Drew Hinkes Profile picture
@KLGates |AdjunctProfessor @NYUStern / @NYUlaw |No legal/financial advice |#Bitcoin |#SmartContracts |#Miami |#Phish
JennyfromBlockchain 🇺🇦 Profile picture ROY Profile picture 2 added to My Authors
Jun 26 28 tweets 12 min read
#Dao is another word the #crypto industry uses for ...well... anything. Here's a proposed taxonomy to clarify what we mean when we say #Dao: (a quickie sunday am #thread): /1 @VitalikButerin's seminal work discussing the types of human/tech hybrid ventures that may/will be created using censorship resistant technology tools remains the first stop for this discussion: (blog.ethereum.org/2014/05/06/dao…) /2
Jun 8 10 tweets 4 min read
#NYDFS issues USD backed #stablecoin guidance; must be fully backed by an asset reserve; issuer must adopt a clear redemption policy, approved by DFS in writing (!!!) redemption at par in fiat; reserve must be held in custody with /1
dfs.ny.gov/reports_and_pu… US state/federally chartered depository institutions and/or asset custodians. Reserve must be held in govt treasuries "subject to DFS- approved reqs re: overcollaterialiation." Reserve must be subject to independent audit 1x month by independent CPA under AICPA attestation /2
Feb 14 6 tweets 2 min read
Take aways from the #blockfi settlement with the #SEC (sec.gov/litigation/adm……) 1. BIA were notes under the Reves test; one factor is that there is "no alternative
regulatory scheme or other risk reducing factors exist with respect to BIAs" Congress can of course, set out a /1 an alternative framework that would potentially push these sorts of ventures into a different regulatory classification. 2. the offer and sale of notes is an investment contract. Yes, you can be debt and an investment contract; the pooling of assets is the key factor here. /2
Oct 13, 2021 6 tweets 6 min read
@gonbegood @lex_node @awrigh01 one of the big problems is that #DAOs as they currently are either legal entities w/ bespoke governance (legal Daos /Laos /daos w/legal wrappers) or groups acting together without legal protection who want to be protected as if they were entities. They either are entities /1 @gonbegood @lex_node @awrigh01 or they *want* the same powers & rights given to entities (individual liability limitation, power to contract as an entity, etc...) w/o the obligations and burdens associated with entities (responsibility to comply with regulation, legal addressability, paying taxes etc...) /2
Jul 24, 2021 12 tweets 6 min read
There has been lots of talk about #uniswap front end interfaces blacklisting #tokens that might be #securities. This is not an attack on #DeFi or regulation of #DeFi specifically, but instead a logical example of how existing regulation applies to legally addressable entities /1 including those that facilitate the use of #decentralized systems- in this case, legally addressable interface providers. And this isn’t new. Quietly, many front end providers are also engaged in #sanctions compliance. While laws obviously apply to legally addressable actors, /2
Jul 19, 2021 20 tweets 11 min read
Today I published "The Limits of Code Deference" papers.ssrn.com/sol3/papers.cf… Inspired by #theDao, #Dapps & #DAOs, this article explores whether #decentralizedventures can absolutely bind their users to their code’s execution. Not surprisingly, the answer is no. Why? A quick🧵: These ventures use code to enable groups of people to act collectively to affect rights to #digital assets. We call these “decentralized ventures.” These decentralized ventures enable transactions among their participants in accordance w/rules created and enforced by their code;
Apr 20, 2021 12 tweets 17 min read
@CaitlinLong_ @uniformlaws @Prof_CarlaReyes I'm very proud of the work done by the brilliant members of the @uniformlaws Digital Asset Working Group incl. @Prof_CarlaReyes @Andrea_Tosato to create this draft. For the twitterati who don't practice law, you may wonder, what's this? & Is it important? YES. A quick #thread @CaitlinLong_ @uniformlaws @Prof_CarlaReyes @Andrea_Tosato The proposed new article 12 of the UCC would include rules for commercial transactions of what we’ve termed "controllable electronic records" or CERs. This would include a wide variety of #digitalassets including what we generally call #cryptocurrency along with /2
Apr 13, 2021 31 tweets 7 min read
We've got a new proposed #SEC #token #safeharbor that would let issuers offer tokens in the US. It's big. But, what's new? How is it different from the prior proposal? What's new? You guessed it. It's unavoidable, It's inevitable. It's a #THREAD. Let's dive in/1 Right off the top, we have the elimination of the "good faith" provision that was previously implied upon the issuers in a(1) & of a(4) which required the issuer to act in good faith to "create liquidity for users." /2
Apr 13, 2021 4 tweets 2 min read
Mar 25, 2021 18 tweets 6 min read
Is #FINCEN coming for #NFT #Art markets? A thread about the #NDAA, Anti-Money Laundering Act of 2020 (AMLA), its expansion of BSA coverage to include “dealers in antiquities,” & what it might mean for the #crypto art world: (link to notice here: fincen.gov/sites/default/… ) /1 Why regulate transactions of antiquities (&maybe art)? The concern is that art & antiquities can be used for money laundering, to violate sanctions, & “have been linked to ...criminal networks, ...terrorism, & the persecution of individuals or groups on cultural grounds.” /2
Mar 17, 2021 29 tweets 12 min read
Yesterday, at the conclusion of my #NYU class discussing #Governance of #Bitcoin and #Cryptocurrencies, I posted this slide, summarizing my thoughts about what the #US can do to improve its #law and #policy related to #Crypto. A #thread on what we can and should fix: First, establish an government wide-policy. What do we want? Are we pro -innovation? Do want to protecting consumers? Do we want to strike a balance in the middle?Do we want to facilitate experimentation? How much control will the govt take over these experiments? /2
Dec 30, 2020 11 tweets 5 min read
OFAC settlement w/@BitGo for apparently failing to prevent users accessing their online hot-wallet service via Crimea, Cuba, Iran, Sudan, & Syria IP addresses; service appears to be a non -custodial online wallet. Violaton of OFAC regs, NOT BSA . Let's look at the regs: /1 31 CFR 515.201, (i.e. Cuban Assets Control Regulations) prohibits transactions by foreign countries and their nationals including "...transfers, withdrawals, or exportations of, any property," /2
Sep 26, 2020 17 tweets 5 min read
🚨🚨🚨BREAKING: clarity on how broker dealers should handle non-custodial digital asset securities transactions on ATS. 🚨🚨🚨 THREAD coming atcha /1 /1 since the Joint Staff Statement (July 8, 2019) which addressed BD custody & handling of trades of digital asset securities (sec.gov/news/public-st…) which emphasized consumer protection, it has not been clear how transactions on ATS should be conducted:
Sep 24, 2020 4 tweets 5 min read
Should #smartcontract code execution always be dispostive? Can code execution actually bind participants if litigation is always available? Does extrinsic goverance of #blockchains that may alter #consensus governance weaken, or strengthen a protocol? Who should care? /1 Short answer- everyone. #Developers #investors & #lawyers all need to understand #blockchain & #smartcontract governance to understand what it means to build on top of others' tech. Can you patent new art built on a blockchain? Will your software work if the underlying chain /2
Aug 12, 2020 6 tweets 6 min read
Another place where #bitcoin tends to show up in litigation is in divorce, when married couples divvy up assets. In DeSouza v. DeSouza, a spouse was held to violate his fiduciary duty to his spouse by concealing #bitcoin. /1 ImageImageImageImage Here, the divorcing spouse had some #bitcoin tied up in #MtGox and some held on private wallets. One spouse did not disclose the holdings until after the divorce, and the other spouse immediately sought an award of 1/2 and attorney's fees. Court agreed, noting that divorcing /2
Aug 11, 2020 11 tweets 9 min read
#California appellate court affirms summary judgment in favor of @coinbase as to claims for #conversion #breach of contract & negligence; related to #coinbase not supporting #bitcoingold fork for its users; since it's precedent in CA, let's dive in /1 ImageImageImageImage Court ruled that there was no agreement to give Plaintiff #Bitcoingold; there was no "contractual obligation to support or provide services for any particular cryptocurrency." Merger clause barred parol evidence & there was no contractual duty. That's breach of contract /2
Jun 6, 2020 5 tweets 3 min read
@CQRollCall reports the Boston Options Exchange (BOX) reworks its plan to use #Ethereum to record ownership of securities, says it resubmitted plan after meeting with regulators; would use #blockchain as an "ancillary method of recordkeeping" with official data kept by DTCC /1 Image New proposal limits trading on exchange to listed items, not to provide unlisted trading privileges, which would allow transactions in securities whose home is on another exchange.
Notably, @SIFMA is reported to have asked the SEC to "take its time to consider the proposal," /2
Jun 2, 2020 6 tweets 3 min read
Claim by Q3 v. Tran et al re: alleged #ponzi disguised as #crypto trading venture remanded to state court by M.D. Fla after being removed to Fed. Ct. under Securities Litigation Uniform Standards Act (SLUSA); issue is if investment was in "covered" or "uncovered securities" /1 ImageImageImage "Covered security" (needed to trigger federal court jursidiction over the matter)= Traded nationally & listed on a regulated national stock exchange. If doesn't involve covered securities, no SLUSA, no federal court jurisidction on that basis. /2
May 30, 2020 17 tweets 5 min read
Court affirms terminating sanctions & default (aka, case over, you lose) against Ringgold for submiting false declarations to defend against the SEC’s case, finding the dec's were false, they were submitted willfully and that terminating sanctions were appropriate under Malone /1 Image Ringgold and #Blockvest marketed an #ICO selling BLV tokens falsely marketing them as “registered” and/or “approved” by the SEC, CFTC, NFA, and touting “partner[ship]” with Deloitte, and createda fictitious regulatory agency, the #Blockchain Exchange Commission
May 28, 2020 6 tweets 3 min read
NEW #SEC consent order with #BitClave related to $25.5mm ICO of . A few interesting points in this settlement (h/t to @collins_belton for the eagle eye) sec.gov/news/press-rel… BitClave raised $25.5 million selling 9,500 investors (called it a fundraiser), incl. to US persons. Issuer was a US entity operating via Singapore PTE LTD. to be used to pay people to watch ads, ICO (July 25, 2017 (date of #TheDao rule 21 report!) -Nov 29, 2017)
Apr 8, 2020 9 tweets 7 min read
Important thread for #crypto users, lenders, borrowers & intermediaries. Unsurprising result, given prior Singapore (Quoine) & UK (Robertson) authorities holding cryptocurrencies to be property; US has been there for (via twisty path) for a while now: #Cryptopia like many other early #crypto trading platforms had quickly changing terms of service- i.e. it's contract with its customers. early T&C stated that the site took no ownership right over any customer's contributed #crypto. ImageImage