Speaker 1: Do. I take the gun and I start to cock
Speaker 1: the gun. I'm not going to pull the trigger. I said,
Speaker 1: do you see that? She will just cheat it down
Speaker 1: and tilt it down a little bit like that. And
Speaker 1: I cocked the gun. Can you see that? Can you
Speaker 1: see that? Can you see that? And she says and
Speaker 1: then I let go of the hammer of the gun
Speaker 1: and the gun goes off. Actor Alec Baldwin was pointing
Speaker 1: a gun at cinematographer Helena Hutchins as they rehearsed a
Speaker 1: scene on the set of The Western Rust in New Mexico.
Speaker 1: Hutchins was fatally shot, but Baldwin has maintained that he
Speaker 1: did not pull the trigger and that gun safety on
Speaker 1: the set was not his responsibility. Someone is responsible for
Speaker 1: what happened, and I can't say who that is, but
Speaker 1: the Santa Fe District Attorney is saying who is responsible.
Speaker 1: Baldwin in the Film's Armorer had a Gutierrez read a
Speaker 1: person died because of this negligence, because of this this recklessness,
Speaker 1: and d A. Mary Carmack all tweets is charging both
Speaker 1: of them with involuntary manslaughter, joining me as former federal
Speaker 1: prosecutor Robert Mintz, A partner mc harder in English, Bob,
Speaker 1: Most people see this as a tragic accident. Is it
Speaker 1: surprising that the d A is bringing charges. What this
Speaker 1: does represent a dramatic culmination of more than a year
Speaker 1: of speculation over who, if anyone, would be held accountable
Speaker 1: for the tragic death of cinematographer Elina Hutchen. In this case,
Speaker 1: there is no evidence that anybody did anything intentionally wrong.
Speaker 1: What it really turns on is whether they acted recklessly,
Speaker 1: In other words, whether they should have been more careful
Speaker 1: in making sure that the weapon that was being handled
Speaker 1: by Alec Baldwin did not contain a loaded bullet and
Speaker 1: ultimately it killed the cinematographer. Based upon a series of
Speaker 1: people who handled that weapon before it was placed into
Speaker 1: the hands of Alec Baldwin, the d A is going
Speaker 1: to file too involuntary manslaughter charges against Baldwin and Guccieras
Speaker 1: read two levels sort of that required different standards of proof.
Speaker 1: Under New Mexico law, there's voluntary manslaughter and involuntary manslaughter.
Speaker 1: Voluntary manslaughter consists of an intentional killing for which there
Speaker 1: was a mitigating circumstance that reduces the crime from murder.
Speaker 1: Involuntary manslaughter, which is what has been charged here, consists
Speaker 1: of a killing that was unintentional, but it results from
Speaker 1: either recklessness or criminal negligence. Here, Alec Baldwin was charged
Speaker 1: with two counts of involuntary manslaughter, one of which carries
Speaker 1: a penalty is up to eighteen months, and the other
Speaker 1: is more serious. It carries a penalty of a mandatory
Speaker 1: jailson of five years in jail because although it was
Speaker 1: involuntary manslaughter in the commission of a lawful act, he
Speaker 1: was done with the use of a firearm, so Balwin
Speaker 1: has said. Balwin has said all along that gun safety
Speaker 1: is not the actor's responsibility, and that he relied on
Speaker 1: the professionals on the set. Does that strike you as
Speaker 1: a good defense? That really is the heart of the
Speaker 1: defense here. Mr Baldwin's defense is simply that he had
Speaker 1: no reason to believe that there was a live bullet
Speaker 1: in the gun or frankly, anywhere on the movie set.
Speaker 1: And this is most important. That he relied on the
Speaker 1: professionals with who he worked, who assured him that gun
Speaker 1: did not have live rounds in it. And the question
Speaker 1: is for this jury, if it ever gets to a jury,
Speaker 1: is whether that is enough, whether he can simply turn
Speaker 1: over the responsibility for gun stacy to the professionals who
Speaker 1: worked around them and rely on what they tell him,
Speaker 1: or whether he has an added responsibility since he is
Speaker 1: the person who is holding the gun. Is he hand
Speaker 1: added burden to do something beyond simply conferring with the
Speaker 1: professionals and relying on what they tell him. The d
Speaker 1: A said that all the actors they spoke to said
Speaker 1: that either the actor should have checked the gun or
Speaker 1: should have had it checked in front of him, and
Speaker 1: that there was a pattern of criminal disregard for, say,
Speaker 1: safety on the set. So at trial, are we likely
Speaker 1: to hear from both sides experts about safety protocols in
Speaker 1: the industry. I think we are. I think in a
Speaker 1: lot of ways, what the DA has done here by
Speaker 1: saying things like, on my watch, no one is above
Speaker 1: the law. Everybody deserves justice, what she's really doing is
Speaker 1: putting not only Alex Baldwin on trial, but in a sense,
Speaker 1: Hollywood on trial, celebrity on trial. Really the question of
Speaker 1: whether Alec Baldwin should get any kind of special treatment
Speaker 1: here or whether he has to play by the same
Speaker 1: rules as everybody else. But the question is what are
Speaker 1: those rule and whether it was reasonable for him to
Speaker 1: rely on what others told him, or whether he had
Speaker 1: an added burden of checking that gun himself or taking
Speaker 1: additional steps to ensure that what he was told was
Speaker 1: accurate because he had in his hand a weapon that
Speaker 1: was a working pistol that if it did have light ammunition,
Speaker 1: could result in the fatality, which is exactly what happens here.
Speaker 1: How problematic is it going to be for Baldwin that
Speaker 1: he and the d A completely disagree about whether he
Speaker 1: pulled the trigger. Well, the trigger wasn't pull I didn't
Speaker 1: pull the trigger. The trigger had to have been pulled,
Speaker 1: so Alec is wrong. That gun was sent off to
Speaker 1: the FBI analyst in Virginia who took this gun to
Speaker 1: the replica of a vintage called forty five, and they
Speaker 1: determined that the weapons tested normally. In other words, they
Speaker 1: concluded that in order for the revolvers as fire, the
Speaker 1: trigger would have to be pulled. So what you have
Speaker 1: there is an inconsistency between what Alex Bold was saying
Speaker 1: about how he handled that weapon and what the FBI
Speaker 1: report says. Doesn't really go to the heart of the case.
Speaker 1: But when you're a defense lawyer, you never really want
Speaker 1: to have that kind of inconsistency because the prosecution may
Speaker 1: be able to argue to objuror that he is not
Speaker 1: telling the truth about whether he pulled the trigger, and
Speaker 1: therefore he made not being totally candid with the jury
Speaker 1: about what he was saying and what he was thinking
Speaker 1: and what he did when he handled that weapon. So
Speaker 1: the inconsistency does not necessarily something that goes to the
Speaker 1: hard the case, but inconsistencies in your witnesses testimony or
Speaker 1: never something that you want as a lawyer. There were
Speaker 1: three people who handled the gun. First gauccierres Read, the
Speaker 1: weapon specialist, Then Assistant Director David Halls, who handed Ballwin
Speaker 1: the gun saying cold gun meaning there was no live
Speaker 1: ammo in it. He's pleading guilty to negligent use of
Speaker 1: a deadly weapon. And then Baldwin any impact from the
Speaker 1: second person in the chain pleading guilty. Now, what happened
Speaker 1: here really is that the district attorney approached this case
Speaker 1: by scrutinizing the actions of everyone who handled the weapon
Speaker 1: and everyone who handled the live ammunition. And what they
Speaker 1: did was they looked at that chain of custody, and
Speaker 1: ultimately the prosecutor concluded that everybody in that chain of
Speaker 1: custody there's some respectability for this fatality. When bringing criminal charges,
Speaker 1: the prosecutor is going to argue, if you are holding
Speaker 1: a gun in your hands, you implicitly have a responsibility
Speaker 1: to make safety your business that you can't simply rely
Speaker 1: on others. And that's the heart of Alex Baldwin's defense
Speaker 1: that in the many years he's been on sets, he's
Speaker 1: handled guns many times. In other movies, he's always relied
Speaker 1: on professionals. He did the same thing here. I think
Speaker 1: we can expect the defense to bring on experts to
Speaker 1: talk about how the entertainment industry handles weapons on movie sets,
Speaker 1: what protocols Hollywood sets typically used, and they're gonna argue
Speaker 1: that what Alex Baldwin did was consistent with the way
Speaker 1: the entertainment industry handles weapons on movie sets. But the
Speaker 1: prostitution is likely to argue, however, is that that doesn't
Speaker 1: matter that the keys this case is not what Alex
Speaker 1: Baldwin did, but whether or not what he did was
Speaker 1: reasonable given the fact that he holding in his hand
Speaker 1: a working pistol. And they're going to try to argue
Speaker 1: that it doesn't matter what the protocols were set by Hollywood,
Speaker 1: that the law is the law, and you don't have
Speaker 1: two legal systems, one for those people who are powerful
Speaker 1: and one for everybody else. The question here is whether
Speaker 1: he acted recklessly and whether he did it willfully, and
Speaker 1: that's really going to be a tough issue for jurors
Speaker 1: to grapple with, which is why this is going to
Speaker 1: be a difficult case, not only for the prosecutions but
Speaker 1: also for the defense. Yeah, and of course, as you know,
Speaker 1: the prosecution has to prove its case beyond a reasonable doubt.
Speaker 1: Baldwin just has to raise a reasonable doubt in the
Speaker 1: juror's minds. Ironically, manslaughter can be more difficult to prove
Speaker 1: than first degree murder. Manslaughter has all of these nuances
Speaker 1: in it, Whereas if you're proving a case of premeditated murder,
Speaker 1: for example, you mostly have great evidence. You's got a confession,
Speaker 1: you have someone who had a motive, you may have
Speaker 1: good DNA evidence, you have behaviors both before and after
Speaker 1: the Criminal Act that helped put this case together. In
Speaker 1: a manslaughter case, there's really not so much of a
Speaker 1: dispute about what happened, but about whether the person acted
Speaker 1: reasonably under the circumstances. And it's a very fact specific
Speaker 1: and it really depends a lot on how the jurors
Speaker 1: viewed the individual's charge and again whether or not they
Speaker 1: viewed their conduct as reasonable. And in these cases where
Speaker 1: there has been a fatality on a movie set, the
Speaker 1: results have varied. This is not the first time that
Speaker 1: an actor has been charged with manslaughter in connection with
Speaker 1: a death during shooting of a movie. For example, in
Speaker 1: nineteen seven and Los Angeles jury acquitted director John Landis
Speaker 1: on four associates of involuntary manslaughter on charges stemming from
Speaker 1: the guests of actor Vic Marland two children in a
Speaker 1: helicopter crash on the set of the Twilight Zone movie.
Speaker 1: That case actually went to trial, and after ten months
Speaker 1: the jury foremant hole reporters that it was an unforeseeable accident,
Speaker 1: then that the case did not warrant prosecution. Other casesn't.
Speaker 1: Even more recently, people have end up leading guilty. There
Speaker 1: was a case during the filming of the movie Midnight Rider,
Speaker 1: a biopic about rock star Gregg Allman, where the director
Speaker 1: pleaded guilty to involuntary manslaughter and served over a year
Speaker 1: in prison in connection with a train crash that's killed
Speaker 1: in the system camera operator. So the results of them vary,
Speaker 1: and it's a very fact specific and it really depends
Speaker 1: a lot on how the jurors viewed the individual's charge
Speaker 1: and again whether or not they viewed their conduct as reasonable.
Speaker 1: This is a case where the stakes are enormously high.
Speaker 1: There's a lot of pressure on the prosecution for bringing
Speaker 1: this case. This case was something that has generated tremendous publicity,
Speaker 1: not only in New Mexico, but throughout the country and
Speaker 1: internationally because of the notoriety and the celebrity a Alex
Speaker 1: for all it went, and so there was enormous pressure
Speaker 1: on the d to look at this case and to
Speaker 1: try to send a message that nobody was above the
Speaker 1: law and that Alex Baudin was not getting any special treatment.
Speaker 1: And the fact that Alex Baldwan actually fired the weapon
Speaker 1: that killed Elana Hucon made it difficult for her to
Speaker 1: ultimately conclude that he bore no responsibility. But at the
Speaker 1: same time, here she's going to be faced with a
Speaker 1: very spirited defense. Alec Baldwin has hired a very good
Speaker 1: criminal defense lawyer and they are going to argue that
Speaker 1: Alex Baldro was told immediately before he was handed the
Speaker 1: gun that the gun was quote unquote cold, which means
Speaker 1: the professional who was handling the gun, who is whose
Speaker 1: custody the gun was in before it was handed to
Speaker 1: Alec Baudin, told him that the gun was safe to
Speaker 1: use as a prop. So it really comes down to
Speaker 1: a question of who do you believe, and whether or
Speaker 1: not you believe that Alex Baldwin was entitled to simply
Speaker 1: rely on the information he was getting from those professionals,
Speaker 1: or whether the industry practice or simply common sense and
Speaker 1: reasonableness dictated that he take additional steps, which is opening
Speaker 1: the chamber, double checking with others, taking additional steps to
Speaker 1: make sure that that weapon was safe to aim at
Speaker 1: somebody on the set, and that it was unreasonable and
Speaker 1: dangerous for him to have simply relied on what others
Speaker 1: told them, no matter that they were professionals and that
Speaker 1: it was their job to maintain the safety of the
Speaker 1: guns on the set. There's a lot of finger pointing
Speaker 1: going on. Alex Bowan has blamed Gautierra's read and Halls,
Speaker 1: and Gautierra's read says she wasn't called inside the church
Speaker 1: to inspect the weapons, and that Baldwin refused her offer
Speaker 1: to train him on this cross draw, which is apparently
Speaker 1: a dangerous method of carrying a hand on that started
Speaker 1: the west at trial. Is it okay if they continue
Speaker 1: pointing fingers at each other or should their defenses aligne Well,
Speaker 1: I think part of Alcoholwin's defense has to be that
Speaker 1: he relied and what other people did otherwise the responsibility
Speaker 1: fall solely to him. So his defense is going to
Speaker 1: be that that these other professionals, who were well trained
Speaker 1: and whose job it was to make sure that the
Speaker 1: gun was not loaded, to make sure that the gun
Speaker 1: was not posing a threat to others, he relied on them,
Speaker 1: and that as the actor, he does that all the
Speaker 1: time and it's not his responsibility to double check what
Speaker 1: they're doing. But in this case, there is the possibility
Speaker 1: that that defense could backfire on them in the sense
Speaker 1: that you are looking at somebody who's wealthy, who's powerful,
Speaker 1: who has a lot of celebrity and notoriety, who seemed
Speaker 1: to be pointing the finger at people who are lesser celebrities,
Speaker 1: people who work in the film industry, but whose names
Speaker 1: the average person has never heard of before, and so
Speaker 1: that's the danger were there that Alec Baldwin is trying
Speaker 1: to pass off his responsibility onto people who were working
Speaker 1: on the set, who are just doing their jobs, who
Speaker 1: may have been overworked, and who will also faced with
Speaker 1: the same charges she is. And the question is should
Speaker 1: everybody in the chain of custody here be responsible or that,
Speaker 1: or should one person in that chain of custody be
Speaker 1: able to rely on the other and try to avoid
Speaker 1: responsibility here. That's going to be the question that jurors
Speaker 1: will have to grapple with. Thanks Bob, that's Robert Mints
Speaker 1: of McCarter and English. There's a turf war between the
Speaker 1: Securities and Exchange Commission and the Commodity Futures Trading Commission
Speaker 1: over which should regulate the crypto industry. This is digital
Speaker 1: assets lost more than two trillion dollars in value and
Speaker 1: a string of prominent ventures blew up. In sec Chairman
Speaker 1: Gary Ginstler has been working to position his agency as
Speaker 1: the one to reign in crypto. Right now, there's not
Speaker 1: a market regulator around these crypto exchanges, and thus there's
Speaker 1: really not protection against frauder manipulation. If the regulator wins
Speaker 1: its high pro while lawsuit accusing Ripple Labs of selling
Speaker 1: unregistered digital tokens without adequate disclosure, it will strengthen the
Speaker 1: SEC's position to take the lead on crypto oversight. My
Speaker 1: guest is securities attorney Robert him a partner at Tarter,
Speaker 1: Krinsky and Drogn. He was formerly an assistant Regional director
Speaker 1: of the SEC. Bob tell us the views of the
Speaker 1: SEC and the CFTC over why it should regulate crypto well.
Speaker 1: The CFTC argues that crypto is more of a commodity
Speaker 1: in the sense that it's like a medium of exchange,
Speaker 1: where people are using it as a substitute for currency,
Speaker 1: and they're using it and they're purchasing things with it,
Speaker 1: and they're not really buying crypto primarily as an investment product,
Speaker 1: you know, the way you would with the stock or
Speaker 1: some sort of security. The SEC takes the opposite view.
Speaker 1: They say a lot of these cryptocurrencies and token offerings,
Speaker 1: although there is an element in them of a value
Speaker 1: of exchange or medium off the times, the primary way
Speaker 1: that these new tokens are marketed as being a profit potential,
Speaker 1: a very significant way for investors to make money by
Speaker 1: this investment, and that's the basis under which the SEC
Speaker 1: argues that it should have jurisdiction over cryptocurrencies and not
Speaker 1: the CFTC. I noticed that a lot of the cryptocurrency
Speaker 1: platforms and even Sam Bankman freed they're advocating for being
Speaker 1: overseen by the CFTC. Is that because SEC oversight would
Speaker 1: be more rigorous. The CFTC S approach is more of
Speaker 1: a lighter approach than the SEC had, And that's why
Speaker 1: a lot of the crypto sponsors and people behind tokens
Speaker 1: prefer the CFTC approach because with the security based regulatory system,
Speaker 1: there's all sorts of requirements for them to draft prospectuses
Speaker 1: and to register the tokens, and then there's also ongoing
Speaker 1: regulation of the exchanges on which those securities trade, and
Speaker 1: if crypto was to be deemed a security, all of
Speaker 1: those burdensome regulations would apply to it. With the c SEC,
Speaker 1: there there's somewhat of a similar regulatory structure in place
Speaker 1: that does have provisions for protection for market participants, but
Speaker 1: it's not really as onerous as the security system in
Speaker 1: a sense, so you don't have to draft prospectuses and
Speaker 1: and give as much in the way of disclosure as
Speaker 1: what we needed is if it was an investment as
Speaker 1: a security, SEC Chairman Gary Gensler seems to be positioning
Speaker 1: his agency to take on the job of overside of crypto.
Speaker 1: He has slapped multimillion dollar fines on crypto companies and
Speaker 1: those who promote digital assets. Yes, Chairman Gensler is certainly
Speaker 1: trying to position the SEC as the primary agency to
Speaker 1: regulate cryptocurrencies in the United States. In a way, this
Speaker 1: is a classic turf battle between two federal agency, the
Speaker 1: CFTC and the SEC, over who's going to have jurisdiction
Speaker 1: over cryptocurrencies. And I think it's indicative of the bigger
Speaker 1: failing in the sense that many other countries are engaging
Speaker 1: in a legislative process where people have votes and there's
Speaker 1: a rulemaking and there's a concerted, well thought out roadmap
Speaker 1: to how cryptocurrencies are going to be regulated. In contrast,
Speaker 1: the United States, we really don't have that system happening.
Speaker 1: There's been a number of different bills that have been
Speaker 1: introduced in Congress that haven't really got anywhere, and much
Speaker 1: of the regulation over the crypto markets in the United
Speaker 1: States is done through enforcement actions, whether those enforcement actions
Speaker 1: are brought by the SEC or the CFTC. And it
Speaker 1: really leaves market participants in the lurch because they really
Speaker 1: don't have the same level of guidance that other countries
Speaker 1: provide in terms of what rules are to be followed
Speaker 1: and what sort of compliance steps have to be taken.
Speaker 1: The Ripple case SEC soon Ripple is the most high
Speaker 1: profile fintech lawsuit. Tell us about it. The Ripple case
Speaker 1: is really the most significant enforcement case in the crypto
Speaker 1: space that the SEC has ever brought. It started the
Speaker 1: case back in December when it filed its complaint which
Speaker 1: alleged that Ripple and two executives with Ripple violated the
Speaker 1: registration provisions of the securities laws and raised over a
Speaker 1: billion dollars in violation of the securities laws in the
Speaker 1: United States. And this came as a great shock to
Speaker 1: the market. Ripple and It's and it's token x RP.
Speaker 1: We're among the most popular crypto tokens in the United
Speaker 1: States at that particular time, and the company had been
Speaker 1: in operations since so at that time eight years had
Speaker 1: gone by without the SEC, you know, ever saying anything
Speaker 1: that this was going to be a problem. Was they
Speaker 1: viewed Ripple or x RP as being an inviolation of
Speaker 1: the securities laws. And then out of nowhere, this enforcement
Speaker 1: lawsuit was filed back in and it really completely shook
Speaker 1: up the market for x RP. It led to its
Speaker 1: delisting in the United States from various exchanges, and the
Speaker 1: people who were holding that crypto token really suffered a
Speaker 1: lot of losses once the SEC brought that enforcement taste.
Speaker 1: And for over two years, Ripple has been fighting the
Speaker 1: SEC in court and trying to win a determination from
Speaker 1: the judge that the SEC simply does not have jurisdiction
Speaker 1: over Ripple or x r P. Yeah, and it's got
Speaker 1: some heavyweights to defend it, including Mary Joe White, who
Speaker 1: led the SEC for almost four years under President Obama.
Speaker 1: So what's taking so long for the judge to make
Speaker 1: this decision. Well, like any complicated case, there's a very
Speaker 1: lengthy discovery period that happened in this case also, where
Speaker 1: depositions were taken, A large amount of documents were exchanged
Speaker 1: between the parties. Each side had numerous experts that they
Speaker 1: retained to try to present evidence and all. This is
Speaker 1: somewhat unique because in the past, when the SEC has
Speaker 1: gone after various cryptocurrency sponsors and tokens. Many of them
Speaker 1: didn't really have the resources to fight the SEC, and
Speaker 1: there was a lot of settlements here. Ripple does have
Speaker 1: the resources, and they've hired very prominent defense attorneys and
Speaker 1: very talented defense attorneys to defend themselves. And right now
Speaker 1: that phase of the case has come to an end,
Speaker 1: and some rey judgment motions have been filed by both
Speaker 1: the SEC and by Ripple asking the judge to rule
Speaker 1: in their favor and saying that a trial is not
Speaker 1: necessary and that each side is requesting that the judge
Speaker 1: rule in their favor. So it's been a very lengthy,
Speaker 1: hard fought battle on both sides. Bob, Is the judge
Speaker 1: just going to make the decision about whether it's coin
Speaker 1: is a security or not? Is that the decision that
Speaker 1: is going to turn the case. Yes, that's really the
Speaker 1: key decision that the judge has to make right now
Speaker 1: on summary judgment, and much can do a few things. Um,
Speaker 1: the judge can rule for either the SEC on one hand,
Speaker 1: or the judge can rule or Ripple on the other
Speaker 1: And what the judge is trying to find out is
Speaker 1: if there's really a material dispute in the underlying facts.
Speaker 1: And if she finds that there is a dispute in
Speaker 1: the facts, didn't going to go to a jury trial.
Speaker 1: If the judge feels that there's no dispute in the
Speaker 1: facts and it's really just a question of law, then
Speaker 1: she'll feel comfortable making that decision. So the judge can
Speaker 1: either rule for one side or the other, or the
Speaker 1: judge can say there's too much in the way of
Speaker 1: factual disputes here and a jury has to rule. So
Speaker 1: there's three different possibilities that the judge can come down on.
Speaker 1: So a federal judge in New Hampshire in November and
Speaker 1: to find a digital asset as a security. Are there
Speaker 1: any cases where judges went the opposite way? Well, it's
Speaker 1: not so much a case, but Bitcoin is probably the
Speaker 1: primary example of a crypto token or cryptocurrency that is
Speaker 1: and deemed not to be a security, where even the
Speaker 1: SEC recognizes that as such. The issue is that almost
Speaker 1: every cryptocurrency is created in a different way, and it's
Speaker 1: marketed in a unique way, and it's very hard to
Speaker 1: generalize from one case to another because in certain cases,
Speaker 1: and the case in New Hampshire which you're referring to
Speaker 1: which involves the library token. The judge had to look
Speaker 1: at the marketing material as to how the token was
Speaker 1: promoted and what statements were made by the company, and
Speaker 1: that's going to vary from company to company. In the
Speaker 1: Ripple case, the judge has to do the same thing.
Speaker 1: Both the SEC and Ripple are pointing to the marketing materials.
Speaker 1: The SEC argues that those marketing materials show that it
Speaker 1: was being promoted to investors who were speculating on it
Speaker 1: and hoping that the price would go up. And then
Speaker 1: Ripple is pointing to other marketing materials that they say
Speaker 1: show that this more or less mechanism of payment and
Speaker 1: that people were buying x RP to is it in
Speaker 1: business transactions and to send money and to make charitable donations.
Speaker 1: So oftentimes it's a very fact specific inquiry and it's
Speaker 1: hard to generalize from one case to another. Do you
Speaker 1: have an opinion about whether x RP is a security
Speaker 1: or not? Yes, I've been following a case very closely
Speaker 1: since its inception, and I've reviewed the party's briefs for
Speaker 1: summary judgment, and both the SEC and Ripple focused on
Speaker 1: what's called the investment contract provision of the security laws,
Speaker 1: and the investment contract provision is what the SEC is
Speaker 1: saying that this crypto token is an investment contract and
Speaker 1: as such is a security, and an investment contract is
Speaker 1: one of the enumerated categories, and the statute as to
Speaker 1: what that is. Case law has defined what an investment
Speaker 1: contract is. But I think Ripple has some very strong
Speaker 1: arguments that many of the provisions of an investment contract
Speaker 1: are not applicable here. Specifically, much of their marketing material
Speaker 1: really does focus on Ripple b promoted as more or
Speaker 1: less a mechanism of payment and not speculative investment, and
Speaker 1: a lot of people have Polomkus briefs and organizations and
Speaker 1: supportive Ripple on that point. In addition, I think Ripple
Speaker 1: has done a good job trying to argue that there's
Speaker 1: no commonality of interest, which is another factor that courts
Speaker 1: look at determine whether it's something is a security or not.
Speaker 1: So I think Ripple has some very strong arguments that
Speaker 1: the judge is going to give serious consideration too. How
Speaker 1: important is this decision by one federal judge in New York?
Speaker 1: I mean, is it going to be very influential? Yes,
Speaker 1: No matter which way this decision goes. This is going
Speaker 1: to be a very influential decision. If the SEC wins
Speaker 1: this case, it's just a litigated case where the defendants
Speaker 1: have had a full opportunity to present all of their
Speaker 1: arguments by the most talented lawyers. And if the SEC
Speaker 1: wins this case in New York Court, it's really going
Speaker 1: to cement its role as the primary regulator over the
Speaker 1: crypto markets, and it's going to give the SEC a
Speaker 1: leg up in terms of wanting to be the lead
Speaker 1: regulator and arguing that almost all crypto is securities. And
Speaker 1: it's going to, I think, have a c change in
Speaker 1: terms of cryptocurrencies having to register and exchanges where they
Speaker 1: are traded, having two registers exchanges with the SEC by
Speaker 1: the same token. If Ripple winds, it's going to be
Speaker 1: a devastating blow to the SEC in terms of its
Speaker 1: efforts to argue that cryptocurrencies are securities. And I think
Speaker 1: it's going to really allow people to feel more comfortable
Speaker 1: creating and disseminating and distributing cryptocurrencies with the more limited
Speaker 1: touch of perhaps c FCC or commodities style regulation over
Speaker 1: a full blown securities regulatory approach. Are judges influenced by
Speaker 1: the thought of protecting unsophisticated investors and that the SEC
Speaker 1: might be better at that. Well, yes, judges are going
Speaker 1: to definitely be very concerned with investor protection, and in fact,
Speaker 1: investor protection is at the root of the securities laws
Speaker 1: that the SEC is trying to enforce. And on top
Speaker 1: of that, we recently have the FTX implosion, which caused
Speaker 1: billions of dollars of losses to innocent investors, and and
Speaker 1: that's also going to be weighing on the judge's mind
Speaker 1: in terms of how important this is going to be.
Speaker 1: But at the end of the day, a lot of
Speaker 1: the judge's decision is going to be looking at the
Speaker 1: text of the Securities Act, and that's the case law
Speaker 1: that's developed under it. And what the defendants have argued
Speaker 1: is that, you know, what the SEC is saying is
Speaker 1: that they feel that that crypto really would benefit from
Speaker 1: more disclosure and more regulation. But the defendants are saying
Speaker 1: that that's fine and good, but it's really Congress's job
Speaker 1: to make those laws and to set the priorities and
Speaker 1: to set the rules, and the SEC just can't come
Speaker 1: into a new area that it doesn't have any sort
Speaker 1: of statutory jurisdiction over and trying to enforce the rules
Speaker 1: which were created in the nineteen thirties for the most part,
Speaker 1: and trying to impose this on a new convention like
Speaker 1: digital asset without any sort of statutory authority from Congress.
Speaker 1: Thanks so much, Bob. That's Robert him of Tartar, Krinsky
Speaker 1: and Dragon. And that's it for this edition of The
Speaker 1: Bloomberg Law Show. Remember you can always get the latest
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