- Daily Update from Securities Docket
- Posts
- The Crypto-Catastrophists
The Crypto-Catastrophists
Bruce Carton
June 03, 2022
Good morning from Washington, D.C.! Here's what's going on today (after you buy your burrito with crypto).
People
Shannon Eagan, a Securities Litigation and Enforcement partner at Cooley, has been named Partner in Charge of the firm's Palo Alto office.
Clips ✂️
Seems bad. But it is weird to put a person in prison for years because he … bought some internet cartoons … before … they were … put on a website? Like on the one hand it certainly seems like insider trading, sure, but on the other hand, does the US government have that much interest in protecting the level playing field of trading markets in internet cartoons? Were you really defrauded, when you sold this guy a copy of “Flipping and spinning” at the going price before he featured it on the homepage? When people worry about insider trading in stocks, it is because they think insider trading undermines confidence in the stock market. I feel like everything that has ever been thought, said or done about NFTs undermines confidence in the NFT market, so it’s kind of random to go after this.
👉 Great stuff as always from Bloomberg's Matt Levine. As he notes, "arguably Chastain (allegedly) invented NFT insider trading; how could have he have known it was wire fraud?"
SEC Charges Global Steel Pipe Manufacturer with Violating Foreign Corrupt Practices Act
The Securities and Exchange Commission today announced that Tenaris, a Luxembourg-based global manufacturer and supplier of steel pipe products, will pay more than $78 million to resolve charges that it violated the Foreign Corrupt Practices Act (FCPA) in connection with a bribery scheme involving its Brazilian subsidiary.
According to the SEC’s order, the resolution with Tenaris is the result of an alleged bribe scheme involving agents and employees of its Brazilian subsidiary to obtain and retain business from the Brazil state-owned entity Petrobras. Specifically, the order finds that between 2008 and 2013, approximately $10.4 million in bribes was paid to a Brazilian government official in connection with the bidding process at Petrobras. The bribes were funded on behalf of Tenaris’ Brazilian subsidiary by companies affiliated with Tenaris’ controlling shareholder.
Japan Passes Crypto Stablecoin Bill That Enshrines Investor Protection
Japan’s parliament passed a bill on Friday that clarified the legal status of stablecoins, defining them essentially as digital money. Stablecoins must be linked to the yen or another legal tender and guarantee holders the right to redeem them at face value, according to the new law.
The legal definition effectively means stablecoins can only be issued by licensed banks, registered money transfer agents and trust companies. The legislation doesn’t address existing asset-backed stablecoins from overseas issuers like Tether, or their algorithmic counterparts. Crypto exchanges in Japan don’t list stablecoins.
The backlash to cryptocurrency investment is growing
Maybe it was when the author of the influential book “Black Swan” said bitcoin was worth “exactly zero.”
Perhaps it was the assessment from a billionaire hedge-fund manager that cryptocurrencies are a “limited supply of nothing.”
Or it could just be one of those cultural shifts that happens when one too many celebrities tries to convince us of something.
Whatever the turning point, a growing group is sounding dire warnings about the dangers of cryptocurrency investment. Call them the crypto-catastrophists — bloggers and billionaires, mathematicians and economists, computer-scientists and 2008-crisis prophets and, even, a 2000’s-era Hollywood personality — who have all come together to unleash a warning to government and citizens about cryptocurrency investment. And their voices have, slowly, begun to rise above crypto’s evangelist din.
👉 Looooong article in the Business section of the Washington Post following up on the "Revenge of the Nerds Letter" discussed here on Wednesday. This will add fuel to the fire for the anti-crypto folks, a.k.a. the "Catastrophists" in this article.
ForUsAll Launches First Crypto Guidance Lawsuit Against DOL
The US Labor Department is being called to task in federal court for its recent strongly worded guidance advising 401(k) plans against cryptocurrency investments.
San Francisco-based plan provider ForUsAll Inc. filed a lawsuit against the department Thursday, claiming regulators breached their statutory purview by threatening “an investigative program” aimed at plan sponsors that offer digital assets through their core plan lineup or self-directed brokerage accounts.
“Over and over again, investors are losing billions because of risky cryptocurrency investments,” said Attorney General James. “Even well-known virtual currencies from reputable trading platforms can still crash and investors can lose billions in the blink of an eye. Too often, cryptocurrency investments create more pain than gain for investors. I urge New Yorkers to be cautious before putting their hard-earned money in risky cryptocurrency investments that can yield more anxiety than fortune.”
The virtual currency market exposes investors to dangerous risks, such as wild price swings and potential losses due to hacking, fraud, or theft. Even “legitimate” investments in virtual assets are subject to speculative bubbles and security issues….
Chipotle will now accept cryptocurrency in US stores
Chipotle, the popular Mexican-style fast-food restaurant chain, will now accept cryptocurrency payments through Flexa, a digital payments platform.
Flexa supports around 98 currencies, including BTC and ETH. Customers can use the app to pay for food items in any of the nearly 3000 Chipotle restaurants in the United States.