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 firm’s BitBlog, where we provide tl;dr overviews and insights into the biggest stories from the past two weeks. I post the weekly updates on my personal blog every Tuesday, where I also provide links to more obscure legal developments and otherwise discuss industry trends and stories. 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.
Things are getting back in the swing of things after the break for the holidays. If you missed it, check out and share my Top 10 Legal Blockchain Legal Developments for 2024 which I wrote for the firm blog. The big news last week was that the SEC v. Coinbase case got stayed pending potential appeal for the appellate court to weigh in on how investment contract analysis should be done for digital assets, and the CFPB proposes rules regarding self-custody wallets.
Here’s everything that happened last week in Web3 legal:
SEC v. Coinbase Litigation Stayed Pending Interlocutory Appeal
The District Court overseeing the SEC v. Coinbase matter has agreed to certify its previous Order denying in part and granting in part Coinbase’s prior Motion for Judgment on the Pleadings. In her Order on the issue, Judge Failla held the case: “presents a controlling question of law regarding the reach and application of Howey to crypto-assets, about which there is substantial ground for difference of opinion, and the resolution of which would advance the ultimate termination of the SEC’s enforcement action.” Judge Failla further agreed to stay the entire matter, including the staking program dispute, due to possibility that the appeals court could decide to take up that issue, even if not expressly certified for appeal. The 2nd Circuit can now agree to hear the case, or send it back to the District Court to continue in litigation and reserve their judgment until after a final resolution of the matter.
Tl;dr– I have previously noted how I wholeheartedly disagreed with Judge Failla’s ruling in favor of the SEC on their “ecosystem” and “land case law should be ignored because land has inherent value” arguments, so it was nice for her to point out that her ruling turned in part on those issues for the 2nd Circuit to agree or disagree with my thoughts on that (she only endorses the “ecosystem” issue as subject to disagreement/unclear case law, but we will see if the 2nd Circuit agrees to limit their analysis as such). Also, shout out to the Blockchain Association’s brief, which seemed to argue directly on-point with what the Court ruled. Shows the power of industry advocacy through amicus briefing.
OTHER STORIES
CFPB Self-Custody Wallet Rule Proposed: The CFPB has issued a proposed rule for comment which would make digital wallet providers (including self-custody wallets) on the hook/responsible for fraudulent transfers. It’s a dumb and unworkable rule that is subject to comment after inauguration and is likely going nowhere, but now industry resources have to go to writing comment letters about why and how this is super dumb. Sigh.
Canada’s Likely Next Prime Minister is Crypto-Friendly: I don’t report much about news from our friends to the North, but apparently the odds-on-favorite to be the next Prime Minister of Canada is pro-crypto Pierre Poilievre? That’s neat for my friends trying to but their maple syrup in tokenized loonies or whatever.
Federal Reserve Vice Chair Resigns: Michael Barr is resigning from his position as the vice chair for supervision of the Federal Reserve, while staying on in his role on the board of governors. Senators Lummis and Scott had some…less than friendly words about his tenure.
CFTC Chair to Resign: CFTC Chair Rostin Behnam is also expected to step down in the upcoming weeks, to make way for a CFTC leader of President-elect Trump’s choosing. While it was cool he took the staunch position that ETH and other assets the SEC was being coy about were not securities, he also led the agency to bring lawsuits against Ookie and others which were less than chill (including current efforts, requiring Coinbase to hand over customer info to trace U.S. users to Polymarket, which is political gamesmanship at its worst, imo).
Department of Treasury Database Hacked: While courts are yo-yoing on Corporate Transparency Act compliance injunctions, the Department of the Treasury has confirmed that it was successfully infiltrated by Chinese hackers. Idk, maybe creating data honeypots through warrantless financial supervision is, in fact, bad? As crazy as that may sound.
First Initial Coin Offering (“ICO”) Under MiCA: It looks like the team behind the EUROe stablecoin is trying to be the first to publicly sell tokens under the framework set up for such sales by the European Markets in Crypto-Assets Regulation (“MiCA”) set of laws and regulations.
Do Kwon in the U.S. and Charged by DOJ: Do Kwon’s federal criminal case has started in New York. Reading through the Superseding Indictment was a trip down memory lane. His trial was set for a year from now, so I don’t plan on reporting on this much unless some previously unknown bombshell drops from motion practice/discovery.
Amicus in YouTuber Crypto Case: The Digital Chamber and Blockchain Association have each filed an amicus brief in the SEC v. Balina appeal in the 5th Circuit regarding whether a foreign national’s statements on internationally available social media (YouTube) is subject to U.S. securities laws.
Senate Digital Asset Subcommittee Formed: The House had a digital asset subcommittee last year (formerly lead by incoming House Financial Services Chair French Hill, soon to be led by Bryan Steil), and now it is the Senate’s turn, with a new subcommittee lead by Senator Lummis. Good to see politicians taking crypto seriously instead of punting to the agencies and letting unelected officials run amuck with the $4 trillion+ industry.
Mango Markets to Wind Down: SOL DeFi platform Mango Markets is winding down after the exploit and associated SEC attention afterwards (including DAO votes rejecting SEC settlement) has made operations impossible. Hate to see it, but with so many other options out there which haven’t been exploited, this seems like not the worst outcome.
CONCLUSION
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Warpcast. 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 