Blockchain Legal Resource

On September 18, 2023, the New York Department of Financial Services (“DFS”) announced new proposed guidance for BitLicense holders and certain limited-purpose trust companies (“VC entities”) seeking to list virtual currencies on their platforms. The proposed guidance would replace existing DFS procedures and establish new protocols for listing virtual currencies that are not subject to the DFS greenlist.  

The proposed guidance seeks to provide a framework under which VC entities may seek DFS approval to self-certify the listing of new coins. In order to self-certify ...

On August 28, 2023, the SEC settled enforcement charges against a Los Angeles-based media and entertainment company for conducting an unregistered offering of non-fungible tokens (NFTs). The case represents the SEC’s first foray into the NFT space.

What Happened: 

As reported in a Hunton Client Alert, the US Department of Justice (DOJ), the US Department of Commerce’s Bureau of Industry and Security (BIS), and the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) recently issued guidance regarding the voluntary self-disclosure by US businesses of violations of US sanctions and export control laws to these agencies (Tri-Seal Compliance Note: Voluntary Self-Disclosure of Potential Violations) (Compliance Note).

As we previously reported in our summary of the Ripple case, a federal district court judged determined that under certain circumstances the offering of a digital asset does not create a security. The reasoning in the Ripple case has been criticized by leading to an outcome that places institutional investors ahead of retail investors and employees. In a separate, recently decided case involving digital assets, another federal district judge has declined to follow the ruling in Ripple.

On July 13, 2023, the Federal District Court for the Southern District of New York issued the hotly anticipated ruling in the SEC’s case against Ripple Labs, Inc. (Ripple). On cross-motions for summary judgment, the court found that only Ripple’s sale of its XRP tokens to institutional buyers pursuant to sales contracts constituted unregistered sales of securities in violation of Section 5 of the Securities Act of 1933. But according to the court, Ripple’s programmatic sales of XRP through crypto exchanges, Ripple using XRP to pay employees and service providers and Ripple ...

Last week, the FTC announced its long-awaited finalization of updated Endorsement Guides. These guidelines come after the FTC initially voted to publish revised guidelines in May 2022. The new Guides were approved by a unanimous vote and make a significant number of updates to the 2009 version.

As reported in a Hunton Client Alert last week, on June 6, 2023, the Federal Deposit Insurance Corporation (“FDIC”), the Board of Governors of the Federal Reserve System (“FRB”) and the Office of the Comptroller of the Currency (“OCC”) (collectively, the “Agencies”) issued final guidance on managing risks associated with third-party relationships, including relationships with fintechs (the “Final Guidance”).¹ Effective as of the June 6, 2023 issuance date, the Final Guidance replaces each of the Agencies’ existing guidance on third-party risk management and provides consistency in the Agencies’ supervisory approaches.² The Final Guidance is directed to all banking organizations supervised by the Agencies and advises such organizations to consider and account for the level of risk, complexity and size of the institution, as well as the nature of the third-party relationship, when conducting sound risk management.

On June 8, 2023, Judge William H. Orrick of the U.S. District Court for the Northern District of California granted a default judgment in favor of the CFTC against Ooki DAO, a cryptocurrency decentralized autonomous exchange. The court also permanently enjoined Ooki DAO from operating its website and awarded the CTFC $643,542 in monetary damages. The court found that Ooki DAO’s lack of participation in the litigation and refusal to appear in court contributed to the default judgment. This decision brings to a close the closely-watched case that establishes new precedents for the legal liability of decentralized autonomous exchanges.

On May 30, 2023, the Commodity Futures Trading Commission Division of Clearing and Risk (DCR) issued a staff advisory (CFTC Letter No. 23-07) on the risks associated with the Derivatives Clearing Organization (DCO) clearing of digital assets. DCR will emphasize compliance with the DCO core principles related to system safeguards, conflicts of interest, and physical delivery.

On May 22, 2023, the Federal Trade Commission (FTC) announced its first monetary settlement with celebrity endorsers for a combined $1.7 million.

The complaint filed by the FTC and the Utah Division of Consumer Protection (DCP) against Response Marketing Group, LLC and its principals, also named two real estate celebrities as defendants—Scott Yancey, star of the home-flipping show Flipping Vegas on A&E, and Dean R. Graziosi, author of Millionaire Success Habits. The complaint alleged that defendants used false promises to sell consumers expensive real estate investment training programs, which Yancey and Graziosi promoted. Yancey and Graziosi were also allegedly involved in efforts to bury online customer complaints that said Response Marketing was a scam and cost consumers more than $400 million.