The Chopping Block: Should XRP Holders Really Be Rejoicing? - Ep. 519
Welcome to “The Chopping Block” – where crypto insiders Haseeb Qureshi, Tom Schmidt, Tarun Chitra, and Robert Leshner chop it up about the latest news. This week, crypto lawyer Stephen Palley joins an emergency live show to unpack Thursday’s judgment in the Ripple case. Crypto markets are pumping after a judge handed Ripple Labs a partial victory in its fight against the SEC. But is the jubilation warranted? “I can understand why people are happy,” said Palley, a partner at Brown Rudnick LLP. “I’m just a little more cautious on what happens next.”
Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, TuneIn, Amazon Music, or on your favorite podcast platform.
Show highlights:
why Judge Analisa Torres ruled that retail sales of XRP do not violate U.S. securities laws
how the court denied summary judgment on some issues relating to Ripple’s Brad Garlinghouse and Chris Larsen
why “Footnote 16” of the ruling was so “surprising,” according to Stephen
whether the SEC will appeal the case and how that process could unfold
why Coinbase, Kraken and other exchanges re-listed XRP and whether that’s a safe step
whether Coinbase will cite the Ripple judgment in its lawsuit against the SEC
how this ruling does not represent a binding precedent
why, even though this is a win for Ripple, it shouldn’t be used for investment strategy
why Haseeb thinks the SEC should “fire their press department”
whether the SEC’s case is “stronger than people on Twitter might like to believe”
how, if proven, the allegations against Celsius founder Alex Mashinsky are “straight-up fraud”
why Stephen says that a lot of the enforcement activity focused on DeFi was an “absolute misuse of resources”
Hosts
Haseeb Qureshi, managing partner at Dragonfly
Robert Leshner, founder of Compound
Tom Schmidt, general partner at Dragonfly
Tarun Chitra, managing partner at Robot Ventures
Guest:
Stephen Palley, litigation partner at Brown Rudnick
Disclosures
Links
Previous coverage of Unchained on the Ripple case:
New Order in SEC vs. Ripple Over XRP Is a Win for Crypto: What Happens Now?
The SEC's Lawsuit Against Ripple and 2 Execs: What You Need to Know
Ripple's XRP: Why Its Chances of Success Are Low
Unchained:
SEC vs Ripple: Judge Rules XRP Sold on Exchanges Is Not a Security
Former Celsius CEO Alex Mashinsky Arrested in New York - Unchained Crypto
CoinDesk:
Ripple, Crypto Industry Score Partial Win in SEC Court Fight Over XRP
Ripple Labs Ruling Throws U.S. Crypto-Token Regulation into Disarray
The Washington Post: Ripple ruling threatens SEC’s crypto regulation push
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Unconfirmed: People Expected a Big SEC Enforcement Action This Week. What Happened? Days - Ep.277
Stephen Palley, partner at Anderson Kill, discusses a few hot-button crypto regulatory issues like lending products, whether DeFi protocols fall under the SEC’s purview, and more. Show highlights:
why Stephen thinks the SEC and CFTC did not announce more extensive crypto enforcement news this week
what areas the SEC Chair Gary Gensler and the SEC as a whole are focused on regulating
what Stephen has heard about whether stablecoins that are not fully-backed are securities
why Coinbase decided to drop its Lend product
why Stephen is skeptical that decentralized protocols should be regulated under existing securities laws
how securities law is contrary to consumer protection in light of DeFi protocols and airdrops
why DeFi AMMs should be regulated differently than centralized market books
whether companies running a front-end for a DeFi protocol should be considered an exchange
why crypto devs are “going Satoshi” because of US securities laws
Thank you to our sponsors!
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Episode Links
Stephen Palley
Twitter: https://twitter.com/stephendpalley
Unchained podcast appearance speaking about Ripple: https://unchainedpodcast.com/the-secs-lawsuit-against-ripple-and-2-execs-what-you-need-to-know/
Topics Covered
Lending Products
Coinbase blogs regarding Lend
https://blog.coinbase.com/the-sec-has-told-us-it-wants-to-sue-us-over-lend-we-have-no-idea-why-a3a1b6507009
https://blog.coinbase.com/sign-up-to-earn-4-apy-on-usd-coin-with-coinbase-cdad79e5f5eb
Lend overview: https://www.jdsupra.com/legalnews/a-september-to-remember-coinbase-avoids-7608131/
Brian Armstrong angry tweet storm
https://twitter.com/brian_armstrong/status/1435439291715358721
BlockFi and Celsius overview
https://www.coindesk.com/policy/2021/09/17/3-states-alabama-securities-commission-also-claims-celsius-violated-securities-laws/
SEC + Gary Gensler
How SEC Chair Gary Gensler’s Views on Crypto Have Changed Since His MIT Days
https://unchainedpodcast.com/how-sec-chair-gary-genslers-views-on-crypto-have-changed-since-his-mit-days/
SEC Chair Gary Gensler Washington Post Q&A
https://www.washingtonpost.com/washington-post-live/2021/09/21/transcript-path-forward-cryptocurrency-with-gary-gensler/
Gary Gensler + Elizabeth Warren letters
https://www.warren.senate.gov/newsroom/press-releases/warren-releases-response-from-sec-chair-gensler-affirming-need-to-regulate-cryptocurrency-exchanges-and-protect-investors-and-our-financial-system
Other
Uniswap delisting certain tokens through its front end
https://www.theblockcrypto.com/linked/112399/uniswap-labs-culls-synthetic-stock-and-derivatives-citing-evolving-regulatory-landscape
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The SEC's Lawsuit Against Ripple and 2 Execs: What You Need to Know - Ep.208
Stephen Palley, partner at Anderson Kill. and Gabriel Shapiro, partner at BSV Law, discuss the SEC's lawsuit against Ripple and two executives, Chris Larsen and Bard Garlinghouse. In this episode, they explain:
what was so "egregious" that the SEC went after two executives, Chris Larsen and Brad Garlinghouse, were charged
why their sales showed an information asymmetry, and why that matters
why the complaint comes close to being a fraud case, but why the SEC didn't charge them with fraud
why the idea that XRP is a currency and therefore cannot be a security will likely not fly
why it's unlikely the case will go to the Supreme Court
the SEC's case for why XRP is a security, and Ripple's role in it
how even on a technical level, the XRP network is centralized
how strong the SEC's case is against Larsen and Garlinghouse
Stephen's and Gabriel's predictions on how the lawsuit will play out
how this will likely impact XRP investors
whether or not Ripple could become an SEC-reporting company and XRP a security
what happened with Ripple's lead investor in its most recent fundraising round
whether or not the SEC might go after exchanges or other players who made money off XRP or collaborated with Ripple around XRP trading
what this means for Coinbase, in particular, because it's going public later this year
what Ripple's defense, in its summarized Wells submission, was
how this case compares to some of the other big SEC/crypto securities cases, Kik/Kin and Telegram
whether there might ever be a digital token that is determined to be a security for specific transactions but not others
what the wider implications of the case are for the rest of the crypto industry
Thank you to our sponsors!
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Episode links:
Stephen Palley: https://twitter.com/stephendpalley
Gabriel Shapiro: https://twitter.com/lex_node
SEC lawsuit against Ripple: https://www.sec.gov/litigation/complaints/2020/comp-pr2020-338.pdf
SEC lawsuit against Ripple being close to a fraud case: https://twitter.com/stephendpalley/status/1341523294344896515?s=20
Former SEC commissioner Joe Grundefest on the case: https://www.theblockcrypto.com/linked/89164/former-sec-commissioner-says-ripple-lawsuit-will-cause-multi-billion-dollar-losses-to-innocent-third-parties
Other lawsuit against Ripple: https://www.courtlistener.com/recap/gov.uscourts.cand.334410/gov.uscourts.cand.334410.115.0.pdf
Technical assessment of Ripple network: https://cryptobern.github.io/noconsensusripple/
Tetragon’s case against Ripple: https://twitter.com/stephendpalley/status/1346531087971999749?s=20
What the case means for exchanges: https://www.coindesk.com/coinbase-delist-xrp-exchanges-dilemma
Coinbase suspends trading in XRP: https://blog.coinbase.com/coinbase-will-suspend-trading-in-xrp-on-january-19-2e09652dbf57
https://www.coindesk.com/coinbase-suspends-xrp-trading
Lawsuit against Coinbase: https://www.bloomberg.com/news/articles/2020-12-30/coinbase-sued-over-xrp-commissions-after-sec-pursues-ripple?sref=m9L277rN
https://twitter.com/stephendpalley/status/1344352455895691269?s=20
People in the industry thinking for a while that XRP is a security: https://www.theblockcrypto.com/genesis/57366/xrp-is-probably-a-security-dont-at-me
Mary Jo White: https://www.coindesk.com/former-sec-chair-represents-ripple-xrp-lawsuit
Ripple’s Wells submission: https://ripple.com/wp-content/uploads/2020/12/Ripple-Wells-Submission-Summary.pdf
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Stephen Palley gives an in depth look at the BitMEX charges — and what it could mean for DeFi regulation
Last Thursday, BitMEX found itself embroiled in both a civil and criminal case with the Commodities Futures Trading Commission (CFTC) and the Department of Justice (DOJ), respectively.
BitMEX was hit by twin lawsuits. The CFTC accused the derivative exchange and its operators, including CEO Arthur Hayes and co-founders Ben Delo and Samuel Reed, of running an unregistered trading platform and violating anti-money laundering and know-your-customer regulations.
The DOJ filed a criminal indictment against Hayes, Delo, Reed and head of business development Greg Dwyer for allegedly violating the Bank Secrecy Act. Reed himself was arrested.
Responding to the breaking news developments, Stephen Palley, partner at Anderson Kill, featured on this week's episode of The Scoop to break down the nuances of the two cases. He touched on:
The process for litigating Bank Secrecy Act violations, and why it's likely the BitMEX operators are likely on the hook for possible prison time
What this case means for the growing decentralized finance space
Key facts in each filing that will be impactful going forward
Why it's surprising that the BitMeX domain has not been seized by law enforcement
A Conversation with Stephen Palley, Partner at Anderson Kill
In this episode of The Scoop, Frank Chaparro and Ryan Todd interview Stephen Palley, Partner at corporate law firm Anderson Kill. Over the course of a forty-five minute long conversation, Stephen discusses the most current lawsuits including recent developments at Bitfinex and Tether. Stephen also shares his thoughts on projects like Maker and how he sees regulation developing.
For the transcript and additional reading materials: https://www.theblockcrypto.com/2019/05/21/a-conversation-with-stephen-palley