Regulation
US SEC Under Fire as Empower Oversight Demands XRP Case Transparency
Empower Oversight is stepping up its attempts to receive information from the Securities and Exchange Commission (SEC) about the conflicts of interest and selective enforcement of cryptocurrencies.
The complainant has asked the SEC’s OIG to issue a report that is still pending and assesses these questions of law, especially those concerning Hinman and Clayton of the SEC.
US SEC Under Fire On Conflict of Interest
Empower Oversight has been trying to get information on conflict of interest at the SEC for almost three years now. In August 2021, the organization began a FOIA lawsuit, which demanded records of the communication between SEC representatives and other parties concerning cryptocurrencies.
🚨BREAKING: @EMPOWR_us Presses @SECGov IG to Complete and Issue Ethics Report on Hinman Conflicts of Interest; Submits NEW REFERRAL ON JAY CLAYTON 👇https://t.co/4U5DDieZ9n
— CryptoLaw (@CryptoLawUS) July 16, 2024
Even when signals were put out five months ago that the SEC-OIG was finalizing its report, Empower Oversight remains worried about the thoroughness of the investigation.
Tristan Leavitt, the president of Empower Oversight, noted that the report may only focus on the conflicts of interest involving Hinman and not those involving former SEC Chair Jay Clayton.
Leavitt also noted that it is very important to look at Clayton’s decisions during his time at SEC, especially concerning the aforementioned cryptocurrencies – Bitcoin, Ether, and XRP – for the sake of proving that the firm can effectively manage and avoid conflicts of interest.
Legal Battles for Transparency
Empower Oversight’s efforts to promote transparency have resulted in several lawsuits. In December 2021, the organization sued the SEC to obtain information on the matters of interest conflict and selective actions taken by the US SEC.
However, the firm has been alleged to have dragged its feet in responding to the FOIA requests, and this culminated into other lawsuits in May 2023 and March 2024. The SEC’s unwillingness to release the documents has been a source of worry on the part of the agency on transparency.
Leavitt also accused the SEC of delaying tactics with regards to the FOIA requests saying that the delay has hampered the monitoring of possible conflict of interest concerning the decisions made by the SEC officials on cryptocurrencies.
Hinman and Clayton’s Cryptocurrency Decisions Under Scrutiny
William Hinman, the former Director of SEC and Jay Clayton, the former Chair of SEC have been in the middle of controversy concerning cryptocurrency regulation. Hinman was well compensated by his previous law firm Simpson Thacher which had a financial interest in pushing Ethereum. The speech made by Hinman in 2018 that Ether is not a security has formed the center of Empower Oversight’s investigations.
Likewise, Clayton’s time in the chairmanship of the firm has been associated with a number of regulatory actions concerning Bitcoin, Ether, and XRP. The FOIA requests that Empower Oversight sent were intended to reveal any possible conflicts of interest and contacts between Clayton and cryptocurrency enthusiasts.
The firm’s refusal to provide these documents has been an ongoing issue and raises questions about the integrity of the SEC’s decision-making process.
Ripple vs SEC: Awaiting Transparency and Final Judgment
The legal conflict between Ripple Labs and the SEC has also played a role in emphasizing the importance of clarity. The case relates to the SEC’s determination of XRP as an unregistered security, and the public has shown keen interest in the possibility of settlements.
In spite of several backdoor meetings, Marc Fagel, a former SEC lawyer, has come out to dismiss rumors of the two parties entering into settlement negotiations, citing that both are still waiting for the district court’s decision.
Empower Oversight is still campaigning for information on how the firm has dealt with cryptocurrencies, such as the Ripple case. The organization’s actions reflect the general trend whereby regulatory authorities responsible for the cryptocurrency markets are being called to explain their actions.
Read Also: Bitcoin Price Tops $65K, Here Why BTC Rally Is Poised To Continue
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.
Polymarket, a crypto-based prediction market, is likely to be prohibited by France’s gambling regulator, the ANJ, after a huge amount of bets were placed on the 2024 U.S. presidential election. Since the global audience engaged in prediction platforms, Polymarket experienced a record jump, with $450 million expected to be distributed to users following the victory of Donald Trump.
This increase of betting volume and large stakes has become a matter of concern for the French regulator because the platform offers unlicensed gambling services.
$450 Million in Payouts Expected After U.S. Election Bets
Prediction markets, which are expected to increase their payout to election bettors to around $450m following Donald Trump’s projected win, are attracting increasing attention.
Although conventional polls pointed to a closer contest, prediction markets such as Polymarket and Kalshi recorded a steep rise in Trump’s chances in the last few days, indicating a strong divergence with poll-based expectations.
Among the active users of Polymarket, a French trader called “Theo” made a $26 million bet on Trump’s win and won $49 million. This big bet made Polymarket popular, as the French authorities paid attention to the platform and its popularity among French residents, which led to concerns about the compliance of the platform with French gambling legislation.
France’s ANJ Considers Blocking Access to Polymarket
The ANJ has claimed that Polymarket is involved in gambling which is only allowed in France by licensed operators. According to local media, the regulator has the power to ban access to unlicensed gambling sites and is expected to restrict access to Polymarket soon.
An ANJ insider said: “Polymarket is just betting on something that is completely uncertain, which is exactly what gambling is.”
If put in place, the ban would prevent the usage of the application in France, despite the fact that users can still try to avoid the restriction by connecting to VPN. The ANJ could also try to influence media outlets and directories to stop advertising or linking to Polymarket and, thus, limit its audiences even more.
Regulatory Concerns Over Market Manipulation
The high level of activity on Polymarket has led to speculations that the platform may be used for market manipulation. Two blockchain analysis firms, Chaos Labs and Inca Digital, recently revealed that there was potential wash trading within Polymarket’s U.S. presidential betting market where the same assets are bought and sold to simply create a fake market. This type of trading is rather manipulative and can lead to the distortion of signals on the market and mislead other participants.
The US Commodity Futures Trading Commission also has concerns about prediction markets and put forward a rule in May aiming at stricter regulation of such markets due to the potential for manipulation.
Although no final decision has been reached, regulatory actions could impact Polymarket’s ability to operate freely in other markets, including the U.S.
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.
FTX co-founder Gary Wang has requested a federal judge not to send him to prison. He noted that he is testifying against the former business partner, Sam Bankman-Fried, someone he has known for a long time in a fraud case.
The lawyer for Wang submitted a sentencing memo in Manhattan federal court wherein he claimed that his client should not be incarcerated as he provided assistance to the prosecutors as well as his role in the scheme was comparatively less.
Wang, who pleaded guilty to fraud and conspiracy when FTX went bankrupt in 2022, is to receive his sentencing on the 20th of November.
FTX Co-Founder Gary Wang Appeals for No Jail Time
The defense counsel for FTX co-founder Gary Wang highlighted his client’s early cooperation with the federal prosecutors as one of the key reasons why the court should consider him for mercy. According to Graff, Wang was one of the first FTX executives to meet with the authorities and share information on the FTX and Alameda Research. Wang gave a testimony in the trial that led to the recent conviction of Bankman-Fried who was sentenced to 25 years in prison.
Speaking at the trial, Wang described how he was ordered to change the code of FTX in order to enable Alameda Research to use the assets of the company’s clients, which is one of the key points of Bankman-Fried’s fraud.
FTX co-founder’s lawyer noted that his involvement in the fraud was less than some of the other former executives, including Caroline Ellison, former CEO of Alameda Research, and Nishad Singh, FTX’s former head of engineering. Wang, his lawyer said, did not start or operate the scheme and was not personally involved in the provision of false information to the investors.
“Gary was not involved in the scheme at its inception, was never provided with details of the scheme, and, in contrast to Bankman-Fried, Ellison and Singh, never engaged in any affirmative action of deception,” Graff wrote.
Sentencing Comparisons to Other Executives
Wang’s attorney argued that a prison sentence would create an “unwarranted sentencing disparity” with Nishad Singh, who avoided jail time after pleading guilty and cooperating with the government. Singh, who faced potential decades-long sentences, was ultimately sentenced to time served and three years of supervised release.
Ellison, another major cooperator, received a two-year prison sentence. FTX co-founder Gary Wang contended that Wang’s level of involvement was even lower than Singh’s, supporting a non-custodial sentence for Wang as well.
Graff also noted Wang’s personal circumstances, stating that Wang is expecting the birth of his first child shortly after his sentencing date. Wang’s attorney suggested that allowing him to remain with his family would align with the court’s treatment of other cooperators in the case.
“Gary wants nothing more than to be a good husband and father and to continue his work to facilitate FTX victims’ recovery,” Graff wrote.
Separately, the U.S. government is working to reclaim approximately $13.25 million in political donations made by FTX executives, including Bankman-Fried and Singh. Judge Lewis Kaplan however granted the government additional time to negotiate the return of these funds, extending discussions with the PACs until January 15, 2025.
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.
The U.S. Securities and Exchange Commission (SEC) has filed a motion seeking judgment in its case against cryptocurrency exchange Kraken, focusing on defenses such as “fair notice” and the “major questions doctrine.”
This move, led by SEC Chairman Gary Gensler’s team, aims to limit further discovery into the agency’s regulatory policies, particularly those affecting the crypto sector. The timing of the filing has drawn attention, as some in the industry view it as a strategic attempt to shield the SEC’s methods from closer examination.
US SEC Files Motion for Judgment Against Kraken
The SEC’s motion seeks to dismiss defenses put forward by Kraken that include the fair notice defense and the major questions doctrine. The fair notice defense argues that Kraken did not receive adequate regulatory guidance regarding its crypto-related activities.
Meanwhile, the major questions doctrine suggests that regulatory agencies, such as the SEC, should not make major policy decisions without clear direction from Congress.
Subsequently, the US SEC’s motion appears intended to prevent further discovery into its policies, which Kraken and other crypto advocates have criticized as inconsistent and unclear. A similar motion was filed in Ripple case, where the US SEC failed to secure a judgment. Michael O’Connor, an attorney representing Kraken expects a similar outcome in the Kraken case, though Kraken has indicated that it has additional defenses should this motion proceed.
This Is A Breaking News, Please Check Back For More
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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