Drew Hinkes
@propelforward
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@winstonlaw |AdjunctProfessor @NYUStern / @NYUlaw /@fsulaw |No legal/financial advice |#crypto |#Miami |#Phish | all views are my views | all errors are mine.
Joined June 2009
#Illinois Senate Bill SB1887 would drive out #blockchain #node operators, #miners, and #validators, waste judicial resources, and confuse existing law in a quixotic attempt to protect Illinois consumers. Let's examine the mess in a #thread:.
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The EARN-IT bill has passed the Senate and is now into the House. This is a very dangerous bill and will hurt encryption and privacy for everyone. It must be stopped.
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Congratulations #Texas, you're the first state to formally attack and attempt to ban anonymous use of #cryptocurrency in the US.
#Texas HB 4371 would require prior verification of #identity for any transaction paid for via #digital currency, only allow the state to operate with a verified identity digital currency, defined as one where identity if sender is known prior to transaction. 1/3 To my knowledge
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Hot Take: This is nonsense. A thief is not a "purchaser" or "owner" and thus can't avail his/herself of the stolen rights under the license (. Reminder- digital assets give you system powers, not legal rights. Legal rights come from law.
Seth Green developed a whole show around his bored ape, because by owning the NFT he owned the right to that character. Then someone stole it. Now Seth doesn’t own the IP to the character in his show anymore
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#NYDFS issues USD backed #stablecoin guidance; must be fully backed by an asset reserve; issuer must adopt a clear redemption policy, approved by DFS in writing (!!!) redemption at par in fiat; reserve must be held in custody with /1.
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Now the question… if and when this actually happens, will the IRS permit #tax treatment of #bitcoin as a foreign currency?.
BREAKING: The President of El Salvador just announced that he is making Bitcoin legal tender in his country. This is the first country to take such a courageous step, but it won’t be the last.
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While it's notable that @KimKardashian settled with the #SEC, it's more interesting to see that the consent order (once again) includes conclusory allegations that the token at issue was a security without the SEC bringing a claim vs the issuer or giving the issuer /1.
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1/x Today a CFTC official suggested that devs may be liable for crimes committed using their code (suggested & predicted by @angela_walch.) Now comes the collision of (1) First Amendment rights -code is free speech (2) contract (disclaimers in licenses) & (3) imposed tort duties.
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The dissent to the #Shapeshift settlement by #SEC Cmmrs. @HesterPeirce and Uyeda captures the experience of companies & lawyers in the #digitalasset and #crypto industry in America better than anything I’ve seen. I couldn’t write it better myself.
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Today I published "The Limits of Code Deference" Inspired by #theDao, #Dapps & #DAOs, this article explores whether #decentralizedventures can absolutely bind their users to their code’s execution. Not surprisingly, the answer is no. Why? A quick🧵:.
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so, Individual X of the Billion dollar #bitcoin forfeiture had a lawyer. and apparently good #privatekey management practices. @Ross_Todd
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We've got a new proposed #SEC #token #safeharbor that would let issuers offer tokens in the US. It's big. But, what's new? How is it different from the prior proposal? What's new? You guessed it. It's unavoidable, It's inevitable. It's a #THREAD. Let's dive in/1.
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here's the full text of the #Token Taxonomy Act, which would exclude #crypto tokens from the #SEC definition of #Securities:
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For the umpteenth time- #digitalassets and technology systems do not provide legal rights to their users. They provide system powers. Legal rights come from substantive law or agreements recognized by substantive law. These are not the same.
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We should stop using the term #blockchain. Marketers & hype-masters have abused it to the point that it's been stripped of meaning. If you mean private distributed database, or public, peer to peer, proof of work network, say so. Words matter. Don't use that one.
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@HesterPeirce "The application of the securities laws to #token projects is not clear, despite the Commission's continuous protestations. " "our scorched earth approach in remedying [#LBRY] violations was completely out of proportion to any investor harm"
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I'm excited to announce that i've joined @WinstonLaw in Miami, as part of their #Digital Assets and #Blockchain Technology practice. Why change firms? What's going on at Winston? You guessed it, it's time for a short thread:.
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The @IRSnews hiring consultants to "Develop[] Exploitation Techniques Against #Cryptowallets" TLDR; the #IRS wants to see inside #crypto wallets so they can tax what's inside your #crypto wallet.
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First class teaching #cryptocurrency and law at @FloridaState College of Law. 1/3 of students had bought some sort of digital assets. The times are a’changing.
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The #SEC will proceed vs #Binance on the basis that #BNB, #BUSD, & its #staking offerings were securities & apparently will abandon its argument that SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, & COTI are securities; is this a shift in the SEC's enforcement strategy ?/1.
The @SECGov has retracted its request for the court to classify tokens like @solana, @Cardano, and @0xPolygon as securities in its lawsuit against @binance.
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If you thought that was bad. Get ready to #Illinoize your blockchain! Yes, #Illinois is going to force you to re-write your blockchain- specifically by including smart contract code capable of responding to court orders. And if you don’t, you can be sued /10.
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Dear #crypto world: Speeches by employees of administrative agencies do not change or create the law. It is a nice indicator though.
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🚨🚨🚨BREAKING: clarity on how broker dealers should handle non-custodial digital asset securities transactions on ATS. 🚨🚨🚨 THREAD coming atcha /1
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here's a court order entered in action vs. iFINEX INC., BFXNA INC., BFXWW INC., TETHER HOLDINGS LIMITED, TETHER OPERATIONS LIMITED, TETHER LIMITED, TETHER INTERNATIONAL LIMITED ordering documents to be turned over to NY State Attorney 1/2
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as a preface, This is a stunning reverse course for a state that was previously pro -innovation. Instead we now get possibly the most unworkable state law related to #crypto and #blockchain I’ve ever seen. A shocking turn of events for the #tech community in #illinois /2.
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The Act would allow a court, upon receipt of an order from the Attorney General or State’s Attorney, to order any appropriate blockchain transaction for digital property or for the execution of a smart contract and require a blockchain network /4
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House introduces bill to "promote United States competitiveness in the evolving global #virtualcurrency marketplace" would obligate #CFTC & #SEC to report to congress on comparison of US/foreign regulation of #crypto, recommend legislative changes, including re: spot markets
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Read my first academic paper (!!!) addressing how courts should handle claims of lost #privatekeys here: ."Throw Away the Key, or the Key Holder? Coercive Contempt for Lost or Forgotten Cryptoasset Private Keys, or Obstinate Holders"
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There has been lots of talk about #uniswap front end interfaces blacklisting #tokens that might be #securities. This is not an attack on #DeFi or regulation of #DeFi specifically, but instead a logical example of how existing regulation applies to legally addressable entities /1.
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SB1887 focuses on consumer protection (this is GOOD). But, the manner in which it seeks to protect consumers is to require #node operators ##miners & #validators to do impossible things, or things that create for themselves new criminal & civil liability at pain of fines/ fees /3.
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If the idea is to protect us from the abuses of banks by making #stablecoin issuers into banks. i'm not sure what we're doing here. .
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if you mine /validate or run a node ANYWHERE may be subject to $10k/day fines if you don’t do something that’s generally impossible or could be a crime or civil violation of law. SMDH. AND it doesn't matter that compliance is impossible /would likely be illegal. /9.
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Read my first academic paper (!!!) addressing how courts should handle claims of lost #privatekeys here: ."Throw Away the Key, or the Key Holder? Coercive Contempt for Lost or Forgotten Cryptoasset Private Keys, or Obstinate Holders".
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@HoarseWisperer my dog waking me up to wedge himself between me and my wife and immediately go back to sleep.
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so, what does this mean? if you're a #miner, #node operator or #validator, you can be fined if you don't seize third party's assets, even if that's impossible, and even if doing so would subject you to criminal or civil liability.
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@el33th4xor caught this. i'm going to break it down in a long, probably painful THREAD.
The SEC issued new guidance for money transmitters using cryptocurrencies. It then deleted the web page. Here's the document, it has far-reaching implications:.
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anyone have the "investment contract registration form" handy? Pls forward. Thx.
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Nobody will remember your dank memes & sick burns on social media when you die. Most people are remembered for how they helped others & for their families. Maybe in the '20's we'll look at our time spent on social media & decide to prioritize family & helping others.
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Subject to fines of $5k-10k per day. AND “The fact that a blockchain network has not adopted reasonable available procedures to comply with subsection (b) shall not be a defense to an action under subsection (c). /8.
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#Ripple summary judgment entered. Looks like institutional sales were sales of a security, but other sales were not. Mandatory reading.
Ripple Lawsuit Update: Summary Mention have been filed for the Judge. Documents can be found here:
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I picked a heck of a day to have @CaitlinLong_ as a guest lecturer in my @nyulaw class #DigitalAssets, #Blockchains & the Future of the Financial Services Industry. The topics- A Banker's view of #Crypto, Chokepoint 2.0, & #custodia vs. the Fed. Get the popcorn ready!.
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I'm incredibly excited to join @CarltonFields & to work with @WinstonOnoWales & @MattKohen to strengthen its top notch #crypto & #blockchain practice, while continuing in my role as General Counsel at @Athenabchain helping to build out the emerging #tokenized #securities industry.
Blockchain lawyer Drew Hinkes (@propelforward) has joined legal services firm @CarltonFields where he will focus on litigating cases for token issuers.
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Wyoming files ""Financial Technology Sandbox Act" bill that would create #Fintech sandbox, defines. #blockchain, includes blockchains w/in the definition of "innovative" & allows for limited use of innovative fintech under supervision of Banking Comm'nr or Sect'y of State.
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Of course, the fact that what the court is ordering is technically impossible is not a defense to an action under this section. The Act comes to the aid of secured creditors (again, in an entirely unworkable way). /13.
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Hey #crypto investment world: here's the proposed new definition of "#accredited #investor" - would require #FINRA or another #SRO to verify the new "education or job experience" qualification.
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issues list: 1. does the mere fact that developers who birthed the protocol are located in the district create venue? 2. do transactions take place "on Uniswap" or with other uniswap users? 3. Does Heart forking someone else's code mean someone else is responsible? /1.
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and if you don't modify your blockchain smart contract to aceept court orders, the plaintiff’s remedy will be for you to return all digital property/value you have received and payment of attorney’s fees and costs. /11
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an opportunity to dispute the conclusions found in the consent order. While the consent order doesn't determine the the issue & has no precedential effect against the issuer, it maintains the pattern of "indirect enforcement" we saw with Wahi.
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#SouthCarolina HB 4351, the "SOUTH CAROLINA #BLOCKCHAIN INDUSTRY EMPOWERMENT ACT OF 2019" is the friendliest batch of pro-#virtualcurrency laws in a single incredibly long title (seriously, check that out): seeks to "ESTABLISH THIS STATE AS AN INCUBATOR FOR TECH INDUSTRIES 1/4
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SEC expressly notes that tokens distributed via airdrop/bounty can still be securities because ". a “gift” of a security is a 'sale' within the meaning of the.Securities Act when the donor receives some real benefit." Expect debate over what constitutes a "real benefit.".
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so, lets count the harms here: 1. courts will serve node operators/validators/miners and have to argue impossibility claims in response to contempt orders and appeals of fines. If miners/validators leave Illinois, there will be added enforcement complexities; /16.
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also, i didnt paste the link to the law up top, which is my bad. here we go:
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4. are we holding developers responsible for code they publish even if they no longer control it and don't profit from it? 5. is this the smoke signal for Uniswap devs launched an unregistered stock exchange? /2.
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so, any node operator, miner or validator can be charged with complying with a court order to transact on a blockchain if they have mined or updated their ledger to include a transaction originating in Illinois. Ugh. Here's the kicker: /7.
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but wait, there's more. A court can order a blockchain transaction as a remedy for a lost private key if the owner loses the key or is dead & the key is unknown to the administrator, or order a blockchain transaction to refund a victim in case of fraud/mistake /12.
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And then there's the issue of impossibility not being a defense; there are likely some constitutional issues that will be brought up every single time this is litigated. /19.
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that processes a blockchain transaction originating in this State at any time after the effective date of this Act shall process a court-ordered blockchain transaction without the need for the private key for with the digital property or smart contract, and hold any /5.
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#RhodeIsland joins the #crypto friendly party, HB 5595 would create an exemption from it's state securities laws for "open #blockchain tokens," mimicking other states but avoiding the use of the term "#utility token"
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1/ #Blockchain patent application filed by RPI @Mastercard rejected; rejection sustained in part on appeal; sought to protect system for "virtual currency micropayments in a financial transaction system by using a universal virtual currency to minimize processing fees
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#OFAC published new FAQ shedding light on unaswered questions stemming from its sanctions imposed against #ETH and #USDC addresses used by #TornadoCash. Let's dive in with a little thread🧵/1.
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the service law will be challenged in other states, particularly if a miner/validator/node operator cant' be found in Illinois. /17.
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As many state legislatures are considering the 2022 Amendments to the #UCC, lawyers, policymakers & the #crypto community are forced to grapple with #commerciallaw, which may be unfamiliar. To some, the purpose and effect of the law may not be clear. What does it mean? a #thread.
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blockchain operator that has mined, validated, or otherwise participated in processing a blockchain transaction on the blockchain network which originated in this State at any time after the effective date of this Act is liable to this State for a violation of subsection (b). /6.
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#Montana joins the #crypto -friendly party with Bill 584, which would recognize #utility tokens and create state #securities exemptions.
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Honored to be recognized as a Florida Legal Trailblazer by the @dbreview . Thanks to my colleagues & friends at @CarltonFields @AthenaBitcoin @Athenabchain @NYUStern and @nyulaw who have supported me on my journey into the emerging law of #crypto #bitcoin & #blockchain tech
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Further, if a node operator/validator/miner can't be found in Illinois, would this law apply in an action brought in federal court? /18 @ohaiom would likely have some thoughts.
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Wait until main street & wall street banks/bankers realize that #NFTs can be used to represent non-fungible financial assets (leases, commercial paper, mortgages, etc. ).
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