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…
In the NFT (Non-Fungible Token) frenzy that swept the country a couple of years back, one of the collections that became among the most popular, and very valuable, is known as the Bored Ape Yacht Club (“BAYC”). Its creator, Yuga Labs, sued Ryder Ripps and Jeremy Cahen for trademark infringement. Ripps maintained that Yuga embedded racist and alt-right dog whistles in the BAYC NFTs. Defendants therefore created their own NFT collection, known as the Ryder…
The recent decision rendered by Judge Victor Marrero of the Southern District of New York is of critical importance to the NFT industry. For the first time, a court held that the issuer of an NFT offered an “investment contract” and, therefore, can potentially be held liable for selling unregistered securities. The decision was made in the context of denying Dapper Lab’s motion to dismiss in Friel v Dapper Labs — meaning that, at the…
The digital assets industry in Thailand has been growing significantly between 2021 and 2022, as more big players in the traditional financial industry and startup spaced enter the digital assets market. Despite the price volatility and regulatory complexities, the country has seen a rise in crypto-related activities. In this updated report – A Complete Guide to the Regulations on Cryptocurrency and Digital Token Offering in Thailand – the Baker McKenzie Thailand team provides an update of the…
For the first time in the UK, in D’Aloia v Persons Unknown, Binance Holdings Limited & Others, the High Court of England and Wales granted an order permitting the service of court documents via an NFT on the blockchain. In said order, the High Court also ruled that exchanges holding cryptoassets could be constructive trustees of the cryptoassets deposited within their infrastructure. The Case Mr D’Aloia, the Claimant, applied for an urgent interim proprietary injunction…
Earlier this month, the United States Department of Justice (DOJ) announced charges against six individuals, in four separate cases, involved in fraudulent crypto related schemes and thereby further highlighted its commitment to protecting investors and consumers. The schemes involved the following alleged fraudulent acts; NFT Fraud (United States v. Le Ahn Tuan): A Vietnamese national and co-conspirators created an NFT called “Baller Ape” and shortly after the first day of trading, engaged in what is…
On 13 April 2022, three organizations – the National Internet Finance Association of China, the China Banking Association and the Securities Association of China – jointly issued the Initiative to Prevent relevant Financial Risks of Non-fungible Tokens (“Initiative”). This is the first Non-Fungible Token (NFT) themed official document involving NFT compliance since the rapid development of NFT in China. Although the Initiative is only a self-regulatory statement and not mandatory regulatory rules, considering the special status of the…
Whether you are creating new virtual worlds, realities or universes, the digital assets that populate them, or the infrastructure that enable individuals to interact and transact in them, there are numerous legal issues that you may have to navigate. Here are four potential pitfalls that creators of and in the metaverse should avoid. Foregoing Legally Enforceable Contracts. Relying on smart contracts, dapps and other programs exclusively expressed in code to govern transactions between parties can be…
On June 11, 2021, Thailand’s Securities and Exchange Commission issued a statement that banned, among other things, all meme tokens. The statement said: The Notification prescribes that digital asset exchanges set their listing rules and prohibits the exchanges from providing services related to utility tokens or cryptocurrencies that have any of the following characteristics: (1) Meme token: having no clear objective or substance or underlying [sic], and whose price running on social media trends; (2) Fan token: tokenized…