US SEC Loses Again In Court After Setbacks In XRP, Grayscale Lawsuits

The US Securities and Exchange Commission (SEC) saw yet another setback in court on December 19, 2023 in a petition for review of its rule on share repurchase data. This comes at the back of the agency’s multiple legal losses in crypto losses, the biggest of which is Ripple’s partial victory in the XRP lawsuit.

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SEC’s Final Rule Vacated

On December 19, judge Jerry E. Smith of the United States Court of Appeals for the Fifth Circuit ruled in favor of granting the motion and vacating the rule requiring issuers to report day-to-day share repurchase data every quarter. The SEC had on May 3, 2023 adopted amendments around disclosure requirements related to securities repurchases. The new rules included requiring issuers to provide daily repurchase activity on a quarterly or semi-annual basis, depending on the type of issuer.

The court had on October 31, 2023 issued an opinion in response to the US Chamber of Commerce’s petition against the new rule. The court said the SEC acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, adding that it failed to respond to petitioners’ comments and failed to conduct a cost-benefit analysis. In the latest order, judge Smith granted the motion to vacate the rule on the grounds that the SEC’s time to respond or oppose has expired.

“Arbitrary and Capricious”

In the Grayscale lawsuit, a panel of judges in the US Court of Appeals for the District of Columbia Circuit ruled that the SEC’s decision to deny Grayscale a spot Bitcoin ETF approval was “arbitrary and capricious.” The judges compared the SEC’s previous decisions related to the approval of Bitcoin futures ETFs and called its actions arbitrary. They said the SEC failed to recognize the financial and mathematical relationship between the spot and futures markets, and granted Grayscale’s petition for reviewing the denial of spot Bitcoin ETF approval.

Also Read: Matrixport Research: Bitcoin ETF Approval To Push BTC Price Above $50K