In my December newsletter, I talked about FTX crypto exchange founder, Sam Bankman-Fried’s, arrest in the Bahamas and the list of charges from the Department of Justice, SEC and CFTC. SBF is not the only one in legal jeopardy.
Celebrities Tom Brady (geez, he’s had a BAD year, huh?), Larry David and Kevin O’Leary are on the wrong side of legal action, as well.
Days after SBF filed for FTX bankruptcy, attorney Adam Moskowitz of The Moskowitz Law Firm, a South Florida litigation boutique, and Boies Schiller Flexner filed actions in Miami federal and state court against Bankman-Fried and celebrity promoters of the exchange.
The federal class action suits allege that FTX’s yield-bearing accounts (YBAs), which pay interest on crypto holdings, were actually unregistered securities in violation of both state and federal securities laws and that celebrities who promoted them should therefore be on the hook for investor damages.
The Moskowitz action, filed on Nov. 15, claims damages are over $11 billion (yes, with a B).
A separate state action in Florida names Brady, Shark Tank TV personality Kevin O’Leary and former Boston Red Sox star David Ortiz — all Florida residents — as defendants. That suit was filed by the law firm of Boies Schiller, seeking a declaratory judgment on whether FTX YBAs are unregistered securities and if, by extension, celebrity promoters violated consumer laws by promoting them.
Bottom line: let the celebrity endorser … beware. Because they may be the only deep pockets accessible to investors, who likely won’t see a satoshi returned from the bankruptcy proceedings.
Reminder: Do NOT keep your assets on centralized exchanges. They are not banks. They are a marketplace where you trade cryptos. Learn to self-custody your assets. That’s the true power of digital ownership in the new economy.
On Tuesday, November, 22, 2022, the U.S. Copyright Office and the U.S. Patent and Trademark Office (USPTO) announced a joint study to examine various IP issues arising from the use of non-fungible tokens (NFTs). The Wednesday, November 23, 2022 Notice of Inquiry for the Federal Register can be found here.
This joint study follows a June 9, 2022 letter from Senate Judiciary Subcommittee on Intellectual Property leadership, Senators Patrick Leahy (D-Chair) and Thom Tillis (R-Tillis), requesting that the Copyright Office and the USPTO conduct a joint study and address issues related to NFTs and intellectual property rights in consultation with the private sector, drawing from the technological, creative, and academic sectors.
The notice seeks written public comments to several questions listed and also announces that the Copyright Office and USPTO intend to hold virtual public roundtables in January 2023.
A Closer Look at Copyright + NFTs
In late 2017 and early 2018, the era of token proliferation to leverage token issuance to raise funds to build blockchain-enabled projects (with a healthy dose of scams and unregistered securities), I began studying the intersection of copyright and blockchains, smart contracts, open source software and token standards in the Ethereum ecosystem (ERC-20 for fungible tokens and ERC-721 and later standards for non-fungible tokens).
My first law review article, CryptoKitties, Cryptography, and Copyright, presented at the 2019 BYU Copyright and Trademark Symposium and published in the American Intellectual Property Law Association Quarterly Journal, 47 AIPLA 219, 2019), examined the copyright implications of unique, scarce digital creative assets transferred and stored on blockchains, which I refer to herein generally as unique crypto assets (UCAs).
Specifically, I explored the emergence of NFTs created based on the ERC-721, a novel token standard at the time that enabled, for the first time, verifiable digital scarcity—an elusive characteristic in the world of Web 2.0. I analyzed whether ERC-721 tokens (and other non-fungible coding standards) could empower UCA holders to maintain control over their cryptographic creations in gaming, collectibles, and the full range of copyright-intensive industries, to name a few.
More recently, I examined the creative justice opportunities that might be enjoyed by systemically marginalized creatives when NFT and blockchain technology is leveraged.
I assessed whether such web3 technologies could provide and protect the economic power and creative control the Copyright Act promised but historically failed (and fails) to secure when at odds with discriminatory practices, contractual loopholes, and statutory impediments like the copyright transfer termination right.
I hope that stakeholders from all aspect of creativity, technology, education and policy submit comments and are invited to provide testimony during any hearings in these matters. This technology has disrupted copyright-intensive industries as much as it has the financial industry. And we’ve only just begun to explore the power and promise (as well as the pitfalls), to be sure.
In working with creatives and collectors at BlackNFTArt, Umba Daima and Black@, I know firsthand how disintermediated access to platforms that connect them on a peer-to-peer basis globally and to transfer artistry for cryptocurrencies (capital assets in the US) has begun to move the needle on the income and wealth gaps (at least before the current crypto winter).
I also know that numerous issues exist for artists, collectors and exchanges: the copyright complexities in the referenced art file connected to an individual token (because the token, itself, it not the art); direct and secondary liability issues for platforms; copyminting issues; file storage; how to respond to takedown notices and decentralized file storage issues; copyright transfer termination issues; estate planning and post-mortem copyright and license management issues. The list goes on. And that is just copyright!
So there is much to discuss. What intellectual property issues do you see at the intersection of IP and NFTs?
I’ve talked about this topic to several lawyers on my podcast, Tech Intersect, so listen, subscribe, share and let’s continue to conversation:
“Lawyers aren’t going away. But the way we work is changing.”
Today’s client and, more importantly tomorrow’s client, demands that lawyers keep pace with the #futureofwork in the #neweconomy. Here’s where I think we are and where we HAVE to go.
How do you foresee this directly impacting the legal industry?
Asked by interviewer Adam Keirstead
Well, there’s a really interesting move in the legal industry to prepare lawyers to have conversations with technologists in the IT department and those who are coding to leverage the existing master contracts that we have in order to figure out ways that we can automate certain functions.
Essentially, there are master agreements underneath that lawyers do, and there’s coding the coders and IT specialists do. They need to be able to talk to each other. This is an area that’s ripe for innovation on the law side.
Lawyers won’t go away, but the way that lawyers are interacting with business people, and in terms of our advice and how we work with them is going to certainly change!
This week, we continue our Digital Money Demystified Series with Bitcoin developer, educator and author, Jimmy Song. We discuss everything from the environmental impact of Bitcoin mining and how it relates to other mining to the role of stablecoins and central bank digital currencies in the future of money. We also examine the differences between Fiat and Bitcoin and why Bitcoin is the future of financial wealth.In this insightful discussion on the myths surrounding Bitcoin and cryptocurrencies and why decentralization is so important for individual sovereignty, Jimmy Song and I break down the differences between Bitcoin and other digital assets in a way that's easy to understand. This week, episode 177 of the Tech Intersect™ Podcast is about the myth that all cryptocurrencies are the same and why Bitcoin reigns supreme! POWERED BY ADVANTAGE EVANS™ ACADEMY Navigate your way from cash to crypto with Digital Money Demystified. Dive into the definitive guide on crypto myths and truths by Professor Tonya M. Evans. This isn't just a book; it's a roadmap to the decentralized web’s future of work, wealth, and creativity. Head over to DigitalMoneyDemystified.com and embark on your crypto journey today! Jimmy Song is a Bitcoin developer, educator and entrepreneur. He's a programmer with over 20 years experience, an open source contributor to many different Bitcoin projects and the author of Programming Bitcoin from O'Reilly, The Little Bitcoin Book, Thank God for Bitcoin and BItcoin and the American Dream. Jimmy has been a lecturer at the University of Texas, an expert witness in legal cases involving Bitcoin and is an advisor to multiple companies. Jimmy writes a weekly newsletter, Bitcoin Tech Talk and has a podcast Bitcoin Fixes This.Jimmy Song and I discuss:The differences between Bitcoin and other cryptocurrencies.Addressing the common myth that cryptocurrencies are bad for the environment.The potential issues with central bank digital currencies such as the lack of privacy and government overreach.The rights you have (or don’t have) over your property with each system.Thank you for listening! If you enjoyed this episode, take a screenshot of the episode to post in your stories and tag me! Don’t forget to follow, rate, and review the podcast and tell me your key takeaways!CONNECT WITH JIMMY SONG:LinkedInX (Formerly Twitter)WebsiteFiat Ruins Everything by Jimmy Song (Amazon)CONNECT WITH DR. TONYA M. EVANS:Questions and requests: email@example.com Follow: Twitter @AtTechIntersect | Instagram @TechIntersect Web: Tech Intersect Podcast Connect for exclusive content: Preorder my book, Digital Money Demystified, at https://digitalmoneydemystified.com/ today!Regulate & The Rabbit Hole by Notty Prod licensed via Creative Commons Attribution-NoDerivatives 4.0 International License. Produced by Tonya M. Evans for Advantage Evans, LLC