Lilya Tessler, a key figure in Sidley’s FinTech and Blockchain practice, recently discussed the ongoing legal battles between the cryptocurrency industry and the SEC. In a conversation about the recent surge in enforcement actions, she opened up about the chaotic nature of the situation.
The SEC has been actively targeting various cryptocurrency projects and exchanges with lawsuits. However, the industry is beginning to push back, with companies counter suing the SEC. The central argument from these companies is that the regulatory framework is unclear, and they are demanding clearer guidance. They believe that instead of facing constant legal challenges, they should be provided with a more defined set of rules to follow.
On The Thinking Crypto podcast, when asked if she had witnessed anything similar in other industries, Tessler said that the scenario is quite unique. The FinTech and blockchain sectors are experiencing an unexpected number of SEC enforcement actions, particularly in areas where there has been little regulatory guidance or rulemaking. This lack of clarity has led to significant pushback from the industry, with many players proactively engaging in litigation against the SEC.
They also discussed other cases, such as SEC vs. Ripple and other similar lawsuits. The interviewer recalled how her firm had previously submitted an amicus brief with the Digital Chamber of Commerce in support of Ripple in the XRP lawsuit. Recently, Judge Torres ruled that XRP itself is not a security and that secondary market sales of XRP do not constitute securities transactions.
Reacting to the same, she said, “The tokens themselves may not be securities. So we’re starting to see the courts, one by one, adopting some of that existing case law, and it’ll be interesting to see how that develops across some of the other litigations that are currently pending.”
