To understand the litigation and regulatory risks that are coming in 2024 for private capital, it is helpful to look back briefly on recent events. Arguably, the single most important event over the last 18 months was the...more
3/19/2024
/ Acquisitions ,
Asset Management ,
Cryptocurrency ,
Cybersecurity ,
Dispute Resolution ,
Enforcement Actions ,
Fund Managers ,
Hedge Funds ,
Interest Rates ,
Investment Management ,
Investors ,
Mergers ,
Private Equity ,
Private Funds ,
Regulatory Agenda ,
Regulatory Reform ,
Regulatory Requirements ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Technology Sector
The gloves are off. The SEC’s recent enforcement actions against leading crypto exchanges suggest that the SEC has decided that time’s up for the crypto industry as it currently exists in the United States....more
6/15/2023
/ Broker-Dealer ,
Clearing Agencies ,
Coinbase ,
Crypto Exchanges ,
Cryptocurrency ,
Enforcement Actions ,
Howey ,
Infrastructure ,
Popular ,
Securities ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Simple Agreement for Future Tokens (SAFT)
Crypto firm bankruptcies and resulting disruption in the crypto ecosystem will continue to exacerbate liquidity and regulatory concerns in this space. Signs of contagion are evident as prices of almost every cryptocurrency...more
Everything, everywhere, all at once, as a descriptor, captures the litigation and regulatory risks for the asset management industry in 2023. Every corner of the market faces greater risks than at any time since 2008. After...more
Government scrutiny of the crypto market has been sharply increasing in recent months on the criminal and civil enforcement fronts.
In parallel proceedings that will be seen in other digital asset contexts — as in the...more
3/15/2023
/ Blockchain ,
CFTC ,
Coinbase ,
Corporate Counsel ,
Criminal Investigations ,
Crypto Exchanges ,
Cryptoassets ,
Cryptocurrency ,
Department of Justice (DOJ) ,
Digital Assets ,
Enforcement Actions ,
Howey ,
Insider Trading ,
SCOTUS ,
Securities and Exchange Commission (SEC)
The organizers of an initial coin offering (ICO) recently won dismissal of an investor’s fraud claims by establishing that their public risk disclosures negated the investor’s claims of reliance on alleged misstatements. The...more
2/10/2023
/ Cryptocurrency ,
Disclosure ,
Dismissals ,
Fraud ,
Initial Coin Offering (ICOs) ,
Investment ,
Investors ,
Purchase Agreement ,
Regulation A ,
Securities ,
Securities and Exchange Commission (SEC) ,
Securities Litigation ,
Simple Agreement for Future Tokens (SAFT)
The SEC spread its reach to Hollywood this month – on October 3, 2022, the SEC announced charges against Kim Kardashian for her social media promotions of EMAX, a digital token issued by EthereumMax. The SEC found that...more
10/14/2022
/ Celebrity Endorsements ,
Cryptoassets ,
Cryptocurrency ,
Disclosure Requirements ,
EDGAR ,
Ethereum ,
Failure To Disclose ,
Kim Kardashian ,
Penalties ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Social Media
In congressional testimony on Thursday, September 15, U.S. Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam urged U.S. Senators to pass a bill that would explicitly grant the CFTC broad regulatory oversight...more
A threshold question in many cryptocurrency inquiries is whether the digital assets qualify as securities under the federal securities laws. If so, then they are subject to a full suite of federal securities regulations....more
3/1/2022
/ Anti-Money Laundering ,
BSA/AML ,
CFTC ,
Cryptocurrency ,
Digital Assets ,
Financial Services Industry ,
Financial Transactions ,
Howey ,
Investment Contract ,
Non-Fungible Tokens (NFTs) ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Unregistered Securities
If 2021 was the year in which regulators and investors enthusiastically embraced environmental, social and governance (“ESG”) considerations, by creating new legal and regulatory frameworks, then 2022 will be the year for...more
2/25/2022
/ Business Plans ,
Business Strategies ,
Capital Investments ,
Climate Change ,
Corporate Governance ,
Corporate Social Responsibility ,
Cryptocurrency ,
Disclosure Requirements ,
Environmental Social & Governance (ESG) ,
Investment ,
Private Funds ,
Publicly-Traded Companies ,
Sustainability
The SEC’s push to regulate the next generation of blockchain-based applications will likely give rise to disputes and enforcement actions, particularly in the developing decentralized finance (DeFi) space....more
For much of 2021, the SEC has been in transition. New Enforcement staff have been settling into their roles since April of 2021, when Gary Gensler was confirmed and sworn in as Chair of the SEC. Under former Chairman Jay...more
1/6/2022
/ Cryptocurrency ,
Disruptive Trading Practices ,
Enforcement Actions ,
Fund Managers ,
Hedge Funds ,
Investment Management ,
Private Equity ,
Private Funds ,
Securities and Exchange Commission (SEC) ,
Securities Violations ,
Special Purpose Acquisition Companies (SPACs)
With new types of digital assets and related business on the rise, federal authorities have been busy investigating. Recently, the SEC, FinCEN and the CFTC have imposed some notable settlements involving cryptocurrency...more
8/27/2021
/ Bank Secrecy Act ,
BitMEX ,
CFTC ,
Cryptocurrency ,
Decentralized Finance (DeFi) ,
Digital Assets ,
Enforcement Actions ,
FinCEN ,
Popular ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Securities Transactions ,
Securities Violations ,
Trading Platforms ,
Unregistered Securities ,
Virtual Currency
Late last year, the SEC filed a litigated action in the U.S. District Court for the Southern District of New York against Ripple Labs Inc. and two of its executive officers (collectively, “Ripple”), alleging that Ripple...more
2/23/2021
/ Bitcoin ,
Cryptocurrency ,
Digital Assets ,
Ether ,
Howey ,
Initial Coin Offering (ICOs) ,
Investment Contract ,
Investors ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Token Sales
One driver for the first widely adopted cryptocurrency Bitcoin was to create a store of value that existed outside of government control. It is therefore no surprise that attempts to regulate the rapidly developing crypto...more
1/8/2021
/ Bitcoin ,
CFTC ,
Cryptoassets ,
Cryptocurrency ,
Enforcement Actions ,
Financial Conduct Authority (FCA) ,
FinCEN ,
HMRC ,
Initial Coin Offering (ICOs) ,
International Tax Issues ,
Securities and Exchange Commission (SEC) ,
UK
The private fund industry is more in the public eye than ever before. Private capital and private markets have experienced massive growth over the last two decades, substantially outpacing the growth of public equity. We have...more
2/19/2020
/ Anti-Money Laundering ,
Capital Markets ,
CFTC ,
Cryptocurrency ,
Global Economy ,
Initial Public Offering (IPO) ,
Investment Banks ,
OCIE ,
Private Equity ,
Private Funds ,
SEC Examination Priorities ,
Securities and Exchange Commission (SEC) ,
Venture Capital
An increasingly sophisticated and active OCIE division, innovative market disruptors, a maturing credit cycle, and a philosophical change in how the private fund industry views and utilizes litigation are likely to lead to...more
2/21/2019
/ Cryptocurrency ,
Cybersecurity ,
Enforcement Actions ,
Fund Managers ,
Initial Coin Offering (ICOs) ,
Investment Adviser ,
Litigation Funding ,
OCIE ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Token Sales
Fund managers take note – after over a year of warning, this month the SEC announced a pair of settlement orders with respect to registration requirements for a fund and broker dealer operating in the crypto and digital...more
The SEC announced a pair of settled orders on Tuesday extending additional provisions of the securities laws over ICOs and other digital assets – the agency’s first ever enforcement actions of their kind. As the SEC has been...more
9/17/2018
/ Broker-Dealer ,
Cryptocurrency ,
Digital Assets ,
Enforcement Actions ,
Initial Coin Offering (ICOs) ,
Investment Advisers Act of 1940 ,
Investment Company Act of 1940 ,
Investment Contract ,
Investors ,
Negligent Misrepresentation ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Token Sales
The theft of millions of bitcoins and related failure of cryptocurrency exchange Mt. Gox—recently written about in the Wall Street Journal—provides a perfect example of how cryptocurrency-related issues can blossom into one...more
Last week, former CFTC Chairman Gary Gensler explained in remarks at M.I.T. that he believes the second and third most widely used virtual currencies—Ether and Ripple—may have been issued and traded in violation of securities...more
5/1/2018
/ CFTC ,
Cryptocurrency ,
Enforcement Actions ,
Fund Managers ,
Initial Coin Offering (ICOs) ,
Investment Adviser ,
OCIE ,
Regulatory Oversight ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Token Sales ,
Unregistered Securities
Last week the staff of the Office of Compliance Inspections and Examinations (OCIE) of the SEC announced its 2018 examination priorities. The 2018 examination priorities include five thematic areas: (i) compliance and risks...more
With the public equity markets at an all-time high and private equity fund raising setting new records, it might seem counter-intuitive to forecast litigation and regulatory risks. The opposite is true. Disputes typically...more
2/13/2018
/ Broker-Dealer ,
Commodity Exchange Act (CEA) ,
Cryptocurrency ,
CTFC ,
Cybersecurity ,
Enforcement Actions ,
Initial Coin Offering (ICOs) ,
Initial Public Offering (IPO) ,
Investment Adviser ,
Investment Advisers Act of 1940 ,
Litigation Fees & Costs ,
Popular ,
Private Equity Funds ,
Securities and Exchange Commission (SEC) ,
Unicorns
In his recent remarks at the Securities Regulation Institute, SEC Chairman Jay Clayton had some stern words for market professionals, especially lawyers, involved in initial coin offerings (ICOs). He expressed concern that...more
1/23/2018
/ Blockchain ,
Cryptocurrency ,
Digital Currency ,
Distributed Ledger Technology (DLT) ,
Financial Institutions ,
Financial Markets ,
Howey ,
Initial Coin Offering (ICOs) ,
Securities and Exchange Commission (SEC) ,
Token Sales ,
Unregistered Securities ,
Virtual Currency