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In its first enforcement action involving NFTs, the SEC focused on issuer marketing that promised outsized returns on investment and platform building.

By Ghaith Mahmood, Nima H. Mohebbi, Stephen P. Wink, Douglas K. Yatter, Adam Zuckerman, and Deric Behar

On August 28, 2023, the Securities and Exchange Commission (SEC) issued a cease-and-desist order (the Order) against a Los Angeles media and entertainment company (the Company) for an unregistered securities offering relating to its sale of $29.9 million worth of non-fungible tokens (NFTs)[1]. The company agreed to a settlement that includes disgorging $5 million, paying another $1 million in fees and penalties, and ceasing and desisting from violating the Securities Act of 1933. Notably, the settlement does not include fraud charges.

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While a conclusion to the much-hyped case may be approaching, market participants should be wary of doomsday prognostications.

By Stephen P. Wink, Douglas K. Yatter, John Sikora, Benjamin Naftalis, William Baker, Jack Barber, Natalie DeLave, and Deric Behar

As a new year begins, the digital assets industry is still enduring a deep and widespread crypto winter. When the story of this crypto winter is written, a chapter will likely be devoted to the…

The plan directs the agency to develop a robust regulatory framework to prevent market misconduct, as SEC officials’ public comments keep advancements in technology high on the agenda.

By Marlon Q. Paz, Stephen P. Wink, Donald Thompson, and Deric Behar

On August 25, 2022, the Securities and Exchange Commission (SEC) published a draft Strategic Plan (the Plan) for fiscal years 2022–2026. The Plan focuses on three goals that, according to SEC Chairman Gary Gensler, advance the SEC’s…

In two recent articles, Latham & Watkins lawyers examine the SEC’s guidance on the application of securities regulations to digital assets and the questions that remain unanswered.

By Stephen P. Wink, Witold Balaban, John J. Sikora, Miles P. Jennings, Emanuel V. Francone, Cameron R. Kates, and Shaun Musuka

Digital Asset Regulation: Howey Evolves

In this article, the authors provide a comprehensive look at the SEC’s evolving guidance that aims to clarify when sales of digital assets (also known as tokens) are securities transactions. The authors discuss the Commission’s early application of the Howey test to digital assets, its pronouncements and enforcement actions, and the response of commentators. They then turn to the SEC’s Framework, issued in 2019, and other current SEC actions. They close by addressing steps the SEC should take to provide market participants with greater clarity on the application of the securities laws to digital assets.

The online document generator helps startups raise capital with customizable market standard terms and optional digital token provisions.

By David L. Concannon, Yvette D. Valdez, Stephen P. Wink, Miles P. Jennings, and Shaun Musuka

In collaboration with ConsenSys and OpenLaw, Latham & Watkins recently launched the Automated Convertible Note Generator, a complimentary tool designed to assist startups with capital raises. The Automated Convertible Note is a potential solution for capital formation that also addresses future token sales in a manner compliant with US securities and commodities regulations.