Looming Legal Battle Puts SEC's Crypto Crusade at Risk ��������������������������������������������������������������

Crypto Weekly

In 2021, the SEC went after crypto. In 2022, crypto is coming for the SEC.

Securities and Exchange Commission Chair Gary Gensler has vowed to rein in what he's dubbed "Wild West" abuses in the $1.6 trillion market. Industry leaders, flush with cash and deeppocketed investors following a trading boom in Bitcoin and other digital assets, are aiming their lawyers at the sheriff of Wall Street in an intensifying legal fight. Blockchain payments firm Ripple, the de facto leader of the revolt, has been winning procedural court cases trying to fend off the SEC in a case that could redefine how the agency polices digital assets. Grayscale Investments, which wants to launch a Bitcoin fund for the masses, brought on the white-shoe law firm Davis Polk to outline a legal case against the agency that could be brought against it if it hinders the company's ambitions. The CEO of another startup, Terraform Labs, sued the SEC after it tried to serve him with a subpoena.

Crypto-friendly legislators who claim that the SEC is overstepping its authority are cheering on the legal assault. It could limit the SEC's reach for years to come and remove what many in the industry view as their biggest regulatory obstacle to launching even more virtual currency products. "As a lawyer, you're trained to not pick fights with regulators," Ripple general counsel Stuart Alderoty said

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in an interview. "But we didn't pick a fight with a regulator, the regulator did. Respect for regulators has to be earned, and I don't think the SEC has earned the industry's respect." An upcoming legal barrage is the latest example of the cryptocurrency industry taking an aggressive stance against Washington policymakers.

This year is poised to be a key inflection point in the politics and regulations around digital assets. Crypto firms are ramping up lobbying and planning to dole out millions of dollars in financial contributions in a bid to secure allies in government and undermine their opponents. Several federal agencies make the issue a top priority and lawmakers draft a raft of legislation.

"There's a carrot-and-stick approach," said Kristin Smith, who leads the Washington-based Blockchain Association, a trade group. "It's aggressive — more aggressive than perhaps other industries." Gensler — a former Goldman Sachs partner who became a progressive darling because of his tough approach to regulating Wall Street — has taken a sweeping view of the SEC's role in cryptocurrency, arguing that most of the products fall under his agency's jurisdiction. A series of enforcement actions and behind-thescenes clashes with startups have put him at odds with the crypto community.

SEC spokespeople declined to comment for this story.

"Right now, we just don't have enough investor protection in crypto," he said in an August speech that set the tone for his approach. "Frankly, at this time, it's more like the Wild West. … If we don't address these issues, I worry a lot of people will be hurt." The SEC's legal war with crypto began in the waning days of the Trump administration just before Gensler took the helm of the agency. The agency in December 2020 sued Ripple, accusing the company of illegally raising more than $1.3 billion through the sale of the digital currency XRP. The SEC contends that XRP is a security that should be registered with the agency under the "Howey test," a landmark Supreme Court ruling that's the legal basis for defining investment contracts. Unlike other SEC enforcement actions that are resolved with a settlement, Ripple fought back, and the case is ongoing in federal court. The company argues that XRP is not an investment contract and that the SEC never provided "fair notice" that XRP was an unregistered security — a due process violation.

Ripple has started to secure procedural wins. This month, a judge overseeing the case ordered the SEC to turn over internal documents that could offer new details on how agency officials developed their views on digital assets. The SEC's

"If you have the first 2023 Tesla and you go on the highway, and you're driving 90 miles an hour, and you tell a police officer that you thought the 75 mile an hour speed limit sign only applied to vehicles produced in 2022 or earlier ... you'll get laughed at,"

Jeff Hauser, a finance industry critic and founder of the watchdog group Revolving Door Project

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allegations are "not just as a case against Ripple, but a case against the entire industry," Alderoty, Ripple's general counsel, said. An associate professor at George Mason University's Antonin Scalia School of Law, J.W. Verret, said an SEC loss on the "Howey test" would mean the regulatory threat that hangs over a number of cryptocurrencies "goes away." "The Ripple litigation could bring about quite a bit of change if Ripple is victorious," he said.

Jeff Hauser, a finance industry critic and founder of the watchdog group Revolving Door Project, said Ripple's claim is akin to arguing that new cars might not be subject to existing speed limits. "If you have the first 2023 Tesla and you go on the highway, and you're driving 90 miles an hour, and you tell a police officer that you thought the 75 mile an hour speed limit sign only applied to vehicles produced in 2022 or earlier ... you'll get laughed at," he said in an interview.

Another potential legal fight that could ensnare the SEC involves its decision to block the launch of Bitcoin-backed funds that would sell shares to investors on public exchanges — a way to ride the price of the digital currency without having to buy it directly. INSTEAD, the SEC has opted to green-light funds tied to Bitcoin futures contracts — a more indirect financial instrument that the Commodity Futures Trading Commission regulates.

Grayscale, a $55 billion investment firm that wants to launch a Bitcoin exchange-traded fund, is building a case that the agency is breaking the law by favoring one model over the other. The firm last year commissioned lawyers at Davis Polk to draft a public letter to the SEC arguing that rejecting a Bitcoinbacked fund would be "arbitrary and capricious." "If you're okay with futuresbased ETFs, you should also be okay with a stock-based ETF," Grayscale chief legal officer Craig Salm said in an interview. Grayscale has not said whether it would sue the SEC if the agency rejected its fund application.

Representative Darren Soto (D-Fla.), a crypto-friendly member of the Congressional Blockchain Caucus, said the firm's argument has merit. Soto and Rep. Tom Emmer (R-Minn.) are asking Gensler to allow firms to offer Bitcoin investment products through regulated exchanges. Grayscale throwing down the gauntlet could help policymakers ramp up the pressure on the SEC, even if it antagonizes the agency.

"It's a risky plan, but it's one that's well within their rights," Soto said in an interview. It's not a risk every firm will be willing to take. Valkyrie Investments CEO Leah Wald said that her firm has no plans to pursue the legal strategy Grayscale previewed, even after the SEC blocked Valkyrie's own Bitcoin ETF. "The onus is on us as an industry to have a more amicable relationship," she said. A former chief of the SEC's Office of Internet Enforcement, John Reed Stark, said that bucking the agency's authority can backfire on firms that could have resolved inquiries without incident.

After Terraform sued the SEC on procedural grounds over its subpoenaing of CEO Do Kwon last year, the agency filed a countersuit revealing that it was investigating the decentralized finance platform for violating a litany of federal securities laws. Terraform did not respond to requests for comment. "It's very reckless. It's not bold or courageous. It's foolhardy because it didn't have to be this way," Stark said in an interview. "The SEC has dug in. I think they're on very solid ground." 

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Bitcoin collapse has echoes of subprime crash, Nobel laureate says: Those who

ignore the risks take the greatest risk

Nobel Laureate and crypto skeptic Paul Krugman said cryptocurrencies and the subprime crisis of the 2000s bear "uncomfortable similarities." In an op-ed for the New York Times on Thursday, Krugman wrote that there are disturbing echoes of the subprime crash 15 years ago.

Krugman conceded that crypto isn't big enough to cause an overall economic crisis. In light of this, he explained that the recent decline in crypto market capitalization, which is about 6% of U.S. GDP, has had detrimental effects on investors who cannot afford big losses. "That's an order of magnitude smaller than the effects of falling home prices when the housing bubble burst," Krugman wrote.

Krugman wrote that those who don't understand what they're getting into and aren't equipped to deal with the downside are disproportionately at risk from a crypto collapse. According to Krugman, as the crypto market goes down and Bitcoin BTCUSD, -0.08% loses 50% of its value from its all-time high, minorities and economically disadvantaged groups bear the brunt of the losses. He cites a survey finding 44% of crypto investors are nonwhite, and 55% do not have a college degree. Krugman compared the impact of crypto declines on marginalized and lessaffluent Americans with the subprime mortgage-lending crisis, which was initially celebrated for opening up homeownership benefits to previously excluded groups. However, "many borrowers didn't understand what they were getting into," Krugman wrote.

Krugman wrote that regulators made the same mistake they did with subprime mortgages: they did not protect the public from financial products they didn't understand, and many vulnerable families may pay the price. Krugman has already written about cryptocurrency in May. He called it a Ponzi scheme, and in 2013, he wrote an op-ed titled "Bitcoin is Evil," saying that it has no legitimate purpose.

The Nobel laureate failed to fulfill previous predictions. Krugman predicted in a 1998 article that the Internet would have no more economic impact than the fax machine by 2005. The Nobel Prize in Economics was awarded to Krugman, a Princeton scholar and writer for The New York Times, for his work analyzing "trade patterns and economic activity locations" and for integrating "previously disparate research fields such as international trade and economic geography." 

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Crypto Weekly

PROJECT 1

Lucky Fairy Token (FAE)

luckyfairy.io luckyfairytoken LuckyFairyToken

Are you a fan of hitting jackpots on online slots and lotteries, or love to make your income from live dealers, and sportsbooks? Are you also a crypto enthusiast? Get ready!

LuckyFairy ($FAE) is a deflationary token launched on the evergrowing AVAX Blockchain. Already partnering with a fully regulated, established online gaming platform in Numbers Game (PlayNumbersGame.com), LuckyFairy garners a 70% revenue share redistributed to $FAE.

The token launched with an initial max supply of 777,777,777, conveniently, and carries a 10% tax. The tax breaks down to: 3%-Marketing & Development 2%-Reflections 2%-Liquidity 2%-Prize Pool 1%-Burn Here’s the winning strategy. By utilizing an anti-whale dump mechanism, the max transaction is 0.5% of the total supply, and a max transaction on sales, with a 45 second cool down period between buys and sells.

100% of the tokens revenue from the casino is put back in the $FAE ecosystem to maximize token growth, and will initially be distributed as such, but is subject to change following a snapshot vote from the community:

40%-Lucky Fairy Buyback and Burn Events 40%-Lucky Fairy Events ie. AVAX, ETH, BNB, and crypto airdrop to $FAE holders 19%-Marketing 1%-Charities

Keep your eyes on this hidden gem as there are future plans to expand past the online casino and step into the metaverse, as well as Esports tournaments and betting, P2E games, decentralized slots machines, and more, and bringing all these additional features on their Lucky Fairy dApp.

PROJECT 2

adacash.io

ADAcsh (ADAcash)

adacashtoken adacashbsc

ADACash is the step forward in yield-generating contracts on the Binance Smart Chain (BSC). A revolutionary new token that earns you ADA reflections just for holding. On each transaction 10% is distributed between all holders as CARDANO every 60 minutes dependant on volume. You receive rewards distributed in ADA rather than token reflections and the contract employs a static reward system. This allows rewards to extend outside of simply holding the coin as would a reflection-based coin operate. ADACash’s Tokenomics: ƒ Token supply of 100,000,000,000,000 ADACash ƒ 15% Buy and Sale Tax* • 10% ADA is redistributed among holders • 2% is used to increase the liquidity pool. • 3% is allocated towards funding the marketing wallet.

NOTE: you must hold 200,000,000 or more ADACash tokens to be eligible for the ADA dividends.

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PROJECT 3

xrisecoin.com

XRise

XriseCoin XriseCoin

With volatility as the main antagonist of mass crypto adoption, XRise is bringing a smart contract that offers a substantial amount of certainty to investors. The goal being to minimize risk and loss that all too often, troubles the BSC space. XRise does this by controlling the max sell limit on every transaction, nurturing exponential growth. Purchases carry no upper limit, and laddering out (safely taking profits) is welcomed. If you invest $1,000, and you have a 500% increase, ($5,000), your day 1 withdrawal would be set at your initial investment, plus 10% of your profit, ($1,000+$400). Let’s say day 2 realizes a 200% profit, putting your remaining $3600 from day 1, at $7200. Your day 2 withdrawal limit would be 10% of your total holdings, ($720). As the process continues, investments and holdings continually grow, while sells have a much lesser impact on the chart.

r

Initial investment-$1,000 ƒ Day 1 (with a 500% increase)-$5,000 ƒ Profit-$4000 ƒ Day 1 withdrawal limit (Initial investment+10% of profit)=$1400 ƒ Remaining balance-$3600 ƒ Day 2 (with a 200% increase)-$7200 ƒ Day 2 withdrawal limit (10%)-$720

Brought to you by the powerhouse team at FudDoxx, XRise will launch on the Binance Smart Chain on February 14th and are accepting presale allocations on their Telegram channel. FudDoxx will pay out their staking rewards in XRise, adding holders, and continually growing a consistent upward trajectory to the XRise token.

PROJECT 4

FudDoxx Token (FDOX)

FuddoxxToken FudDoxx FudDoxx

Building on security, FudDoxx offers a wide range of services to benefit the entire crypto space. The team has compiled a list of projects that have passed their extensive verification process. FudDoxx offers doxxing services to bridge the gap between investors and developers. The doxxing info received by the team is securely stored for use in the event that a project scams, and is proven as far as possible, then that information would be released to the public and authorities. FudDoxx Audit service goes beyond the detailed analysis of solidity code. Not only tearing apart the smart contracts, but their risk assessment factors in the audited projects vision, team, maturity, funding, and community.

The FudDoxx team has also incorporated a beautiful, userfriendly NFT marketplace in their ecosystem, (see for yourself, FudCoinNFT.com), where you will find everything from pixelated images, audio, video, and unique sports memorabilia NFT's, to name a few. The simple navigation process streamlines buying and selling digital art.

Fuddoxx doesn't stop there!

ƒ Swap platform: Complete (Swap.FudDoxx.com) ƒ Staking and Farming platform: In development ƒ ICO launchpad: In development

With so many avenues for continual success in crypto, FudDoxx truly covers every base with their comprehensive suite of revenue-generating, and security, features.

FudDoxx Token (FDOX) launched on Binance Smart Chain with a total supply of 100 trillion and has 328 holders at the time of writing. A 12% tax is attached to every transaction which breaks down to 7% LP, 3% marketing in BNB, and 2% native reflections.