Shannon approved Terraform Labs plan to liquidate its assets following an ongoing SEC lawsuit.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
UN Calls for Global AI Governance As Meta & OpenAI Face Challenges
AI News: The United Nations has issued seven recommendations for reducing the risks of artificial intelligence (AI) based on input from a UN advisory body. The final report of the council’s advisory body focuses on the importance of developing a unified approach to the regulation of AI and will be considered at a UN meeting scheduled for later this month.
AI News: UN Calls for Global AI Governance
The council of 39 experts noted that large multinational corporations have been able to dominate the development of AI technologies given the increasing rate of growth, which is a major concern. The panel stressed that there is an ‘unavoidable’ need for the governance of artificial intelligence on a global scale, since the creation and use of artificial intelligence cannot be solely attributed to market mechanisms.
According to the UN report, to counter the lack of information between the AI labs and the rest of the world, it is suggested that a panel should be formed to disseminate accurate and independent information on artificial intelligence.
The recommendations include the creation of a global AI fund to address the capacity and collaboration differences especially in the developing countries that cannot afford to use AI. The report also provides recommendations on how to establish a global artificial intelligencedata framework for the purpose of increasing transparency and accountability, and the establishment of a policy dialogue that would be aimed at addressing all the matters concerning the governance of artificial intelligence.
While the report did not propose a new International organization for the regulation, it pointed out that if risks associated with the new technology were to escalate then there may be the need for a more powerful global body with the mandate to enforce the regulation of the technology. The United Nation’s approach is different from that of some countries, including the United States, which has recently approved of ‘a blueprint for action’ to manage AI in military use – something China has not endorsed.
Calls for Regulatory Harmonization in Europe
Concurrent with the AI news, leaders, including Yann LeCun, Meta’s Chief AI Scientist and many CEOs and academics from Europe, have demanded to know how the regulation will work in Europe. In an open letter, they stated that the EU has the potential to reap the economic benefits of AI if the rules do not hinder the freedom of research and ethical implementation of AI.
Meta’s upcoming multimodal artificial intelligence model, Llama, will not be released in the EU due to regulatory restrictions, which shows the conflict between innovation and regulation.
“Europe needs regulatory certainty on AI”
An open letter signed by Mark Zuckerberg, me, and a number of European CEOs and academics.The EU is well positioned to contribute to progress in AI and profit from its positive economic impact *if* regulations do not impair open…
— Yann LeCun (@ylecun) September 19, 2024
The open letter argues that excessively stringent rules can hinder the EU’s ability to advance in the field, and calls on the policymakers to implement the measures that will allow for the development of a robust artificial intelligence industry while addressing the risks. The letter emphasizes the need for coherent laws that can foster the advancement of AI while not hindering its growth like the warning on Apple iPhone OS as reported by CoinGape.
OpenAI Restructures Safety Oversight Amid Criticism
In addition, there are concerns about how OpenAI has positioned itself where the principles of safety and regulation of AI are concerned. As a result of the criticism from the US politicians and the former employees, the CEO of the company, Sam Altman, stepped down from the company’s Safety and Security Committee.
This committee was formed in the first place to monitor the safety of the artificial intelligence technology and has now been reshaped into an independent authority that can hold back on new model releases until safety risks are addressed.
The new oversight group comprises individuals like Nicole Seligman, former US Army General Paul Nakasone, and Quora CEO Adam D’Angelo, whose role is to ensure that the safety measures put in place by OpenAI are in line with the organization’s objectives. This United Nations AI news comes at the heels of allegations of internal strife, with former researchers claiming that OpenAI is more focused on profit-making than actual artificial intelligence governance.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
SEC requests for more time to produce documents in Coinbase case
- SEC reportedly seeks an extension to February 2025 for it to provide case documents to Coinbase.
- Coinbase, Binance and Kraken all facing SEC lawsuits.
The US Securities and Exchange Commission has filed for an extension from the court, asking for more time as it looks to provide documents related to its case against crypto exchange Coinbase. Cointelegraph reported this on Sept. 19
SEC asks for extension
Court documents filed on Sept. 18 reveal that the SEC wants the court to extend the timeline for them to furnish Coinbase with key material by four months.
The regulator filed its request at the US District Court for the Southern District of New York, and if granted, will see it have until February 2025 for the deadline to share over 133,000 documents.
SEC’s court filing comes a month to the end of the initial timeline on Oct. 18, which is when the securities watchdog was to hand over documents as part of the case’s discovery proceedings phase. According to the regulator, an extension will allow it to produce the necessary documents.
SEC has sued several crypto companies
These latest developments in the SEC vs. Coinbase lawsuit adds to several others in recent months and weeks. It includes court filings and verdicts in the regulator’s cases against crypto exchanges Binance and Kraken, which are the other major industry players in a legal battle with the SEC.
Both the courts and US lawmakers have taken issue with the SEC’s use of the term “digital asset securities’. This is part of the main allegations against crypto exchanges, with the regulator alleging securities laws violations by these firms.
The term ‘digital asset security’ does not appear anywhere in any law enacted by Congress or in any rule promulgated by the SEC or in any decision rendered by the Supreme Court. It appears nowhere in the 2 million pages of the Federal Register. If it comes from neither statute… pic.twitter.com/ucSaCzEvOU
— Rep. Ritchie Torres (@RepRitchie) September 19, 2024
In 2020, the agency sued Ripple Labs over the XRP cryptocurrency – a case that dragged for three years before a notable ruling in July 2023 declared XRP not a security. The regulator also reached a $4 billion settlement with Terraform Labs.
A judge denied Kraken’s motion to dismiss the SEC’s lawsuit agaisnt the exchange in August this year.
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