The U.S. District Court for the Southern District of New York recently rejected a proposed settlement of a securities class action involving purchasers of digital tokens due to concerns about whether the lead plaintiff had adequately represented the class for settlement purposes.  Judge Lewis A. Kaplan held in Williams v.

Last month, our post about art NFTs and the DMCA highlighted the distinction between non-fungible tokens and the copyrighted works they represent. In the context of copyright, this dichotomy is generally uncontroversial: In most cases, an NFT merely points to an underlying work but does not contain a copy of the work it represents, and so it is conceptually and legally separate from that work for copyright purposes. But NFTs can be used to signify ownership of products beyond digital artworks—and where those products involve trademarks, new legal issues arise.

Enter Nike: On February 3, the apparel and footwear giant sued StockX, an online resale marketplace for sneakers and other collectibles, in the US District Court for the Southern District of New York, alleging trademark infringement in connection with StockX’s issuance of NFTs featuring Nike sneakers. In the complaint, Nike asserts that these Nike-branded “Vault NFTs”—which StockX’s website says merely track ownership of a physical pair of sneakers in the company’s possession, like a virtual claims ticket or receipt—are in fact “new virtual products.” (Nike v. StockX LLC, No. 22-00983 (S.D.N.Y. filed Feb. 3, 2022)). In their March 31 answer, StockX reasserts their website’s position and insists that “Vault NFTs are absolutely not ‘virtual products’ or digital sneakers” (emphasis in original). StockX instead claims that the Vault NFTs are merely a convenient use of new technology that allows buyers to track ownership without having to possess the physical sneaker, such that the “owner can make a future trade without incurring transaction costs, delay, or risk of damage or loss associated with shipping physical sneakers to StockX and then to the ultimate recipients.”

Cryptocurrency, social media, and celebrity or influencer endorsements have all been top of mind recently, including for advertisers. A newly filed lawsuit is asking a federal court to consider the intersection of these areas, with potential implications for advertisers looking to expand into the cryptocurrency space. EthereumMax executives (“Executive Defendants”)

In the latest development in the ongoing dispute between the SEC and Telegram Group Inc. (Telegram), Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York in a March 24, 2020 opinion granted the SEC’s motion for preliminary injunction to prevent Telegram from distributing

On December 10th, 2018, a U.S. District Judge for the District of New Jersey denied Latium Network, Inc. (“Latium”) and its co-founders’ motion to dismiss a class action alleging violations of Section 5 of the Securities Act of 1933 (the “Act”) for offering and selling unregistered securities in the form of Latium X (“LATX”) tokens.

For digitally savvy investors itching to know whether U.S. courts would treat crypto-tokens as securities subject to the regulatory requirements of the Securities Act of 1933, the wait is over—sort of. The first federal judge to decide the issue in the class-action context landed on the same side as the SEC did back in 2017, finding that the virtual tokens in the case could be characterized as securities. We discussed the SEC’s 2017 report in a previous articleSee Margaret A. Dale and Mark D. Harris, The SEC Concludes that Digital Tokens May Be Securities, NYLJ, Aug. 8, 2017.

On June 25, 2018, Magistrate Judge Andrea M. Simonton of the Southern District of Florida issued this cutting-edge opinion in Rensel v. Centra Tech. Her Report and Recommendation (R&R) considered a motion for a temporary restraining order to safeguard the proceeds from an initial coin offering (ICO). The underlying shareholder class action alleged that Centra Tech, a Florida-based technology start-up company, and several of its founders and executives, had violated various provisions of the Securities Act. To reach her decision, Judge Simonton analyzed whether the tokens Centra Tech offered during the course of its ICO were securities for purposes of the Securities Act (despite the defendants conceding the point for purposes of the motion).

A class action lawsuit was filed on May 3rd against Ripple Labs Inc.—a fintech startup that controls the third-largest cryptocurrency in the world—and its CEO Brad Garlinghouse, alleging that Ripple sold unregistered, non-exempt securities in violation of federal and California state securities laws.

In their complaint, Plaintiffs characterized the sale of XRP (Ripple’s native token) as “a scheme by Defendants to raise hundreds of millions of dollars through the unregistered sale of XRP” and “what is essentially a never-ending initial coin offering (ICO).” In addition to attorney fees, costs of the suit, and punitive damages, the plaintiffs also request a declaration from the court that the sale of XRP is an unregistered securities sale and to enjoin defendants from further violating securities laws.

The Federal Trade Commission (FTC) recently sought and received a temporary restraining order (TRO) against four promoters of alleged pyramid schemes involving cryptocurrencies. The promoters were charged with violating the FTC Act’s prohibition on unfair or deceptive acts or practices in or affecting commerce.

The FTC’s complaint (filed under seal