Good day everyone,
I hope you are all having a good day, welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the recent news of the SEC looking to brings sanctions against Elon Musk due to the billionaire failing to appear and provide testimony to the financial regulator regarding his $44 billion purchase of the Twitter platform in 2022.
Elon Musk v SEC
The United States Securities and Exchange Commission (SEC) have moved to impose sanctions on Elon Musk after the billionaire failed to attend a court-ordered deposition related to his $44 billion acquisition of Twitter. The regulator announced on Friday the 20th of September that they intend to seek sanctions against Musk due to him cancelling his scheduled testimony just three hours before it was set to take place back on the 10th of September in Los Angeles.
The SEC made this filing in a San Francisco federal court and it stated they would request an order which would demand Musk to explain why he should not be held in civil contempt for failing to appear. The reasoning behind Musk failing to attending was due to a scheduling conflict, with the billionaire attending the launch of SpaceX's Polaris Dawn mission in Cape Canaveral, Florida. Musk only notified the SEC of his intention to attend the launch a mere three hours before his testimony was supposed to begin, “and after the SEC spent thousands of dollars to fly three attorneys to Los Angeles” according to the filing. Musk's actions violated a May 31 court order compelling his testimony, as noted in the filing, and SEC lawyer Robin Andrews wrote:
"Musk's excuse itself smacks of gamesmanship. The court must make clear that Musk’s gamesmanship and delay tactics must cease."
Musk’s counsel in the filing called the sanctions drastic and inappropriate, as they noted the “non-urgent half-day testimony was rescheduled for the critical rocket launch.” They also cited the importance of Musk's attendance at the launch of the rocket and how he has cooperated throughout the entire process thus far.
The SEC have argued that Musk must have been aware of the planned launch well in advance, especially given the company's internal discussions two days prior. They are pushing for Musk to be held in contempt for waiting so long to alert the agency that he would not be in attendance for the testimony. They are also looking for reimbursement for the expenditure in travel costs and for other relief deemed appropriate by the court.
The testimony has been rescheduled for the 3rd of October as the SEC is investigating whether Musk violated securities laws in early 2022 when he started accumulating Twitter stock. There has been criticism of Musk for how he waited at least 10 days too long to disclose he was buying Twitter shares. Investors are required to disclose when they reach 5% ownership of public companies but Musk waited until he owned 9.2% of Twitters shares before disclosing this information. Soon thereafter he offered to buy the whole company. This led to accusations of Musk misleading shareholders.
Musk has since argued that the delay in disclosing this information was a misunderstanding of the SEC disclosure requirements, and that "all indications" suggested his delay was a "mistake." This is not the first clash between Elon Musk and the SEC, as back in 2018 the Tesla CEO tweeted in 2018 about a deal to take the electric car maker private at $420 per share. The SEC argued this was misleading and it resulted in a $20 million settlement with Musk that also forced him out as Tesla’s chair. Musk then appeared on “60 Minutes” to declare that he does “not respect the SEC.” Musk also recently noted the SEC was trying to "harass" him through subpoenas.
Many have been critical of the SEC given their “regulation-by-enforcement” approach to the crypto industry and Musk has long been seen as a devoted supporter of crypto. Some have argued that the SEC have so far failed to create and establish a clear and concise regulatory framework for cryptocurrencies, and instead they have pursued legal action against key industry players. With Musk having the potential to bring crypto to the social media space of 'X' (formerly Twitter) some may feel this is another case aimed at those with keen interest in crypto.
However, Musk is facing regulatory scrutiny from more than just the SEC. Back in August the Irish Data Protection Commission, a watchdog group from the European Union, filed a lawsuit against the X social media platform. This lawsuit claims the platform has breached AI data violations and is demanding 'X' stop collecting the data of European users. The Brazilian Supreme Court has also upheld a ban originally ordered by Judge Alexandre De Moraes. The United Kingdom are also considering summoning Musk to testify before parliament regarding the social media platform's content moderation policies.
Have a great day.
Peace. CryptoGod-1.
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