Intro/Disclaimer: In late 2022 I started preparing updates for the attorneys at my firm practicing in the Web3 space regarding what legal stories people were talking about the prior week. The firm has started turning these into bi-weekly posts on the award winning BitBlog summarizing the top stories with tl;dr breakdowns on the stories’ importance and general thoughts on their ripple effects on the industry. But for more comprehensive and unfiltered thoughts, I have been putting the weekly updates on my personal blog as well on Tuesdays. Note, any opinions from these (or any of my other) blogs are mine alone, and are not adopted or endorsed by my firm.
EDITOR’S NOTE: I realized today this was still in the drafts and didn’t publish on my usual Tuesday schedule. My bad! To make it up to you, I am giving free subscriptions to the blog this month. Anybody you get to subscribe will get the blog completely free. Merry Christmas/Happy Hanukkah/Happy Holidays!
I started doing these updates almost exactly a year ago, and this is only the second time (the first was the 6/26 update) where there are no major stories worth breaking down in detail. The week after the 6/26 update was when Coinbase filed its early answer against the SEC and started a landslide of activities, so hopefully this latest week isn’t some indication that the industry at large is getting ready to go into upheaval?
There was some news, though, regarding pending digital asset regulations in Congress, a Department of Treasury kerfuffle, and some drama around the Blast layer-2 protocol funding which are discussed below.
Here’s everything that happened last week in Web3 law:
Other Stories
CZ was Ordered to remain in the U.S. for the time being while awaiting a decision on his ability to return to the UAE until his sentencing in February. It seems odd to settle with him if the DOJ didn’t think he could be trusted to return when the time comes, but here we are.
I’m not going to comment at all on this Show Cause Order issued against the SEC but people who read this blog might find it interesting. Read additional media coverage here and here.
It sucks that other political issues stopped even largely bi-partisan crypto bills like the stablecoin bill in the House from being voted on this year, but that’s just standard congressional disfunction. Love to see Financial Services Committee Chair Patrick McHenry still fighting for the market structure bill to be included with the National Defense Authorization Act. I don’t think I have ever donated anything of significance to political candidates, but McHenry, Torres, and Emmer are probably going to be the first based on what they are doing with digital assets.
These Coinbase ads are phenomenal. That’s the update.
A scammer who was able to obtain access to a person’s Apple ID to sell a Board Ape and other digital assets was just sentenced to eight years in prison. Of course @ZachXBT (best freelance blockchain forensics player in the game) was critical in catching the criminal.
This isn’t a crypto story, but a delightful lawyer story of two firms spending 66 pages of motions, oppositions, and declarations fighting over what “double-space” means in the local rules. All is well that ends well, with the Court issuing an Order that “the Parties are encouraged to spend their valuable time focusing on the merits of this case, and certainly not figuring out how many sometimes-useless words will fit on a page.”
I am not going to lie to you and say I read this manifesto length blog post from Vitalik on his approach to the “e/acc” vs. “kill computer danger with regulatory fire” debate. But I did read the ChatGPT summary, and it seems like post worth reading in full that I will probably never get around to.
The SEC moved up the Franklin Templeton spot Bitcoin ETF comment period, which may signal an intent to grant approvals for these various applications around the same time?
Listen, I think Paradigm has been a huge positive to the space and often cite to their legal advocacy in these updates as stellar work. But what is going on with their portfolio company Blast is WILD. The founder is saying Paradigm suggested Blast change to a ponzi-looking token distribution model, while Paradigm is saying the Blast launch was poorly executed. Drama all around.
Jito is releasing a governance token for its staking participants, and it looks like I am going to have to actually self-custody and self-stake my SOL? Which seems like a lot of hassle, but those sweet sweet governance token rewards…Probably a good thing to get off exchanges anyways with the SEC labeling SOL a “crypto asset security” in various lawsuits.
People are starting to listen to me about crypto gaming tokens/rewards systems being the next hot thing. That and pick and shovel providers like Wormhole, who provide cross chain bridge services and closed on a $225 million funding round this week (maybe? I thought this deal was done a while ago, but I could be mistaken) are likely to be big for liquidity providers looking to deploy capital.
The Department of Treasury released their “Potential Options to Strengthen Counter-Terrorist Financing Authorities” letter and it’s as bad as you would think. In the wake of another mixing service being sanctioned, I am once again reiterating that Americans need to take back their Fourth Amendment rights to be free of warrantless government searches. Also worth pointing out that they implicitly admit they don’t have the legal authority to designate software in OFAC sanctions despite doing exactly that in the Tornado.cash case.
The KyberSwap exploiter has demanded a surrender of complete control over the legal entities behind Kyber and on-chain and off-chain assets. The exploiter’s threat about being “contacted by agents from any of the 206 sovereignties” is funny considering he is demanding control of legal entities in those “sovereignties” sooo…? I put the odds of the exploiter arguing they can’t be prosecuted because of gold fringes on a flag or something at -250 when they are inevitably arrested and put in jail forever.
Huge get by Bastion to hire a former AUSA and a16z/Kraken Chief of Staff Caroline Friedman as the start-up’s Chief Operating Officer. Love it when lawyers take executive roles in digital asset companies.
14 of the Forbes 30 under 30 in finance had ties to crypto including Uniswap founder Hayden Adams and Ava Labs cofounder Kevin Sekniqi. Which is suboptimal considering the list previously contained illustrious names like Sam Bankman-Fried, Martin Shkreli, Charlie Javice, and others who either went to jail or are going to jail.
So ChatGPT is giving out random people’s names, phone numbers, and bitcoin wallet addresses in some cases? Robots aren’t supposed to snitch on other robots! Not cool.
Conclusion
If you have any questions or would like me to write about anything else, let me know on either of my twitter pages! As always, I am an attorney, I am not your attorney. For legal advice, you should always consult (and pay for) an attorney.
The NFTtorney 