Tag Archives: David E. Kirk

SEC Halts Cryptoasset “Staking-As-A-Service” Program Amidst Tightening Regulatory Enforcement Environment

by Kevin S. Schwartz, David M. Adlerstein, and David E. Kirk

Author photographs

From left to right: Kevin S. Schwartz, David M. Adlerstein, and David E. Kirk (Photos courtesy of Wachtell Lipton Rosen & Katz)

Late last week, the SEC filed and simultaneously settled charges against the Kraken cryptoasset exchange for failing to register as a security the offer and sale of its “staking-as-a-service” program. The complaint’s allegations against Kraken, coupled with statements by the SEC’s Chairman, indicate that the SEC may pursue staking-as-a-service programs that have features like Kraken’s as unregistered securities offerings, raising fundamental questions for a sector of the crypto-industry with assets most recently valued at $91.8 billion. This also represents the latest in a series of actions by regulators attempting to shape the status and availability of particular financial products through enforcement tools rather than prescriptive guidance that might aid market participants in adapting existing rules to novel financial products.
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SEC Civil Insider Trading Case Has Broader Repercussions for Cryptoasset Market

by Kevin S. Schwartz, Rosemary Spaziani, David M. Adlerstein, David E. Kirk, and I. Andrew Mun.

On July 21st, the U.S. Attorney’s Office for the Southern District of New York criminally charged three individuals, including a former employee of the cryptoasset exchange Coinbase, with wire fraud in connection with alleged trading of particular cryptoassets ahead of Coinbase’s public announcement that it would make a market in them. In a parallel action, the SEC brought civil insider trading charges against the same individuals, asserting that their trades violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The criminal action itself is notable as the first insider trading case involving cryptocurrency markets, but it does not address the legal status of the traded cryptoassets. The SEC’s civil action, however, expressly asserts that at least nine of the cryptoassets at issue are securities that are subject to the federal securities laws.
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