• The CFTC’s lawsuit filed against Binance Holdings and CEO Changpeng Zhao may have implications for the Ripple case against the SEC.
• Neil Hartner of Ripple warned not to be too euphoric about the statement, as commodities can also be securities.
• A LBRY hearing transcript reveals how the SEC has been using ambiguity as a weapon against the crypto industry.
CFTC Lawsuit and Ripple Case
The Commodity Futures Trading Commission (CFTC) recently filed a lawsuit against Binance Holdings and its CEO Changpeng Zhao (CZ). This case may have implications for the ongoing Ripple case against the U.S. Securities and Exchange Commission (SEC). Neil Hartner, senior staff software engineer at Ripple working on On-Demand Liquidity (ODL) cross border payments, pointed out that commodities can also be securities, making it possible to be subject to both regulators at once.
SEC’s Use of Ambiguity
Paul Grewal, chief legal officer at Coinbase, noted that this confusion is due to different regulators having different definitions of what constitutes a security or commodity. Hartner further noted that no security can be subject to commodity laws due to this ambiguity being weaponised by the SEC. A transcript from a November 2022 status hearing between LBRY and the SEC was made available yesterday which revealed how LBRY CEO Jeremy Kauffman asked to speak directly to Judge Paul Barba about every offer of remediation he had made being rejected by SEC despite them not clarifying rules for five years before they were sued.
CryptoLaw posted this document on their website yesterday which highlights how this ambiguity is being used as a weapon against crypto companies in general rather than just in individual cases such as with Ripple or LBRY. This makes it difficult for companies in the space to easily navigate regulations and understand what qualifies as a security or commodity when filing paperwork with government agencies such as the CFTC or SEC.
Worst Of Both Worlds
Hartner warned that it would be „the worst of both worlds“ if one was simultaneously subject to both regulations – double the regulators means double confusion when attempting to comply with laws set by each agency respectively. These regulatory issues are becoming more complex over time due to new technologies such as blockchain continuing to emerge which require updated legislation and regulations from governments around the world so that commercial activity involving these new technologies can remain compliant with both local and international laws.
In conclusion, while there may be implications from CFTC’s lawsuit filed against Binance Holdings on Ripple’s case against SEC, it is important not to overlook how ambiguity is increasingly being used by government agencies such as these two in order make sure that companies operating within cryptocurrencies are complying with all relevant laws set out by their respective jurisdictions before engaging in any commercial activities involving digital assets or other forms of digital currencies/currencies exchange services etc..