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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: Former President Donald Trump lost a critical court battle to

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Speaker 1: keep legal details secret from the Special Council investigating his

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Speaker 1: alleged mishandling of classified information and obstruction of justice. It

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Speaker 1: was a double loss for Trump, as a federal appeals

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Speaker 1: court ordered his attorney, Evan Corkran, to return to the

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Speaker 1: grand jury to answer questions he had said were protected

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Speaker 1: by the attorney client privilege, and also to turn over

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Speaker 1: materials he prepared during his representation of Trump. Federal prosecutors

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Speaker 1: had convinced the judge overseeing the grand jury that the

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Speaker 1: crime fraud exception to the attorney client privilege and the

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Speaker 1: attorney work product doctrine should apply in Corkran's case. That

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Speaker 1: exception kicks in when the government can present evidence that

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Speaker 1: a client may have used their lawyer to commit an

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Speaker 1: ongoing or few future crime. Joining me is Joshua Castenberg,

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Speaker 1: a professor at the University of New Mexico Law School

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Speaker 1: who served as a prosecutor and judge in hundreds of

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Speaker 1: trials in the US Air Force. Joshua tell us how

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Speaker 1: the crime fraud exception works in piercing the attorney client privilege.

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Speaker 1: Of all the privileges that exists, the attorney client privilege

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Speaker 1: is the only one that's truly constitutional in nature. I mean,

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Speaker 1: two of them predate the Constitution, you know, the Foust

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Speaker 1: privilege and the clergy privilege, but the attorney client privilege

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Speaker 1: is sort of rooted in both the fifth and sixth Amendments.

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Speaker 1: And you can go back to Elizabethan, England, if not

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Speaker 1: before that, find that privilege was in existent. So that's

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Speaker 1: an important one. But there are exceptions, and one of

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Speaker 1: the exceptions to the privilege is the crime fraud exception,

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Speaker 1: and it basically is what is that play here? A

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Speaker 1: defendant or an individual who is seeking legal help do

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Speaker 1: one of two things that will arose the attorney quiet privilege.

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Speaker 1: One has involved the attorney in the crime, whether the

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Speaker 1: attorney knows he or he is being involved in the

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Speaker 1: crime or not as irrelevant and so like a classic example,

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Speaker 1: the old mafia kind of way is to use your

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Speaker 1: attorney as an alibi, say, while I was meeting with

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Speaker 1: my attorney, when is back you aren't? You know? And

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Speaker 1: that alibi doesn't hold up. The other one is the

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Speaker 1: attorney knowingly being a part of the crime. And then

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Speaker 1: there's a third category, which is if the attorney knows

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Speaker 1: that a crime is about to occur as in the

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Speaker 1: process of occurring, he or he cannot be a part

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Speaker 1: of that. And so those are the exceptions to the

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Speaker 1: attorney client privilege. My understanding is that the US District

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Speaker 1: Court judge who is overseeing the grand jury, believes that

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Speaker 1: Jack Smith, you know, the special counsel who had provided

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Speaker 1: a sealed set of documents or other information, was indicating

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Speaker 1: that Evan Corkran could no longer be used as a

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Speaker 1: protection for the attorney client privilege because the crime fraud

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Speaker 1: exception applied. We don't know exactly what's being alleged here.

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Speaker 1: We do know that the Court of Appeals for the

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Speaker 1: District of Columbia in rapid Fire Succession upheld the US

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Speaker 1: District cord judge. I mean, usually the courts don't work

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Speaker 1: that best, but in this case it did. How unusual

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Speaker 1: is it to have a court pierced the attorney client

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Speaker 1: privilege because of the crime fraud exception. It's very unusual.

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Speaker 1: Normally courts will err on the side of caution because

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Speaker 1: of the importance of the attorney client privilege. But in

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Speaker 1: this case. I'm not saying they didn't err on the

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Speaker 1: side of caution. There may have been overwhelming evidence presented

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Speaker 1: before the US District Cord judge that made it crystal

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Speaker 1: clearer that mister Corkrane was being used in a manner

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Speaker 1: so that the crime fraud exception applied. And there's some

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Speaker 1: visible evidence that you can kind of discern, and that

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Speaker 1: is mister Trump often takes this case as public and

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Speaker 1: mister Trump did what I suspect many defendants or people

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Speaker 1: are suspected of doing. They told their attorneys, look, I've

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Speaker 1: handed over everything, and in point of fact, they have it,

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Speaker 1: and they know they have it, and so the attorneys

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Speaker 1: signed off on that. And I think that's what's that

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Speaker 1: play here, is that the attorneys signed off on documents

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Speaker 1: and good faith, but that good faith was never justified

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Speaker 1: and it led to other avenues of investigation and evidence

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Speaker 1: of other criminal wrongdoing that the attorneys were unwittingly involved.

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Speaker 1: And I want to stress that there's no suggestion that

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Speaker 1: I've seen that mister Corkrane is guilty of anything other

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Speaker 1: than being used in a manner so that the crime

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Speaker 1: fraud exception applies. Corkran also has to turn over documents

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Speaker 1: and materials he prepared during his presentation of Trump what's

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Speaker 1: called work product. Is that even more unusual to have

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Speaker 1: work product turned over to the prosecution. Yeah, it's highly unusual.

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Speaker 1: So you know, if you think about a case called

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Speaker 1: n Ray Vince Foster, you may remember Vince Foster was

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Speaker 1: corne Hillary Clinton's attorney's dating back to the Whitewater investigation.

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Speaker 1: Vince Foster committed suicide and the federal government argued that

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Speaker 1: materials that he had prepared for future litigation were no

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Speaker 1: longer protected by the work product privilege. And what the

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Speaker 1: courts of appeal decided in the case is that the

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Speaker 1: crime fraud exception is so important it exists past the

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Speaker 1: life of the attorney. So you think about if I'm

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Speaker 1: an attorney, a criminal defense attorney, and I'm interviewing people

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Speaker 1: and I write down on my note, well, this witness

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Speaker 1: is terrible for us. There's no way we're going to

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Speaker 1: call this quitman or my client lies to make something

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Speaker 1: like that. That's supposed to be protected by the work

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Speaker 1: product privilege. That's why that privilege has given heightened protection.

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Speaker 1: So it's highly unusual that the work product privilege would

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Speaker 1: be eroded by this crime fraud exception, and it may,

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Speaker 1: at the end of the day help mister Smith prove

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Speaker 1: charges against mister Trump. Does it seem as if this

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Speaker 1: could actually be the centerpiece of an obstruction case? Absolutely,

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Speaker 1: it's very well. Could you mentioned the speed at which

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Speaker 1: the appellate court handled this? Why do you think they

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Speaker 1: saw that need for speed? Well, a challenge to a

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Speaker 1: government action is usually put to the front of the

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Speaker 1: docket in this nature because there's a grand jury of

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Speaker 1: citizens that's already been convened, and the grand jury is

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Speaker 1: already meeting, and you know, you try to avoid delays

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Speaker 1: and try to avoid an erosion of what's known as

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Speaker 1: judicial economy, which is which is sort of a technical

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Speaker 1: way of thing, don't waste the citizens time who are

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Speaker 1: fulfilling their duty as grand jury. But I think there's

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Speaker 1: something more than that, And I think that there's a

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Speaker 1: fear that either the evidence will disappear or that there's

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Speaker 1: some type of national security aspect or other law enforcement

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Speaker 1: aspect that's going on that if there was a danger

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Speaker 1: of village to the public, would it affect other criminal

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Speaker 1: investigations on either mister Trump or others. And so that's

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Speaker 1: probably why the appellate court acted with the speed that

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Speaker 1: it did. But again that's just my guess. So if

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Speaker 1: Trump did use one of his lawyers to further criminal

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Speaker 1: activity in line with the crime fraud exception, does that

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Speaker 1: indicate that there was obstruction? I think that that's a

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Speaker 1: fair indictation that obstruction occurred, and that Jack Smith is

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Speaker 1: likely to pursue that as a criminal charge in the future.

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Speaker 1: To me, it's telling. I mean, I can't say that

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Speaker 1: a certainty, but it's really telling. Every time Trump loses

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Speaker 1: in court, he always appeals. So is it surprising that

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Speaker 1: he didn't appeal this. He could have appealed and asked

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Speaker 1: for an obank panel of the DC Circuit. We could

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Speaker 1: appeal to the Supreme Court. Is it surprising that he

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Speaker 1: hasn't appealed at all? Yeah, I'm I am very surprised

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Speaker 1: that he hasn't appealed at all. And you're absolutely right.

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Speaker 1: And almost every time he's confronted by a litigation, you know,

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Speaker 1: he seeks a higher review, and I'm surprised that he hasn't. Now,

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Speaker 1: it's very difficult to get an onbonked panel, but even

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Speaker 1: the act of appealing for an on bonked Panel as

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Speaker 1: a stepping stone to the Supreme Court can buy a

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Speaker 1: defendant upwards and you know, six months to a year.

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Speaker 1: And I can't begin to guess why it is that

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Speaker 1: he didn't do that. I want to for a moment

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Speaker 1: ago to the New York investigation, and in that we

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Speaker 1: had an unusual situation where the Republican chairman of three

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Speaker 1: House committees sent a letter to the Manhattan District attorney

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Speaker 1: who's investigating Donald Trump, seeking information about his actions in

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Speaker 1: the case. The Republicans criticize the grand jury investigation as

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Speaker 1: an unprecedented abuse of prosecutorial authority, even though no indictment

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Speaker 1: has been handed down and the grand jury proceedings are secret,

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Speaker 1: so they don't know what's been testified to the General

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Speaker 1: Council for Manhattan DA Alvin Bragg wrote back, slamming the

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Speaker 1: congressional request as an unlawful incursion into New York sovereignty.

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Speaker 1: I've been talking to Joshua Katzenberg, a professor at the

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Speaker 1: University of New Mexico Law School. So what's your take

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Speaker 1: on this demand from the Republican chairman. This is a

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Speaker 1: great issue to boil down. Congress certainly has the authority

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Speaker 1: to investigate where federal dollars are spent, and federal dollars

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Speaker 1: are spent everywhere in law enforcement. Of no doubt that

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Speaker 1: the New York District Attorney relies somewhat on federal dollars. However,

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Speaker 1: there are limits to what the House and Senate can investigate,

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Speaker 1: and those limits were established, some of them during the

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Speaker 1: War in Sport. You know, because during the Red Scare,

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Speaker 1: the House on American Activities Committee in the Senate Internal

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Speaker 1: Security Committee would harass random citizens on the barraft of

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Speaker 1: evidence that they may have once spoke in favor of communism.

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Speaker 1: And so a number of controls were set in that

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Speaker 1: are supposed to prevent the House and Senate from harassing individuals.

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Speaker 1: In a manner of speaking, those controls would also protect

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Speaker 1: a state law enforcement legitimate law enforcement. On top of that. Look,

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Speaker 1: you know, Jim Jordans and others in the Judiciary Committee

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Speaker 1: are lawyers, and they know that a grand jury proceeding

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Speaker 1: a secret, that grand jury proceedings can only become public

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Speaker 1: on a judge's order, and that this is an end

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Speaker 1: run on not only New York law, but on a

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Speaker 1: legal principle that applies to all fifty states. There is

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Speaker 1: in a single state out there that permits their grand

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Speaker 1: jury proceedings to become public on whim without judicial review.

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Speaker 1: And so this is all political posturing on the part

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Speaker 1: of the House, notwithstanding the fact that they don't even

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Speaker 1: know exactly who's been called in the breadth and scope

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Speaker 1: of this investigation. Now, it'll probably be settled by a

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Speaker 1: US District Court judge who will quash that part of

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Speaker 1: the indictment. On a broader issue, I would say that

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Speaker 1: every day in the United States, there are thousands of

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Speaker 1: grand juries, and thousands of prosecutions, and tens of thousands

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Speaker 1: of criminal investigations, and for the House to send a

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Speaker 1: precedent on looking into any of those simply because they

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Speaker 1: have a favorite person who's being investigated, will grind investigations

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Speaker 1: into political corruption to a stop. So I don't think

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Speaker 1: a US district court judges going to side with the House,

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Speaker 1: because I think the Republicans in the House are politically

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Speaker 1: posturing rather than actually advancing sound legal arguments. Having said that,

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Speaker 1: you know, as they teach my students, we might think

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Speaker 1: that Watergate and the corruption under the Nixmon administration actually

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Speaker 1: solves something. Maybe it did, but we will ever know

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Speaker 1: because in nineteen seventy, nineteen eighties, nineteen nine, you can't

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Speaker 1: find a single year where a member of Congress isn't

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Speaker 1: being investigated or brought before a grand jury. The names

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Speaker 1: of the Web Tech Scandal, Abscam, Korea Gate, Randall, Duke, Cunningham, Duncan,

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Speaker 1: Hunter Junior. The list goes on and on, and there's

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Speaker 1: probably an equal number of Democrats and Republicans who found

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Speaker 1: themselves investigated, prosecuted, in some cases convicted and going to jail.

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Speaker 1: And if the House has the authority to do it,

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Speaker 1: Jim Jordan thinks that they have the authority to do

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Speaker 1: now it will be very very different call or the us'

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Speaker 1: attorney or state attorney generals to investigate and prosecute political

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Speaker 1: corruption in the future. Thanks for being on the show.

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Speaker 1: That's Professor Joshua Castenberg of the University of Mexico Law School.

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Speaker 1: The Supreme Court Justice has appeared divided in its first

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Speaker 1: case in the world of cryptocurrency, foreshadowing future cases that

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Speaker 1: could help define the industry. But this case was really

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Speaker 1: a procedural battle over arbitration. Coin Base Global wants to

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Speaker 1: put two lawsuits on hold while it appeals a decision

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Speaker 1: that denied it arbitration. During the argument, some justice is

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Speaker 1: like Chief Justice John Roberts and Justice Elina Kagan indicated

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Speaker 1: that coin Base might be asking for too much. They

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Speaker 1: gave you the most valuable rights you could have. You

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Speaker 1: don't have to wait till the case is over. You

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Speaker 1: can go up right away. So they were thinking about

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Speaker 1: the problem you face when you lose on your arbitration

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Speaker 1: claim and litigation is going, and this is what they

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Speaker 1: gave you. Why isn't that enough? Now, if the district

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Speaker 1: court or the appellate court thinks that, gosh, you guys

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Speaker 1: have a really good claim and you're going to end

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Speaker 1: up winning, I guess that this would be the appellate court.

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Speaker 1: In the appellate court, you can get a discretionary stay,

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Speaker 1: but otherwise, you know, you've gotten a pretty valuable thing.

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Speaker 1: You just haven't gotten the whole ball of wax. But

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Speaker 1: other justice has raised concerns about a lower court undermining

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Speaker 1: the effect of an appellate court decision. Here's Justice Neil Gorsuch.

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Speaker 1: Do you dispute that there is a one court at

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Speaker 1: a time rule that is pretty ancient, goes back to

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Speaker 1: the common law. I mean, how far that rule extends,

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Speaker 1: and whether it goes as far as a really good question,

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Speaker 1: But do you dispute that principle that a lower court

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Speaker 1: could essentially undermine appellate jurisdiction over an issue that the

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Speaker 1: Court of Appeals has before it? Joining me is Security's

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Speaker 1: law expert Robert him a partner a Tartar, Krinsky and Drogen.

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Speaker 1: This is the first time the Supreme Court is considering

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Speaker 1: a case with cryptocurrency. But it really isn't about cryptocurrency,

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Speaker 1: is it. It's not directly about cryptocurrency, even though this

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Speaker 1: is really the first appearance that a cryptocurrency case is

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Speaker 1: making at the Supreme Court. What this case is about

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Speaker 1: is whether or not coin base is entitled to a

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Speaker 1: stay of some federal court litigation that's pending in California

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Speaker 1: while the appellate court hears a motion that it filed

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Speaker 1: to push those cases into arbitration. I mean, talk about

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Speaker 1: a technical case or a procedural case. Why did the

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Speaker 1: court take a case like this It seems like it's limited. Well,

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Speaker 1: this is an interesting case because it comes up quite

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Speaker 1: a bit, not just in the crypto industry, but in

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Speaker 1: many other industries, such as banking and retail. And I

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Speaker 1: think the big reason the court took the case is

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Speaker 1: because there's a very deep split among the appellate courts,

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Speaker 1: the federal appelate courts as to how they come out

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Speaker 1: on this question. And what happened was is that this

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Speaker 1: was a consolidated appeal. At the Supreme Court. They heard

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Speaker 1: two cases that were filed as class actions, and the

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Speaker 1: lead plaintiffs in both cases had signed user agreements with

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Speaker 1: Coinbase which said that any disputes would be heard in arbitration.

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Speaker 1: So even though they had those agreements in place, for

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Speaker 1: a variety of reasons, the district court denied Coinbas's motions

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Speaker 1: to compel arbitration, and coin Base immediately appealed that decision.

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Speaker 1: And the question is whether or not the court has

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Speaker 1: to stay the case in court pending the time that

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Speaker 1: the appellate court is hearing coin bases appeal, And that's

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Speaker 1: a question that's divided the appellate courts in this country.

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Speaker 1: Do most companies have arbitration clauses in their user agreements? Yes,

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Speaker 1: these are pretty universal among financial services companies and crypto

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Speaker 1: related businesses. And the purpose of the arbitration clauses to

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Speaker 1: put these cases into a forum that's supposed to be

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Speaker 1: less expensive than court litigation, less burdensome, and quicker. And

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Speaker 1: what coin bases argument is is that even though they

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Speaker 1: have a right to appeal of the denial of their motion,

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Speaker 1: if the case does not stayed and the case goilles

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Speaker 1: forward in the court while the appeals pending, Coinbase is saying,

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Speaker 1: they really lose the benefit of these arbitration clauses because

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Speaker 1: now they're forced to incur expenses and they're forced to litigate,

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Speaker 1: maybe for a full year while their appealless pending, and

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Speaker 1: if they ultimately win the appeal in the case ghost arbitration,

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Speaker 1: well you know, the money's already spent on attorney's fees

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Speaker 1: and discovery and so forth. So it's really frustrating the

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Speaker 1: intent of the arbitration claus According to Coinbas's arguments, it

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Speaker 1: sounds like a good argument. What's the argument of the plaintiff, Well,

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Speaker 1: the plaintiffs are arguing based on the text of the

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Speaker 1: Federal Arbitration Act, which is the statute that's governs the appeals,

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Speaker 1: and it gives coin Base their right to this immediate appeal.

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Speaker 1: And in that statute, Congress did not give an automatic

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Speaker 1: stay to a defendant debts appealing the case, and traditionally,

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Speaker 1: when there's no statute, the appellate court has discretion, and

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Speaker 1: the plantiffs are saying that this case is really no

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Speaker 1: different than any other case, that the appellate court should

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Speaker 1: really retain the discretion on whether to stay the case

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Speaker 1: or whether to allow the case to proceed in court.

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Speaker 1: And because it's not specifically set out in the statute

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Speaker 1: as to whether an automatic stay should be granted or not,

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Speaker 1: the plantiffs here are the lawyers that are representing the

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Speaker 1: account holders, are saying to the Supreme Court, you know,

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Speaker 1: you don't need to change anything. You should just keep

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Speaker 1: it the way it is and let the court have discretion.

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Speaker 1: And coin Base says, well, but in practice, you know,

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Speaker 1: the appellate courts they don't stay these cases and it's

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Speaker 1: having a very detrimental effect on them. Under coin based argument,

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Speaker 1: would the appellate courts have to consider every time there's

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Speaker 1: a denial of an arbitration clause the federal courts would

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Speaker 1: have to consider whether or not to stay the action below. Yeah,

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Speaker 1: the question here is whether or not the appellate courts

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Speaker 1: will have discretion to stay the case or whether there

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Speaker 1: would be an automatic state that is mandatory anytime a

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Speaker 1: defendant makes an appeal to the federal appellate court. So

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Speaker 1: coin Base is saying that there should be no discretion

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Speaker 1: that as soon as they file their notice of appeal,

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Speaker 1: the case in the trial courts should be stayed pending

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Speaker 1: a resolution of that appeal, because otherwise it would be

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Speaker 1: too expensive and too time consuming to litigate that. And

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Speaker 1: the plaintiffs are saying, no, you know, under established practice,

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Speaker 1: courts have discretion on whether or not to stay the case,

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Speaker 1: and the plaintiffs want to keep the general rule in place,

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Speaker 1: and coin Base wants to essentially create a special rule

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Speaker 1: that's based on the statute that says that the stay

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Speaker 1: is not discretionary and that it's aandatory that it be stayed. So, Bob,

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Speaker 1: there would be less litigation at the appellate level if

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Speaker 1: there was just a general rule that it's stayed. Yes, absolutely,

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Speaker 1: And that's one of Coinbas's arguments is that there needs

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Speaker 1: to be more clarity in this area because the whole

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Speaker 1: purpose of arbitration clauses. Then the purpose of the statute

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Speaker 1: that relates to arbitration is that there's a public policy

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Speaker 1: in favor of cheaper and more efficient ways to handle

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Speaker 1: disputes and arbitration, and that purpose is being frustrated because

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Speaker 1: there's no clear rule. It's really just up to the

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Speaker 1: discretion of the court in terms of whether to allow

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Speaker 1: a court case to go forward or not during the

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Speaker 1: pendency of the appeal. And coin Base is arguing that

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Speaker 1: this creates a tremendous amount of pressure on them to

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Speaker 1: settle cases, because if the case is going to go

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Speaker 1: forward in the district court pending the appeal, then coin

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Speaker 1: Base doesn't want us spend the money on attorney's fees

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Speaker 1: and other costs to try to put this into arbitration

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Speaker 1: in a year or two down the road. And coin

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Speaker 1: Base is saying that due to these financial pressures, they

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Speaker 1: have a big incentive to settle and to forego their

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Speaker 1: rights to arbitration. So what did you hear from the justices?

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Speaker 1: What were their areas of questioning? Well, the justices were

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Speaker 1: pretty evenly divided. I would say they were really seeing

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Speaker 1: both sides of the coin here. Some of the justices

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Speaker 1: were very concerned about the financial pressures on coin Base

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Speaker 1: and other defendants to settle cases if there's a threat

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Speaker 1: that the underlying court case could go forward, but other

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Speaker 1: judges were more in line with the planiffs here and

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Speaker 1: the users, who were saying that, well, there's no specific

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Speaker 1: statute that authorizes an automatic stay, and this is more

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Speaker 1: or less a policy question, and if Congress wanted to

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Speaker 1: enact the statute that had a automatic stay, they would

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Speaker 1: have done so, and in fact they did so in

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Speaker 1: other instances, but the Congress didn't do so here. So

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Speaker 1: there was compete concerns on both sides. And the problem

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Speaker 1: is that Congress was silent when it passed the statute

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Speaker 1: to say whether or not there should be a stay

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Speaker 1: that was automatically granted or not. Was the split among

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Speaker 1: the justices down ideological lines or not, Yes, it was.

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Speaker 1: The more conservative wing of the Supreme Courts was much

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Speaker 1: more concerned about the burdensomeness on businesses like coin base

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Speaker 1: and having to to litigate these types of cases, and

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Speaker 1: while their appeal was pending, and the more liberal wing

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Speaker 1: of the court was concerned about the users and the

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Speaker 1: consumers and how that would play out. And one of

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Speaker 1: the big concerns that the more liberal wing of the

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Speaker 1: court had was that if they ruled in favor of

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Speaker 1: coin basins, that there was an automatic stay of the

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Speaker 1: district court litigation did not create incentive on the planiffs

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Speaker 1: to want to settle, because now you know the case

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Speaker 1: is going to go forward in arbitration, and then the

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Speaker 1: arbitrator has to side whether or not that arbitration is

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Speaker 1: the appropriate forum. And the point was made that there's

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Speaker 1: tremendous changes occurring every day in the crypto industry. Companies

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Speaker 1: are going bankrupt, very volatile, and they said ruling in

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Speaker 1: favor of coin Base would be detrimental to the plaintiffs

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Speaker 1: and their right to have as speedy hearing on their case.

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Speaker 1: The Supreme Court is usually in favor of arbitration, so

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Speaker 1: if it proceeds along the lines it usually has what

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Speaker 1: does that indicate? What would their decision be here? Yes,

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Speaker 1: there's a strong preference in federal court practice to put

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Speaker 1: cases into arbitration if there is a valid basis for

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Speaker 1: doing so, or even an arguably valid basis for doing so.

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Speaker 1: The courts are really overburdened at this point. There's a

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Speaker 1: lot of cases that they have to get through, so

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Speaker 1: oftentimes courts will look for ways to put cases into

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Speaker 1: arbitration to reduce that burden, and they often cite to

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Speaker 1: the congressional intent to that effect, as well as a

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Speaker 1: way to try to reduce expenses and attorney's fees and

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Speaker 1: these types of disputes. The interesting and somewhat ironic thing

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Speaker 1: here too, is that the conservative wing of the Court,

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Speaker 1: which is usually focused very much on the text of

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Speaker 1: statutory interpretation and deferring to Congress, would under that type

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Speaker 1: of analysis, would say, well, the statue doesn't specifically provide

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Speaker 1: for an automatic stay, so we as a court cannot

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Speaker 1: read that into the statue. We have to go with

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Speaker 1: what the Congress said. And they didn't say anything here,

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Speaker 1: but they really didn't play out that way in the

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Speaker 1: oral arguments, where the conservative wing was more concerned about

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Speaker 1: the litigation burdens and the attorney's fees on businesses than

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Speaker 1: they were with the more strict textual analysis of the statue.

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Speaker 1: So does it sound as if coin Bases on the

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Speaker 1: winning side of this, Well, it's hard to say, but

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Speaker 1: I do think that overall the court was leading in

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Speaker 1: coin Bases in favor due to the public policy that's

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Speaker 1: reflected in the Statute for arbitration, as well as the

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Speaker 1: burdens at businesses like coin base with based and having

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Speaker 1: to litigate essentially a district court in a trial court

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Speaker 1: case while their appeal was pending, and the justices overall

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Speaker 1: seemed to be very concerned about that issue. So was

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Speaker 1: there any question at all involving cryptocurrency itself. It really

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Speaker 1: didn't come up the concept of cryptocurrency or any unique

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Speaker 1: features of cryptocurrency here, other than to make the point

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Speaker 1: that it was a very volatile industry and there was

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Speaker 1: some need for speedy resolutions of disputes, But that really

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Speaker 1: wasn't unique to the crypto industry. Broadening the discussion here

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Speaker 1: and speaking about higher stakes fights, it's on crypto issues

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Speaker 1: that may find their way to the court. Elliott Stein,

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Speaker 1: Bloomberg Intelligence litigation analysts thinks that the Ripple case is

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Speaker 1: going to be one that's going to end up at

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Speaker 1: the Supreme Court. So tell us a little about that case. Yeah,

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Speaker 1: the Ripple case, it is really a fundamental case because

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Speaker 1: it really gets to jurisdictional questions among regulators and who

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Speaker 1: has the jurisdiction to regulate cryptocurrency in the absence of

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Speaker 1: specific legislation by Congress. And in the Ripple case, the

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Speaker 1: question is whether that particular cryptocurrency qualifies as a security

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Speaker 1: for purposes of the federal securities laws. Then there's various

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Speaker 1: motions that are pending with the Court, and we're waiting

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Speaker 1: for a decision right now in terms of which way

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Speaker 1: the court will go. If it rules in favor of

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Speaker 1: the SEC, that's going to bring a lot of the

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Speaker 1: crypto industry under the regulatory purview of the SEC. But

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Speaker 1: if it rules in favor of Ripple, it could really

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Speaker 1: open up things to a less regulatory environment for crypto

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Speaker 1: in the United States. Now. That case is awaiting a

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00:27:06,480 --> 00:27:09,840
Speaker 1: key ruling from a federal judge in New York, but

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00:27:10,000 --> 00:27:14,879
Speaker 1: Ripple's chief executive officer Brad Garlinghouse said the company will

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00:27:14,920 --> 00:27:19,280
Speaker 1: absolutely appeal should it lose the case. Quote, for legal

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00:27:19,320 --> 00:27:22,280
Speaker 1: eagles who are paying attention to Tea Leaves based upon

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00:27:22,400 --> 00:27:25,080
Speaker 1: cases that have gone to the Supreme Court, we are

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00:27:25,160 --> 00:27:30,040
Speaker 1: exceedingly optimistic about what that path looks like. Another issue

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00:27:30,040 --> 00:27:31,760
Speaker 1: that could hit the High Court as soon as the

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00:27:31,840 --> 00:27:35,080
Speaker 1: nine month term that starts in October is already at

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00:27:35,080 --> 00:27:39,040
Speaker 1: a federal appellate court in Washington. It's expected to rule

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00:27:39,160 --> 00:27:41,879
Speaker 1: in the coming months on the SEC's rejection of a

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00:27:41,960 --> 00:27:47,360
Speaker 1: proposed bitcoin exchange traded fund after approving a similar product

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00:27:47,400 --> 00:27:52,200
Speaker 1: based on bitcoin futures. Yes, that's right. So that there

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00:27:52,320 --> 00:27:56,160
Speaker 1: was another case that was recently heard by the Supreme

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00:27:56,200 --> 00:27:59,480
Speaker 1: Court in terms of whether or not the SEC was

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00:27:59,560 --> 00:28:03,560
Speaker 1: just a bide in rejecting the application of an ETF

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00:28:03,600 --> 00:28:07,200
Speaker 1: provider who wanted to create an ETF based on the

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00:28:07,200 --> 00:28:11,240
Speaker 1: spot prices of bitcoin, and the SEC said, well that

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Speaker 1: that's an unregulated market and there's too much of a

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00:28:13,880 --> 00:28:17,399
Speaker 1: risk abroad and we're not going to approve this type

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00:28:17,400 --> 00:28:21,480
Speaker 1: of the ETF, and the ETF appeal because it said, well,

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00:28:21,520 --> 00:28:26,679
Speaker 1: the SEC has approved other types of ETFs based on bitcoins,

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00:28:26,720 --> 00:28:31,720
Speaker 1: specifically bitcoin futures, and there is really no substantive distinction

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Speaker 1: between the two which the SEC disagrees on. I mean,

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Speaker 1: this current Supreme Court, the Roberts Court, in its current formation,

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00:28:42,040 --> 00:28:49,000
Speaker 1: seems usually in favor of limiting regulatory agency's power. So

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Speaker 1: the SEC, if it goes before this Supreme Court usually

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00:28:53,680 --> 00:28:59,640
Speaker 1: faces an uphill battle. Yes, this current Supreme Court has

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00:28:59,680 --> 00:29:03,640
Speaker 1: not been very friendly territory to the SEC, and it

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00:29:03,680 --> 00:29:07,560
Speaker 1: hasn't been for a number of years that the Court

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00:29:07,760 --> 00:29:12,080
Speaker 1: has struck down various SEC rules and cases over the

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00:29:12,160 --> 00:29:15,040
Speaker 1: years and has shown a really high level of concern

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00:29:15,160 --> 00:29:20,120
Speaker 1: that the SEC is overreaching in terms of their jurisdictional

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00:29:20,400 --> 00:29:23,440
Speaker 1: arguments and trying to bring things into the front their

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00:29:23,480 --> 00:29:28,640
Speaker 1: purview that really are not authorized by Congress or by statute.

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Speaker 1: And a lot of people who are following this industry,

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00:29:32,760 --> 00:29:36,200
Speaker 1: a lot of its attorneys and regulators, are really looking

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00:29:36,200 --> 00:29:38,719
Speaker 1: to see how some of these cases play out as

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00:29:38,760 --> 00:29:42,200
Speaker 1: the SEC tries to take on a more expansive role

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00:29:42,240 --> 00:29:46,000
Speaker 1: over the crypto industry, and people and companies push back

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00:29:46,040 --> 00:29:49,400
Speaker 1: and say that the SEC doesn't have any congressional authority

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Speaker 1: to do that, and we need Congress to act in

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00:29:52,720 --> 00:29:55,920
Speaker 1: order for the SEC to have that authority. We shall

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00:29:55,960 --> 00:29:58,480
Speaker 1: see what happens. Keep our eye on the court. Thanks

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00:29:58,480 --> 00:30:02,800
Speaker 1: so much, Bob, Securities law expert Robert him a partner

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00:30:02,800 --> 00:30:06,120
Speaker 1: at Tartar, Krinsky and Drogen. And that's it for this

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00:30:06,280 --> 00:30:09,000
Speaker 1: edition of The Bloomberg Law Show. Remember you can always

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00:30:09,000 --> 00:30:12,280
Speaker 1: get the latest legal news, honor Bloomberg Law Podcast. You

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00:30:12,360 --> 00:30:16,360
Speaker 1: can find them on Apple Podcasts, Spotify, and at www

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00:30:16,560 --> 00:30:20,800
Speaker 1: dot Bloomberg dot com, slash podcast, Slash Law, And remember

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00:30:20,880 --> 00:30:23,840
Speaker 1: to tune into The Bloomberg Law Show every weeknight at

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00:30:23,840 --> 00:30:27,320
Speaker 1: ten pm Wall Street Time, I'm June Grosso and you're

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00:30:27,440 --> 00:30:28,640
Speaker 1: listening to Bloomberg