Crypto Scores Big Win As US SEC Suffers Loss In ‘Dealer’ Lawsuit

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Crypto Scores Big Win As US SEC Suffers Loss In "Dealer" Lawsuit

The US Securities and Exchange Commission (SEC) has suffered another major loss to crypto plaintiffs in Texas. In a new ruling, Judge Reed O’Connor of the US District Court for the Northern District of Texas ordered that the regulator’s use of the term securities “dealer” is not backed by any US laws.

US SEC Overreach Stemmed Again

The ruling from Judge O’Connor hinges on a lawsuit filed by industry groups, Blockchain Association and Crypto Freedom for Alliance of Texas. The duo challenged the broad use of the term “dealer,” which now forms a mainstay in fighting securities fraud.

The Judge aligned with the plaintiffs who had issues with the inclusion of crypto entities in the securities dealer definition. As outlined, the plaintiffs believe the wide application of the term is unhealthy for general market growth. They argued that this is especially true for the Decentralized Finance (DeFi) ecosystem.

Turning his back against the markets regulator, Judge O’Connor said,

“The court concludes that the SEC exceeded its statutory authority by enacting such a broad definition of dealer untethered from the text, history, and structure of the Exchange Act,” the ruling from Judge O’Connor reads.

Many of the market regulator’s policies remain controversial. The US SEC captured this securities dealer provision under Rule 3a5-4. This rule defines a dealer as someone who “engages in a regular pattern of buying and selling securities that provides liquidity to other market participants.”

Typically, a dealer is the one who often “express trading interest at or near the best available prices on both sides of the market.” In addition, it encompasses those who generate funds from Bid-Ask spreads. This broad definition makes crypto highly susceptible to more enforcement.

Changes Beginning With Gary Gensler’s Resignation

Meanwhile, the markets regulator suffered this legal battle almost at the time Gary Gensler shared the timeline for its long-awaited resignation as US SEC Chair.

Known as a regulator that resorts first to enforcement, the “dealer” lawsuit ruling serves as a vote of no confidence. With January 20th set as his departure date, crypto proponents remain anxious about who will take over next.

Many names remain under the radar as the right pick. While Former CFTC Chairman Chris Giancarlo has ruled out the prospect, reports place Paul Atkins as a top candidate to watch. The crypto ecosystem wants changes at the US SEC. Industry experts believe the President’s choice will play a role in achieving this.

The post Crypto Scores Big Win As US SEC Suffers Loss In ‘Dealer’ Lawsuit appeared first on CoinGape.

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