The U.S. Copyright Office (“Office”) has published guidance on its policy and practices for examining and registering works that contain material generated by the use of artificial intelligence technology. Some of the key points include the following:…
Continue Reading Copyright Office Guidance on AI

The highly anticipated jury verdict in the Hermès litigation over MetaBirkins NFTs has some important takeaways for both artists and sellers of NFTs as well as brand owners.
Continue Reading Takeaways from the Hermès Litigation over MetaBirkins NFTs

Roblox recently announced that it is working on generative artificial intelligence (AI) tools that will help developers who build experiences on Roblox, to more easily create games and assets. The first two test tools create generative AI content from a text prompt and enable generative AI to complete computer code. This is just the tip of the iceberg on how generative AI will be used in games and a variety of other creative industries. Music, film, art, comic books, and literary works are some other uses. AI tools are powerful and their use will no doubt be far reaching. In…
Continue Reading How Generative AI Generates Legal Issues in the Games Industry

The rapid rise of AI used with advertising, marketing and other consumer facing applications has caused the FTC to continue to take notice and issues guidance. For example, the FTC is concerned about false or unsubstantiated claims about an AI product’s efficacy. It has issued AI-related guidance in the past. The following is some recent FTC guidance to consider when referencing AI in your advertising. This guidance is not necessarily new, but the fact that it is being reiterated should be a signal that the FTC continues to focus on this area and that actions may be forthcoming. In fact,…
Continue Reading You Don’t Need a Machine to Predict What the FTC Might Do About Unsupported AI Claims

The Securities Exchange Commission (“SEC” or “Commission”) has taken action against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC (“Gemini”) (collectively, “Defendants”) in a recently-filed complaint alleging that the crypto companies violated federal securities laws by engaging in the unregistered offer and sale of securities in the form of their “Gemini Earn Agreements.” In doing so, the Commission not only relied upon the mainstay Howey Test for determining whether an agreement is a security, but also summoned Howey’s lesser-known cousin, the Reves Test, notably leading with the latter in its complaint.
Continue Reading SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit

Despite the minimal regulatory enforcement actions against blockchain game companies and NFT issuers, now is NOT the time to become complacent about regulatory issues. As indicated below, many U.S. agencies are increasing their focus on regulatory enforcements in the crypto space and NFTs are no exception. In 2022, we saw U.S. regulators ramp up staffing for more enforcements. All of this was happening before the FTX debacle. Things are only going to intensify in 2023 as a result of FTX. Some of the areas to remain focused on include the following.

To learn more about this topic, see here.
Continue Reading NFT Regulatory Issues – a 2022 Review and 2023 Preview

We have previously posted about the SEC lawsuit against LBRY. In that post, we noted that while the crypto community is rightfully focused on the Ripple case to see how the SEC will fare in court on enforcements alleging cryptocurrency offerings are a security, a lesser-known case may provide clarity first. And today that came to be. The federal district court in the LBRY case granted summary judgment in favor of the SEC. In so ruling, the Court found no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not…
Continue Reading Federal Court Rules LBRY Offered Security and Rejects Arguments SEC Did Not Provide Fair Notice

We previously blogged about the NFT insider trading case against Nathaniel Chastain. He was charged with wire fraud and money laundering in connection with a scheme to commit “insider trading” in Non-Fungible Tokens (“NFTs”) by using confidential information about what NFTs were going to be featured on a marketplace homepage for his personal financial gain. Despite referring to this case as insider trading, there was no allegation that the NFTs at issue were securities. This caused many in the NFT community to question whether this activity could be illegal if the NFTs were not securities. In fact, there was a…
Continue Reading NFT Insider Trading Charge Doesn’t Require the NFT To Be a Security

On September 26, 2022, New York Attorney General Letitia James (the “NYAG”) took definitive action in the wake of her warning last year that crypto lending platforms must register with her office or face legal action, filing a complaint against Nexo Inc. and Nexo Capital, Inc. (collectively “Nexo”) alleging that Nexo violated New York’s Martin Act and Executive Law by acting as an unregistered securities and/or commodities broker-dealer within the state. Specifically, the complaint alleges that Nexo improperly offered and sold securities and commodities by allowing users to purchase, sell, deposit, trade, borrow against, and earn interest on virtual currency,…
Continue Reading NYAG Delivers on Promise to Rein In Unregistered Crypto Lending with New Suit

In October 2021, San Francisco crypto currency exchange Coinbase made waves after releasing a proposed regulatory framework for digital assets entitled Digital Asset Policy Proposal: Safeguarding America’s Financial Leadership (“dApp”). The proposal generated significant discussion during the House Financial Services Committee meeting with blockchain industry leaders on December 8, 2021. It resonated with many key players supportive of industry-friendly legislation. The dApp policy proposal highlighted two significant challenges currently facing the digital asset industry and regulators: (1) the lack of a specialized regulator leaves a void that the various regulators attempt to fill despite questionable jurisdictional authority to cover all…
Continue Reading Digital Asset Policy: Aspirations, Reality and Regulation

U.S. state and federal lawmakers, as well as federal regulators, are increasingly focusing on the role of blockchain and distributed ledger technology in ongoing efforts to combat climate change and to facilitate the transition from carbon-based fossil fuels.

There have been several key developments in the recent weeks at the state and federal level, covering two broad categories:

(1) Initiatives targeting carbon emissions associated with data mining operations, including New York State legislation to temporarily halt certain carbon-powered cryptocurrency mining operations and a U.S. Senate bill calling on federal agencies to report on the impact of such mining operations on…
Continue Reading Lawmakers and Regulators Examine Role of Blockchain Technology in Energy Transitions

We have previously addressed the recent indictment against Nathaniel Chastain, a former executive of a major NFT marketplace, for insider trading involving NFTs. The indictment charges Chastain with one count of wire fraud and one count of money laundering. It does not allege that the NFT is a security. It does not allege violation of the insider trading laws under securities law. Since then, as we have reported, that SEC has been investigating lack of insider trading policies for NFT/crypto exchanges.
Continue Reading NFT Insider Trading – Can There Be A Crime If It’s Not A Security?

It is well known that insider trading—the practice of buying and selling stocks, bonds, or other securities based on material, non-public information—is unlawful. For that reason, many companies have compliance programs and policies that restrict trading by officers, directors, employees or other “insiders” with access to such information. …
Continue Reading NFT Insider Trading Compliance Policies – What They Cover and Why You Need One