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Lawyer Calls Out Mistakes In Brad Garlinghouse & Chris Larsen’s Deal

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Fred Rispoli, a lawyer in the Ripple vs SEC case, has criticized Brad Garlinghouse and Chris Larsen for agreeing to drop only some of the charges that the U.S. Securities and Exchange Commission (SEC) has leveled against them. According to Rispoli, the executives should have sought for the dismissal of all the charges instead of coming to a partial settlement.

Fred Rispoli Criticizes Brad Garlinghouse and Chris Larsen’s Deal

Through a series of posts on the X platform, Fred Rispoli, a lawyer, pointed out what he called blunders in the legal approach that Garlinghouse, Ripple’s CEO, and Larsen, the company’s executive chairman, took. 

He personally expressed concern with their decision to drop some of the claims while not seeking a full trial on the “aiding and abetting” charges raised by the US SEC.

In the view of Rispoli, Ripple’s leaders were in the best position to defend themselves against the SEC’s allegations, especially the “Institutional Sales” claim, which would only hold if there was evidence of recklessness. He stated that the agency lacked compelling evidence to meet that burden, and a jury would likely have been frustrated by the SEC’s case, possibly resulting in a unanimous verdict in favor of Garlinghouse and Larsen.

Missed Opportunities for Key Testimonies in Ripple vs SEC Case

Rispoli also added that had Ripple CEO Brad Garlinghouse and Larsen proceeded to trial, there was a possibility that potential witnesses would have come into the picture. He said that the SEC’s former chairman Jay Clayton and its former co-director of the corporation finance division Bill Hinman, alongside other industry players, might have been called to give evidence. 

These testimonies in the Ripple Vs SEC case could have given a clue on internal SEC determinations regarding the classification of cryptocurrencies, specifically XRP.

Additionally, a trial would have allowed presenting some documents that were previously shielded from discovery. Rispoli noted that this could have been advantageous for Ripple and other digital currency companies in the future as the data disclosed could be applied in legal concerns with the US SEC.

Ripple’s Cross-Appeal and the SEC’s Latest Move

In response to the SEC’s ongoing attempts to appeal certain aspects of a 2023 judgment given by the U.S. District Judge Analisa Torres, Ripple Labs filed a cross-appeal. In her decision, Torres stated that Ripple’s sales of XRP to retail investors on digital platforms were not securities sales. 

However, the regulator is now appealing other parts of the decision in the Ripple Vs SEC case, including the firm’s institutional sales, and the distribution of XRP for non-cash considerations.

Stuart Alderoty, Ripple’s legal chief, also sounded optimistic about the case stating that the agency’s appeal would not go well. “I felt good about our case in the Southern District of New York. I feel even better about our case in the Second Circuit,” Alderoty said in a recent interview.

US SEC’s Filing Deadline and Response

Some controversy had arisen regarding whether the SEC filed its brief within the time allowed for filing an appeal. Some of the X users argued that the agency failed to file its Form C within the 14 days’ period for filing the appeal in the Ripple Vs SEC case. The form itself had been submitted on October 16 while the Second Circuit’s docket reflected the filing as having been made on October 17 thus raising questions as to the validity of the filing.

When asked about the deadline of the filing, the US SEC spokesperson said, “It was filed on time.” Meanwhile, despite all this, the US SEC’s appeal doesn’t challenge the part of the decision that states that XRP sales to retail investors through exchanges are not securities. That decision is still valid, still leaving the court’s finding that XRP is not a security when sold to retail investors intact.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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.





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Regulation

Elon Musk’s Companies Revenue Under Risk As EU Warns Heavy Penalties

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2 days ago

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October 17, 2024

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The European Union (EU) has warned Elon Musk’s social media platform X sternly, indicating that it could face substantial fines. These penalties may extend to revenue generated from X and Musk’s other enterprises, such as SpaceX and Neuralink. This measure could amplify the financial risks for Musk’s businesses under the EU’s Digital Services Act (DSA).

European Union Targets Elon Musk’s Empire with Potential Revenue-Based Fines

Recent reports reveal that the European Union (EU) is contemplating imposing fines on Elon Musk’s X platform, potentially including revenues from his myriad other business ventures in the calculations. This approach comes under the Digital Services Act, which empowers the bloc to fine online platforms up to 6% of their annual global revenue for violations such as inadequate content moderation and transparency failures.

Hence, the potential fines could incorporate earnings from Musk’s companies like Space Exploration Technologies Corp. and Neuralink Corp., escalating the financial stakes. This approach suggests an aggressive regulatory posture in which Musk himself could be considered the liable entity rather than just the X platform. 

However, it is important to note that Tesla Inc. remains outside the purview of these potential fines, as it is a publicly-traded company not under Musk’s full control.

Navigating EU Regulations: X Platform Avoids DMA Scrutiny

These developments come even as Musk’s X platform managed to evade regulations under the EU’s Digital Markets Act last month due to its minimal market impact. However, the platform continues to face scrutiny for its content moderation practices. 

Moreover, the ongoing scrutiny stems from the platform’s struggles with controlling harmful content and misinformation. These challenges are magnified by the platform’s global reach and the high visibility and influence of its owner, Elon Musk.

Despite bypassing the requirements of the Digital Markets Act, X is still in the regulatory spotlight. The European Union’s Digital Services Act (DSA) is still a major regulatory concern, especially with the recent revenue-inclusion warning. The DSA ensures that digital platforms operate transparently and are held accountable for the content they host.

In addition, Elon Musk’s Tesla recently transferred its Bitcoin holdings, aggregating to a value of $760 million. The move involved reallocating its publicly known Bitcoin stash across multiple transactions, marking the company’s first such financial activity in over two years. These movements sparked speculation regarding the intentions behind them. 

In spite of the Tesla CEO’s continued troubles with the EU’s Digital Services Act (DSA), Musk has maintained strong support for Trump in the coming US elections. This has led Musk to offer a substantial $75 million donation to America PAC, boosting Donald Trump’s presidential campaign.

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Ronny Mugendi

Ronny Mugendi is a seasoned crypto journalist with four years of professional experience, having contributed significantly to various media outlets on cryptocurrency trends and technologies. With over 4000 published articles across various media outlets, he aims to inform, educate and introduce more people to the Blockchain and DeFi world. Outside of his journalism career, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.

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.





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What’s Next for Crypto Mining in Russia? Leaders Discuss Taxes and Legislation

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2 days ago

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October 16, 2024

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Russia has been steadily moving towards full regulation of its crypto mining industry, as government officials and industry leaders met at the first forum of the Industrial Mining Association (IMA) in Moscow. 

The event, which happened on October 14, involved 70% of Russia’s crypto mining farms, showing that the country is increasingly interested in the sector. The discussions centred mainly on taxation, legal aspects of mining, and impact of crytocurrencies on cross border business transactions.

Taxation Framework for Crypto Miners

The primary discussion point of the forum was the proposal made by the Russian Federal Tax Service (FTS) to introduce a two-tier tax system for crypto-mining companies. The recommended plan to tax miners is proposed to be implemented at two key points. 

First, miners will be expected to make a deposit once they get cryptocurrency into their wallets. In the second stage, another tax payment or deduction would be calculated on the basis of the price at which the mined coins are sold or transferred from the wallet.

FTS official Alexey Katyayev noted that there is no final decision on the issue of the taxation system. Nonetheless, crypto mining will not be taxed with Value Added Tax (VAT) since cryptocurrencies are not meant for consumption within the country. Concurrently, individual miners will still be required to pay personal income tax on their profits.

Cross-Border Payments and Experimental Legal Regime

Another key area of discussion at the forum was the possibility of using mined cryptocurrencies for cross-border payments, especially under the Russia crypto mining’s Experimental Legal Regime (ELR). At the present moment, the Bank of Russia is developing the necessary infrastructure for the implementation of cross-border operations with the help of digital currencies. 

Nevertheless, there were different views on this matter. Some of the respondents complained that domestic production of crypto mining may not be adequate for export purposes. Some argued that instead of using cryptocurrencies, one should employ other financial digital assets designed for the international market.

Though details on the experimental regime remain scarce, it was agreed that information about the participants and trials’ results should not be made public. Anton Tkachev, Deputy Chairman of the State Duma Committee on Information Policy, noted that the anonymity of the experiment is crucial to avoid possible penalties and retain competitiveness in the Russian cryptocurrency mining sector.

Crypto Mining Registry and Compliance

In an attempt to increase the industry’s transparency, the Russian Federal Tax Service also suggested the creation of a national register of crypto miners. To this end, miners and other companies that engage in the cryptocurrency mining business will be required to provide information such as the location of their data centers, power consumption, and origin of the mining rigs used.

Additionally, they will be required to report their cryptocurrency output and electricity usage. While much of this data will remain confidential, the registry aims to ensure greater oversight and compliance with the law.

According to Katyayev, businesses that engage in crypto mining alongside other sectors such as manufacturing, cannot claim deductions in one area to offset against earnings in the other. However, he pointed out that regulation will enhance competition in the sector through the provision of clear legal framework.

Outlook for Russia’s Crypto Mining Industry

The consensus among forum participants was that crypto mining in Russia has a bright future, especially as the government continues to develop comprehensive regulations. 

According to Igor Runets, the CEO of BitRiver, the industry will generate new opportunities in the next 1-2 years as the required facilities for energy-consuming computing like artificial intelligence are set up.

The two features that are likely to make market players list their companies on the stock exchanges include transparency and legal certainty. Timofey Semenov, CEO of Intelion Data Systems, noted that this will open up new capital opportunities for large companies, which is crucial for the further development of Russian crypto mining.

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Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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.





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Regulation

US Congressman Byron Donalds Proposes Crypto Regulatory Sandbox

Published

3 days ago

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October 16, 2024

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In a recent conversation with KMSmithDC, U.S. Congressman Byron Donalds stressed the importance of developing a regulatory sandbox for the crypto industry. Donalds described the industry as a “toddler” that is still young but has a possibility of growing. 

He pointed out that the cryptocurrency market has the potential to become a half a trillion dollar industry in the US if there are favorable regulations put in place.

Byron Donalds Advocates for Regulatory Flexibility

Byron Donalds emphasized that the use of a more flexible approach to the regulation of the rapidly developing crypto industry is crucial. He noted that the present model adopted by most regulatory bodies, including the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), is too rigid. 

According to US Congressman Donalds, a more adaptive system, like a regulatory sandbox, would allow industry participants to set guidelines as they innovate.

”What the industry really needs is a regulatory sandbox”, Donalds said. “You guys make the rules because the industry is going to change so fast over the next five years.” He pointed out that the current regulatory authorities are “not very innovative enough” to match the advancement of technology hence the need for a shift in the system.

Donald Trump Campaign’s Support for Crypto

US Congressman Donalds, an avid supporter of Donald Trump’s 2024 presidential campaign, also discussed how the Trump campaign has adopted cryptocurrency. Moreover, the PAC supporting Trump has allegedly collected $7.5 million in cryptocurrency contributions during July-September 2024. 

These donations in BTC, ETH, XRP, and USD stablecoins reveal that Trump has changed his view about digital currencies. Additionally, the prediction market platform, Polymarket, has given a 59.5% chance of Donald Trump to win the U.S election while 40.3% chance of Kamala Harris.

Source: Polymarket

This is quite a change from Trump’s previous stance on cryptocurrencies during his tenure as president. The fundraising success, garnered from more than 15 US states and Puerto Rico, places Trump as the candidate favorable to cryptocurrencies as the November 2024 elections approach.

In the conversation, Byron Donalds accused the Democratic leadership of not taking the regulation of cryptocurrencies seriously. He also dismissed recent remarks by Democratic politicians, including VP Kamala Harris and Senator Sherrod Brown, on digital assets regulation.

Donalds said that, although some Democrats have lately discussed the need for frameworks, such statements are political. “Vice President Harris is saying it now because there are some issues in her polling,” he said. He also pointed out that the criticism coming from Sherrod Brown could have to do with him being in a tight race in Ohio.

Trump’s Plan to Overhaul Regulatory Agencies

According to the US Congressman Donalds, a potential Trump administration would aim at “cleaning house” in major regulatory bodies such as the US SEC and CFTC. In these talkings, there has been a rumour that Robinhood CLO, Dan Gallagher, may become the new US SEC Chair under the leadership of Donald Trump.

He believes that regulators should focus solely on their assigned missions rather than expanding their roles. “It’s about making sure that regulators simply do the job of carrying out the mission that the agency was given,” Byron Donalds stated.

He reiterated his belief that current regulatory bodies are falling behind in adapting to the fast-paced developments in the crypto industry. According to Donalds, if Trump wins the presidency, the administration will aim to ensure that these agencies better align with the needs of a rapidly evolving digital economy.

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Kelvin Munene Murithi

Kelvin is a distinguished writer with expertise in crypto and finance, holding a Bachelor’s degree in Actuarial Science. Known for his incisive analysis and insightful content, he possesses a strong command of English and excels in conducting thorough research and delivering timely cryptocurrency market updates.

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.





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