Non-Fungible Insights: Blockchain Decrypted

On February 27, 2025, the Securities and Exchange Commission released a staff statement (Staff Statement) that clarifies that meme coins, defined 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,” are not securities.

On February 7, 2024, the Securities and Exchange Commission (SEC) announced charges against TradeStation Crypto, Inc. for “failing to register the offer and sale of a crypto lending product” that it offered to U.S. investors from approximately August 2020 to June 2022.

On May 18, 2023, House Majority Whip Tom Emmer (R-MN) and Representative Darren Soto (D-FL) proposed the bipartisan Securities Clarities Act (the “Act”). The purpose of the Act is to “clarify and codify that an asset sold pursuant to an investment contract….including an asset in digital form…, that is not otherwise a security…does not become a security as a result of being sold or otherwise transferred pursuant to an investment contract.”

On May 30, 2023, the U.S. Securities and Exchange Commission (SEC) settled its case against a former Coinbase employee and his brother for alleged “insider trading” of digital assets. At the heart of the dispute was whether several digital assets trading on the platform were properly regarded as “securities” under U.S. law.

On February 22, 2023, the Southern District of New York denied a motion to dismiss by blockchain company Dapper Labs and its CEO Roham Gharegozlou. Dapper Labs is behind the “NBA Top Shot Moments” Non-Fungible Token collection and also controls the private Flow blockchain network, on which the NFT transactions occur via the exclusive FLOW tokens.

On November 7, 2022, the United States District Court for the District of New Hampshire ruled that the digital asset LBRY Credits (LBC), offered to purchasers by LBRY, Inc., is an unregistered security for U.S. federal securities law purposes. This summary judgment follows a March 2021 Securities and Exchange Commission (SEC) enforcement action in which the agency claimed that LBRY’s offer and sale of LBC violated Sections 5(a) and 5(c) of the Securities Act of 1933 prohibiting unregistered offerings or sales of securities in interstate commerce. Ruling in favor of the SEC, the court determined that LBRY offered LBC as a security and rejected LBRY’s argument that it lacked “fair notice.”

On October 3, 2022, the Securities and Exchange Commission (SEC) issued a cease-and-desist order against media personality Kim Kardashian for violations of Section 17(b) of the Securities Act of 1933, which makes it unlawful for any person to promote a “security” without fully disclosing the receipt and amount of compensation received for such promotion. Section 17(b) is known as the SEC’s “anti-touting rule.”

On September 8, 2022, Securities and Exchange Commission (SEC) Chair Gary Gensler expounded his thoughts on cryptocurrency tokens (“Tokens”) and cryptocurrency intermediaries (“Intermediaries”) at the Practising Law Institute’s “SEC Speaks” program.

The Commission recently filed S.E.C. v. Wahi, et. al. (2022), an insider trading case brought in federal court in the state of Washington against a former Coinbase manager and others. The crux of the action is whether the former manager unlawfully provided the others advance notice of which digital assets were to be listed on the Coinbase platform before the listing was announced publicly.

On June 13, 2022, a class-action lawsuit was filed in the Northern District of California against Binance U.S. (“Binance”), the United States-headquartered partner of one of the most prominent global digital asset exchange platforms. The named Plaintiff, who had purchased Terra USD (“UST”) through Binance since April 13, 2022, alleges, among other things, that Binance misrepresented UST as a “safe” asset to purchasers and violated U.S. federal and state securities laws.