On September 18, 2023 the New York State Department of Financial Services (DFS) issued an update on an ongoing initiative to strengthen DFS oversight of virtual currencies. A central aspect of the proposed guidance are enhanced criteria for coin-listing and delisting procedures.
DFS wants to establish itself (or, as DFS sees it, maintain is role)…
On September 7th, 2023, the U.S. Commodity Futures Trading Commission (“CFTC”) announced settlement orders against three operators of decentralized finance (“DeFi”) protocols: Opyn, Inc. (“Opyn”), Deridex, Inc. (“Deridex”), and ZeroEx, Inc. (“ZeroEx”). The announcement is a clear message that the CFTC will be asserting jurisdiction in the DeFi space, and may be as much a…
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,…
On August 29, 2023, the D.C. Circuit Court of Appeals delivered the most recent blow to the SEC’s crypto crackdown with its ruling in Grayscale Investments, LLC v. SEC. The decision was a big win for Grayscale and a clear repudiation of the SEC’s handling of Grayscale’s (and, implicitly, others’) spot Bitcoin ETF application under…
On August 25, 2023, the United States Treasury Department issued a notice of proposed rulemaking regarding tax reporting by brokers of transactions involving the sale or exchange of digital assets (“Proposed Regulations“). These long-awaited Proposed Regulations are in response to section 80603 of the Infrastructure Investment and Jobs Act of 2021, which expanded the…
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…
We have previously reported on U.S. Securities and Exchange Commission cases against influencers for violating the anti-touting statute. On August 22, 2023, the SEC announced settled charges against Washington, D.C.-based investment adviser Fundrise Advisors, LLC arising from the firm’s solicitation arrangements with online content creators.
The following information is taken from the Order. Fundrise…
We have previously reported (here and here) on the refund lawsuit that a couple, the Jarretts, brought against the U.S. Internal Revenue Service. Mr. Jarrett produced Tezos tokens, a form of cryptocurrency, through a process known as “staking” — a system being used by more and more blockchains. As Jarrett saw things, staking…
In Revenue Ruling 2023-14, issued July 31, 2023, the IRS ruled that a cash-method taxpayer that receives additional units of cryptocurrency as rewards for validating transactions on a proof-of-stake blockchain must recognize the fair market value of the validation rewards as income in the taxable year in which the taxpayer gains dominion and control…
Almost five years ago, we reported on the SEC’s first-ever case against celebrities for touting ICOs. In 2022, Kim Kardashian paid $1.26 million in connection with her touting on social media a crypto asset security (she received about $250,000 for a post on Instagram). On August 4, 2023, in the SEC’s most recent touting case,…
