Kim K&a $4.5B Heist: 10 Great Crypto Legal Dramas

[ad_1]

Its hard to top the recent legal drama between Bored Ape Yacht Clubs allegedly Nazi-sympathizing founders and the conceptual artist selling copycat apes to undercut their NFT empire. But as I teased last week, there are a growing number of remarkable crypto cases that are a must-watch for anyone interested in the industry, from Wall Street to Hollywood. Below, youll find the ten that I find most exciting and am now closely tracking.

Let me state at the outset that Ive never owned any crypto assets or digital art on the blockchain, and Ill readily admit Ive never participated in a DAO (unlike my partner Baratunde Thurston, who tried to buy a piece of the US Constitution). Nor am I entirely convinced of the value of decentralized finance, or DeFiat least from an investment standpoint. What appears to some crypto fans as a long overdue effort to reclaim power from Wall Street banks and the Federal Reserve seems to me to be an enterprise transferring power to the techno-elite. And Im not sure I trust Tyler and Cameron Winklevoss more than Jamie Dimon.

But from a non-investment standpoint, I can also identify innovation when I see it, from DeFi to Web 3.0, and particularly in the legal arena where so many questions pertaining to this digital frontierWho owns the rights to an NFT character? Is Kim Kardashian liable for pumping the value of a digital token?are being actively litigated. Usually, I have a pretty decent intuition for legal outcomes. But not with these ten cases. Well, make that nine cases where anything could happen. I would not bet a single bitcoin against Kim K.

The 10 Most Interesting Cases in Crypto

George Kattula c. Coinbase: Ill start off with a case thats also the newest one on this list. Filed on August 15, this putative class action targets a widespread problem thats been haunting the crypto world: assets keep slipping from the wallets of Coinbase account holders. The plaintiffs look to pin legal responsibility on Coinbase for rampant hacking and theft and also contend that the $16 billion public company should be registering the tokens listed on its platform with the Securities and Exchange Commission. Like some other pending suits (Armijo v. Ozone Networks, for example, pertaining to stolen Bored Apes), the plaintiffs will need to first get around arbitration provisions in the user agreement, not to mention a class action waiver.

Securities and Exchange Commission v. Ripple Labs Inc: Speaking of crypto assets as alleged unregistered securities, this is the test case the one that could determine whether the federal agency that oversees public markets plays a strong regulatory role in crypto moving forward. The SEC accuses Ripple and two executives of conducting an illegal $1.3 billion offering, and this proceeding has gotten so hot that the judge recently allowed the government to keep the identity of its experts a secret for now. Summary judgment motions are due next month. Meanwhile, the SEC is pursuing other companies and individuals for failing to register securities, such as those behind the Dragon token in a complaint filed this past week.

Dan Carman c. Janet Yellen: When Congress passed a big infrastructure law last year, lawmakers tucked in a provision that requires crypto exchanges like Coinbase to notify the IRS of high-value transactions. The plaintiffs in this Kentucky case claim that this reporting provision amounts to an unreasonable search under the Fourth Amendment and ultimately an unconstitutional violation of ones privacy. The dispute could eventually become catnip for the Supreme Court, which may also be intrigued by a First Circuit opinion last week in Harper v. Rettig concerning how the IRS obtained records about attorneys crypto holdings. In the meantime, the Biden administration must respond by November 7.

Free Holdings v. Kevin McCoy: The history and terminology surrounding non-fungible tokens will be explored in this complex slander of title lawsuit focused on how the auction house Sothebys marketed the first NFT: Kevin McCoys Quantum, a 2014 blockchain-recorded artwork which sold for $1.472 million last year. The plaintiff (a Canadian holding company) alleges being the rightful owner of McCoys first NFT after the artist failed to renew his registration. The suit focuses on whether Sothebys and McCoy offered a false narrative about how Quantum was burned or removed from one blockchain and then re-minted on another.

Miramax v. Quentin Tarantino: How should Hollywood think of NFTs and fit them into its traditional entertainment framework? Famed movie director Quentin Tarantino insists he held onto rights to publish the Pulp Fiction screenplay and can sell NFTs derived from that screenplay while Miramax argues that Tarantinos reserved rights are pretty limited and dont cover this. A judge is set to rule soon, and while theres been some buzz of a potential settlement thanks to Miramax reporting progress in a recent filing, an insider tells me a deal isnt actually imminent.

Nike v. StockX: The defender is an online sneaker marketplace selling NFTs of Nike shoes. The twist, according to StockX, is that the NFT corresponds to a physical shoe in a warehouse and is effectively a claim ticket to the stored item. Nike sees intellectual property infringement. StockX responds that what its doing is protected as nominative fair use, which allows certain lawful references to trademarks, and the first-sale doctrine, which allows the owner of a particular copy of a work to sell that copy. The parties are in the midst of the discovery phase of this case.

Celsius Network bankruptcy: If crypto is ever to achieve long-term trust and stability, a successful restructuring where creditors feel taken care of is probably necessary. Thats where Celsius, the much-ballyhooed and now-bankrupt crypto bank, comes into play. Celsius customers transferred their crypto assets, earned rewards, and took out loans using crypto as collateral. But in July, the company filed for Chapter 11, leading customers to worry what would happen to the banks $5 billion in lost assets. The debtor continues to operate, however, and has at least a few months before cash runs out. Meanwhile, a US trustee recently cited the relatively new, purposefully opaque, and, at best, loosely regulated crypto market while calling for the appointment of an independent examiner to investigate Celsius and report on what went wrong.

In Re Ethereummax Investor Litigation: When crypto assets implode, should the celebrities who hyped them face any consequences? This particular case aims to apply legal blame to Kim Kardashian, Floyd Mayweather, Jr., and Paul Pierce for artificially inflating the price of EMAX tokens. Kardashian recently moved to dismiss this investor class action on the basis, among other things, that plaintiffs failed to adequately show EMAX buyers were inspired by her Instagram posts to purchase the tokens.

Christian Sarcuni, et al., c. bZx DAO, et. al: There is remarkably little jurisprudence regarding decentralized autonomous organizations, or DAOs, in which a digital token affords certain voting rights taken by the collective. The bZx DAO, for instance, governed a protocol that allowed users to trade in crypto assets on margin, but became the target of angry users who lost their funds to hackers. Now a big question is whether bZx DAO token holders are partners” jointly liable for alleged negligence or whether these strangers are nothing of the sort and shielded from legal responsibility. A California judge is currently hearing arguments on whether the plaintiffs have properly stated a claim.

USA v. Lichtenstein: Finally, theres this criminal case, which seems destined for adaptation into a future movie or TV show. Heather Morgan and Ilya Lichtenstein were a New York couple who dabbled in tech entrepreneurship, writing, rappingyes, reallyand being social influencers. In other words, they were pretty typical millennials. But according to the government, they were also quietly trying to launder over 120,000 bitcoin stolen in a 2016 hack. The value of that bitcoin had climbed from hundreds of thousands of dollars to around $4 billion at the time they were arrestedmaking their alleged heist technically the biggest in the countrys history. FBI agents found tens of thousands in foreign currencies, hollowed out books, dozens of tablet computers, and a burner phone when raiding their apartment. Their lawyers say the money laundering accusations are predicated on a series of circumstantial inferences and assumptions drawn from a complex web of convoluted blockchain and cryptocurrency tracing assertions. The trial, if there is no plea deal, should be a fascinating one.

[ad_2]