We have followed for years the saga of the many applications for a spot Bitcoin ETF that have been denied by the U.S. Securities and Exchange Commission (SEC). See here and here. In April 2022, however, the SEC approved the Teucrium ETF — resting its decision on the fact that it was a futures ETF. But, unlike the earlier approved funds that had been filed under the 40 Act, Teucrium had filed under the Securities…
In previous posts, we addressed the interesting service of process issues that were the subject of a number of decisions in the lawsuit that the United States Commodity Futures Trading Commission (CFTC) brought against Ooki DAO (a DAO is a decentralized autonomous organization). But the case has also received a lot of attention for the larger issues of a proceeding against a decentralized organization and who might be liable for its acts. The court’s recent…
In an earlier post, we reported that Judge William Orrick of the Northern District of California had authorized service of process on Ooki DAO (a DAO is a decentralized autonomous organization) through a Help Chat Box on Ooki DAO’s website, with contemporaneous notice through an Online Forum linked through its website. In another post, we reported that the Judge Orrick subsequently required the CFTC also to serve process on two Token Holders once it was…
In an earlier post, we reported that a judge had authorized service of process on a DAO (decentralized autonomous organization) through a Help Chat Box on the DAO’s website, with contemporaneous notice through an Online Forum linked through its website. Four amici — venture capital firms Paradigm and Andreessen Horowitz, crypto legal consortium LeXpunK, and the DeFi Education Fund — sought reconsideration of that decision. On December 12, 2023, Judge William Orrick issued an order…
Kim Kardashian, Floyd Mayweather, Jr. and Paul Pierce are among the defendants being sued for their role in promoting EthereumMax (“EMAX”), a cryptocurrency project centered around the EthereumMax tokens, a blockchain-based digital asset. The Defendants moved to dismiss the lawsuit. In the decision granting the motion, the Court first noted that Private Securities Litigation Reform Act (“PSLRA”) likely barred the claim based on its excluding RICO claims. To his surprise, however, Defendants did not seek…
Nexo Financial LLC is a company that describes itself as a leading cryptocurrency institution offering a number of digital assets services through its website. It offered its customers, among other things, an Earn Interest Product, which allowed customers to lend certain digital assets in interest-bearing accounts. On December 1, 2021, the Consumer Financial Protection Bureau (“Bureau”) served Nexo with a civil investigative demand (“CID”) requiring that a representative of the company appear by videoconference for…
On November 23, 2022, New York Governor Kathy Hochul signed legislation that imposes a two-year moratorium on certain crypto-mining operations that run on carbon-based power sources. The “Purpose or General Idea” portion of the legislation provides: To establish a moratorium on air permit issuance and renewal for electric generating facilities that utilize a carbon-based fuel and that provides, in whole or in part, behind-the-meter electric energy consumed or utilized by cryptocurrency mining operations that use…
This post concerns a lawsuit brought by the United States Commodity Futures Trading Commission (CFTC). The complaint alleges that, from approximately June 1, 2019 to approximately August 23, 2021, bZeroX, LLC (bZeroX) designed, deployed, marketed, and made solicitations concerning a blockchain-based software protocol that accepted orders for and facilitated margined and leveraged retail commodity transactions (functioning similarly to a trading platform). This protocol (the bZx Protocol) permitted users to contribute margin (collateral) to open leveraged positions…
Early posts in this blog mentioned how former U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton famously told Congress in February 2018 that “I believe every ICO I’ve seen is a security.” His successor, current SEC Chairman Gary Gensler, has said on multiple occasions (for example, here) that he believes the vast majority of digital tokens are securities. In a decision issued on November 7, 2022, U.S. District Judge Paul J. Barbadoro held that…
Bittrex, Inc. is a company based in Bellevue, Washington that provides an online virtual currency exchange and hosted wallet services. The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) alleged that Bittrex violated programs for sanctions against Cuba, Iran, Sudan, and Syria, as well as Ukraine-related. More specifically, according to OFAC, Bittrex failed to prevent persons apparently located in the sanctioned jurisdictions from using its platform to engage in over $263 million worth…