Attorney John E. Deaton, representing the XRP community in Ripple’s case against the U.S. Securities and Exchange Commission (SEC), has criticized the SEC’s latest yearly enforcement report.
The SEC’s annual enforcement report for fiscal year 2023 encompasses 784 enforcement actions. In the report, SEC chair Gary Gensler stressed the significance of the Enforcement Department’s role in protecting investors.
“The investing public benefits from the Enforcement Division’s work as a cop on the beat. FY 2023’s results demonstrate the Division’s effectiveness—working alongside colleagues throughout SEC—in following the facts & the law wherever they lead to hold wrongdoers accountable,” he said.
Apart from Deaton, Australian attorney Bill Morgan, affiliated with the XRP community, also criticized the SEC’s effectiveness, particularly in the LBRY case.
“How much did you obtain from the LBRY case? Nothing so far because you drove LBRY into insolvency. What were the SEC’s taxpayers’ funded legal costs? A lot. Who was protected? Nobody. Who was hurt? Investors. What was achieved of worth from the case? Nothing? What was the opportunity cost? Not using those agency resources to prevent real scams like FTX,” he said.
The SEC’s report lacks information about the Ripple case and the classification of XRP as a security. Fred Rispoli, founder of HODL Law and a pro-XRP attorney, recently commented on the SEC vs. Ripple case, pointing out a reason why the SEC might not have mentioned the Ripple case in its report.
“SEC vs. Ripple. The remedies-related discovery schedule is set. There is no chance of a 2nd Cir. ruling on an appeal by either party (if one is ever filed) before mid-2026. Think of everything that will happen between now and then. Game Over, SEC. You lost,” Rispoli said.
The SEC’s enforcement report for Fiscal Year 2023 outlines its strategy for regulating the crypto industry. This year, the SEC’s actions addressed various issues, such as large-scale frauds, unregistered offerings, and non-compliance.
The SEC’s action against crypto frauds included high-profile cases such as Terraform Labs and its founder, Do Kwon, and Richard Heart and his firms Hex, PulseChain and PulseX. The SEC also highlighted the case of FTX CEO Samuel Bankman-Fried as part of its effort to address major frauds in the crypto industry.
Apart from combating fraud, the SEC focused on unregistered securities offerings in the crypto sector. It took action against several firms accused of offering unregistered securities through crypto asset lending and staking programs, such as Genesis/Gemini, Celsius, Kraken and Nexo. Some of these cases were settled, with Kraken agreeing to a $30 million payment and Nexo agreeing to pay $22.5 million in civil penalties.
The report also emphasized the SEC’s actions against crypto asset intermediaries. Charges were brought against entities such as Beaxy, Bittrex, Binance and Coinbase, stressing the importance of complying with securities laws.
The SEC also targeted illegal celebrity promotions of crypto asset securities, including influencers and celebrities like Paul Pierce, Kim Kardashian, Lindsay Lohan and Jake Paul. They faced charges for endorsing crypto securities without sufficient disclosures about the compensation they had received for these promotions.
Additionally, the report highlighted the SEC’s win in the LBRY case. A federal court affirmed the SEC’s stance that LBRY, Inc. had violated federal securities laws’ registration provisions by offering and selling LBC tokens.
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