- Gemini, Genesis, and DCG were sued by the NYAG on Thursday.
- The SEC dropped charges against Ripple’s Brad Garlinghouse and Chris Larsen.
- The Ripple-affiliated XRP token surged overnight following the news.
Happy Friday!
What a week. From a false start on spot Bitcoin exchange-traded fund approval on Monday to the SEC dropping its long-running lawsuit against Ripple’s top executives on Thursday. It’s been a busy time in crypto.
Let’s dig in!
Legal drama
Spot Bitcoin ETFs made headlines again this week as legal professionals saw their fair share of action too.
Ripple’s lawyers have cause for celebration after they won another victory over the US Securities and Exchange Commission.
The SEC said in a letter to the court on Thursday that it was dropping civil charges against Ripple’s CEO Brad Garlinghouse and Executive Chairman Chris Larsen. The regulator will meet with Ripple to discuss remedies for the pending charges in the case, which relate to institutional sales of the XRP token.
District Court Judge Analisa Torres ruled in July that public sales of XRP on exchanges did not constitute unregulated securities offerings, but that institutional sales were illegal.
“The SEC voted to dismiss charges with prejudice — a stunning capitulation by the government,” Ripple’s statement on the matter said. It was a “landmark SEC surrender,” said the firm.
The Ripple-affiliated XRP token soared following the news and was up 7.2% in the last 24 hours during early afternoon trading UK time.
Still, it wasn’t all good news for crypto lawyers. While Sam Bankman-Fried’s trial trundles on, other crypto bigwigs might soon wind up in court.
On Thursday, New York Attorney General Letitia James sued three crypto firms — Gemini, Genesis, and DCG — along with several of their current and former executives. The attorney general said they defrauded more than 230,000 investors, almost 30,000 of them New Yorkers, of more than $1 billion.
James’s office accused the Winklevoss twins’ crypto exchange Gemini of defrauding investors. The state said Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment.
The AG’s investigation said Gemini’s own analysis of its financial position showed that it was risky. The attorney general’s office said Gemini was aware loans were under-secured and highly concentrated in one entity — Sam Bankman-Fried’s crypto hedge fund, Alameda Research.
“Gemini lied to investors about an investment program it ran with Genesis called Gemini Earn,” said James in a news release.
The Winklevoss twins’ exchange rebutted the state’s action in a post on X. “Blaming a victim for being defrauded and lied to makes no sense and we look forward to defending ourselves against this inconsistent position,” it said.
In the suit, the attorney general also leveled similar allegations against Barry Silbert’s Digital Currency Group and its subsidiary, bankrupt crypto lender Genesis. The attorney general also individually sued Michael Moro, former CEO of Genesis, and DCG chief Silbert.
DCG did not immediately respond to a request for comment from DL News. Silbert said in a statement that he was “shocked by the baseless allegations in the Attorney General’s complaint” and intends to “fight these claims in court.”
Genesis said the NYAG informed the firm of its intention to file the lawsuit “late yesterday.” While it said there is “no basis” for the the state’s claims against Genesis, it has been “cooperating with all authorities and intend to continue doing so.”
“With its rush to file this lawsuit, the NYAG has risked significant harm to Genesis’s creditors for the reasons we have explained to the NYAG on multiple occasions, including in a letter we sent to the NYAG last night,” it said.
Crypto market movers
- Bitcoin is up 5.4% over the last 24 hours as it flirts with levels around $30,000.
- Ethereum gained 4% in the same period, changing hands for just over $1,610.
What we’re reading
- Uniswap token holders split over new fee set to bring in millions in revenue — DL News
- Grayscale’s courtroom win against SEC emboldens crypto supporters, but risks mount in Q4 — DL News
- SBF’s post-collapse media tour came back to bite him in court — DL News
Adam Morgan McCarthy is DL News’ London-based Markets Correspondent. Got a tip? Reach out at adam@dlnews.com.