The lawsuit filed by the Commodity Futures Trading Commission (CFTC) against Binance Holdings and its CEO Changpeng Zhao (CZ) may have implications for Ripple’s case against the US Securities and Exchange Commission (SEC). Blockbytes writes that the CFTC lawsuit filed yesterday highlights an interesting battle at the US regulatory level.
The CFTC wrote in the complaint that Bitcoin, Ethereum and Litecoin are all commodities. However, Neil Hartner, a senior staff software engineer at Ripple working on On-Demand Liquidity (ODL) payments, remind in the tweet was not too euphoric about the statement.
“Don’t be happy that the CFTC shows some cryptos as commodities. The CFTC has made it clear in the case of Telegram that commodities can also be securities. It’s the worst of both worlds if you have both. Double regulators and confusion to deal with,” wrote Hartner on Twitter.
The Ripple employee also referred to a tweet by Paul Grewal, the chief legal officer at Coinbase, which also pointed to this issue:
Security may be a commodity, except when it isn’t. And it depends on which regulator you ask, and when. If you are confused, you are not alone. Is this really the best American law has to offer?
Hartner further noted that commodities may be subject to securities laws, but no securities may be subject to commodity laws, adding: “We all believe the answer is no, but the SEC is deliberately avoiding the question and creating ambiguity.”
LBRY Case Shows Pathway For Ripple And Crypto Industry
The use of ambiguity as a weapon against the crypto industry is most evident in the transcript of the November 21, 2022 status hearing between LBRY and the SEC, which is now publicly available. CryptoLaw posted on transcript on the website yesterday.
The documents reveal how LBRY CEO Jeremy Kauffman asked to speak directly to the judge about how the SEC has rejected every remediation offer he has made. This is in the background of the agency refusing to say what the rule was five years before he was charged.
Judge Paul Barbadoro expressed “sympathy” for LBRY’s situation and asked the SEC why it did not clarify the remaining issues regarding the drug and the status of the secondary market for LBC so that there is clarity for LBC holders. SEC attorney Peter Moore responded in a tepid manner and said there had been “many discussions over the years” about “what the path would be.”
In an exasperated response to Moore, Kauffman goes to the heart of the company’s abuse by the SEC and any company that is sued. Kaufman said, “You’re lying, Peter,” and “I’ll do anything. He can talk now. […] Isn’t it security now? […] This is a simple question. However, LBRY and Kaufmann did not receive an answer.
It is clear that the SEC does not want clarity, but wants to attack the crypto industry in Operation Choke Point 2.0. With the lawsuit, Ripple is at the forefront and could face a battle for years if the case goes to the Supreme Court.
The law firm that represented the original Operation Choke Point case in 2014 has published a whitepaper that explains how banking regulators will use the same illegal threats and influence against the crypto industry in 2023, noted Jake Chervinsky, chief policy officer at the Blockchain Association.
The price of XRP is $0.5108, up 6.4% in the last 24 hours.
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