News & Events

DLx Alert: Commerce Department Proposes Rule to Require Cloud Infrastructure Service Providers to Adopt Enhanced KYC and Due Diligence Procedures, Citing National Security Concerns

Mar 8, 2024

Important Alert The U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) has proposed a rule1 that could mark a significant development in the regulation of network infrastructure providers and digital assets (or “crypto assets”). The proposed rule seeks to address national security concerns associated with what the proposal refers to as U.S. “Infrastructure-as-a-Service” […]

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Court Tracker

Consider DLx Law a source for updates on recent legal outcomes and ongoing cases that are shaping the landscape of blockchain and the financial services industry. With our Court Tracker, you can closely monitor other legal developments that are noteworthy for many of our clients and the industry as a whole. Check back in from time to time to stay informed about some recent regulatory enforcement actions and notable court cases.

Importantly, we make no representation whatsoever that the Court Tracker is up to date, comprehensive, or accurate, and it should not be relied on as legal or regulatory advice. Read our full disclaimer.

Notable Decisions

SEC v. Beaxy Digital, Ltd., et al.

N.D. Ill. (Fed. Trial Ct.)

Field: Dec. 25, 2023

Description: The SEC charged Beaxy (a digital asset trading platform) and its executives and founders with (1) raising $8 million in an unregistered securities offering (BXY tokens), misappropriating $900,000 of it for personal use, and (2) failing to register as a national securities exchange, broker, and clearing agency when facilitating the purchase and sale of digital assets as securities. The SEC alleged in its complaint that BXY tokens are securities.

Case docket

Judgment entered

( BY Feb 13, 2024 )

Summary: The court entered default judgment against the defendants after they failed to make an appearance or respond to the SEC’s complaint.

Final judgment
In re: Coinbase Inc.

3d Cir. (Fed. Appeals Ct.)

Field: Apr. 24, 2023

Description: In spring of 2023, Coinbase filed an appellate-level petition seeking a writ of mandamus to compel the SEC to act on Coinbase’s pending rulemaking petition to provide clarity for the crypto industry.

Case docket

Judgment entered

( BY Dec 18, 2023 )

Summary: Considered to be in large part the result of Coinbase’s mandamus petition seeking to compel a decision, the SEC on December 15, 2023, finally issued a formal decision denying Coinbase’s petition to have the SEC engage in rulemaking to clarify its interpretation of how securities laws can be applicable to business activities involving cryptocurrencies. As a result, the judge denied Coinbase’s mandamus petition as moot. Although it is not the outcome Coinbase sought, it now has a judicially reviewable decision to move forward with.

Final judgment
SEC v. Bittrex, Inc., et al.

W.D. Wash. (Fed. Trial Ct.)

Field: Apr. 17, 2023

Description: The SEC charged crypto asset trading platform Bittrex, Inc. and one of its founders for operating an unregistered national securities exchange, broker, and clearing agency. The SEC also charged its affiliate, Bittrex Global GmbH, for failing to register as a national securities exchange. In its complaint, the SEC alleged the following digital assets are unregistered securities: DASH, IHT, MANA, NGC, OMG, POWR, TKN.

Case docket

Judgment entered

( BY Aug 15, 2023 )

Bittrex filed for bankruptcy in May, shortly after the SEC filed its complaint in April. The bankruptcy judge approved Bittrex Global’s settlement with the SEC to pay a $5.6 million fine and return $18.4 million in illicit profit within 60 days after its liquidation plan is filed with the bankruptcy court. The court entered a consent order to the SEC settlement agreement in its final judgment.

Final judgment
SEC v. Terraform Labs PTE Ltd. & Do Hyeong Kwon

S.D.N.Y. (Fed. Trial Ct.)

Field: Feb. 16, 2023

Description: The SEC charged Terraform Labs PTE Ltd and Do Hyeong Kwon with a multibillion-dollar crypto asset securities fraud. The SEC alleged that from April 2018 to May 2022, Terraform and Kwon raised billions of dollars from investors by offering and selling digital asset securities, including an algorithmic stablecoin called Terra USD (UST) and other crypto asset securities, many in unregistered transactions. In its complaint, the SEC alleged the following digital assets are unregistered securities: UST, LUNA, MIR.

Case docket

Judgment entered

( BY Jun 12, 2024 )

Summary: The defendants entered a settlement agreement with the SEC, and the judge entered the consent order on June 12, 2024, with civil penalties, including just under $4.5 million in total monetary remedies against Terraform Labs, to be allocated under the organization’s Chapter 11 plan in U.S. Bankruptcy Court.

Final judgment
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Ongoing Cases

SEC v. Consensys Software Inc.

E.D.N.Y. (Fed. Trial Ct.)

Field: Jun. 28, 2024

Description: The SEC charged Consensys Software Inc., the development company behind MetaMask, for allegedly conducting unregistered offers and sales of securities by facilitating investments by MetaMask users into certain cryptocurrency staking protocols, namely, Lido and Rocket Pool. According to the SEC’s complaint, Consensys failed to register as a broker and did not meet the legal requirements for offering staking services while it collected more than $250 million in fees. The SEC’s complaint comes shortly after Consensys sued the SEC in April following its receipt of a Wells notice from the agency, challenging its attempts to classify ETH tokens and related staking service protocols as being unregistered securities.

Case docket

Status: Parties have made initial court appearances, and litigation and related discussions remain ongoing. Updated 7/12/2024.

The SEC's complaint
[Anticipated] SEC v. Universal Navigation Inc. (Uniswap Labs)

TBD

Field: Apr. 26, 2024

Description: Uniswap Labs reportedly received a Wells Notice from the Securities Exchange Commission (“SEC”) on April 10, 2024, notifying the developers behind the Ethereum-based decentralized exchange that the agency had found potential violations of U.S. securities laws. Consequently, Uniswap Labs has been anticipating that the SEC might file charges against in the U.S. District Court of the Southern District of New York in the coming weeks or months. Then, on May 21, Uniswap Labs preemptively submitted a filing to the SEC arguing various reasons why the agency should not pursue legal action against the company.

Status: The SEC at this point is only anticipated to file charges against Uniswap Labs. Many experts speculate as to what exactly the SEC’s charges might include if it were to move forward, and some speculate the SEC’s ulterior motive might be an attempt to gather evidence in connection with Ethereum, which the federal agency has had a growing interest in in recent years. If and when the SEC files charges, we will provide updates. Updated 7/12/2024.

SEC v. Payward, Inc. & Payward Ventures, Inc. (Kraken Exchange)

N.D. Cal. (Fed. Trial Ct.)

Field: Nov. 20, 2023

Description: The SEC filed charges against Payward, Inc., and Payward Ventures, Inc. (collectively known as Kraken Exchange or simply as “Kraken”), alleging it has been operating as an unregistered securities exchange, broker, dealer, and clearing agency since at least 2018, generating millions of dollars in ill-gotten gains. The SEC’s complaint also accuses Kraken of failing to prevent conflicts of interest and commingling customer funds with its own operational accounts, which violates federal securities laws designed to protect investors.

Case docket

Status: On February 22, 2024, Kraken filed a motion with the court to dismiss the SEC’s claims. On June 20, the parties attended a case management conference and hearing on Kraken’s motion to dismiss. Then, on July 5, the parties filed stipulations with the court along with a request for an order to permit both the SEC and Kraken to each file two-page letter briefs to address considerations resulting from a federal district court ruling on June 28 wherein the judge dismissed the SEC’s claims of securities law violations against Binance.US involving certain cryptocurrencies and the secondary sales of BNB tokens. The judge’s adjudication on Kraken’s motion to dismiss remains pending. Updated 7/12/2024.

The SEC's complaint
SEC v. Binance Holdings Limited, et al.

D.D.C. (Fed. Trial Ct.)

Field: Oct. 24, 2023

Description: SEC charged Binance and BAM Trading for unlawfully acting as an exchange, broker-dealer, and clearing agency on the Binance Platforms without registering with the SEC. Binance and BAM Trading was also charged with unlawfully engaging in the unregistered offers and sales of “BNB” (Binance’s own crypto asset) and “BUSD,” as well as others, on Binance.US. On Oct. 4, 2023, the judge declined the SEC’s interlocutory appeal. On Oct. 18, 2023, the SEC also dropped its pending claims against Ripple Chief Executive Brad Garlinghouse and co-founder Chris Larsen.

Case docket

StatusThe judge entered judgment on June 28, 2024, granting in part the defendants’ joint motion to dismiss the SEC’s claims related to sales of BUSD tokens, secondary sales of BNB tokens, and Binance’s Simple Earn services. Nevertheless, the parties will likely proceed to litigate or enter settlement discussions on the SEC’s remaining claims, which the judge ruled would proceed, including claims in connection with Binance’s BNB Vault services, staking program, primary sales and an initial coin offering of BNB tokens, among others. Updated 7/12/2024.

The SEC's Complaint
SEC v. Richard J. Schueler, et al.

E.D.N.Y. (Fed. Trial Ct.)

Field: Jul. 31, 2023

Description: The SEC charged Richard Heart for engaging in the unregistered offer and sale of the cryptocurrency assets Hex, PulseChain, and PulseX, and for defrauding investors.

Case docket

Status: The case is ongoing; the parties have proceeded to litigate on matters relevant to discovery of evidence and protective orders. Updated 7/12/2024.

The SEC's complaint
SEC v. Celsius Network Limited, et al.

S.D.N.Y. (Fed. Trial Ct.)

Field: Jul. 13, 2023

Description: SEC charged Celsius and its founder and CEO (Alex Mashinsky) with engaging in unregistered offers and sales of securities and four counts of fraud in connection with allegations they raised billions from the sale and price manipulation of unregistered securities (CEL tokens) as part of its “Earn Interest Program.”

Case docket

Status: The case, previously assigned to Judge P. Crotty, was reassigned April 16, 2024. This followed a general appearance by Mashinsky and Celsius and the subsequent issuance of a court order for injunctive relief in November 2023, permanently restraining and enjoining these defendants from engaging in activities alleged to be in violation of applicable securities laws. The case is stayed pending likely settlement discussions between the parties. Updated 7/12/2024.

The SEC’s Complaint
SEC v. Coinbase, Inc. & Coinbase Global, Inc.

S.D.N.Y. (Fed. Trial Ct.)

Field: Jun. 6, 2023

Description: The SEC charged Coinbase for failing to register with the SEC as a securities broker, exchange, or clearing agency despite allegedly operating a trading platform and providing staking services consisting of securities transactions. The SEC also charged Coinbase with operating as an unregistered securities broker in connection with providing Coinbase Prime and Coinbase Wallet services. On March 27, 2024 the judge issued an order dismissing the SEC’s allegations that Coinbase operates as an unregistered securities broker by providing its customers with access to the Coinbase Wallet. The judge’s March 27 order—which was a response to Coinbase’s motion for judgment on the pleadings (filed August 4, 2023)—denied all other requests included in Coinbase’s motion, finding that all other of the SEC’s allegations were sufficiently well pleaded.

Case docket

Status: On April 12, Coinbase filed a motion for leave to appeal the judge’s March 27 order to the 2d Circuit. If appeal is unsuccessful, the parties would proceed to discovery and potential litigation or settlement discussions in connection with the SEC’s remaining charges. The parties are continuing to litigate on matters relevant to leave for appeal. Updated 7/12/2024.

The SEC's Complaint
SEC v. Justin Sun, et al.

S.D.N.Y. (Fed. Trial Ct.)

Field: Mar. 22, 2023

Description: The SEC charged Justin Sun and his companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT) through unregistered bounty programs and monthly airdrops. The SEC also charged Sun and his companies with orchestrating an arrangement to pay influential celebrities to promote TRX and BTT on social media without disclosure of their compensation, for which those celebrities (Austin Mahone and DeAndre Cortez Way) were also charged. The SEC alleged in its complaint that TRX and BTT tokens are securities.

Case docket

Status: One defendant, Austin Mahone, made an appearance and entered a settlement agreement with the SEC on August 4, 2023. The remaining defendants filed a motion to dismiss the SEC’s charges on March 28, 2024. The SEC responded by filing an amended complaint with the court on April 18 to correct certain of its pleadings, and the defendants filed a motion to dismiss the amended complaint on May 30. Party proponents submitted memorandums to the court in support and opposition of the defendant’s motions up through June 28, and now the case is pending the judge’s adjudication on the motions to dismiss. Updated 7/12/2024.

The SEC’s Complaint
SEC v. Ho Wan Kwok, et al.

S.D.N.Y. (Fed. Trial Ct.)

Field: Mar. 15, 2023

Description: The SEC charged exiled Chinese businessman Miles Guo, his financial advisor William Je, and others for their alleged involvement in unregistered and fraudulent offerings that raised over $850 million. The SEC also charged Guo for raising hundreds of millions of dollars from investors through an unregistered digital asset security referred to as “H-Coin,” “Himalaya Coin,” or “HCN” and a related purported stablecoin.

Case docket

StatusParties have made initial court appearances, and litigation and related discussions remain ongoing. Updated 7/12/2024.

The SEC’s Complaint
SEC v. Green United, LLC

D. Utah (Fed. Trial Ct.)

Field: Mar. 3, 2023

Description: The SEC charged Utah-based company Green United, LLC and its founder and promoter with defrauding investors to the tune of at least $18 million in connection with an unregistered offering of digital asset securities called “Green Boxes” or “Green Nodes,” The SEC alleged that Green United and its principals led investors to believe these products mined a digital token they called GREEN on what they called the “Green Blockchain.” The SEC alleged in its complaint that GREEN tokens are securities.

Case docket

Status: Parties have made initial court appearances, and litigation and related discussions remain ongoing, with the judge most recently granting leave for the parties to file excess pages with the court on May 10, 2024. Updated 7/12/2024.

The SEC’s Complaint
SEC v. Avraham Eisenberg

S.D.N.Y. (Fed. Trial Ct.)

Field: Jan. 20, 2023

Description: The SEC charged Avraham Eisenberg with fraud and market manipulation in relation to MNGO tokens purchased and sold as unregistered securities on the Mango Markets trading platform. The SEC alleged in its complaint that MNGO tokens are securities.

Case docket

Status: The case was stayed on March 13, 2023, pending the conclusion of Eisenberg’s criminal trial. Updated 7/12/2024.

The SEC’s Complaint
SEC v. Ripple Labs, Inc., et al.

S.D.N.Y. (Fed. Trial Ct.)

Field: Dec. 22, 2020

Description: The SEC accused Ripple Labs, and its executive and founder, with conducting the unregistered sale and offering of XRP securities under the Securities Act §§ 5(a) & 5(c). The judge partially granted Ripple’s motion for summary judgment on July 13, 2023. She ruled institutional sales of XRP did constitute unregistered sales, but the sale of XRP on exchanges did not. On October 4, 2023, the judge declined the SEC’s interlocutory appeal. On Oct. 23, 2023, the SEC also dropped its pending claims against Ripple Chief Executive Brad Garlinghouse and co-founder Chris Larsen.

Case docket

Status: Litigation remains ongoing; throughout 2024 so far, the parties have proceeded to adjudicate on matters of discovery and sealing of records. Updated 7/12/2024.

The SEC's complaint
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Law & Regulation Tracker

Review our Law & Regulation Tracker to stay informed about new or potentially forthcoming legislation or regulation affecting blockchain technology and high-tech financial services sectors in the United States. Come back for important updates.

Importantly, we make no representation whatsoever that the Law & Regulation Tracker is up to date, comprehensive, or accurate, and it should not be relied on as legal or regulatory advice. Read our full disclaimer.

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In Case You Missed It

DLx Law’s team members will often post relevant news here that they are tracking, including about forthcoming laws or regulations and current events affecting digital assets or high-tech industries. Bookmark this page and come back to stack informed about important happenings.
 

News

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Alerts & Announcements

Below, preview a history of important alerts published by the DLx Law team about legal and regulatory matters affecting blockchain technology, payments, and financial services, as well as important public announcements and press engagements. Come back to stay up to date on our goings on or sign up for our mailing list.

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Coming Up

Bookmark this page to stay informed about upcoming events, pivotal dates, and industry happenings. Our calendar offers an overview of some important upcoming events, including conferences, panels, congressional hearings, regulatory happenings, and more.

Time moves fast in the rapidly evolving world of digital assets, blockchain, and financial technology, and it can be easy to skip a beat. Stay in sync, explore what’s on the horizon, and plan your engagements accordingly.

Jul. 10

Policy Forum on DeFi and the Criminal Code

Hosted by the Cato Institute

Washington, DC

Learn more & register

Sep. 16

-22

Token2049 Singapore

The world's largest crypto conference

Singapore

Learn more & register
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Amil Malik

Amil assists with various client matters in connection with digital assets and the adoption of blockchain technology, including general corporate law, securities law, and financial services regulation. She joined DLx Law after receiving her J.D. from the George Washington University School of Law, where much of her studies focused on national security and cybersecurity law.

Amil received her B.B.A./B.A. with high honors from the University of Texas at Austin. Between university and law school, Amil worked as a mergers and acquisitions analyst in New York, where she performed financial valuations and analysis as part of advisory services provided to sell-side and buy-side clients across media, consumer, technology, shipping, and financial technology industries. Amil is licensed to practice law in the District of Columbia.

Tom Momberg

+17186645458 tom.momberg@dlxlaw.com

Tom advises clients in an array of matters related to blockchain technology, decentralized finance, banking and payments systems, financial products, and financial technology applications. He joined DLx Law as an attorney after working as in-house counsel for a payments and banking software service provider, advising on various legal and regulatory matters, operations, risk, customer due diligence, and corporate best practices.

Tom received his J.D. from George Mason University Law School in Virginia and his B.A. from the University of Wisconsin-Milwaukee. Tom is a former journalist, and, while in law school, he interned for DLx Law and served as a law clerk for several federal institutions in Washington, D.C., including the CFTC, FCC, and House Judiciary Committee. Tom is admitted to practice law in the District of Columbia and the State of Oregon.

Sarah Chen

+19296345691 sarah.chen@dlxlaw.com

Sarah advises clients in all matters related to the adoption of blockchain technology, including general corporate, venture financing, securities laws and financial regulatory. Prior to joining DLx Law, Sarah was a senior associate in the M&A group of an international law firm headquartered in New York City, advising public companies and private equity firms on mergers, acquisitions, and other corporate transactions.

Sarah received her B.A. from New York University, magna cum laude, and her J.D. from Columbia Law School where she was a James Kent Scholar. During law school, Sarah also served as a judicial extern to the Hon. Debra Ann Livingston of the U.S. Court of Appeals for the Second Circuit. Sarah is licensed to practice law in the State of New York.

Gregory Strong

+3027665535 greg.strong@dlxlaw.com

Greg focuses on advising entities regarding legal issues associated with the adoption of blockchain technology. Prior to joining DLx Law, Greg was a Deputy Attorney General in the Delaware Department of Justice. He served as the Director of the Investor Protection Unit for three years and was responsible for administering and enforcing the provisions of the Delaware Securities Act. Prior to his appointment as Director of the Investor Protection Unit, Greg was the Director of the Consumer Protection Unit for three years.

Greg has successfully represented the State of Delaware in many complex civil enforcement matters alleging violations of Delaware investor and consumer protection statutes and has extensive litigation experience. Greg graduated from Lehigh University with a B.S. in Finance and received his J.D./M.B.A. from Temple University.

Angela Angelovska-Wilson

+12023651448 angela@dlxlaw.com

Angela is an early distributed ledger technology adopter and a leading authority in the evolving global legal and regulatory landscape surrounding distributed ledger technology and smart contracts. Prior to co-founding DLx Law, Angela served as the Chief Legal & Compliance Officer of Digital Asset and was part of the founding team.

Prior to joining Digital Asset, Angela was a partner at Reed Smith where she regularly advised clients on the implementation of new technologies to finance and the complex regulatory schemes involved in the development, creation, marketing, sale and servicing of various financial services and products. Before Reed Smith, Angela spent most of her career in various roles at Latham & Watkins, where she was recognized by The Legal 500 US among the top finance attorneys in the U.S.

Angela has a deep understanding of the Fin-Tech industry and in particular the distributed ledger industry, having been involved in a number of startups in various roles, as an employee, entrepreneur and advisor. In addition to DLx Law, Angela is also co-founder of Sila Inc., an innovative technology company.