Category

Securities

Category

One of the issues that we, and much of the rest of the crypto community, have been following for many years is the battle between the crypto industry and the SEC on the issue of whether crypto assets are securities. In November 2022, a federal district judge in New Hampshire held that the LBRY token was a security. On July 13, 2023, a federal district judge in the Southern District of New York ruled that Ripple Labs’…

In November 2023, the German Parliament adopted the Act on Financing of the Future (Zukunftsfinanzierungsgesetz, “ZuFinG”), which will allow German stock corporations to issue stock “on chain” (crypto-shares). This is achieved by amending the existing German Act on Electronic Securities (“eWpG”) and the stock corporation law. However, a few requirements will need to be fulfilled. In particular, a change from a traditional paper-based issuance to crypto shares will require that all existing shareholders agree, which…

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…

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 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…

On November 18, 2022, the U.S. Securities and Exchange Commission issued an order instituting administrative proceedings against American CryptoFed DAO LLC (“American CryptoFed”), an issuer of digital assets, to determine whether a stop order should be issued denying or suspending the effective date of the registration of the Ducat and Locke tokens (the “Tokens”) under the Securities Act of 1933 (the “Securities Act”). The SEC’s Enforcement Division (“Enforcement”) alleges that American CryptoFed’s Form S-1 registration statement…

On September 15, 2022 the U.S. Securities and Exchange Commission (“SEC” or “Commission”) issued an order denying the SEC Enforcement Division’s (“Enforcement”) motion to expedite enforcement proceedings against American CryptoFed DAO LLC (“CryptoFed”) an issuer of digital assets. CyrptoFed had previously filed a Form 10 registration statement with the SEC seeking to register two classes of digital assets, the Ducat and Locke tokens, as equity securities under Section 12(g) of the Securities Exchange Act of…

BlockFi is a wealth management and trading firm for cryptocurrency holders that first commenced operations in 2017. It has had a very busy few months. In March 2021, it reportedly closed a Series D funding that valued the company at $3 billion. Block recently reported that BlockFi is in talks to raise a new Series E funding round of $500 million, which would bring the company valuation to nearly $5 billion. It has also been…

The U.S. Securities and Exchange Commission announced on May 28, 2021 that it had filed an action against five individuals alleging that they promoted a global unregistered digital asset securities offering that raised over $2 billion from retail investors. These activities relate to BitConnect, which shut down its business in early 2018, shortly after, as we reported, the Texas State Securities Board issued a cease and desist letter. At that time, the regulator alleged that…