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

Key Takeaways:

• SEC responds in Binance enforcement action on securities claims
• David Sacks to be U.S. crypto, A.I. czar

Recent Legal Developments

SEC Responds to Binance’s Motion to Dismiss on Securities Claims

The SEC has responded to Binance’s motion to dismiss in the agency’s case against the company and related entities. The memorandum explains the agency’s argument as to why Binance’s BNB token alongside ten other digital assets should be considered securities, pushing a legal theory that the tokens meet the Howey test and rejecting Binance’s contention that funds must flow into the hands of the issuer. The case is of a kind, related to other exchange cases initiated roughly around the same time.

Insight: With the SEC slated to undergo some major changes in leadership in the near future, it leaves open the question of what may come of these lawsuits: will they continue in the current form? Will some be withdrawn? With respect to the Binance suit, the core allegation is the sale of unregistered securities pursuant to the Howey test and Section 5 of the Securities Act. With that said, however, this case also may ultimately demonstrate the limits of the Howey test with regard to new technologies. 

David Sacks Named as Crypto and A.I. Czar

President-elect Donald Trump has nominated David Sacks to a new post to the White House: crypto and A.I. czar. Sacks is a limited partner with MultiCoin Capital and has extensive venture capital experience. The role will likely complement the President-elect Trump’s promised crypto advisor council in some capacity as well.

Insight: While it is unclear what exactly this role will entail, its creation nevertheless suggests that the incoming Trump administration is taking a technology-forward stance with regard to innovation. President-elect Trump explained in a post that crypto and A.I. are “two critical areas to the future of American competitiveness,” and that Sacks would focus on making America “the clear global leader in both areas[.]” As such, it seems likely that this role will see Sacks working alongside industry members to maintain said global competition.

The Mempool: Noteworthy Reads and Listens:

• Tornado Cash and the Limits of Money Transmission: Circle’s Jacob E. Hirshman and Kaili Wang, and Arktouros’ Matt McGuire have published our favorite read of the past two weeks on Tornado Cash and the DOJ’s case in the Stanford Blockchain Review. The paper provides a technical overview of how Tornado Cash works and proceeds to explain how Tornado Cash does not fit neatly into Section 1960. This paper dovetails wonderfully with the Fifth Circuit’s opinion in Van Loon, too.
• Robert Schwinger on England and Digital Assets as “Property”: NRF Partner Robert Schwinger has authored an enlightening column in the New York Law Journal which probes English uncertainty into whether or not crypto assets qualify as “property” under the law.
• CoinDesk Asks: “What Will Crypto Policy Look Like in 2025?”: CoinDesk was joined by TRM Labs’ Ari Redbord to discuss the future of crypto policy in the coming year, providing great insights into what the industry has to look forward to.

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.