Until the new presidential administration assumed the position, the digital asset industry was involved in an existential confrontation with the United States Stock Exchange and Securities Commission. For years, the SEC released a regulation campaign for the fight for the abrasive land against the digital asset industry and its most used platforms for not complying with the confusing, or non -existent rules, on which it constitutes security and who must register to buy and sell them. Now, under a new leadership, the SEC has confirmed the end of its age regulation.
While this change has drastically reduced (although not eliminated) exposure to regulatory demands by the agency, the industry must prepare for private plaintiffs to exploit the emptiness of the application and perpetuate, at least in the short term, ambiguities in the request of federal securities laws when bringing demands in the US courts. Uu. Leaders responsible for the owners of the information of the materials or others who violate the evil. of the Securities Laws.
The change of U of the sec.
According to its new leadership, the SEC has confirmed the end of the era regulated by compliance and took significant measures to progress its policy objectives, including an approach to the prosecution of bad actors and fraud in the digital asset space. The most significant regulatory changes include:
- Cryptographic Working Group: Only one day after his mandate as an interim president of the SEC, Commissioner Uyeda announced the formation of a “cryptographic working group” and, in doing so, he publicly recognized what many had been saying for a long time: the refusal of the SC to the rules of promulgation and, instead, regulating by the application of the application “confusion about what is legal” that includes “the WHO must be recorded” to commercial digital problems It is important, it is important, it is important ,,, it is important ,,, it is important, e ,, it is important ,,, it is important, e ,, it is important ,,, it is important, e, it is important, e ,, it is important ,,, it is important ,,, it is important ,,, it is important ,,, it is important ,,, it is important, it is important, it is important, it is important, it is important, it is important. as To register. The declared mission of the Crypto’s homework group is to provide clarity to these questions and develop a regulatory framework for digital assets. It is organizing a series of round industry tables, with the first to focus on how to define which digital assets are values. .
- Cyber and Emerging Technology Unit: The SEC replaced the Crypto Assets and Cybernetic Unit with the Cyber and Emerging Technology Unit (“CETU”), which focuses on protecting “retail investors from bad actors.” The SEC announced that CETU and its 30 fraud specialists and lawyers (below more than 50) would focus on “[f]Raud that involves blockchain technology and cryptographic assets “, among other priorities.
These changes indicate that the application of the SEC in the digital asset space will undoubtedly decrease, since the agency will no longer use its application arm as the main means to create a regulatory policy and its associated reduction in the personnel focused on blockchain and cryptographic matters. According to the SEC, its staff remains committed to processing bad actors and claims based on fraud, and Commissioner Hester Peirce clarifies that the change in priorities and resources is not the end of the application of the SEC and that “the statutes that are already in books do not allow a free for all.”
Unstable law is an opportunity for litigation
Given the application withdrawal of the SEC, individuals and companies must be prepared for private plaintiffs to exploit compliance vacuum. Historically, the bar of private plaintiffs has intervened to seek litigation following the decrease in regulatory application (or at least the perception of the same), whether demands that allege the violation of federal antitrust laws or financial misconduct in violation of the values of securities after the crisis of 2008. Such private costumes, often brought as class actions, can be a expensive discomfort for companies and its founders (often appointed as defendants), even for those who prevail at an early stage.
In the digital asset space, private plaintiffs can still use federal securities as a basis for bringing a variety of accusations, which include:
- selling unregistered values;
- Participate in the sale of values through a prospect (for example, white paper) that contains statements or omissions of material facts;
- values fraud and other misconduct (for example, carpet pulls or pump and fall schemes);
- Violations of people who have decision -making control over the seller, such as the founders or the leadership of the company
Private plaintiffs can also seek alleged violations of the laws of state securities and other causes of customary law action.
Although the new interpretation of the SEC of the Securities Laws is more aligned with the thought of the industry, it does not join the courts that analyze the question of whether a digital asset is a security. For example, private plaintiffs sought the Tron Foundation and its founders, claiming that they cheated investors by promoting, offering and selling TRX, an alleged security, in violation of federal and state laws. At the end of last year, the United States District Court for the Southern District of New York partially denied the motion of the defendants to dismiss, and in doing so, he explained that the previous frame of the SEC to determine if the cryptography assets were values was a “non -binding interpretation of a legal standard.”
And although the decisions of the Courts of Appeal are binding for the courts under them, the SEC recently dismissed a lawsuit (which involved Coinbase) that was pending appeal review of the issue of whether the transactions of cryptographic assets qualify as values. It is rumored that another similar demand will be fired soon. This means, for now, that the lower courts will continue to lack a orientation of a superior court on that issue, leaving free private plaintiffs to argue that federal laws of values are applied.
As a result, companies must expect an increase in private litigation. An area to see are meme coins. While there are persuasive arguments of why meme coins should not be considered values, private plaintiffs will surely argue that the circumstances of a private memes currency take it within the scope of federal laws of values.
This year has been mainly positive for the digital asset industry. He has escaped the control of an agency that was apparently determined to crush it. But the companies and their founders who return to evaluate their legal risk should confer their legal teams about whether they can be the objective of a greater private litigation, so that they can create strategies to mitigate such exposure.
