We have been writing for years about what had become an almost quixotic quest for U.S. SEC approval of a spot Bitcoin ETF (see one such post here). The D.C. Circuit’s decision in the Grayscale case (see post here) was a clear repudiation of the SEC’s position and infused the industry with hope that such approval might finally be forthcoming. Though it has not happened yet, this post provides an update on this topic. There…
On September 18, 2023 the New York State Department of Financial Services (DFS) issued an update on an ongoing initiative to strengthen DFS oversight of virtual currencies. A central aspect of the proposed guidance are enhanced criteria for coin-listing and delisting procedures. DFS wants to establish itself (or, as DFS sees it, maintain is role) as the leading cryptocurrency regulator in the country. Towards that end, the DFS press release states: “The Department has added more…
We recently reported on the first NFT enforcement action brought by the U.S. Securities and Exchange Commission. On September 13, 2023, the Commission brought its second, against Stoner Cats 2 LLC (SC2), the entity responsible for the cartoon series Stoner Cats. The animated Web3 series featured the voices of Ashton Kutcher, Mila Kunis, Chris Rock, Jane Fonda, Seth MacFarlane and others. The series is about the adventures of cats who learned to talk after inhaling…
We previously reported on the Friel v Dapper Labs decision, which was a first-of-its-kind decision in the U.S. courts, holding that an NFT (non-fungible token) can be a security under U.S. securities law. On August 28, 2023, the U.S. Securities and Exchange Commission brought its first NFT enforcement action, against Impact Theory, LLC, a media and entertainment company headquartered in Los Angeles. It read very much like the SEC’s actions concerning cryptocurrency. As in those…
We have previously reported on U.S. Securities and Exchange Commission cases against influencers for violating the anti-touting statute. On August 22, 2023, the SEC announced settled charges against Washington, D.C.-based investment adviser Fundrise Advisors, LLC arising from the firmâs solicitation arrangements with online content creators. The following information is taken from the Order. Fundrise has been registered with the SEC as an investment adviser since September 25, 2014 and, as of March 31, 2023, reported…
We have previously reported (here and here) on the refund lawsuit that a couple, the Jarretts, brought against the U.S. Internal Revenue Service. Mr. Jarrett produced Tezos tokens, a form of cryptocurrency, through a process known as âstakingâ — a system being used by more and more blockchains. As Jarrett saw things, staking uses existing Tezos tokens and computing power to produce new tokens. Thus, he argued, he would owe taxes on the tokens only…
Almost five years ago, we reported on the SEC’s first-ever case against celebrities for touting ICOs. In 2022, Kim Kardashian paid $1.26 million in connection with her touting on social media a crypto asset security (she received about $250,000 for a post on Instagram). On August 4, 2023, in the SEC’s most recent touting case, singer Austin Mahone consented to a judgment under which he paid about $46,000 for illegal touting. The simple concept behind…
Quantstamp is a Blockchain security firm that raised funds through an initial coin offering (ICO). According to the SEC, in August 2017, Quantstamp released a White Paper with respect to its upcoming offering of a crypto asset called QSP, which described Quantstampâs plans to develop a protocol on the Ethereum blockchain that would provide automated security audits of smart contracts (the âProtocolâ). The White Paper also described Quantstampâs plans to implement a governance system âafter the…
In November 2022, U.S. District Judge Paul J. Barbadoro of the District of New Hampshire held that LBRY, Inc. had conducted unregistered offerings of securities in violation of § 5 of the Securities Act with respect to its offer of sale of its LBC token. That token was meant to be used by content creators and audience members on LBRY’s âcontent marketplace,â which billed itself as an alternative to YouTube. On July 11, 2023, the judge…
On July 11, 2023, the Unites States Attorney’s office for the Southern District of New York announced that it had arrested Shakeeb Ahmed and charged him with wire fraud and money laundering in connection with his attack on a decentralized cryptocurrency exchange (the âCrypto Exchangeâ). Although the indictment did not identify the exchange, based on the facts described in the indictment, it has been reported that the hack was against Crema Finance, a decentralized cryptocurrency platform…