Acting SEC Chairman Mark Uyeda Announces First Step of "SEC Crypto 2.0"

SEC Crypto 2.0: Acting Chairman Uyeda Announces Formation of New Crypto Task Force

Today SEC Acting Chairman Mark T. Uyeda launched a crypto task force dedicated to developing a comprehensive and clear regulatory framework for crypto assets. Commissioner Hester Peirce will lead the task force. Richard Gabbert, Senior Advisor to the Acting Chairman, and Taylor Asher, Senior Policy Advisor to the Acting Chairman, will serve as the task force’s Chief of Staff and Chief Policy Advisor, respectively.

Drawing from talented staff across the agency, the Task Force will collaborate with Commission staff and the public to set the SEC on a sensible regulatory path that respects the bounds of the law. To date, the SEC has relied primarily on enforcement actions to regulate crypto retroactively and reactively, often adopting novel and untested legal interpretations along the way. Clarity regarding who must register, and practical solutions for those seeking to register, have been elusive. The result has been confusion about what is legal, which creates an environment hostile to innovation and conducive to fraud. The SEC can do better.

The Task Force’s focus will be to help the Commission draw clear regulatory lines, provide realistic paths to registration, craft sensible disclosure frameworks, and deploy enforcement resources judiciously.

SEC Files AI-Washing Enforcement Action Against Restaurant Technology Company

In what may be the SEC’s first AI-washing enforcement action against a reporting company, on January 14, 2025, the agency brought a settled enforcement action against Presto Automation, a restaurant services technology company, based on the company’s alleged misrepresentations “regarding critical aspects of its flagship artificial intelligence (“AI”) product, Presto Voice….”

Trump AG Pick Bondi’s Brother Steers ‘MrBeast’ TikTok Bid

YouTube personality “MrBeast” Jimmy Donaldson and a group of investors tapped Brad Bondi, the brother of President Donald Trump’s pick to run the Justice Department, for legal advice on their bid to buy TikTok. The group, which is led by tech entrepreneur Jesse Tinsley, said Sunday that it made an all-cash offer to buy the popular social media app whose future in the US is in limbo. Bondi, whose sister Pam Bondi was nominated by Trump for attorney general, helms a team of lawyers from Paul Hastings representing the group in the bid.

The SEC Was Busy Last Week

What if the US Securities and Exchange Commission never brings another enforcement case? What if it’s like “ahh, go ahead, do all the fraud you want”? What if the only enforcement cases are against BlackRock for doing ESG investing, or against short sellers of Trump Media & Technology Group Corp.? Crime might be legal now, if you are a vocal enough supporter of Donald Trump, and the financial and crypto industries are rushing to support him. It’s hard to imagine anyone getting in trouble for texting about work from their personal phones, now.

Just in case, the SEC filed a ton of enforcement actions on Friday, the last practical day it could do so before the administration changed. We will talk about a few of the highlights in the following sections.[…]

Last week’s cases, like every case, make rules. Or rather, made rules. They made rules that were meaningful in the world of Gary Gensler’s SEC. Can you just ignore these rules now? Are they a waste of time? Are you allowed to do all of the things that last week’s cases say you are not allowed to do? Probably not, no, probably I wouldn’t go that far. Still it feels weird to talk today about what the rules are, based on last week’s cases. I’m going to do it anyway, but the rules have probably changed.

“Under the Wire” E-Comms Settlements: More Confusion Than Closure

Normally, these kinds of group announcements are line-drawing exercises intended to clearly identify violative conduct and to warn of continued, vigorous enforcement against such conduct. However, this situation perhaps raises more questions than answers.

In assessing the impact of these settlements, fund managers should consider the following open points:

1. The Recordkeeping Rule has existed (in various iterations) for over half a century, and the SEC’s current position on its coverage differs from the historical understanding. It has never imposed a blanket retention requirement on (as was the case before the invention of email) every scrap of paper utilized in the day-to-day operation of an adviser’s business; furthermore, no court has found that the rule extends to all or substantially all “business related” communications involving an adviser’s personnel.

2. Relatedly, litigation with the remaining subjects of Enforcement’s initiative is still a possibility. The SEC has not fared well in high-stakes litigation over the past few years, and there are numerous managers still caught in the investigation that may want to bring the fight to the SEC in this post-Chevron, post-National Association of Fund Managers environment.

3. Finally, the SEC will have a new (acting) Chair in just a few days, and presumably a new permanent Chair in a matter of weeks. While it is difficult to predict positions, priorities, and outcomes, the next Director of Enforcement may have different thoughts on whether these actions are worth an investment of time and resources.