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US digital asset disputes updater: exploring the latest cases, regulatory developments, and legal trends

March 10, 2025
Eric Martin Gage Raju-Salicki
Eric Martin Gage Raju-Salicki
Posted in US Digital Assets disputes updater

Key Takeaways:

  • SEC halts enforcement actions against exchanges
  • Second Circuit renders Section 12(a) decision in Risley
  • New NFT class action suit filed
Recent Legal Developments

The second half of February was much more exciting for crypto: the SEC withdrew a number of its cases, the agency opted not to appeal in the Dealer Rule case, and we’ve now seen the announcement of a crypto strategic reserve featuring a wider array of tokens than some may have anticipated. As the SEC softens its stance toward cryptocurrencies, there remain overarching questions about the role of regulators in crypto, what legislative frameworks could look like, and, of course, civil litigation.

SEC Exchange Litigation Ends

It appears that all of the SEC’s exchange cases have now reached a terminus: Gemini, Binance—albeit only stayed for 60 days, and other major exchanges are no longer subject to SEC enforcement action lawsuits or investigations. The SEC has withdrawn these enforcement action suits over the course of February, and appears to have shifted its focus primarily to fraud.
 
Insight: The end of these cases represents a real turn for the SEC. As the SEC shifts its focus, it is likely that room will be given to exchanges to innovate. The end of these suits should also be taken in tandem with the SEC’s Crypto Task Force asking for feedback from the public on crypto-related questions. As such, exchanges should—and most already have—tender feedback to the SEC on the technological underpinnings of their services. For example, staking as a service is not inherently a securities transaction and should, under most circumstances, not be treated as such.

Risley Decision in the Second Circuit Impacts Section 12(a) Claims

Right at the end of February, the Second Circuit tendered its decision in Risley v. Universal Navigation, better known as the civil class action against Uniswap. The case involved claims under Section 12(a) of the Securities Act and Section 29(b) of the Exchange Act. The Second Circuit ultimately affirmed the lower court’s dismissal of these two securities claims.

Insight: This case has a little bit of something for everyone. The court’s decision with regard to Section 12(a) affirmed that promotion of a protocol by itself on social media is insufficient to reach the level of solicitation necessary to assert a Section 12(a) claim. Moreover, the court’s Section 29(b) analysis emphasized—much like the Fifth Circuit in Van Loon—that it “ ‘defies logic’ that a drafter of a smart contract, a computer code, could be held liable under the Exchange Act for a third-party user’s misuse of the platform.” All smart contract developers should take solace in this decision—your work is unlikely to subject you to certain Securities and Exchange Act claims under factual circumstances similar to those in Risley.

Another NFT Class Action Suit Filed

An NFT class action suit was filed at the end of February, this time against Game of Silks, which, according to the complaint, “brought real-life horse racing to the metaverse.” The complaint further alleged that the protocol allowed participants to invest in and earn a percentage of a racehorse’s winnings. As the complaint additionally alleged, the NFTs involved soon depreciated in value and payments ceased. This led the plaintiffs to file a suit under Sections 12 and 15 of the Securities Act of 1933. 

Insight: Given that the Astrals NFT lawsuit settled immediately after a finding of Section 12(a) seller liability, it is little surprise to see another lawsuit applying this playbook. It’s also noteworthy that this case was filed in the Southern District of Florida—the very same district that the Astrals suit was heard in. As such, it’s likely that we’ll see much of the same arguments applied in this case should it proceed, potentially adding to Section 12(a) jurisprudence. However, the one interesting and potentially mitigating factor to this new litigation is the SEC’s weighing of securities designation for NFTs. If the SEC offers guidance that NFTs are not securities—as it has just done with memecoins—such guidance would likely be given due weight by a court.

The Mempool: Noteworthy Reads and Listens:

  • On Section 12(a): Last week, Gage published an article in the International Journal of Blockchain Law about Section 12(a) of the Securities Act’s dual risks. The article discusses how courts are contending with Section 12(a) and crypto—and was fittingly published the day of the Second Circuit’s Risley decision. You can check it out in Volume 11 of the Journal (see page 16).
  • Commissioner Peirce’s Open Door: Commissioner Peirce recently published a statement drafting questions around a potential token taxonomy. The questions are broad and should be answered to develop specific and tailored regulation where necessary to address crypto as a novel technology. Of particular note is the question of securities status. The SEC appears to be shifting away from concerns about its jurisdiction to regulate cryptocurrency and instead turning toward meatier questions of how best to approach these assets.
  • The SEC on Memecoins: The SEC’s Division of Corporate Finance has taken a position on memecoins—albeit not a rule, regulation, or even a guidance. The Division explained 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.” The Division also added the caveat that fraud is still fraud, and memecoin sales are still subject to other laws even if they are not securities.

If you have any questions about these developments or your own digital asset-related litigation matters, please contact NRF Digital Asset Disputes Partner Eric Martin or Associate Gage Raju-Salicki to set up some time to discuss your questions.