@BirdnalsLAW Louder for the people in the back. This entire fiasco should have been one case, in one court, on one (APA) claim. But those aren’t splashy enough so we get this mess.
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Stefan Schropp
243 posts
Stefan Schropp
@SPSchropp
Sr. Reg. Counsel @Paradigm. Posting tech law & policy, baseball, and dogs. Former @RopesGray, @UNC_Law, & @YaleBaseball. Opinions somebody’s.
Washington, DC Katılım Ocak 2012
810 Takip Edilen508 Takipçiler
Love to see it.
State gambling regulators aren't bringing APA challenges to what the CFTC has permitted to be listed on CFTC-regulated exchanges because they know they will lose. So they try to backdoor it by going after the exchanges themselves.
The CFTC doesn't have to, and indeed shouldn't, act on the basis of a state circuit court judge who has no jurisdiction to tell the federal agency what to do. If the judge orders a CFTC-regulated exchange to do something that can only be accomplished by rule change, and the CFTC refuses to accept that rule change (as is the agency's right), guess what the state gambling regulators have to do?
Bring an APA challenge. Like they should have done in the first place. But they won't. Because they will lose.
CFTC@CFTC
.@CFTC Stays KalshiEX Rule Change and Exercises Emergency Authority to Order Fulfillment of Pending Trades: cftc.gov/PressRoom/Pres…
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I’ve read some thoughtful and good-faith opinions that came out against the PMs. Judge Torres’ order was not one of them.
Kalshi is right to call a spade a spade.
Daniel Wallach@WALLACHLEGAL
NEW: Kalshi disparages the New York federal decision denying it preliminary injunctive relief as "flawed" (3x), "untenable," and "resting on a selective quotation" of the CEA's exclusive jurisdiction provision in urging a Utah federal court to grant it a preliminary injunction.
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This should put to bed the notion that state and federal regulation can coexist in this space.
Doesn’t settle who should own it, but the idea that PMs could comply with both is a fiction that won’t withstand a minute of practical experience.
InGame@InGameHQ
Kalshi is weighing its options after CFTC rejected an emergency rule change to unwind certain trades involving users based in Michigan. Instead said it will force Kalshi to honor the trades even though a state court said they must be voided.
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Stefan Schropp retweetledi
Thank you for your leadership, @FLEOAORG.
FLEOA@FLEOAORG
FLEOA has submitted a letter to the U.S. Senate Committee on Banking, Housing, and Urban Affairs expressing its support for H.R. 3633, the Digital Asset Market Clarity Act, while offering targeted recommendations to strengthen the legislation and preserve essential federal law enforcement authorities. Read our full press release about this here: fleoa.org/pages/FLEOA-Su… #FLEOA #PressRelease #Legislation
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Can’t wait for the next state court lecture on how state gaming regulators protect consumers (It’s all taxes. All the way down.) 👇
Ariel Givner@GivnerAriel
Terry Thompson is suing DraftKings and its affiliates, the NFL, and VIP hosts for turning him from a guy who bet on games for fun into an addict who lost $1.85 million… and nearly his life. He claims the app was built to do this. Here’s your breakdown 👇
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Nobody should face that choice, and we're already seeing the fallout from the legal ambiguity as developers shelve projects, move offshore, and block US users, all to the detriment of American leadership in frontier technologies. More in our blog: paradigm.xyz/writing/paradi…
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That was a mistake. As our brief makes clear, a DOJ memo it can revoke (or ignore) at any time doesn't erase the “credible threat” of a theory DOJ is *still* pursuing against @rstormsf and others. And with that sword hanging over his head, Michael’s options are to forgo his First Amendment rights or chance a felony indictment.
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Yesterday, @Paradigm filed an amicus brief in support of @LewellenMichael and all non-custodial software developers. Developers shouldn’t have to risk a felony to learn if their code is legal, and the Fifth Circuit should make sure the trial court answers that critical question.
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Stefan Schropp retweetledi
Stefan Schropp retweetledi
The two most important legal cases for prediction markets?
@SPSchropp says the two worth watching are in the:
1. Third Circuit, the first federal appeals court to issue a ruling on this topic, and
2. Sixth Circuit, a good vehicle to be the case that lands at the Supreme Court.
Jacob Robinson@JacobRobinsonJD
Prediction markets are a (poorly understood) multi-billion dollar industry. This @LawofCodeFM episode is a multi-hour deep dive on prediction markets, from conclave betting in 15th century Rome to proposed rulemaking from the @CFTC earlier this month. My goal: the internet's most comprehensive explainer on prediction markets. I spent several months and over 100 hours on this podcast, and spoke to the world's leading experts on the legal layer of prediction markets: @robertjdenault, @WALLACHLEGAL, @SPSchropp, Sam Enzer, @iampaulgrewal, @BradBourque, @ThaniaCh, @passalacqua_mj, @JoshSterlingLaw, @_jamico, as well as @KolemanStrumpf, @mattkalish, with clips from prior conversations with @giancarloMKTS, @DustinGouker. By the end of this episode, I promise you'll be in the top percentile for understanding prediction markets, regardless of your starting point. (You just might want to listen twice. There's a lot here.) 0:00 Intro 1:40 16th century papal betting @KolemanStrumpf 11:13 Insider trading rules @robertjdenault 16:20 The Google insider case 27:38 Why prediction markets matter @giancarloMKTS 33:20 Election betting in America 44:50 Iowa Electronic Markets 52:11 Dodd-Frank, swaps and the Special Rule 54:23 Senator Lincoln on sports contracts 1:02:04 Parlays as swaps 1:07:38 CFTC's exclusive jurisdiction @ThaniaCh 1:13:45 Perspective on CFTC's NPRM @passalacqua_mj 1:21:10 Exceptions that swallow the rule @iampaulgrewal 1:33:40 How prediction markets actually work 1:42:20 Kalshi's fee structure 1:44:33 Cardi B and the resolution problem @DustinGouker 1:51:20 @Polymarket's decentralized resolution @_jamico 1:58:10 The Ninth Circuit case 2:14:04 CFTC's proposed rulemaking @BradBourque, @SPSchropp 2:25:21 @Kalshi's landmark 2024 win 2:29:20 PASPA, Murphy v. NCAA @WALLACHLEGAL 2:51:29 The case against banning prediction markets @robertjdenault Nothing in this podcast is legal or investment advice. Thank you to the sponsors of this episode, @CahillGordon (@NYcryptolawyer), @HyperliquidPC and .
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Stefan Schropp retweetledi
Public service announcement:
The specter of Gary Gensler still looms large in DC — as the dark lord puppeteers his minions against the current @CFTC’s push to modernize markets, forming unholy alliances with the very corporate incumbents he and his Warrenite ilk purport to oppose.
Let’s walk through it (not exhaustive):
Article A:
- Gensler, long a supremacist for federal regulatory authority, has decided that he’s now a state and tribal rights champion! Here he is on a tribal podcast saying that actually casinos are a good thing.
Article B:
- Gensler files an anti-prediction market amicus brief to re-define the authority of the very agency whose authority he sought to expand, authored by his former enforcement director Aitan Goelman.
Article C:
- @CMEGroup, who enjoyed limitless power and influence at the CFTC during previous admins (including Gensler’s), is now represented by the very same Aitan Goelman in their lawsuit against the CFTC, as they try to beat back any onshoring of perps, lest it cut into their profit margins or market share.
Article D:
- Gensler’s former SEC Chief of Staff @amandalfischer, from her perch at “consumer protection” (read: corporatist protection) organization @BetterMarkets seems to find a way to be quoted in every single DC media story covering perps, prediction markets, crypto, the CFTC, the SEC, etc -- sticking up for incumbent power in each. She certainly knows a lot about a lot! And a lot of reporters!
Any self-respecting champion of competition, opponent of corporate monopolies, or conservative federalist should very much ask why Gary Gensler is suddenly your friend.
The answer: you’re being used.
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Stefan Schropp retweetledi
🚨NEWS: The National Organization of Black Law Enforcement Executives (NOBLE) has endorsed the Clarity Act, becoming the first major law enforcement organization to publicly support the legislation, which includes the Blockchain Regulatory Certainty Act (BRCA).
In a letter to Senate leaders, @noblenatl says the bill “contains several provisions that would provide law enforcement with meaningful new capabilities while preserving longstanding criminal enforcement authorities.”
Responding to concerns raised by other law enforcement groups, NOBLE adds that the legislation “does not alter the longstanding federal criminal authorities that investigators and prosecutors rely upon every day,” including statutes governing money laundering and unlicensed money transmitting businesses.
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@JacobRobinsonJD you want to make history here and file a podcast as an amicus?
Stefan Schropp@SPSchropp
Minnesota Attorney General Ellison making a personal appearance today (although not arguing). Judge Menendez makes clear she is very aware of the broader environment of these cases and has read the briefing and orders in those other cases, but asks who is responsible for "educating the middle aged judge on prediction markets" in a moment of levity.
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Court wishes everyone a wonderful long weekend and says the Court will get the order out "as soon as we can."
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Kalshi with a few points to wrap up:
- Presumption against preemption does not apply to express preemption cases.
- Reiterates that MN can bring an APA action to kick certain contracts off the DCM and then they can regulate them.
- Congress preempted not just swaps, but anything that could become a swap. They wanted to be broad.
- CFTC has been clear it is not permissible to offer different contracts in different states. Impartial access cannot work with state law.
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We're live from Minneapolis this morning for a Preliminary Injunction hearing on Kalshi's challenge to Minnesota's new law that makes operating a prediction market a felony. The law is scheduled to go into effect on August 1, and Judge Menendez is scheduled to take the bench shortly. I'll have updates 👇
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