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.
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How Generative AI Generates Legal Issues in the Games Industry
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 the near term, so too will the associated legal issues. Some of the legal issues include:
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You Don’t Need a Machine to Predict What the FTC Might Do About Unsupported AI Claims
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
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SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit
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.
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NFT Regulatory Issues – a 2022 Review and 2023 Preview
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
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Federal Court Rules LBRY Offered Security and Rejects Arguments SEC Did Not Provide Fair Notice
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 have a triable defense that it lacked fair notice.
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NFT Insider Trading Charge Doesn’t Require the NFT To Be a Security
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 fair amount of misinformation circulated about this issue. To clarify the legal issues, we explained in a second blog about this case that there is Supreme Court precedent (Carpenter v. US) that found that mail and wire fraud charges need not be predicated on the underlying subject matter constituting a security. Nevertheless, Chastain moved to dismiss the indictment based on this and two other arguments. The Court refused to dismiss the indictment. The Court found that the Carpenter case “actually dooms Chastain’s argument.”
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NYAG Delivers on Promise to Rein In Unregistered Crypto Lending with New Suit
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, while unregistered. The complaint further alleges that Nexo made various misrepresentations regarding its operations. The NYAG seeks an injunction, disgorgement, restitution, and a permanent bar prohibiting Nexo from purchasing or selling securities or commodities in New York.
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Digital Asset Policy: Aspirations, Reality and Regulation
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”).
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Lawmakers and Regulators Examine Role of Blockchain Technology in Energy Transitions
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
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