Marisa

@mtcoppel

70 Following

128 Followers

Marisa pfp

Loved writing this with @atuminelli

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Jake Chervinsky

The Fifth Circuit just vacated the SEC's private funds rule, holding that the SEC exceeded its statutory authority. The administrative state is out of control, and the federal courts are reining it in. Love to see it 🔥 https://storage.courtlistener.com/recap/gov.uscourts.ca5.215539/gov.uscourts.ca5.215539.123.1.pdf

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Today we responded to the SEC’s Wells notice We believe DeFi is revolutionary and we’re going to fight to protect it Summary of our response and the full 40 page document here: https://blog.uniswap.org/the-fight-for-defi-continues

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We’re proud to work alongside CFAT in ensuring SEC overreach cannot stifle innovation, disrupt market stability, or damage US economic competitiveness. Thank you to our excellent counsel at Sullivan & Cromwell who are advocating on our behalf. Stay tuned for next steps...

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See the full list of relief we are requesting:

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And, by its own admission, the SEC did not even attempt to evaluate the additional costs that would be imposed on digital asset markets by the rule. Instead, the Commission is content keeping the wool over its eyes.

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Despite briefly acknowledging the negative impact the rule will have on digital asset markets, the SEC made no attempt to address or mitigate it, violating its obligation under the APA to consider any new rule’s effect on efficiency, competition, and capital markets.

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And, the SEC fails to clarify a key threshold issue despite commenters asking for clarification: how to determine which crypto asset transactions qualify as securities transactions. This makes it even harder for industry to determine whether compliance is necessary.

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Commenters raised dozens of concerns that the SEC fails to address, in violation of the APA. For instance, the new rule would drain liquidity from markets and generally deter interaction with DeFi protocols. The SEC’s response to which can best be described as a shrug.

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The SEC goes further – even if a participant’s trading activity doesn’t meet either test to be a dealer, they still cannot presume to be free from liability for failure to register as a one. So there’s this third, undefined, test too…

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The new rule introduces two tests to identify dealers, both focus on the effect of trading activity rather than focusing on a customer relationship. Again, this is a drastic departure from any previous SEC interpretation of the term “dealer.”

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The rule has a majorly detrimental impact on the digital asset ecosystem, particularly DeFi – pulling in liquidity providers and DeFi software and its developers, although it is vague and unclear. Requiring intermediation of DeFi protocols defeats the purpose of DeFi.

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Now, the redefined term doesn’t factor in a customer relationship and focuses entirely on whether a person’s activity has the post hoc effect of providing liquidity. The rule violates the APA by exceeding the SEC’s statutory authority and failing to contain proper analysis.

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We raise several APA claims centering on the SEC’s unlawful redefining of the term “dealer.” By statute, the courts, and the SEC’s own interpretation, being a “dealer” previously turned on the specific services offered to customers. The SEC has flipped this on its head.

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Today is the 1 week anniversary of @blockchainassn filing its first lawsuit against the SEC - challenging the dealer rule. It's unfortunate that it's come to this, but we're excited to defend our members and the industry alongside our co-plaintiff, the Crypto Freedom Alliance of Texas. https://t.co/JnWZcKVXzO

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Amanda Tuminelli

While I am incredibly proud of the amount of work we have done to defend defi so far, we are just getting started. We need additional resources to keep up the fight. Please support@fund-defi

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11/ All in all, I am optimistic. The @coinbase team is composed of some of the best lawyers in the world and their arguments are strong. Full opinion here: https://storage.courtlistener.com/recap/gov.uscourts.nysd.599908/gov.uscourts.nysd.599908.105.0.pdf [end]

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10/ Although the SEC has already attempted to use this opinion as favorable precedent in the Binance case, and they will continue to do so in other ongoing cases, I'm hopeful that courts will refuse to give the opinion too much weight given that no discovery has taken place.

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9/ Keep in mind that it is extremely rare for dismissal motions like this one to be granted in full - especially against the government. The win on Coinbase Wallet is a big deal and should not be overshadowed by the remaining claims moving forward.

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8/ The court also focuses almost entirely on facts related to how token projects initially launched their tokens. Remember that the court must take these facts as true. Additional facts will come out in discovery that will undoubtedly support Coinbase's strong arguments.

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