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
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SEC Brings First NFT Enforcement Case
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.
The SEC’s order cites the DAO Report to conclude that the NFTs here were investment contracts under the
DOJ, BIS, and OFAC Issue Inter-Agency Guidance on Voluntary Self-Disclosures of Sanctions and Export Control Violations
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
Federal Court Declines to Follow Ripple Holding
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
Court’s Ruling Splits Partly in Favor of SEC and Partly for 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
FTC Updates Endorsement Guides: Highlights Online Reviews, Social Media Tags, and Clear Disclosures
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.
The Commission reviewed the 108 comments it received and amended the final Guides based
Interagency Guidance for Bank Risk Management of Third-Party Relationships
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
CFTC Wins Default Judgment Against Ooki DAO
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.
CFTC Staff Issues Alert on Risks of Clearing Digital Assets
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
FTC Secures First Monetary Settlement Against Celebrity Endorsers
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
New York Attorney General Proposes Sweeping Crypto Legislation
On May 5, 2023, New York Attorney General Letitia James released proposed legislation that seeks to regulate all facets of the cryptocurrency industry. Entitled the “Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act,” if enacted the draft bill would substantially expand New York’s oversight of crypto enterprises conducting business in the Empire State.
The bill
SEC Steps up Oversight of Crypto Exchanges
On April 14, 2023, by a 3-2 party-line vote the US Securities and Exchange Commission (SEC) reopened the public comment period and provided supplemental information on amendments proposed in January 2022 to the definition of “exchange” under Rule 3b-16. The SEC previously reopened the comment period in May 2022. The April 2023 action provides supplemental information
NFT Service Brings Litigation Into the Metaverse!
As reported on the Hunton Insurance Recovery Blog, blockchain technology has been touted as inherently reliable for years. More recently, collectors of Non-Fungible Tokens (NFTs) have explored expanded uses for that novel technology. Some courts have bought in and, in doing so, recently authorized a use that perhaps no one had imagined when NFTs
US Bureau of Economic Analysis Conducts Survey of US Businesses Having Foreign Ownership of Voting Interests of 10% or More
What Happened
As we reported in yesterday’s client alert, the US Bureau of Economic Analysis (BEA) has announced that it is conducting a survey of all US businesses whose voting interests are 10% or more owned, directly or indirectly, by a foreign person. Responses to this survey are mandatory for every such US business enterprise,
DOJ Announcements on Corporate Compliance Programs, Compensation Clawbacks and National Security
What Happened
The US Department of Justice (“DOJ”) made several recent announcements expanding on its expectations for corporate compliance programs and unveiling new guidance on executive compensation structures, consequence management and business communications and ephemeral messaging.
DOJ also announced a new enforcement push focused on the intersection of corporate crime and national security.
Analysis
Updated
Bank Turmoil Brings Increased Risk of Litigation and Investigations
Hunton Andrews Kurth LLP continues to assist clients and monitor developments in the financial markets arising from the liquidity challenges and market volatility currently facing the banking industry. Late Tuesday brought the first inevitable wave of lawsuits and government investigations. There will be many more in the days ahead.
Government Investigations
Press reports indicate that