S&C Secures Ruling Vacating SEC’s Expanded Dealer Definition for Crypto Groups

In a recent victory, Sullivan & Cromwell LLP obtained a summary judgment decision from the U.S. District Court for the Northern District of Texas, overturning the Securities and Exchange Commission’s rules that expanded the definition of “dealers” required to register under the Securities Exchange Act. Representing two nonprofits, the Crypto Freedom Alliance of Texas and the Blockchain Association, the firm argued that the SEC’s definition was too broad and could include traders in decentralized finance protocols.

The court agreed with the plaintiffs, stating that the SEC had overstepped its authority by enacting such a broad definition of dealer without proper connection to the Exchange Act. The Sullivan & Cromwell team involved in the case included Judson Littleton, Jeff Wall, Elizabeth Rose, Oliver Engebretson-Schooley, Cooper Godfrey, and Gabriella Papper.

This win marks the firm’s third success in challenging agency rulemaking in the past four months. Earlier victories include securing a decision to vacate the FTC’s noncompete rule and obtaining a stay of the FCC’s net-neutrality rule. The firm is currently representing industry and business groups in various other rule challenges in different courts across the country.

For more updates and insights from Sullivan & Cromwell LLP, subscribe to stay informed.