With Congress on break the administrative agencies taking a break after being busy last week, it was another slow week in terms of legal developments. However, as predicted, with the SEC backing off regulation by enforcement, Plaintiffs’ attorneys and state regulators are taking up the litigation mantle.
Here’s everything that happened last week in Web3 legal:
Oregon Sues Coinbase Over Alleged State Securities Laws Violations
Oregon’s state Attorney General has brought a lawsuit against Coinbase alleging the exchange has violated Oregon state securities laws through listings of certain assets alleged to be securities under Oregon law. Coinbase has released a statement claiming “Oregon’s holdout campaign is obstruction for the sake of obstruction. It is a desperate scheme that does nothing to move the crypto conversation forward, and in fact takes us a giant leap backwards from hard-won progress.”
Tl;dr: As expected, states and private litigants are filling the securities litigation gap left by the SEC dropping its pending and threatened cases against digital asset participants in favor of working towards a statutory and rulemaking framework. The Oregon lawsuit names 31 assets as “Unregistered Securities” despite other states dropping their lawsuits against Coinbase after the SEC dropped its own cases against the exchange. This latest move by Oregon is disappointing to industry participants but not unexpected.
OTHER STORIES
Phantom Wallet Lawsuit: It looks like an attorney is big mad his private keys got exported and is suing the wallet developer that he was using to access those funds. Not sure his “Wiener Doge” coins were the store of value he makes them out to be in the lawsuit, but best of luck with that I guess.
OKX Coming to America: OKX exchange is expanding into the U.S. correctly this time after settling with the DOJ/paying a half billion dollar fine over previously allowing U.S. users to go HAM on their exchange without KYC/AML checks.
ETF Staking/In-Kind Decisions Delayed: The SEC has punted on making decisions on whether people who buy various crypto ETFs should get the benefit of having the proof-of-stake assets staked to earn fees. I am told by tax nerds this is largely a tax complication issue, but I am not a tax nerd so my eyes probably glazed over before I could comprehend the reasoning for this.
SEC Roundtable on Crypto Custody: The SEC has announced the time and speakers in its next crypto roundtable on custody. It remains great to see as many of these conversations as possible happen in public (even if there are legitimate concerns about the motivations of some of the participants).
Rebranding Memecoins: The lead developer of Coinbase’s Layer-2 Network, Base, is trying to make “content coins” a thing. Meanwhile, Base already has Rodeo which is a superior way of tokenizing content and rewarding creators in every single way. Literally the only good thing to come out of this saga is the Modest Proposal for crypto: Tokenize Babies.
MEV Submission: Really great work from the team at Paradigm explaining how MEV works and what the SEC should consider in regulation in light of those technical realities. Good stuff.
DOJ Memo Confirmed Not Applicable for Fraud: Just as previously expected, the DOJ memo regarding cutting down on criminal actions for crypto actors is not a get out of jail free card for past (alleged) frauds.
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.
Outro/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.
The NFTtorney 