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.
Regulation
Gary Gensler To Step Down As US SEC Chair In January
In a recent development, the US Securities and Exchange Commission (SEC) announced that Gary Gensler will step down from his position next year. This follows calls for Gensler to resign since Donald Trump won the US presidential elections.
Gary Gensler To Step Down As US SEC Chair
The US SEC announced in a press release that Gary Gensler will depart the Agency on January 20, 2025. The US SEC Chair also confirmed this development in an X post. Interestingly, this comes on the same day that Donald Trump will be inaugurated as the 47th president of the United States.
Following the announcement, Gensler also used the opportunity to reflect on his time at the Commission. He remarked that it has been an “honor of a lifetime” to serve alongside those at the SEC. He also thanked President Biden for the opportunity to serve in the position. Gensler has been the US SEC Chair since April 2021. During his time, he has spearheaded several litigations against the crypto industry.
This includes the long-running legal battle with Ripple, which Gensler took over from his predecessor Jay Clayton, which bordered on whether XRP was a security. Up till now, the Agency continues to reiterate this ‘digital asset securities’ claim.
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
BitClave Investors Get $4.6M Back In US SEC Settlement Distribution
BitClave investors have started receiving $4.6 million in repayments from the U.S. Securities and Exchange Commission (SEC), following a settlement reached in 2020. The SEC announced on Nov. 20 that payments from the BitClave Fair Fund had been disbursed to eligible investors harmed during the company’s 2017 initial coin offering (ICO).
Pro-XRP lawyer and online commentator “MetaLawMan” criticized the SEC’s stance on digital assets, stating on social media, “Here we go again with ‘digital asset securities.’ Unbelievable.” The lawyer’s statement reflects ongoing industry frustrations over the SEC’s regulatory approach to cryptocurrencies.
BitClave Investors Get $4.6M Back in US SEC Settlement
The US SEC assured the public that $4.6 million was returned to investors who filed the claims and were eligible for the refunds. These funds were agreed upon in 2020 after the SEC accused BitClave of conducting an unregistered ICO.
The company’s initial coin offering (ICO) in 2017 brought in $25.5 million in only 32 seconds and distributed its Consumer Activity Token (CAT) to thousands of buyers. The SEC therefore claimed that the ICO was an unregistered securities transaction because potential investors were induced to invest in the CAT token with an expectation of appreciation of its value.
Under the settlement, BitClave will have to refund the money it raised and also pay $4 million in fines and interest. In between these settlements, John Deaton has accused the regulator of using laws that were set in 1933.
The Fair Fund was therefore created to ensure that the funds are returned to the affected investors. The claims submission period closed in August 2023, and the eligible investors received the information on the claims in March 2024. The Securities and Exchange Commission posted on its social media accounts that the payment has been made, and “the checks are in the mail.”
BitClave Settlement Included Penalties and Token Destruction
In the settlement, BitClave did not accept or reject the accusations made by the SEC but agreed to cough up $29 million. This total consisted of the $25.5 million that was generated in the ICO and the additional $4 million in fines.
Concurrently, the company also committed to burning 1 billion of the catalyst tokens that have not been distributed and to ask exchanges to delist the token.
The Securities and Exchange Commission therefore pointed out that by February 2023, BitClave had only remitted $12m to the Fair Fund, thus leaving questions on the balance of $7.4m. Neither the SEC nor the fund administrator gave further details on the matter, and it is still uncertain as to how the outstanding payment will be collected.
US SEC Maintains Strict Regulatory Stance on Crypto
The US SEC has continued to enforce regulations on crypto companies under the Biden administration, with over 100 enforcement actions taken against the industry. BitClave’s settlement, subsequently, is one of many cases where the regulator has targeted unregistered ICOs and other alleged securities violations.
BitClave’s case, handled under former SEC Chairman Jay Clayton, emphasized the agency’s view that many digital assets fall under securities laws. The CAT white paper described potential value increases, which the regulator argued encouraged speculative investment in an unregistered security.
As the US SEC faces criticism, President-elect Donald Trump has expressed plans to reshape crypto oversight. Trump has promised to remove current SEC Chair Gary Gensler and is reportedly considering creating a new White House position dedicated to cryptocurrency policy.
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
US SEC Pushes Timeline For Franklin Templeton Crypto Index ETF
The United States Securities and Exchange Commission (US SEC) has further delayed its decision on Franklin Templeton’s Bitcoin and Ethereum index ETF. From the filing made on November 20, 2024, it has been agreed that the decision on the proposal will be made on January 6, 2025 to afford the regulating authority ample time to consider the proposal.
US SEC Extends Review Period for Franklin Templeton Crypto Index ETF
According to the US SEC filing of November 20, 2024, the commission deferred its decision on the Bitcoin and Ethereum index ETF by Franklin Templeton. Therefore, the regulatory body is seeking to extend the review period to January 6, 2025. The extension will help to have more time to consider the application which was filed on September 19, 2024.
The proposal was first published in the Federal Register on October 8, to kick start a thirty-five (35) days review period. As a result, the review was to end on November 22, 2024. Consequently, the review was to expire on November 22, 2024. However, the SEC’s decision to delay indicates a thorough approach to reviewing the fund’s compliance with crypto regulations.
Meanwhile, no public comments on the proposed rule change have been submitted, leaving the US SEC to focus on internal assessments. This delay concurs with the commission’s conservative approach to the products that are connected with cryptocurrencies. The extra time will allow more detailed research of fund’s organization and market risks.
Franklin Templeton Expands Push Into Cryptocurrency ETFs
Franklin Templeton is broadening its efforts in the cryptocurrency space with its proposed Bitcoin and Ethereum index ETF. The asset manager, which oversees $1.5 trillion in assets, has previously launched a spot Bitcoin ETF and a spot Ethereum ETF.
If approved, the latest ETF would add to Franklin Templeton’s portfolio of crypto-focused investment products, further diversifying options for institutional.
In addition, Franklin Templeton has taken a major step in its tokenization efforts, announcing the expansion of its Benji tokenization platform to the Ethereum network. This marks the fifth blockchain integration for the platform this year, following launches on Aptos, Avalanche, Arbitrum, and Coinbase’s Base.
Despite the US SEC overall crypto ETF delays, other market players are moving further with their strategies . Last week, Bitwise submitted a registration statement to transform the Bitwise 10 Crypto Index Fund which now manages $1.3 billion into an ETP. It investments in Bitcoin represent 75% of the fund and Ethereum is 16% of the fund; these two assets sum up to 91%.
Moreover, the filing comes when diversified crypto index funds seem to be gaining popularity among investors. Bitwise’s move will make investing in cryptocurrencies more accessible for retail audiences. When approved, this ETP will also set a paradigm for the expansion of multi-asset crypto based product offerings.
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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