Identifying potential investors is one of the most difficult challenges facing early-stage companies. The range of amounts sought at this stage is typically greater than what could be provided by the founders and friends and family, but below what would attract a VC or a registered broker-dealer. The problem is even more acute in geographic
The Securities and Exchange Commission recently brought its first two enforcement actions against issuers of non-fungible tokens (NFTs), resulting in cease-and-desist orders, penalties and other remedies, finding that the NFTs were investment contracts and that each of the issuers had engaged in an offering of securities without registration in violation of Section 5 of the Securities Act of 1933. These enforcement actions create legal ambiguity and risk for NFT developers regarding the marketing, transferability and royalty generating capacity of NFTs.Continue Reading SEC’s First Two NFT Enforcement Actions Cast Shadow of Ambiguity
Judge Analisa Torres’ greatly anticipated Order in the SEC’s lawsuit against Ripple is a split decision. The Order basically finds that Ripple’s digital token XRP is a security when sold privately to individuals and institutional investors pursuant to purchase agreements, but is not a security when sold on a digital asset exchange where sellers don’t know who’s buying and buyers don’t know who’s selling.[1] Although the Order should be perceived as at least a partial victory for crypto, it perversely upends a fundamental tenet of the securities laws which is that the laws are designed to protect those who cannot fend for themselves. Moreover, the finding that digital tokens sold anonymously on digital asset exchanges is not a security also seems to contradict the “fraud on the market” theory of securities liability.Continue Reading Parting the Crypto Sea: Ripple’s XRP Ruled to be a Security When Sold to Private Investors, But Not When Sold on an Exchange
Elon Musk’s contentious relationship with the Securities and Exchange Commission is
likely to become even more complicated as a result of Mr. Musk’s filings with the Commission to report his recent purchases of shares in Twitter, Inc.
On April 4, 2022, Elon Musk filed a Schedule 13G with the SEC to report his ownership of
The Securities and Exchange Commission just proposed new rules to protect
investors in private investment funds. The proposed rules would require private fund advisers to disclose certain information and avoid certain practices. But these retail-like protections for private fund investors seem inconsistent with the long-held belief that such investors can fend for themselves. The proposed
Ever since the SPAC market exploded in late 2020 and early 2021, the SEC has sounded
alarm bells through investor alerts, staff statements and public comments. In March of 2021, it warned investors not to invest in SPACs just because of celebrity endorsements. In April, an SEC staff announcement said SPACs needed to account for
The Securities and Exchange Commission announced on July 13, 2021 that it settled fraud charges against a special purpose acquisition company, its sponsor, its sponsor’s CEO and its proposed merger target for making misleading statements about the target’s technology and national security concerns. Charges against the target’s CEO are proceeding. The settlement order imposes
On December 2, the Securities and Exchange Commission filed a lawsuit against
Ripple Labs, Inc. and two of its executives alleging they offered and sold over $1.38 billion of digital asset XRP without registration or exemption in violation of Section 5 of the Securities Act of 1933, seeking disgorgement of ill-gotten gains. Ripple filed an
For the second time in nine days, I recently drove ten hours round-trip to drop my son 
off at school for spring semester. The first time around, he ended up returning home with me the next day for unexpected oral surgery to remove his wisdom teeth after completing his mandatory one-day COVID quarantine at school.
A freeze on government regulation is generally perceived by most people as being a positive development for private enterprise. Not necessarily so, however, when the regulation being frozen is itself a reform of preexisting regulatory burdens.
Among the many Presidential Actions taken by President Biden on his first day in office was one entitled Regulatory