Intro/Disclaimer: Since late 2022, I’ve prepared weekly updates for attorneys at my firm to stay abreast of the latest Web3 legal developments. The biggest stories are included in Bi-Weekly posts on the renowned BitBlog, where we provide concise tl;dr overviews and insights into how these developments might ripple through the industry. In pursuit of a more thorough and personal discourse, I also share expanded versions of these updates on my personal blog every Tuesday. Here, you’ll find my unvarnished perspectives, offering a deeper dive into the nuances of these legal narratives. Please note, the views and opinions I express, both on BitBlog and my personal blog, are solely my own. They do not reflect the official stance or endorsement of my firm.
Last update I talked about the Coinbase oral arguments in the exchange’s case against the SEC. This update, Binance got its day in court and faced a more uphill battle than Coinbase seemed to during the oral arguments on the Binance Motion to Dismiss. In other news, FinCEN’s crypto mixing rule proposals faced stiff push back, and some members of Congress are big mad that Meta/Facebook is still pursuing its token trademarks.
Here’s everything that happened last week in Web3 law:
Binance Faces Off with SEC on Motion to Dismiss Oral Arguments
Binance had its day in Court in its own battle with the SEC. While the unique issues in the Coinbase litigation is the Coinbase wallet and staking services, Binance has its own issues with its self-issued BNB token and its stablecoin BUSD which the exchange began winding down support for in November of 2023. This was another marathon hearing, lasting four hours and with the Court asking tough questions from both sides of the dispute.
Tl;dr: Judge Amy Jackson seemed equally skeptical of the claims by Binance that the BNB token was not originally sold in an investment contract as she was by the claims by the SEC that a stablecoin which cannot raise in value is an investment contract. Similar to Judge Failla, the Binance Court also asked the SEC for its limiting principle on when tokens are investment contracts vs. not. Interesting, while the SEC stated “the token itself is not the security” in Coinbase, here the SEC stated “the token itself represents the investment contract . . . the token represents the embodiment of an investment contract.” Which one is it? Even the SEC appears to not know.
Other Stories
The CFTC brought charges against digital asset platform Debiex for its alleged involvement in a pig butchering scheme. Pro-tip, the hot lady in your LinkedIn DMs is not some magnanimous investment advisor sent from God to bless you with riches; it is a guy in a non-extradition country with a fake picture scamming you.
Chamber of Digital Commerce, Coinbase, Paradigm, and others all submitted comments to FinCEN’s Notice of Proposed Rulemaking which would result in bulk data collection and reporting requirements for all transactions involving any crypto mixing even with no indication of suspicious activity. It is sometimes hard to tell when a regulator is making a good faith effort to curb illicit finance with a poor understanding of the technology vs. when it is a political vendetta against tech which certain politicians find undesirable which is merely posing as a good faith effort. How FinCEN responds to this thoughtful pushback will tell us either way.
Speaking of mixing services, I donated and I highly recommend people consider donating to the defense of Tornado Cash developers Roman Storm and Alex Pertsev. Roman in particular is a U.S. resident that is being potentially sent to jail for the rest of his life for writing code. Code which is 100% neutral, and can be used by anyone (good or bad) to preserve their privacy. Was that code in turn used by North Korea’s Lazarus group? Yes. Just like Lazarus group uses Gmail, Microsoft operating systems, and U.S. computer parts. Tornado was also used by people sending money to Ukraine, and women living under dictatorships where they don’t have rights. Coding should not be illegal nor should privacy be criminalized.
Representative Maxine Waters is taking umbrage with Facebook continuing to pursue digital asset trademarks. Yes, the same Maxine Waters who received large inflows of campaign funds from FTX/SBF.
Our favorite SEC Commissioner Hester Peirce seems to think that the pending spot Ether ETF applications will not face the same judicial challenges as the spot Bitcoin ETFs went through. But with Gensler being the deciding vote, I don’t know if I share her optimism.
Speaking of spot Ether ETFs, Scott Johnsson is the single best follow for all things ETF, and he proves it again with this great thread breaking down the current analysis of chances of approval and timeline for same.
I already have entirely too many books on my reading list, including the upcoming book from Chris Dixon which I preordered and cannot wait to read. But I might need to add The Everything Token to my list.
The SEC brought 46 enforcement actions against crypto companies and individuals in 2023, which is a 50% increase since Gensler took over in 2021. So that’s fun.
Pro-tip: don’t help client money launder billions of dollars. That’s a lesson that former Lock Lorde partner Mark Scott is learning the hard way after being sentenced to ten years in prison.
The DOJ is selling $117 million worth of Bitcoin seized from various sick road cases. I love how the federal government generally uses Coinbase for these sales while the federal government is actively prosecuting Coinbase through the SEC.
Apparently OpenSea is looking to acquire or be acquired by various companies. OpenSea had a stranglehold on the secondary marketplaces during the NFT boom, and while I cannot fault them for not risking the token rewards strategy of other platforms, it certainly seems like they rested on their laurels for too long and have gotten passed as a result.
I will 100% be watching the Amazon Original movie around the Bitfinex money launderers.
The list of Senators who are listed as pro-crypto on Coinbase’s aggregator has grown to 18. That is compared to 30 marked anti-crypto and the vast majority marked neutral or unknown. It’s an uphill climb, but it appears lobbying efforts are working their way up that hill.
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 
Great info!
LikeLike