Ethereum

Circuit

Silk Road

A United States appeals court has backed a California federal judge’s decision to throw out a crypto-focused law firm’s pre-emptive lawsuit against the US Securities and Exchange Commission in an attempt to force the regulator to clarify its classification of Ether.
Hodl Law’s November 2022 <a data-ct-non-breakable="null" href="https://www.courtlistener.com/docket/65776169/1/hodl-law-pllc-v-securities-and-exchange-commission/" rel="null" target="null" text="null">complaint</a> against the regulator in a San Diego district court failed to show “a realistic danger” of it facing SEC enforcement action for breaking <a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/commodities-vs-securities" rel="null" target="null" text="null">securities laws</a> just because it used the Ethereum blockchain and Ether (<a data-ct-non-breakable="null" href="https://cointelegraph.com/ethereum-price" rel="null" target="null" text="null">ETH</a>), a ninth circuit appeals court panel said on Aug. 22.
“Hodl Law’s complaint contains no allegations that the SEC has investigated, prosecuted, or threatened to investigate or prosecute the law firm’s use of Ether or Ethereum,” the three-judge panel wrote in an unpublished opinion.
The firm hoped the suit would force the SEC to clarify its position on if it considers <a data-ct-non-breakable="null" href="https://cointelegraph.com/learn/is-ethereum-a-security-ccurrency-or-commodity" rel="null" target="null" text="null">ETH a security</a> after it launched a slate of enforcement actions against crypto firms, implicating <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/sec-labels-61-cryptocurrencies-securities-after-binance-suit" rel="null" target="null" text="null">dozens of cryptocurrencies</a> under securities laws.&nbsp;
“If the SEC determines that transactions involving Ether or the Ethereum network violate the Securities Act, Hodl Law would already be in violation of the law because it currently engages in such transactions as part of its law practice,” the panel wrote.
The judges backed the California court’s July 2023 <a data-ct-non-breakable="null" href="https://www.courtlistener.com/docket/65776169/12/hodl-law-pllc-v-securities-and-exchange-commission/" rel="null" target="null" text="null">dismissal</a> of the case, finding that Hodl Law failed to find proof that the SEC had engaged in “final agency action,” meaning the regulator had decided that ETH is a security.
<figure>
 <img alt="Crypto law firm loses appeal to force SEC’s hand on Ether classification" name="" src="https://s3.cointelegraph.com/uploads/2024-08/Screenshot%202024-08-23%20at%203.40.01%E2%80%AFPM">
 <figcaption style="text-align: center;">
 Highlighted excerpt of the panel’s opinion holding that the SEC has not alleged ETH is a security in any of its enforcement actions. Source: Pacer
 </figcaption>
</figure>
The panel added the law firm hadn’t identified “any authority that requires the SEC to engage in specific rulemaking or respond to private parties’ requests for guidance” on <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/sec-ethereum-investigation-court-consensys" rel="null" target="null" text="null">ETH’s legal classification</a>.
Hodl Law’s senior managing partner Fred Rispoli wrote in an Aug. 22 X <a data-ct-non-breakable="null" href="https://x.com/freddyriz/status/1826707082340696106" rel="null" target="null" text="null">post</a> that the court’s decision was “disappointing but expected.”
Related: <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/compliance-regulate-crypto-silk-road" rel="null" target="null" text="null">Compliance experts should help regulate crypto — Silk Road 2.0 founder</a>
“All we wanted was for the court to give us a chance to argue [ETH] is not a federal security,” he said.&nbsp;
<figure>
 <img alt="Crypto law firm loses appeal to force SEC’s hand on Ether classification" name="" src="https://s3.cointelegraph.com/uploads/2024-08/Screenshot%202024-08-23%20at%2015-25-31%20Fred%20Rispoli%20on%20X%20Well%20%40hodl_law%20lost%20in%20the%209th%20Circuit%20today.%20Disappointing%20but%20expected%20if%20you%20caught%20the%20oral%20argument%20%28and%20thank%20you%20with%20my%20entire%20heart%20if%20you%20did%29.%20All%20we%20wanted%20was%20for%20the%20court%20to%20give%20%5B...%5D">
 <figcaption style="text-align: center;">
 Source: <a data-ct-non-breakable="null" href="https://x.com/freddyriz/status/1826707082340696106" rel="null" target="null" text="null">Fred Rispoli</a>
 </figcaption>
</figure>
The SEC has not determined whether ETH and assets on the Ethereum blockchain are <a data-ct-non-breakable="null" href="https://cointelegraph.com/news/spot-ethereum-etfs-begin-trading-sec-approval" rel="" target="_self" text="null">securities despite approving</a> spot ETH exchange-traded funds in July.
The ninth circuit panel said it’s possible the SEC “will never decide that Ether or Ethereum is a ‘security’ under the Securities Act.”
Rispoli hit back at the panel’s holding, saying, “This is not how the rule of law is supposed to operate in the United States of America.”
“We have some more avenues to attempt to force the SEC to provide an answer to us,” Rispoli said. “We are not giving up.”
Magazine: <a data-ct-non-breakable="null" href="https://cointelegraph.com/magazine/ethereum-defi-cryptocurrency-tokens-narrative-bull-market-michael-van-de-poppe-cointelegraph-magazine/" rel="null" target="null" text="null">DeFi and Ethereum are the ‘new narrative’: Michaël van de Poppe, X Hall of Flame</a>

Crypto law firm loses appeal to force SEC’s hand on Ether classification

Cointelegraph

Other articles published on Aug 23, 2024

Why ETH ETFs Make Poodlana +2 More The Best Cryptos To Buy In September

XRP and MoonTaurus 2024 Price Prediction: Analysts Suggest They’re Poised for a Major Breakout

How Sahil Arora Netted $3M with Celeb Token Pump-and-Dump Schemes

Bitcoin Climbs to $62,000 as Fed Cuts Rates

7 best cryptos to buy under 1 Dollar – Alpaca Finance, IO.net, JasmyCoin, Simmon’s Cat

Bitwage Powers Bitcoin Payroll for 4,500 Companies

Join our free newsletter for daily crypto updates!