Yes, yes, we know what’s going to be number one, but there were other lawsuits and legal shenanigans in 2023 you know?
Let’s check them out!
Grayscale vs. SEC
When Grayscale sued the Securities and Exchange Commission (SEC) last June, it raised a great many eyebrows. The fund had just seen its Bitcoin Grayscale Trust-Bitcoin ETF conversion (which, by the way, is the only way that GBTC holders will be able to sell their holdings) rejected, and it wasn’t taking the decision lying down.
Fast forward 14 months to August this year, and Judge Neomi Rao ruled that the SEC had been “arbitrary and capricious” in its denial of Grayscale’s application, invalidating its reasons for the denial and sending it back to the agency to have another go. Judge Rao criticized the SEC’s lack of explanation for its differential treatment of similar products, underscoring the substantial commonalities between Grayscale’s product and SEC-approved Bitcoin futures ETFs.
SEC vs. Ripple
Another battle lost by the SEC, this time famously against Ripple. The authority had sued Ripple and its founders Brad Garlinghouse and Chris Larsen as well as the company in late 2021, alleging that XRP was a security that Ripple had effectively held a seven-year ICO starting in 2013. The case was quickly viewed as a seminal one for the crypto space, with the ramifications of defeat and victory debated in equal measure.
It didn’t take long for the tide to turn in Ripple’s favor, with the company winning rulings on evidence that the SEC wanted to retain, and in July this year it scored a massive victory when Judge Analise Torres of the United States District Court for the Southern District of New York ruled in favor of Ripple.
Judge Torres ruled that “XRP, as a digital token, is not in and of itself a “contract, transaction[,] or scheme” that embodies the Howey requirements of an investment contract,” which is what the entire case hinged on as far as the crypto space went. However, institutional sales were considered securities transactions, but the SEC decided to halt their pursuit of Larsen and Garlinghouse in this aspect in October.
However, the SEC has appealed the core decision, a case that will be heard next year.
United States v. Bankman-Fried
The trial of Sam Bankman-Fried was, it goes without saying, the biggest crypto court case this year, and in fact any year. Bankman-Fried’s doings at FTX and Alameda Research, where he moved money around with scant regard for the law and allowed his companies unlimited credit, garnered worldwide attention and put crypto firmly back in a negative spotlight.
The trial itself laid out the pattern of abuse Bankman-Fried perpetrated over the years at FTX, where he created a golden goose that he then proceeded to shit on and then burn in the space of a few months, lending billions in customer funds to Alameda and basing the value of much of his empire on the company’s exchange token, FTT.
Bankman-Fried was found guilty of all seven counts of wire fraud and conspiracy to launder money of which he was accused, with the verdict coming after just four hours of jury deliberation. While mainstream media outlets lapped up every new revelation that dropped each day, the crypto world had already shrugged its shoulders and moved on after a couple of days, helped in part by the fact that the crypto market was booming without Bankman-Fried’s input.
The conviction of Sam Bankman-Fried closed a chapter in the crypto story and allowed closure for those impacted by his actions, but the fact that the crypto world had already moved on by the time of the trial was the most telling aspect of all.
