Digital Currency and Blockchain Technology
C&G’s Digital Currency & Blockchain Technology team regularly represents clients across a growing range of crypto-related products, structures, and investments, including compliant coin offerings, NFTs, dedicated investment funds, and traditional investments involving crypto enterprises. We also have extensive experience advising international clients on crypto cross-border regulatory and compliance issues.
Our attorneys understand the regulatory framework of this emerging industry. We advise clients with respect to licensing, regulatory compliance, contract negotiation, dispute management and litigation, and data protection, and regularly work with in-house counsel to manage all aspects of a project. We regularly counsel clients with regards to terms of service agreements and other policies and procedures, as well as provide compliance advice on issues including know-your-customer (KYC) and anti-money laundering rules and regulations.
We have advised on issues relating to derivative trading regulations in both the U.S. and the EU, and have also designed, documented, and negotiated structured and flow over-the-counter derivatives, as well as clearing of exchange-traded derivatives.
Our attorneys have extensive experience advising on Initial Coin Offerings (ICOs) in multiple jurisdictions, including France and the UK, and Regulation D and other private placements in the U.S.
We are active thought leaders in the blockchain space. Our attorneys speak and write regularly on blockchain-related issues and teach cryptocurrency and blockchain law and policy at prominent law schools.
Digital Currency & Blockchain Technology
Advising a leading cryptocurrency exchange platform on all aspects (operational, financial, regulatory, tax) of its initial coin offering aimed at financing its new exchange platform. This matter has global jurisdiction, with an emphasis on the U.S., U.K., Asia, and France.
Representing a blockchain-based platform, in relation to all main aspects of its business, including service terms and conditions, token issuance, and all main aspects of its upcoming initial coin offering.
Assisting a private equity fund with a Regulation D private placement token offering to U.S. investors for a blockchain-focused private equity fund.Read More
- The SEC action directly raises the question whether the tokens at issue qualify as unregistered securities, with significant implications for whether the platforms that facilitate trading in those tokens are potentially exposed to legal liability as unregistered securities exchanges.
- While Coinbase is not named in the SEC's complaint as an unregistered securities exchange, the nine tokens mentioned in the complaint were all traded on Coinbase, leaving it unclear what, if any, consequences will result from the SEC’s enforcement action for Coinbase.
- These are also the first cases to allege “tippee” liability for insider trading in the crypto sphere -- a "tippee" being a person who receives and trades on information obtained by someone else (the "tipper") in violation of the tipper's duty to a third party.
In addition, while the DOJ brought the criminal case under the wire fraud and conspiracy statutes, the SEC asserted its claims under the securities laws – marking the first time the SEC has alleged insider trading in violation of securities laws in the crypto context. The SEC action directly raises the question whether the tokens at issue qualify as unregistered securities, with significant implications for whether the platforms that facilitate trading in those tokens are potentially exposed to legal liability as unregistered securities exchanges.
- Coinbase recently filed a Motion to Dismiss that has significant potential implications for the statutory seller defense in the crypto context.
- In its motion, the company argues that it is not a statutory seller and therefore lacks privity with its customers, absolving it of all liability under the Securities Act and Exchange Act.
- The basis for Coinbase’s motion is contained in its user agreement, which specifically states that when users buy or sell assets on the Coinbase site, they are not buying or selling them "from Coinbase."
- The case presents an interesting question in the context of suits against crypto exchanges: can statutory seller liability be extinguished by a user agreement saying that customers are not transacting with the exchange, even though the exchange maintains the keys and controls the crypto at all times until it is transferred to the customer?
- Although details of the game have yet to be released, Sorare is expected to issue a set number of MLB NFT cards for each player that displays an image of the player in question, with their team and number, much like a physical baseball card. Participants can purchase the cards and then use them to build a team and compete against others.
- There is some concern among consumers that purchasing digital collectibles, such as NFTs, poses a higher risk than purchasing physical collectibles. If the game collapses, for instance, there is a possibility that purchased NFTs could lose their value.
- It remains to be seen how this partnership will play out, but given the previous success of Sorare’s fantasy soccer league and the continued public interest in cryptocurrency, it is likely that the MLB game will be a success.
- The bill’s underlying theory is that the continued expansion of crypto mining operations running POW authentication methods to validate blockchain transactions will negatively impact compliance with the Climate Leadership and Community Protection Act, which requires New York to substantially reduce greenhouse gas emissions.
- Despite some believing this bill will impose an outright ban on all mining, if passed, the bill won’t affect presently operating POW mining operations, instead only prohibiting the issuance of new permits. Mining operations that use alternative energies, such as wind or solar, will also remain unaffected.
- But the bill could still do serious and lasting damage to NY’s mining industry, as mining operations may be hesitant to invest substantial capital into New York if they fear having their operations shutdown at any time due to changes in the state’s regulatory landscape.
- Chairman Gensler's speech provides new insight into the approach the SEC will be taking in each of these three key areas.
- We can expect inbound regulatory efforts in each of the three areas he addressed, with potential SEC-CFTC coordination on exchange registration requirements, and some form of regulation or increased enforcement efforts with respect to stablecoins and tokens.
- The SEC clearly intends to step up regulation and enforcement in these areas and, in particular, seems to be set on mandating registration for crypto trading platforms.
- The Response Document highlights the government’s post-Brexit push to drive transformational growth in the UK’s FinTech space through cryptoassets and DLT and confirms its plans to enact legislation to recognise stablecoins as a valid means of payment by bringing them into the existing regulatory perimeter.
- The Treasury’s move to make stablecoins a valid means of payment is the first in an array of measures set to be implemented to secure the UK’s status as “the world’s preeminent financial centre” and “a global hub for cryptoasset technology and investment.”
- The proposed changes should be seen as an effort by the UK to remain relevant in the FinTech space following its exit from the European Union and the damage to its reputation as an attractive business environment that accompanied it.
- In the past few months, the DOJ has announced new task forces and more resources to combat fraud in connection with COVID-19 relief, criminal activity related to cryptocurrency, and sanctions violations by Russian entities and individuals linked to the Putin regime.
- These initiatives signal an uptick in criminal enforcement in the coming months, especially in the areas involving fraud, digital assets, sanctions, and money laundering.
- In conjunction with other agencies, the FSOC will study the risks and impact of digital assets and explore the possibility of creating a Central Bank Digital Currency in the United States.
- The order directs the executive agencies to explore creating a digital version of the U.S. dollar that could be used to facilitate digital transactions while still being controlled by the U.S. Department of the Treasury.
- President Biden expressed concern about the impact of cryptocurrencies on the integrity of the financial system.
- The announcement further suggests that NCET’s initial mandate will broaden the enforcement focus from criminal actors themselves to those who enable and facilitate illicit activities involving cryptocurrency.
- Cryptocurrency exchanges should take appropriate steps to work with counsel to avoid becoming the subject of a DOJ investigation or prosecution.
- The increased scrutiny will also likely extend to all cryptocurrency-focused businesses, NFT platforms, companies that accept cryptocurrency as payment, and even those that merely do business with third parties dealing in cryptocurrency.
- Given the heightened scrutiny from the DOJ and a constantly evolving regulatory landscape, all companies in the industry should evaluate compliance programs and practices to mitigate risk and exposure.
Bonnie J Roe explores how Regulation A may be the best alternative for conducting an initial coin offering in her latest article for Bloomberg Law.
Christian R Everdell analyzes the potential implications of the regulation of cryptocurrency as a result of Ryan Coffey v. Ripple Labs, Inc. in his latest article for Law360.
Christian R Everdell continues his examination of SEC enforcement actions regarding initial coin offerings in an article published by the New York Law Journal, this time analyzing the SEC’s response to RECoin, PlexCoin, and Munchee.
Even start-ups are being disrupted! In this article, C&G counsel Christian Everdell examines the SEC’s role in regulating Initial Coin Offerings.
Recently, legitimate businesses have begun to recognize the potential value of distributed ledger technology as a stand-alone technological innovation with numerous benefits, including, among other things, preventing money laundering. In this article, Christian R Everdell examines some of the potential applications of Blockchain technology to prevent crime.
Partner Chris Everdell spoke about cryptocurrencies, blockchain, and ICO enforcement actions as a guest lecturer at the Computer Crime Law class at Harvard Law School.
Christian Everdell participated on the "Focus on CryptoCurrency: How to Identify Transactions that are Using Digital Currency to Avoid U.S. Sanctions" panel at the ACI's 11th Flagship Conference on Economic Sanctions: Enforcement & Compliance. The panel discussed how new payment methods are challenging the existing banking system for risk and compliance, how non-US companies use digital currency to avoid US sanctions rules, and how financial institutions can protect themselves.