SAFT

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The RFIA would enact a rebuttable presumption that an ancillary asset in connection with an investment contract is a commodity.

By Marlon Q. Paz, Stephen P. Wink, Jenny Cieplak, and Deric Behar

Latham & Watkins presents a blog series on the Responsible Financial Innovation Act, which was introduced in the US Senate on June 10, 2022, to create a framework for digital assets, cryptocurrency, and blockchain technology. This first post in the series covers SEC and securities issues.

Securities issues are covered in Title III (Responsible Securities Innovation) of the Responsible Financial Innovation Act (RFIA). The RFIA would add a new Section 41 to the Securities Exchange Act of 1934 (Securities Offerings Involving Certain Intangible Assets) that would provide much-needed statutory clarity on the allocation of regulatory jurisdiction over digital assets.

SEC’s motion for a preliminary injunction is granted, prohibiting delivery of Telegram tokens to purchasers.

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

On March 24, the Court in the Southern District of New York sided with the SEC and granted an injunction prohibiting Telegram Group Inc. and TON Issuer Inc. (together, Telegram) from delivering Telegram’s digital token, “Grams,” to 175 entities and high-net-worth individuals (Initial Purchasers).

As we previously discussed after the SEC filed its complaint, Telegram entered into agreements with the Initial Purchasers (Gram Interest Agreements), where, in exchange for US$1.7 billion from the Initial Purchasers, Telegram provided a promise to deliver Grams to the Initial Purchasers upon the launch of its blockchain (TON Blockchain).

Latham derivatives and FinTech partner Yvette Valdez explores regulatory issues impacting cryptocurrency derivatives on the Fintech Beat podcast.

By Yvette D. Valdez

New York partner Yvette Valdez, a member of Latham & Watkins’ FinTech Industry Group, recently discussed timely issues at the intersection of cryptoassets and derivatives law on a new episode of Fintech Beat.

Valdez spoke with host Chris Brummer about a number of regulatory issues impacting cryptocurrency derivatives, including:

  • Whether cryptocurrencies or stablecoins are inherently derivatives
  • The ramifications of being deemed a derivative
  • Cryptocurrency derivatives and tokenized derivatives
  • Considerations for token developers to better navigate the regulatory field
  • The potential pitfalls of the Simple Agreement for Future Tokens (SAFT) from a commodities regulatory point of view
  • The Automated Convertible Note, a free-to-use tool developed by Latham & Watkins in collaboration with ConsenSys and OpenLaw, which addresses future token sales in a manner compliant with US securities and commodities regulations

As the agency pursues and prevents offerings of tokens it deems unregistered securities, further issues emerge.

By John J. Sikora Jr., Stephen P. Wink, Douglas K. Yatter, Cameron R. Kates, Shaun Musuka, and Deric Behar

The recent wave of US Securities and Exchange Commission (SEC) enforcement actions relating to initial coin offerings (ICOs) continues with two orders and a judicial complaint issued against digital asset firms for conducting unregistered securities offerings. The actions against Block.one, Nebulous, and Telegram are each notable for the facts and circumstances under which they were issued, but also as counterpoints to each other and previous ICO-related enforcement actions. This blog post offers a brief synopsis of these actions and discusses their impact on the evolving regulatory and enforcement landscape.

SEC issues cease-and-desist orders for unregistered token presales and anti-touting violations.

By Stephen P. Wink, Cameron R. Kates, Shaun Musuka, and Deric Behar

Not content to let the dog days of summer slip by, the US Securities and Exchange Commission (SEC) recently issued two cease-and-desist orders relating to the offer, sale, and marketing of cryptocurrencies.

SimplyVital – Simply Saying a Sale Is Exempt Will Not Suffice

In the first order (SV Order), the SEC concluded that SimplyVital Health, Inc. (SimplyVital), a “health care-related blockchain ecosystem” start-up, violated the Securities Act of 1933 (Securities Act) by failing to register an initial coin offering (ICO) presale.

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.