This year has seen a number of high-profile crypto cases, with the US Securities and Exchange Commission (SEC), the Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC) and the Treasury Department all getting involved.
The most notable of these was the legal battle between Ripple Labs and the SEC. Ripple Labs refused to settle the lawsuit, which was filed by the SEC in December 2020, and instead explored all options to defend themselves from allegations that they had sold XRP as unregistered securities. After spending more than $200 million in legal fees, Judge Analisa Torres handed down a split decision on July 13th. Ripple Labs were cleared of selling XRP to retail investors, but found guilty of selling to institutional investors. The SEC attempted to appeal the decision, but the interlocutory appeal was rejected, and the agency is now looking to settlement hearings in 2021.
Binance also had a difficult year, with the SEC and other agencies accusing the trading platform of supporting the trading of unregistered securities, operating as an unregistered broker-dealer, as well as being the subject of a long-standing investigation by the DOJ. In the end, the firm agreed to a joint settlement with the DOJ, CFTC, and FinCEN worth $4.3 billion – resulting in the departure of co-founder Changpeng ‘CZ’ Zhao.
Coinbase, being the only publicly-listed crypto trading platform in the US, also faced a number of legal challenges, most notably from the SEC. The trading platform also took the SEC to court, demanding guidance on crypto regulations. The SEC eventually denied Coinbase’s request, claiming that the industry was already covered under existing securities laws. Coinbase Executives have since made it clear that they are not content to accept this response.
Grayscale Investments had a victory against the SEC in one of the year’s biggest cases. The SEC had denied Grayscale’s request to convert its Grayscale Bitcoin Trust (GBTC) to a Bitcoin spot Exchange Traded Fund (ETF). The court deemed the SEC’s denial as “capricious and arbitrary” and ordered a review of the SEC’s stance on the application. The SEC showed no interest in appealing, raising the possibility of a spot Bitcoin ETF in the near future.
Finally, LBRY.com, a blockchain file-sharing and payment network, was accused by the SEC in March 2021 of selling its LBRY Credit token (LBC) as a security under the 1933 Securities Act. The court sided with the SEC, but LBRY has decided to appeal the case. The SEC has a history of losing in higher courts, so it remains to be seen whether or not LBRY will be successful this time around.
