The New NFT Valuation Math: Multiply by Zero

NFT Crash: 95% of the Market May Now Be Worthless, Study Finds

Are NFTs dead?

A recent study looking at the price of thousands of collections seems to suggest the answer is “yes.”

A report by dappGambl based on data provided by NFT Scan and CoinMarketCap showed that out of 73,257 NFT collections the researchers looked at, 69,795 of them, or slightly over 95%, had a market cap of zero ether.

By their estimates, almost 23 million people hold these worthless assets.

SEC Charges Mexico-based Company, its CEO, and Four Individuals in Ponzi Scheme Targeting Spanish-Speaking U.S. Investors

The Securities and Exchange Commission today announced charges against Mexico-based company Aras Investment Business Group S.A.P.I. de C.V., its CEO Armando Gutierrez Rosas, and four individuals for fraudulently raising at least $15 million from more than 450 retail investors in the U.S., most of whom were members of the Mexican American community.

The SEC’s complaint, filed in U.S. District Court for the Western District of Texas, alleges that, from about March 2020 through November 2021, Gutierrez raised money from retail investors in the U.S. for the purported purpose of investing in U.S. real estate and mining operations in Mexico, promising investors monthly returns as high as 10 percent. According to the complaint, no U.S. investor funds were used for investment purposes; instead, Gutierrez was operating a Ponzi scheme and affinity fraud and used investor funds to pay for his personal expenses including a $2.5 million mansion in Texas. Along with Gutierrez, the SEC also charged Efren Quiroz, Luis Quiroz, Maria Tolentino, and Diayanira Rendon for their roles in the alleged fraud.

Sam Bankman-Fried to stay in jail, appeals court rules

A U.S. appeals court on Thursday upheld a judge’s decision to jail former cryptocurrency billionaire Sam Bankman-Fried ahead of his Oct. 3 trial on fraud charges stemming from the November 2022 collapse of his now-bankrupt FTX exchange.

In a written decision, a three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan said it agreed with U.S. District Judge Lewis Kaplan’s finding that Bankman-Fried had likely attempted to tamper with two witnesses.

Bankman-Fried’s expert witnesses rejected by judge

A U.S. judge on Thursday restricted Sam Bankman-Fried’s ability to call expert witnesses to testify at his criminal fraud trial, in a blow to the FTX cryptocurrency exchange founder.

Bankman-Fried wanted to call seven experts on topics such as cryptocurrency markets and English contracts, to convince jurors to acquit him of stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund.

But in a written order, U.S. District Judge Lewis Kaplan said three proposed witnesses cannot take the stand, because their testimony was irrelevant or could confuse the jury.

He also said Bankman-Fried may seek to call the remaining four experts, but only to rebut prosecution witnesses.

SEC crypto enforcement chief David Hirsch outlines next possible areas of SEC crypto focus

Crypto assets are causing “a lot of risk and harm to investors” and institutional investors should be careful about acting as statutory underwriters, said David Hirsch, chief of the SEC Crypto Assets and Cyber Unit, Division of Enforcement. Hirsch discussed SEC enforcement actions against crypto exchanges, celebrity touters, and NFT issuers, among other topics, in a Q&A session at the Securities Enforcement Forum Central 2023 conference on September 19.

The Q&A was conducted by A. Kristina Littman, partner at Willkie Farr & Gallagher. The conference was organized by Securities Docket.

Fenwick & West Says It Knew Nothing About Alleged FTX Fraud

Fenwick has asked a federal judge to toss a lawsuit alleging it played a role in FTX’s fraud, saying its work for the crypto exchange amounted to “routine” legal services.

***

Fenwick’s alleged services can be reduced to “three basic acts,” the Gibson Dunn team, led by partner Kevin Rosen, argued—employing lawyers that eventually left Fenwick to join FTX; forming corporations that Bankman-Fried used to perpetrate fraud; and advising FTX on regulatory compliance as it pertained to crypto trading.

“A lawyer’s representation of a client and knowledge of their employees does not make them omniscient as to the client’s inner workings,” the motion said.

New California Climate Law Pulls In Private Companies

California is poised to force many private businesses to report on carbon emissions, dramatically increasing the number of U.S. companies that could be subject to some kind of U.S. climate reporting.

Gov. Gavin Newsom on Sunday said he would sign landmark legislation that would require businesses, including those privately held, to begin reporting on emissions if they operate in California and have at least $1 billion in revenue. In addition to their direct emissions, those businesses would have to account for emissions by suppliers and customers, so-called “Scope 3” emissions that are considered more nebulous and difficult to pin down.

What’s in a Name? A Lot, Says the SEC

On Wednesday the SEC adopted amendments to the “Names Rule” that are meant to promote “truth in advertising” according to SEC Chair Gary Gensler. Specifically, the amendments require funds with names that reference a thematic investment focus (such as incorporation of Environmental, Social, and Governance (“ESG”) factors), or that suggest an investment portfolio with certain characteristics (such as “growth” or “value”) to invest at least 80% of the value of their assets in those named focus areas.

Companies like Coinbase, Airbnb, Oatly and DoorDash go on offense

As Axios’ Crystal Kim recently pointed out in her crypto newsletter, most companies clam up when the Securities and Exchange Commission (SEC) comes knocking, but that’s not the approach Coinbase Global is taking.

Zoom in: Coinbase has been unusually vocal about run-ins with its primary regulator in blogs, tweets, podcasts and media interviews — offering up subpoenas, court filings (theirs and their adversaries) and legal analysis in near real time to the public.

–Coinbase also started an advocacy campaign called Stand With Crypto seeking to mobilize public support for crypto rules. —“In terms of how we thought about public messaging, we needed to start with first principles to basically reconsider anything and everything we had been taught about how to engage,” Paul Grewal, Coinbase’s chief legal officer, told Kim.

Zoom out: Coinbase isn’t alone….