The U.S. Court of Appeals has upheld the decision by Hodl Law to dismiss a lawsuit against the SEC that sought to clarify whether Ethereum (ETH) is classified as a security. Meanwhile, the SEC has denied a motion to dismiss Richard Heart’s $1 billion lawsuit, and Michelle Bond faces campaign finance charges related to the 2022 congressional elections. There are also concerns in the crypto industry about the revived Nvidia lawsuit, which could set a precedent for frivolous securities litigation.
ETH Classification Lawsuit Dismissed by Appeals Court
A U.S. appeals court upheld a California federal judge’s decision. Dismiss the lawsuit This is a lawsuit filed by Hodl Law, a law firm focused on cryptocurrencies, against the U.S. Securities and Exchange Commission (SEC). The lawsuit was filed to urge the SEC to clarify its stance on cryptocurrencies. Ethereum (ETH) ~is Classified as Security.
On August 22, a panel of the 9th Circuit Court of Appeals ruled that Hodl Law’s lawsuit failed to demonstrate a “realistic risk” of facing SEC enforcement action solely because of its use of the Ethereum blockchain and ETH in its operations. Hodl Law filed the lawsuit in November 2022 in the U.S. District Court in San Diego, attempting to force the SEC to clarify its stance on ETH. Specifically, the regulator’s Enforcement Action Against multiple cryptocurrency companies.
However, the appeals court panel noted that the law firm’s lawsuit did not allege any SEC investigation, prosecution, or threat of prosecution related to ETH or the use of the Ethereum network. The panel also found that Hodl Law failed to provide evidence that the SEC had engaged in “final agency action” or made a definitive determination that ETH was in fact a security.
In July 2023, the California courts be rejected Hodl Law filed suit after finding that the SEC had not established its legal authority to engage in specific rulemaking or respond to requests for guidance from private parties on the legal classification of ETH. The appeals court agreed with this decision, stating that the SEC had not made a determination on whether ETH and the assets on the Ethereum blockchain were securities. Ether Exchange Listed Fund (ETF) was launched in early July.
Fred Rispoli, senior managing partner at Hodl Law, said he was disappointed by the court’s ruling, but admitted it was still somewhat expected. In an August 22 post to X, Rispoli said the firm simply wanted a chance to argue that ETH was not a federal security.
He also criticized the court’s ruling, arguing that it was a complete contradiction of how the rule of law should operate in the United States. Despite the setback, Rispoli said the Hodl Law is still looking for other ways to force the SEC to provide a definitive answer. Legal Status of ETH.
SEC Denies Richard Heart’s Motion to Dismiss
Meanwhile, the SEC has taken action against the founder of Hex (HEX). Richard Hart’s Attempt to dismiss a $1 billion securities lawsuit filed against him. The SEC argued that He argued that he had full authority to file suit against Heart in federal court in New York on August 22, and that Heart’s motion to dismiss ignores the reasonable allegations in the complaint and applicable law.
Heart or Richard Schueler filed a motion to dismiss, arguing that: SEC has no jurisdiction He is charged with the crime because he resided overseas and was not in the United States during that time. He also argued that the SEC did not allege any involvement with his actions targeting the United States or with any U.S.-based entities, employees, contracts, accounts payable, marketing activities, or travel.
Screenshot of Richard Heart’s motion to dismiss (Source: Courtroom listener)
In response, the SEC said Heart specifically targeted U.S. investors in its promotions. The regulator also noted that Heart made virtual appearances at conferences in Las Vegas in March and September 2022, promoting HEX, PulseChain (PLS), and PulseX (PLSX), which the SEC alleges were intended to be cryptocurrencies. Unregistered securities. The SEC also shared that Heart was interviewed in person on a Miami-based podcast in August 2022, promoting HEX and PLS, and that at least one U.S. developer was involved in creating these projects.
The SEC reiterated its core claim that Heart used millions of dollars raised from PulseChain investors to purchase luxury items, including watches, cars, and what it claimed to be the world’s largest black diamond. According to the SEC, Heart raised more than $350 million from investors to develop the Ethereum fork, but spent more than $12 million on personal luxury items.
Heart’s motion to dismiss argued that the SEC did not allege fraud or provide false or misleading statements. He also argued that the SEC’s lawsuit violated his free speech rights because it used his public comments to claim a securities offering.
The SEC didn’t take Heart’s free speech claim very seriously, calling it “novel and unsubstantiated.” The SEC even compared him to a bank robber who claimed his constitutional rights were violated when prosecutors quoted him saying “stick ’em up.” His next hearing in the case is scheduled for October 24.
Campaign Finance Allegations Against Michelle Bond
In other legal news, U.S. authorities Charged Michelle BondFormer partner FTX Digital Markets co-CEO Ryan Salame has been indicted on campaign finance charges. The indictment, unsealed on August 22 in the Southern District Court of New York, accuses Bond and an unnamed co-conspirator of illegally funding the 2022 U.S. House of Representatives elections.
U.S. Attorney Damien Williams shared some details about the charges against Bond, which include conspiring to raise illegal campaign contributions, soliciting and accepting excessive donations, and making false statements to the Federal Election Commission and congressional committees.
The indictment does not identify any of the names FTX ContributorIt is likely a reference to Salameh, who allegedly made the company pay Bond $400,000, an action that was allegedly covered up through false statements.
Bond ran as a Republican candidate in New York’s 1st Congressional District in 2022, but failed to advance past the primary. Salameh pleaded guilty in September 2023 to conspiracy to operate an unlicensed money transmitter and campaign finance fraud. I was sentenced He was sentenced to 7.5 years in prison. He is due to report on October 13.
On August 21, Salameh’s lawyers I submitted a petition The guilty plea was vacated, claiming that the prosecution and Bond had a verbal agreement that no charges would be filed. Salame and Bond have a 9-month-old child together, and Salame claimed that authorities were targeting him and his loved ones.
Amid these legal issues, Bond started a cryptocurrency-focused project. Think Tank She aims to create a regulatory environment favorable to financial technology, digital assets, and artificial intelligence. She has been CEO of Capitol Advisory, a consulting firm, since 2023.
Cryptocurrency Industry Concerns Rise as Nvidia Lawsuit Resurfaces
The U.S. Supreme Court’s decision to allow a revived legal battle between chipmaker Nvidia and a group of investors to continue could pose some risks to the cryptocurrency industry, according to cryptocurrency advocacy groups. Amicus Brief In the lawsuit, filed on August 20, The Digital Chamber (TDC) supported Nvidia’s attempt to overturn an appeals court ruling from August and revive a lawsuit alleging that Nvidia had narrowed its scope. GPU Sales To cryptocurrency miners.
Perry Ann Boring, founder and CEO of TDC, expressed concern that the decision could lead to a surge of “frivolous securities litigation” targeting the cryptocurrency industry. The briefing Class action lawsuit against Nvidia It relied on expert opinions based on “unsubstantiated assumptions and inferences” about the cryptocurrency industry and Nvidia’s revenue, without providing specific evidence to back up its claims.
TDC warned that if the plaintiff wins, it will be in a very disadvantageous situation. A dangerous precedent It allows speculative and unproven claims to gain traction in court. The group also warns that this could be detrimental to innovative companies, particularly in the cryptocurrency space, by creating costly litigation burdens and discouraging investment.
The lawsuit was originally filed in 2018 and accused Nvidia of concealing more than $1 billion in GPU sales to cryptocurrency miners and downplaying the size of those sales in public statements. The lawsuit also alleged that Nvidia Financial Results It fell along with the cryptocurrency market, proving that the company relies solely on sales to miners.
TDC, on the other hand, argued that the case did not meet the standards set forth in the Private Securities Litigation Reform Act (PSLRA) of 1995, which requires clear identification of the misleading statement and the supporting facts.