Digital Asset Companies Continue New Product Launches
By Robert A. Musiala Jr.
Decentralized finance (DeFi) startup Figure Markets recently announced that it has launched “the first interest-bearing transferable stablecoin native to a public blockchain, registered with the Securities and Exchange Commission.” According to a blog post by the company, “YLDS … is a fixed price, daily accrual public security native to the Provenance Blockchain.” The blog post further notes that “YLDS can be transferred peer-to-peer and is backed by the same securities that prime money market funds hold.”
In other news, two major digital asset custody providers, BitGo and Copper, recently announced “the launch of a first-of-its-kind trading and off-exchange settlement solution.” According to a BitGo blog post, the solution allows clients to trade on the Deribit derivatives exchange “while their assets are secured off-exchange in qualified custody with BitGo Trust” and trades are “automatically settled via Copper’s ClearLoop and BitGo’s Go Network infrastructure.”
In another recent development, Ripple, a U.S. payments and digital assets company, announced multiple new features on its XRP Ledger (XRPL) blockchain network. According to a company blog post, the newly announced features include an automated market maker, decentralized identity capabilities, integration with pricing oracles, a new “Multi-Purpose Token (MPT)” standard, an XRPL lending protocol and an XRPL EVM sidechain.
Finally, according to recent reports, the developers of the Avalanche blockchain network have launched a reloadable crypto debit card, the Avalanche Card, in partnership with a major credit card provider. The debit card reportedly allows users to spend crypto anywhere that accepts payments from the credit card provider’s network. The Avalanche card will reportedly be available initially in Latin America and the Caribbean.
For more information, please refer to the following links:
SEC Seeks Public Input for Crypto Task Force, Closes Crypto Investigations
By Robert A. Musiala Jr.
On Feb. 21, Commissioner Hester M. Peirce of the U.S. Securities and Exchange Commission (SEC) published a statement requesting public input for the SEC’s Crypto Task Force. The request for public input asks for comments on 48 specific questions that broadly fall into the following categories: security status of crypto assets, crypto assets that are not securities, registered token offerings, safe harbors from registration, secondary market trading of crypto assets, crypto asset custody (including by broker-dealers, investment advisers and investment companies), crypto lending, crypto exchange-traded products, tokenized securities and innovation sandbox issues. The statement provides links to a written submission form for providing input and a form for submitting a request to meet with the SEC’s Crypto Task Force.
Separately, according to various company announcements and news reports, the SEC has recently closed its investigations into multiple major U.S. digital asset companies. The closed investigations include those related to the software company that developed the protocol for the world’s largest decentralized exchange (DEX), the OpenSea nonfungible token (NFT) marketplace, two major U.S. cryptocurrency trading platforms and a major U.S. Ethereum development company.
For more information, please refer to the following links:
SEC Division of Corporation Finance Publishes Statement on Meme Coins
By Robert A. Musiala Jr.
On Feb. 27, the U.S. Securities and Exchange Commission’s (SEC) Division of Corporation Finance (the Division) published a Staff Statement on Meme Coins (the Statement). The following are key takeaways from the Statement:
- Meme Coins Are Not Securities. According to the Statement, “It is the Division’s view that transactions in the types of meme coins described in this statement, do not involve the offer and sale of securities under the federal securities laws.”
- Definition of Meme Coin. The Statement defines a “meme coin” as “a type of crypto asset inspired by internet memes, characters, current events, or trends for which the promoter seeks to attract an enthusiastic online community to purchase the meme coin and engage in its trading.” The Statement notes that “[m]eme coins also typically have limited or no use or functionality.”
- Akin to Collectibles. According to the Statement, meme coins are “akin to collectibles” because they “typically are purchased for entertainment, social interaction, and cultural purposes, and their value is driven primarily by market demand and speculation.”
- Investment Contract Analysis. The Statement analyzes meme coins under the “investment contract” test set forth in SEC v. W.J. Howey Co. and finds that “[t]he offer and sale of meme coins does not involve an investment in an enterprise nor is it undertaken with a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others.”
- Caution – Disguised Securities. The Statement cautions that its guidance “does not extend to the offer and sale of meme coins … that are labeled ‘meme coins’ in an effort to evade the application of the federal securities laws by disguising a product that otherwise would constitute a security.”
- Caution – Other Laws. The Statement also cautions that “although the offer and sale of meme coins may not be subject to the federal securities laws, fraudulent conduct related to the offer and sale of meme coins may be subject to enforcement action or prosecution by other federal or state agencies under other federal and state laws.”
For more information, please refer to the following link:
Congressional Research Service Publishes Report on Banking and Crypto
By Robert A. Musiala Jr.
The U.S. Congressional Research Service recently published a report titled “Banking and Cryptocurrency: Policy Issues.” According to the report, bank involvement with crypto can fall into three categories: (1) banks can provide traditional banking services, such as lending and deposit taking to crypto firms; (2) banks can provide crypto services, such as payment applications and tokenization; and (3) crypto firms can seek to acquire banks or bank charters. Among other things, the report provides details on each of these categories, discusses related policy issues and provides an overview of relevant legislative action in the 118th Congress. In its concluding observations, the report discusses policy concerns related to banking crypto, anti-money laundering challenges, financial stability risks, safety and soundness issues, state charter options, and potential actions by Congress to impact the relationship between crypto and banking.
For more information, please refer to the following link:
DOJ Crypto Enforcement Targets Unlicensed Exchanges, Market Makers, Scams
By Robert A. Musiala Jr.
The U.S. Department of Justice (DOJ) recently announced that the OKX cryptocurrency exchange has pled guilty to operating an unlicensed money transmitting business. According to a DOJ press release, as part of the guilty plea and sentencing, OKX agreed to pay monetary penalties totaling more than $504 million. Among other things, the press release noted that while OKX has had an “official policy” preventing U.S. persons from transacting on the exchange, from 2018 to 2024 “OKX served U.S. retail and institutional customers that engaged in over one trillion dollars’ worth of transactions through OKX.”
Another recent DOJ press release announced that a Russian national residing in Portugal “has been extradited to the United States for his role in a wide-ranging conspiracy to allegedly manipulate cryptocurrency markets on behalf of client cryptocurrency companies.” According to the press release, the defendant is the founder of Gotbit, a well-known cryptocurrency “market maker.”
In a third press release, the DOJ announced that a Montana man has been found guilty of participating in a cryptocurrency money laundering conspiracy. According to the press release, the defendant “conspired with others to launder the proceeds of wire fraud and mail fraud schemes through cryptocurrency,” including “romance scams, business email compromises, real estate scams, and other fraudulent schemes.”
For more information, please refer to the following links:
Bybit Exchange Suffers Largest Hack in Crypto History – Over $1.4B
By Lauren Bass
Last week, hackers reportedly stole over $1.4 billion worth of Ether and other digital assets from the Dubai-based Bybit cryptocurrency exchange by hijacking a “routine transfer” of assets between digital wallets and manipulating the smart contract code to divert the funds.
The exchange and related asset protocols mounted a swift response. According to statements immediately issued by Bybit’s CEO, user assets were backed one to one and the exchange would cover any loss incurred. Within days of the attack, the mETH Protocol reportedly coordinated efforts among security professionals, partners and ecosystem players to recover $42 million in stolen assets, and the exchange received an influx of loans, whale deposits and ETH purchases that helped “close the gap” created by the massive theft.
By the end of the week, the FBI released an alert identifying North Korea’s “TraderTraitors” as the party responsible for the hack. The FBI also provided over 50 Ethereum wallets believed to be connected to the theft and asked for private-sector assistance in blocking the transfer (and further laundering) of any assets to/from the wallets.
According to cyber analysts, this attack mirrors earlier attacks on other networks in which bad actors use “sophisticated” social engineering techniques to deceive wallet holders into unknowingly approving transactions containing malicious code. The thieves then employ “intricate” methods to launder and move the stolen assets.
For more information, please refer to the following links:
Crypto Hacks Continue, 2025 Crypto Crime Report Published
By Lauren Bass
The $1.4 billion Bybit hack was not the only threat faced by blockchain-based platforms this past week. In another hack, a Hong Kong-based stablecoin neobank, Infini, reportedly suffered $50 million in losses when a contract developer improperly retained administrative rights, which it later used to siphon USD Coin (USDC) from the platform. Statements issued by the platform founder suggest that platform users will be fully compensated for their losses. Separately, a California-based developer platform reportedly suffered a malware attack that siphoned users’ personal data, banking records and over $485,000 worth of bitcoin.
In the wake of these recent attacks, Chainalysis, a blockchain analytics firm, released its “2025 Crypto Crime Report,” which estimates that the total value of illicit blockchain activity in 2024 was approximately $51 billion – a projected increase from 2023’s $46.1 billion but less than 2022’s $54.3 billion. The report provides an in-depth analysis of 2024 crypto crimes in the areas of ransomware, darknet markets, market manipulation, scams, stolen funds, sanctions, extremism and organized crime.
For more information, please refer to the following links:
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