Feb 24, 2023

The Chamber of Digital Commerce Founder and CEO Perianne Boring joins "First Mover" to discuss why the crypto lobbying group is urging a federal court to dismiss a case against an ex-Coinbase staffer, arguing it unfairly labels several cryptocurrencies as securities.

Video transcript

The state of crypto is presented by Tron connecting the world to the power of Cryptocurrency amid a flurry of sec enforcement actions against crypto firms. Sec Chair, Gary Gensler is making clear his view that most digital assets are securities that fall under his agency's purview. The Chamber of Digital Commerce, a crypto trade group is fighting that notion at least one front, urging a federal court to dismiss a case against an ex coin based staffer arguing the case unfairly label several cryptocurrencies as securities. Joining us now with more is Chamber of Digital Commerce founder and CEO Per Boring Per this sec is suing a lot of companies ripple dos and his uh terraform labs for issuing us T Lunar Mirror uh alleging their unregistered securities. The Chamber of Digital Commerce filed an Amic brief supporting an ex coin based employee Sea Wahi who is accused of insider training because in that case, the SEC has labeled several cryptocurrencies as security. So why hone in on this particular case? What's really novel about this case is that the SEC is going uh has uh piggybacked on to uh a a case brought by the Department of Justice and they're go, they're lodging on to a third party who had nothing to do with the issuance of these tokens is not involved in uh the uh uh the listing of these tokens. Um But using this case to define them as securities. Um So we take a serious concern um with this approach, we see this as backdoor rulemaking and just another step in the Se C's regulation by enforcement. It, it's super important to note that the SEC has never promulgated regulations under the administrative procedures act to clearly define what sorts of digital asset transactions it considers to be transact uh securities transactions. Um And at the same time, um the the congress is, is working on legislation that would restrict the Se C's jurisdiction in this space. So we see this action as seriously concerning and would have significant ramifications for the entire digital asset industry and it was imperative that the industry had a voice in this case. Do you think that that the defendant should be tried at all for insider trading on under any circumstance here? Yes, absolutely. So, one of the things that's really unique about this case is the Doj brought the case, they're alleging insider trading. I wanna be super clear that anyone who breaks the laws breaks just basic code of ethics, we should absolutely enforce against those individuals. So in no way, shape or form, are we trying to downplay the seriousness of insider trading? What we have asked the court to dismiss is the S ECs case, which would have absolutely nothing to do with the punishments that will come of the individuals who have broken not only uh the rules of their employer, but also the law. Uh, so judicial restraint, it would, it would not let these alleged wrongdoers get off the hook. They've already been indicted by the DOJ, they've pled guilty. Uh, they're certainly subject to an action for, for civil fraud as well. Um But a ruling that embraces the Se C's uh position uh and endorsing it, it, its tactics could have negative implications for the digital asset ecosystem. Uh So a great question and a really important distinction on why this particular case is very unique. Does this case will allow the SCC to lay out through enforcement? How they see cryptocurrencies in terms as unregistered securities? I mean, I, they believe that securities follow the how we test. And so these are unregistered securities because they are an investment contract. They, uh they follow the how we test. So the Howie test sets a four pronged test for determining whether a given asset was sold as an investment contract and thus constitutes a securities offering, but it does not shed any light on whether the underlying itself is a security. Additionally, the Howie test was never meant to apply, apply to the sorts of secondary market transactions that are at issue here uh where there was no contract uh no contract at all. Uh Again, the SEC has never promulgated any regulations under the administrative procedures act to clearly define what type of digital asset transactions it considers to be securities transactions. Congress is working on, on writing new rules that would limit the S ECs uh jurisdiction in this space. Uh And the only type of, of guidance that we have from the SEC uh regarding um digital assets is in the form of non binding speeches and statements that have been conflicting from administration to administration. Hey, Perry Anne, great to have you back on the show. I kind of want to zoom out for a moment here because this is just another example of sort of sec madness and everybody is just getting so alarmed about it. And I just want to ask you your thought about one of these very popular narratives in crypto right now, which is that, you know, because of the sec's regulations by enforcement approach and because of the sort of general confusion in Washington, we're going to start seeing an exodus of crypto companies from the United States to other more friendly jurisdictions. I'm curious if you're hearing that in Washington and if you agree with that fear, which I'm seeing, you know, more and more of um in the crypto industry, I think that's already happened. Um I that that's been an issue for, for, for many years uh at the Chamber of Digital Commerce, we started raising the, the these issues of not having any um promulgated regulations uh from the SEC on what it constitutes uh digital asset securities. We started raising these issues back in 2016 and we saw that Exodus and that brain drain uh that, that time in, in crypto history was when we saw um kind of the first wave of initial coin offerings. Uh and a lot of those tokens left the United States. And if you just look at basic market data, you can see that the majority of digital asset activity does not happen in the United States. It's happening overseas. We have pushed innovation outside of the United States jurisdiction because of our lack of leadership in Washington. Well, SEC chair, Gary Gansler has suggested that he's frustrated over uh with the crypto industry's unwillingness to come through his doors. Uh He recently told Coindesk that these platforms aren't even coming in and asking for meetings and saying that he's really, he really deeply respects the few that have come in. What's your reaction to that? Chairman Gusler knows that it's not just as easy to, to go on the S ECs website and fill out a form when he tells companies to come in and register. There is no framework for companies for digital asset uh issuers, allocators exchanges to, to register under. Uh Additionally, there are a lot of companies that did go into the SEC talked to the SEC and came out with an enforcement Act A so II, I don't know what other um, results uh, the chairman would be looking for, uh, or would be expecting from the industry again. Just gonna point to the SEC has never promulgated regulations under the Administrative Procedures Act. They are regulating through enforcement and by press release. And that is not how you develop a healthy compliant and robust regulated market for any industry. All right. Thank you. Thank you for your time. That was Chamber of digital Commerce, CEO Per Boring.

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