Palley Profile picture
Partner, @brownrudnick, Digital Commerce. Personal account. Not legal advice. Word inventoor. May change my mind. "I contain multitudes."
Finn the Human Profile picture ☀️💧Leon-Gerard Vandenberg 🇳🇱🇨🇦🇦🇺 Profile picture Mark Radcliffe Profile picture 3 added to My Authors
Oct 31 18 tweets 3 min read
DeFi is at an historical inflection point.

The legal status of these alternative financial rails will be resolved for short/mid-term purposes in the next 2 to 3 years, maybe sooner.

A thread. 1/n At issue is the application of hundred year old legal models written to govern centralized financial markets and centralized asset issuers.
May 19 9 tweets 3 min read
A couple of folks asked for more on the 5th Circuit case limiting the use of SEC admin tribunals.

tl;dr: It doesn't "dismantle the SEC" or stop enforcement.

Over-simplifying a bit: in fraud cases cases, the SEC will have to go to fed ct.

More below👇

ca5.uscourts.gov/opinions/pub/2… Image The 5th circuit is one federal appeals court of a dozen, and this ruling was by a three judge panel -- not the full circuit.

It's likely the case will be re-heard "en banc" by the full 5th circuit (all the judges). Then maybe the Supreme Courts wants to weigh in ...
Feb 18 5 tweets 2 min read
11th Circuit Court of Appeals reverses trial court decision in Bitconnect case and holds that peddling shitcoins in a non-targeted way on the interwebs (YouTube, Twitter etc) exposes promoters to liability from purchasers of unregistered securities. This reversal means people like Trevon James ("you didn't lose all your money/you lost all your money") are potentially liable to people who lost money in the Bitconnect Ponzi.
Feb 2 4 tweets 1 min read
I have seen dipshittery you people wouldn't believe ICOs on fire off shore in Gibraltar
Nov 19, 2021 4 tweets 1 min read
while the idea of "buying the constitution" seemed gross to me for a bunch of reasons, the fact that scores of unaffiliated strangers from around the world could pool the equivalent of $40 million+ in a couple of days without using banking rails is undeniably astonishing. I rolled my eyes at people who proclaimed this as meaningful for political or ideological reasons -- but the ability to organize capital quickly and internationally without using gov intermediaries/rails can't be ignored.
Nov 1, 2021 4 tweets 2 min read
Not sure if this is a huge surprise but what jumps off the page for me in the PWG report is the recommendation that fiat-backed stables should only be issued by chartered banks with FDIC coverage.

home.treasury.gov/system/files/1… There's some hedge language here but I can't imagine that the intent is for IDI's to be issuing algorithmic stables backed by tokens. There's no way FDIC would (or could?) take on that risk.
Oct 27, 2021 10 tweets 2 min read
Naive attempts by regulators to shut down truly decentralized protocols will end up being a fruitless game of regulatory whack-a-mole that will reveal both an inherent mismatch between circa 1930s securities law regimes and a powerlessness to make meaningful impact. If the laws don't match the risk -- they don't, w/r/t most of DeFi -- policymakers need update the rules of the road and regulate what properly should be the subject of regulation.

focus on code-based risks not current registration & disclosure requirements which ill fit DeFi
May 28, 2021 5 tweets 2 min read
Whelp, it only took a couple of years and a formal investigation, but a bunch of Bitconnect promoters just got sued by the SEC. Interested to see that Bitconnect's founder and main promoter is not named.
May 14, 2021 8 tweets 3 min read
Goofy new lawsuit filed in state court claims that NBA Top Shots are unregistered securities.

I attach a link to the full complaint for your hilarity.

scribd.com/document/50790… First off, there is no real nexus to NY. The fact that there's a partnership with the NBA, which has a nexus to NY, is weak ass tea. That's the technical term.
May 13, 2021 11 tweets 2 min read
The biggest mistake that the SEC made in the post-ICO cleanup was letting a multi-billion dollar ICO off the hook with a $24 million penalty.

The message that this sent was that it's OK to play chicken with regulations and the consequences are minimal.

We hear this every day. The SEC is currently doing the same thing by allowing massive decentralized exchanges that are probably actually '34 act exchanges operate with apparent impunity.

Few people we speak with get the fact that investigations are private and enforcement takes time.
May 12, 2021 4 tweets 1 min read
elon, lol the gnashing of teeth and howls of disbelief from bitcoiners is permeating my basement office redoubt
Feb 3, 2021 10 tweets 4 min read
Does the fact that ethereum nodes have a significant presence in the United States give rise to U.S. jurisdiction over a token sale without more?

According to a federal judge in New York in a new opinion issued on 1/21 the answer to that question is no!

A brief thread 👇 Barron v. Helbiz was a putative (that is so-called) class action filed in the Southern District of New York.

At issue was a 2018 ICO for something called HelbizCoin.

According to the buyers it was aptly named and they filed a typical ICO recovery lawsuit.
Feb 1, 2021 30 tweets 9 min read
Some thoughts on Ripple's Answer to the SEC Complaint, which was filed last week. ImageImage When a defendant is sued they have a couple of immediate options. They can move to dismiss, they can answer, they can ask for more time. It's very easy -- and typical -- for a defendant to ask for more time and slow things down. They filed a relatively quick answer.
Dec 30, 2020 7 tweets 3 min read
New one count California federal court lawsuit alleges Coinbase violated state unfair competition laws by selling XRP, alleged to be an unregistered security, and taking commissions from the sale. Presumably CB will respond by moving to compel arbitration -- the TOS arb clause has been upheld recently -- and citing class waiver as well.
Dec 28, 2020 4 tweets 1 min read
Claims against the company by aggrieved bag holders are inevitable. theblockcrypto.com/linked/89469/c… the SEC complaint lays out a pretty good roadmap.
Dec 28, 2020 5 tweets 2 min read
Bitcoin is "literally" not a Ponzi scheme. Ponzis are an investment fraud where fraudsters pay old investors w/ new investor $$, unknown to either. Also, $25 million a day in investor cash "literally" does not go to miners.

Maybe dumb for you to spend $$ on, but not a Ponzi. This is not a Bitcoin panegyric. You can think Bitcoin is heavily manipulated, a stupid thing to spend money on, used for bad things, etc etc etc. it simply doesn't meet the definition of a Ponzi scheme. If you're going to argue against it use better arguments & legal theories.
Dec 22, 2020 21 tweets 9 min read
So, this Ripple lawsuit, let's talk about it, shall we? The SEC begins this Complaint with a little bit of history, demonstrating that in their view of history XRP & Ripple were pretty much the same thing at the outset.
Dec 22, 2020 4 tweets 1 min read
The fact that SEC may be going after Ripple and XRP should be no surprise to anyone who believes that rules mean things and that the law applies to people with lobbyists and expensive lawyers just as much as to poor achlubbs without ‘em. This reminds me of the outrage Kik kicked up after the SEC wasn’t persuaded by its wells letter response. We know how that ended.
Oct 5, 2020 11 tweets 5 min read
BREAKING: SEC sues John McAfee for lying about eating his own schnitzel on national t.v. But seriously, he's been sued in Federal Court in New York for allegedly violating a bundle of U.S. securities laws that we all saw him seemingly violating in real time on twitter -- touting, scalping, and so forth
Oct 1, 2020 8 tweets 3 min read
BREAKING: CFTC sues Bitmex, Arthur Hayes "to enjoin their ongoing illegal offering of commodity derivatives to U.S. persons, their acceptance of funds to margin derivatives transactions from individuals and entities in the U.S., & their operation of a derivatives trading platform CFTC says that during the relevant period " BitMEX has conducted trillions of dollars in digital asset derivatives transactions and earned fees worth more than $1 billion from transactions on its platform" from 85k US user accounts.
Sep 30, 2020 17 tweets 5 min read
Judge Hellerstein's ruling on the SEC's Kik Complaint clinically shreds ICOs, "token distribution events", utility tokens, and the entire 2017/2018 ICO craze.

This was entirely predictable, and expect to see more of the same.

And now I shall thread this shred👇 A note on procedure, to set the stage.

This was a ruling on motions for summary judgment by SEC and defendant.

An sj motion lets a party defeat the other side's case in whole of part if the court finds the facts entitle one side to judgment as a matter of law