January 9, 2025 – The Digital Chamber today filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit in U.S. SECURITIES AND EXCHANGE COMMISSION v. IAN BALINA, in support of BALINA’s appeal seeking reversal of the district court’s judgment against him.
Why is this Case Important?
The SEC’s overreaching enforcement campaign against the digital assets industry under its current Chair, Gary Gensler, reinforces the need for lasting judicial guardrails to prevent federal government agencies, including the SEC—regardless of changes from administration to administration—from crippling innovation through actions that exceed statutory authority.
One of the critical checks against regulatory overreach is the presumption recognized by the U.S. Supreme Court in Morrison v. National Australia Bank Ltd. against applying U.S. securities laws to extraterritorial transactions (whether in cryptographically secured digital assets or traditional financial instruments). In the BALINA case, however, the district court misapplied Morrison in ways that pose existential harm to the blossoming global digital assets economy and America’s place in it.
For the U.S. digital assets market to flourish—and for the United States to enjoy the resulting jobs, investments, and other economic benefits —it is critical to establish clear, bright-line rules to guide global market participants on when U.S. securities laws apply—and when they do not—in the context of digital asset transactions.
The SEC’s arbitrary and capricious approach to enforcement against digital assets activity has achieved the opposite result. Indeed, the SEC’s unpredictable lawsuits enforcing the securities laws against digital asset participants have further compounded confusion in the market by generating court decisions that are often ambiguous, inconsistent with one another, and contrary to long-standing principles of United States securities laws, such as limits on extraterritorial application.
The district court’s fatally flawed ruling—which improperly applied U.S. securities laws to transactions that are legally and factually extraterritorial—is emblematic of these issues.
Our amicus brief provides the Fifth Circuit with essential context about the importance of Morrison and related caselaw, and explains how proper application of Morrison’s requirements would protect the global digital asset industry from inappropriate extraterritorial overreach by the SEC.
“Today, TDC directed its advocacy efforts to push back on the SEC’s efforts to exceed its jurisdictional powers. Digital asset market participants around the world need to have a clear idea of when a transaction is subject to U.S. regulation and when it is not in order to continue their important and innovative work in a lawful manner,” said Perianne Boring, Founder and CEO of The Digital Commerce. “We are hopeful that the Fifth Circuit will consider the arguments set forth in our brief, and we will continue to support the fair and equivalent application of laws for the global digital asset industry.”
“We are optimistic that the incoming administration will take a more constructive approach to regulating the crypto sector in America, but we are grateful to The Digital Chamber for fighting to ensure that judicial guardrails like Morrison remain intact to prevent government overreach for all administrations to come, ” said Samson Enzer, Partner at Cahill Gordon & Reindel LLP. The Chamber is represented in this matter by Samson Enzer, Landis Best, Lewis Cohen, Miles Wiley, and Victoria Yuhas of Cahill Gordon & Reindel LLP. We appreciate the contributions to this initiative by the Cahill Gordon team and other members of The Digital Chamber.
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