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NFT creators should craft strategies to avoid minting or auctioning NFTs that use the likeness of an individual without their consent.

By Ghaith Mahmood, Nima H. Mohebbi, and Tara McCortney

As non-fungible tokens (NFTs) increase in popularity, the so-called common law “right of publicity” may create additional legal risks for NFT minters. The common law right of publicity prevents the commercial exploitation of an individual’s identity without that person’s consent.[1] Most U.S. states have defined a right of publicity and, correspondingly, a standard tort for violation of that right — frequently referred to as the tort of appropriation.

While the law is similar across most US jurisdictions, California — the heart of the entertainment industry — has particularly well-developed authority in this area. For this reason, this blog post focuses on California law in describing the unique issues that NFTs may present.

The no-action letter is the first to expressly permit token transfer off-platform to non-users and conversion to fiat currency by token holders.

By Stephen P. Wink, Shaun Musuka, and Deric Behar

As crypto prices surge, we find ourselves in the midst of another crypto wave. Given the unrelenting flow of news that accompanies such periods, it may have been easy to miss that the SEC staff recently granted no-action relief to another Ethereum-based token, VCOIN.

In only its third no-action letter to date for digital tokens, the SEC cleared the way for the software development company IMVU, Inc. to sell VCOIN, an ERC-20 token, as a transferable non-security to its global platform users. In its incoming letter, IMVU stated that it operates “one of the largest online three-dimensional avatar-based social communities in the world” with “over 7 million monthly active users from more than 140 countries” and “a user-generated virtual goods catalog of more than 40 million items.” In the same letter, IMVU sought guidance from the SEC as to whether its offering of VCOIN would require registration under Section 5 of the Securities Act and Section 12(g) of the Exchange Act.