Edition No. 9

Cryptoqueen makes FBI top 10; Grayscale sues the SEC; Celsius fighting the clock; NFTs and IP Rights; Europe's new MiCA agreement; and much more. Here's what happened from 6/27/2022-7/3/2022

and

Jul 05, 2022

Welcome to Around the Blockchain, a weekly letter dedicated to keeping readers up to date on the fast-paced world of Crypto & Law by airdropping current stories and projects directly to your browser.

1. On the Docket (Top 5 Stories of the Week)

2. Podcasts, Videos, & Blogs (The faces, voices, and pens of Web3’s brightest contributors)

3. Bird Watching (Tweet, tweet!)

4. Motion to Compel (Meant to provoke thought and action)

5. The Stetson Report (Brought to you by the law students of the Stetson Blockchain & Law Society)

6. The Public Ledger (Highlights from our weekly library of sources, built by our Feedly AI)

7. Closing Statements

On the Docket

Five things you might have missed last week:

1. 'Cryptoqueen' Accused of $4 billion OneCoin Fraud Added to FBI's Most-Wanted List

Once upon a time…

Known to the world as the “Cryptoqueen”, Ruja Ignatova is just the 11th woman in history to be added to the FBI’s most wanted list. Liana Walker of the Australian Broadcasting Company (ABC) paints a vivid picture of the 42 year old mogul from Sofia, Bulgaria. Her troubles now stem from what was heralded as a “Bitcoin Killer” - OneCoin, but her brushes with fraud actually began in 2012, for delaying the insolvency of a casting plant with help from her father. Shortly after, in 2013, Ignatov found herself in hot water once again for connections to a failed multi-level marketing scheme, BigCoin.

“Dr. Ignatova launched OneCoin in 2014 with Sebastian Greenwood, who is currently in prison awaiting trial. By 2017 there was more than $4 billion (AUS $5.8 billion) invested in the cryptocurrency.”

See Also: WSJ.Com; WashingtonPost.com

2. Grayscale Sues SEC After Rejection of Bid to Turn the Largest Bitcoin Fund into an ETF

“Give me six hours to chop down a tree and I will spend the first four sharpening the ax.”

After the SEC rejected the most recent proposal by the Grayscale Bitcoin Trust (GBTC) for conversion to a Bitcoin Exchange-Traded Fund (ETF), Grayscale BTC CEO Michael Sonnenshein stated simply:

“We're Ready for a Legal Battle with the SEC.”

An SEC notice soliciting comments received overwhelming community support (99.96% favorable), and as a decision from the regulatory authority neared, Grayscale prepared for all contingencies with Sonnenshein adding:

“We retained one of the country’s premier advocates, former U.S. Solicitor General Donald B. Verrilli, Jr…We have made the strongest likely legal team to help us communicate the importance of this issue.”

See also: CryptoNews.com; CoinTelegraph.com

3. Celsius Seeks Show of Client Support as Lawyers Push for Chapter 11 Bankruptcy

Lending Problems // Borrowed Time:

The clock continues to tick for DeFi lender Celsius, with attorneys nipping at their heels as they attempt to outrun potential insolvency. After tapping Citigroup for advise on its financial options, Celsius now seeks the aid of its community, according to Andrew Rummer of The Block:

“Celsius believes many of its retail clients would prefer the firm to avoid bankruptcy, according to people with knowledge of the situation. To that end, users can show their support by engaging “HODL Mode” in their Celsius account, said the people.”

Time will tell if the consumers who have been hurt so badly by the lending giant’s collapse will be able to forgive and forget, and whether Celsius can outlast the storm. For now, the rain continues to pour; the clock continues to tick.

See also: Bloomberg.com;

4. At NYU Law Forum, Experts Examine the Rise of NFTs

NFT // IP

Intellectual property experts Amy Adler, Emily Kempin, and Christopher Jon Sprigman, met with other industry leaders at the NYU Law Forum to talk about NFTs and their interactions with IP law.

“Panelists explored topics such as the relationship between authenticity and value, the value of NFTs for commercial brands, and the challenges that NFTs—in particular, their reproducibility and popularity—present to current copyright law.”

5. EU Negotiators Strike Deal on MiCA (Markets in Crypto Assets Regulation)

It Takes a Village:

Per our EU CryptoLaw Analyst Ann Sofie Cloots:

Negotiators from the European Parliament and the Council reached a political agreement on the MiCA Regulation, the EU’s new crypto rulebook. We don’t have the final text yet: the agreement first needs to be adopted formally by both the EU Parliament and the Council before it is officially published and comes into force – likely at the end of 2022 or early 2023.

Here’s what we do know: (most) NFTs and (genuine) DeFi are out, but some environmental disclosure is in. MiCA covers crypto assets that are not financial instruments, but the dividing line isn’t clear yet (ESMA, the EU’s securities regulator, is tasked with offering guidance on that dividing line). The rules apply both to crypto issuers, such as stablecoin issuers, and service providers, although NFTs (such as in-game items or collectibles) are generally excluded and the text reportedly doesn’t cover DeFi either. The new rules impose transparency and disclosure obligations for actions such as publishing and updating whitepapers.

MiCA also imposes market abuse rules, similar to financial market regulation. Significant crypto-asset service providers will have to disclose their energy consumption – a compromise that replaced the unsuccessful call for a ban on proof-of-work blockchains (the “bitcoin ban”).

ESMA will become the new crypto sheriff, according to MEP Urtasun, and will maintain a register of crypto service providers that operate in the Union without authorization.

The political agreement on MiCA came just days after a compromise was reached on a revised Transfer in Funds Regulation, laying down KYC rules for crypto transactions. MiCA imposes complementary anti-money laundering safeguards. For all the criticism that MiCA has faced, and all the open questions that remain, there is little doubt that this comprehensive rulebook will set the benchmark for lawmakers around the world.

Ann Sofie Cloots is an instructor at the University of Cambridge in London, England, and the author of Crypto Law News, a weekly newsletter dedicated to all things Crypto & Law.

Podcasts, Videos, and Blogs

The brightest voices & sharpest pens:

Episode #53 of the Law of Code Podcast features Adam Sternbach, General Counsel at Fractional, and former Counsel to New Jersey Governor Phil Murphy. In this wide-ranging episode, Jacob and Adam cover the BAYC, owning a valuable NFT, working as general counsel, and much more:

In this weeks Rollup, the Bankless podcast team talks 3AC, BlockFi, Grayscale, and more:

The DOI Coin podcast is joined by Galactic Blaze to talk about NFTs and crypto education:

In Ep. 370 of the Unchained Podcast, Laura Shin sits down with Hasu, strategic advisor to Lido, and Tarun Chitra, founder of Gauntlet, to talk about Staked Ethereum:

Ann Sofie Cloots, our friend and collaborator, touches on the EU MiCA deal, Basel Proposal, DeFi lending & staking, the crypto VC tech bro problem, and much more in CryptoLaw’s Newsletter #57:

CryptoLaw’s Newsletter

EU MiCA deal, bank crypto cap Basel proposal, how to tax DeFi lending & staking, crypto VC tech bro problem

Hello everyone, TLDR: EU negotiators reach deal on Markets in Crypto Assets (MiCA) Regulation Cap on bank crypto holdings: Basel prudential regime update Singapore considers tighter crypto retail rules as 3AC forced to file for bankruptcy Who’s hurt most by crypto price crash…

3 years ago · CryptoLaw

Bird Watching

Tweet, Tweet, Tweet!

Wait until the plate cools Uncle Sam, you’ll burn your tongue:

Ally Versprille @allyversprille

SCOOP on @TheTerminal now. IRS and Treasury are likely to delay new reporting rules for crypto brokers, according to people familiar who asked not to be named because a final decision hasn’t been made. Move would push back efforts to collect billions in taxes from traders.

Like Oceans 12. If they were stealing a flash drive. And got caught.

Hailey Lennon @HaileyLennonBTC

🚨 Two Men Charged With Plan To Commit Home Invasion Robbery For Tens Of Millions Of Dollars In Bitcoin justice.gov/usao-sdny/pr/t…

Avast, ye pirates:

OpenSea @opensea

An employee of our email vendor, Customer.io, misused their employee access to download & share email addresses with an unauthorized external party. Email addresses provided to OpenSea by users or newsletter subscribers were impacted. opensea.io/blog/safety-se…

Motion To Compel

Thought-provoking questions and arguments for your consideration each week:

Could the Supreme Court’s Wrecking Ball Impact SEC Authority?

Forbes contributor Andrea Tinianow raises some compelling questions about the SEC’s future in DeFi, noting the recent surge in controversial decisions by the Supreme Court could indicate potential change in the Crypto Arena. As the battle of SEC v. Ripple has continued to rage, the ever-expanding definition of “securities” has come into question, and there has been no shortage of speculation into the future of the term.

According to Jenner & Block Partner Kayvan Sadeghi:

“The SEC’s approach to crypto assets relies on an expansive interpretation of its own authority. For example, the SEC seeks to characterize digital tokens, themselves, as securities, even outside the context of any fundraising, without a clear basis in current law for doing so.”

Elsewhere, Josh Klayman, head of Financial Technology at Linklaters, noted:

“At the time of Howey, who could have predicted the rise of digital assets and token sales? Yet, we still can apply the Howey test to determine whether an investment contract exists under US federal securities law, even though the drafters of the Securities Act and the Exchange Act never mentioned — and probably never contemplated — crypto or ICOs.”

What do you think, anon? Do you support changing the way we define securities to prevent overreach by regulatory authorities in the United States?

The Stetson Report

CBDC 101 - Class in Session:

Around the Blockchain is excited to present the first installment of our latest collaboration: a monthly foray into crypto law from the law students of the Stetson Blockchain & Law Society!

This month, Co-founder of the Stetson Blockchain & Law Society Michael Findlay offers a crash course on CBDCs. Read the full article HERE, or by following the link above!

The Public Ledger

Highlights from the hundreds of sources gathered each week by our research AI. Always DYOR - but in case you don’t have time, here’s some of ours:

General News and Opinion

U.S. - Federal

U.S. - State Law

International

NOTE: For your convenience, we have started identifying articles that require a subscription or site registration (paid or free) with ** preceding the article link, and the linked site in () after.

Closing Statements

We want to hear from you:

If you enjoyed what you read today, subscribe to receive the weekly publication and give the authors a follow on Twitter for updates on what’s next for the newsletter!

If you didn’t enjoy it, let us know why! We value the opinion of our readers above all else. After all, this letter is for you. - Kyler & Chris

Stetson Blockchain & Law Society x Around the Blockchain:

We hope you enjoyed the inaugural presentation of the Stetson Report, a new monthly segment from the brilliant law students of the Stetson Blockchain & Law Society! Each week, the students at SBLS will contribute an article, think-piece, or other piece of work in the realm of crypto law.

Quote of the Week:

“Every smart person that I admire in the world - and those I semi-fear - is focused on this concept of crypto for a reason. They understand that this is the driving force of the fourth industrial revolution: steam engine, electricity, then the microchip - blockchain and crypto is the fourth.” - Brock Pierce

Ok, all done! You can go ahead and check your P/L now (Coin Market Cap)

This newsletter is curated, annotated, and edited by Christopher Foreman (Twitter - @CryptlessInSEA) and Kyler Wandler (Twitter - @KylerW56); with consultation and input from Jacob Robinson of the Law of Code Podcast; editing courtesy of TΞxas ₿l◎ckchain LawyΞr ; in collaboration with Ann Sofie Cloots; and support from the Blockchain Barristers Law Student Collective and the Stetson Blockchain & Law Society.

The articles and opinions in this newsletter are not legal or financial advice. For legal and financial guidance, please consult a qualified attorney or financial advisor.

Special thanks / image credits:

Law / Scale Image; Twitter Image; Blockchain Image; Podcast Image; P / L Image; Connection GIF; Axe GIF; Time GIF; Movie GIF;

Around the Blockchain