On September 7th, 2023, the U.S. Commodity Futures Trading Commission (“CFTC”) announced settlement orders against three operators of decentralized finance (“DeFi”) protocols: Opyn, Inc. (“Opyn”), Deridex, Inc. (“Deridex”), and ZeroEx, Inc. (“ZeroEx”). The announcement is a clear message that the CFTC will be asserting jurisdiction in the DeFi space, and may be as much a signal to the SEC as it is a message to the DeFi industry that the CFTC is claiming crypto regulatory…
On August 29, 2023, the D.C. Circuit Court of Appeals delivered the most recent blow to the SEC’s crypto crackdown with its ruling in Grayscale Investments, LLC v. SEC. The decision was a big win for Grayscale and a clear repudiation of the SEC’s handling of Grayscale’s (and, implicitly, others’) spot Bitcoin ETF application under the Administrative Procedure Act (“APA”). By way of background, in 2013, Gemini founders Tyler and Cameron Winklevoss first sought to…
On July 13, 2023, Judge Analisa Torres of the United States District Court or the Southern District of New York issued an Order on competing motions for summary judgment in the closely followed SEC v. Ripple Labs, Inc. litigation. As the first court decision to broadly address the question of whether a cryptocurrency itself is a security, as the SEC has maintained it is in most circumstances, the Order may have broad implications to the state of…
The pace of the SEC’s crypto crackdown ramped up in early June 2023 with the Commission’s highest profile actions against crypto trading platforms since the crypto market turmoil at the end of 2022. The SEC’s actions place crypto trading platforms and the market as a whole on extremely uncertain regulatory footing in the US, and the frustration from the industry is palpable. The SEC’s enforcement activity comes immediately on the heels of promising legislative efforts from Congress,…
On April 14, 2023, the United States Securities and Exchange Commission (“SEC”) reopened the comment period and provided supplemental information on proposed amendments to Rule 3b-16 under the Securities Exchange Act of 1934 (“Exchange Act”) which defines certain terms used in the definition of “exchange” in Section 3(a)(1) of the Exchange Act.. The reopening is primarily intended to address the significant comments received by the SEC in response to the initial proposal, many of which…
Following a host of notable bankruptcy filings in the digital asset industry, the New York State Department of Financial Services (DFS) recently issued guidance (the DFS Guidance) to emphasize sound custody and disclosure practices for firms providing digital asset custody services to better protect customers in the event of an insolvency or similar proceeding. While the Guidance applies only to DFS-regulated digital asset firms, it picks up on a common concern from other U.S. regulators,…
Potentially in connection with the recent events rocking the crypto industry, FINRA is conducting a new sweep on “Crypto Asset Communications” by broker-dealers. If they haven’t already received the request, broker-dealers with crypto-related affiliates likely will be contacted. Notably, this is the first announced sweep that FINRA has issued in over a year. This Crypto Asset sweep is not limited to communications about crypto assets that are “securities,” and it requests recent crypto asset communications over a…