• 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.

• Alberta’s Bill 16 will allow third-party operators in online gambling by 2025
• The province aims to capture grey market bets and boost revenue like Ontario
• Safeguards like self-exclusion and player monitoring will promote responsible gambling

Alberta is on the brink of a significant shift in its online gambling landscape. With the passage of Bill 16, the province aims to open up sports betting, iGaming, and crypto casinos to third-party operators by the end of this year. 

Alberta’s move follows Ontario’s example and is designed to capture the grey market while promoting responsible gambling through updated regulations and safeguards.

Bill 16 a game-changer for Alberta’s gambling industry

In May, the Alberta government passed Bill 16, also known as the Red Tape Reduction Statutes Amendment Act, marking a monumental shift in the province’s approach to online gambling. 

The bill, which received Royal Assent shortly after, allows the provincial government to oversee and regulate online gaming alongside Alberta Gaming, Liquor and Cannabis (AGLC). This opens the door for private, licensed operators to enter the Alberta market, replacing the government’s previous monopoly on legal online gambling.

Currently, the only legal option in Alberta is PlayAlberta, a platform managed by AGLC that offers casino games and sports betting. However, offshore “grey market” sites like Bet365 and Bodog continue to attract many Albertans, contributing to an unregulated market. 

Ontario implemented a similar model in 2022, which generated $1.48 billion in total gaming revenue during its first year and Alberta’s government hopes to replicate this success by drawing bets away from illicit markets and boosting its own revenues.

Alberta’s expansion plans aim to address the limitations of PlayAlberta and enhance competition. The provincial government is currently in the process of consultations with industry stakeholders to determine the best path forward. 

Though a specific launch date has yet to be set, Service Alberta and Red Tape Reduction Minister Dale Nally has emphasized that the government intends to act quickly once a final strategy is determined.

Regulated expansion with a focus on safety

While opening the Canadian sports betting market offers lucrative revenue opportunities, the move is not without its challenges. Alberta is mindful of the potential risks associated with an expanded gambling market, particularly in terms of problem gambling and addiction. 

David Hodgins, a professor of clinical psychology at the University of Calgary and research director with the Alberta Gaming Research Institute, expressed concerns about the social impacts of having multiple operators in the province. He emphasized the importance of implementing strong safeguards to minimize harm.

To promote responsible gambling, Alberta is looking to adopt measures like self-exclusion programs that would allow individuals to ban themselves from all gambling sites within the province. Ontario is working toward such a system, and Alberta is keen to follow suit. 

Minister Nally confirmed that he is interested in provincewide self-exclusion tools, as well as monitoring player behaviour to detect sudden shifts in betting patterns—another strategy aimed at curbing problem gambling.

Revenue splits between the government and private operators are also being reviewed. Ontario takes 20% of revenues from regulated gambling websites, a model Alberta is studying closely. A balance must be struck to ensure the tax rate is appealing enough to encourage operators to join Alberta’s market, while also generating significant revenue for the province.

As Alberta moves closer to an open, regulated online gambling market, it seeks to capture the benefits seen in Ontario while ensuring safety and responsible gaming practices.

With consultations nearing completion, and regulatory frameworks being refined, the province could see a new era of sports betting and iGaming by the end of 2024 or early 2025.

An ex-SEC official has raised concerns over the regulatory body’s approach to digital assets, coinciding with a recent settlement involving the decentralized finance (DeFi) platform, Rari Capital.

Michael Liftik, an ex SEC official and current partner at law firm Quinn Emanuel, emphasized the agency’s reluctance to issue clear guidelines for digital assets, while pursuing enforcement actions against firms in the sector. His remarks have sparked further debate on the SEC’s regulatory strategy.

Rari Capital Settlement with the SEC

The SEC has announced it had settled charges against Rari Capital and its co-founders. The DeFi platform, which offered yield-bearing services to crypto investors, faced accusations of misleading investors and engaging in unregistered broker activity. 

Rari Capital’s Earn pools, marketed as being able to autonomously manage and rebalance investments, were found to require manual intervention, contradicting the firm’s claims.

The settlement also covered activities related to Rari’s Fuse pools, with the agency stating that the co-founders, Jai Bhavnani, Jack Lipstone, and David Lucid, were involved in broker activities without proper registration. At its peak, the platform held over $1 billion in assets. Though Rari Capital and its executives neither admitted nor denied the charges, they agreed to cease breaking securities laws in the future.

Ex SEC Official Blasts Approach to Enforcement

Liftik’s criticism of the U.S. Securities and Exchange Commission’s approach resonates with broader discontent within the crypto industry. He highlighted the agency’s preference for enforcement actions over rulemaking or providing clear guidance.

In addition, the ex-SEC Official noted that the agency’s reliance on a “whack-a-mole” enforcement strategy, where firms are targeted one by one, creates a difficult operating environment for companies trying to comply with evolving rules.

A memorable line from Michael Liftik, partner at law firm @quinnemanuel and a former senior @SECGov employee, from today’s @FinancialCmte hearing:

“The SEC has refused to issue new rules or meaningful guidance relating to digital assets and, at the same time, has engaged in… https://t.co/ZTCxly1ViG

— Eleanor Terrett (@EleanorTerrett) September 18, 2024

This criticism comes as the U.S. Securities and Exchange Commission continues to scrutinize decentralized finance platforms. Over recent years, several firms, both centralized and decentralized, have been charged with securities violations, reinforcing Liftik’s argument. The agency has made it clear that labeling a platform as “decentralized” or “autonomous” does not exempt it from securities laws.

Rari Capital’s History and Hack Incident

Rari Capital’s legal troubles were compounded by a significant exploit in May 2022, when its Fuse borrowing and lending platform was hacked, leading to the theft of $80 million.

As a result, the hack forced the firm to halt new deposits and begin winding down the platform, leading to its eventual shutdown.

In the agency’s settlement, the agency acknowledged the firm’s cooperation in returning performance-based fees to affected users and its remedial efforts in response to the hack. The settlement with Rari Capital Infrastructure LLC, which took over the firm after the hack, further stipulated that the company must refrain from violating securities laws in the future.

Growing Regulatory Divide in U.S. Crypto Legislation

The U.S. Securities and Exchange Commission’s latest actions come amid an ongoing debate in Congress over crypto regulation. Recent hearings have exposed a divide among lawmakers regarding how the digital asset industry should be regulated. A memo circulating in Congress suggests that some Democratic leaders view crypto as a partisan issue, labeling it as an innovation aligned with “extreme MAGA Republicans.”

Concurrent with the ex-SEC official statements, this political divide has heightened tensions as regulators and lawmakers attempt to craft comprehensive crypto legislation. Proposals such as the FIT 21 bill, which aims to classify digital assets and modernize securities laws, remain a focal point of debate.

Critics argue that the current regulatory environment under the Biden administration is stifling innovation, while proponents of tighter regulations advocate for stronger investor protections.

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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.

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