Crypto firms have filed prior lawsuits against the SEC. Shares? Observers say that the survival of the industry.. The end is to take the crypto case to the Supreme Court.
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Crypto firms are on the offensive in a legal battle against the Securities and Exchange Commission.
At stake: the survival of their businesses.
They are doing so by filing cases in Texas and Louisiana.
Observers say their last game is to take their cases to the Supreme Court.
Crypto.com filed a lawsuit against the US regulator last week. MetaMask developer Consensis; Clothing company Beba and the DeFi Education Fund; And Artists Brian Frye and Jonathan Mann have brought their own suits in recent months.
The lawsuits are early strikes against the agency, which has been trailing the industry as it files lawsuit after lawsuit against crypto firms.
These industry lawsuits are filed in the US South, unlike the SEC, which chooses to file its cases in New York or Washington, DC.
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So what?
Well, Texas and Louisiana fall under the Fifth Circuit Appeals.
Of the US's 13 appeals circuits, the Fifth Circuit has always been the most conservative. But it was reversed Hard right After Republican Donald Trump The court appointed six judges During his presidency.
The court upheld restrictions on abortion, expanded gun rights — and called it that Go to court If you want to resist the Biden administration and the power of regulators.
Academic Todd Phillips says every industry in the US is trying to get its appeals heard in the Fifth Circuit News. Crypto is no different.
“Everybody who pays attention knows that the industry is forum-shopping” — choosing to file cases in sympathetic courts, says Phillips, an assistant professor of law at Georgia State University.
Not every company on this list is forum-shopping. For example, one could argue that Frye and Mann filed in Louisiana because Frye lives there.
However, if they get that far, their cases will be heard in the conservative-leaning Fifth Circuit.
But this is not the end of the industry.
Phillips said the industry hopes to create a “circuit split” — a situation where two appellate courts make conflicting decisions about whether crypto assets are securities.
When a circuit split occurs, the Supreme Court is more likely to hear a case. Then, it can solve the problem once and for all.
The SEC could reasonably hope for appellate court success as judges in New York or the District of Columbia. Initial sympathy was shown For agency arguments.
Industry SEC v. Ripple Labs considers the decision a key court victory. In that case, New York federal judge Analisa Torres ruled that crypto transactions are not securities when they occur on exchanges.
Ripple Labs is headed to the Second Circuit of Appeals, which could potentially overturn the Torres ruling, Phillips said.
So to create that circuit split, the industry needs a ripple-style victory in another, more sympathetic appeals court. And it's possible to get it in Texas.
Update: This article has been updated to clarify the legal case regarding Beba and the DeFi Education Fund.
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