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

Key Takeaways:

• SEC, Binance reach stay in enforcement action as other cases halt
• More civil lawsuits against Pump.Fun

Recent Legal Developments

Crypto continues to have exciting developments: new stablecoin bills, a CFTC nominee who has hands-on crypto experience, and even the SEC’s crypto task force meeting with crypto groups. To be sure, these are all signs of a changing environment for crypto both in Congress and agencies. What remains to be seen, however, is how courts handle crypto. Crypto litigation has been a mixed bag in the first half of February, though it is possible some suits may taper off in the near future.

SEC Litigation Halting

In early February, the SEC and Binance were granted their joint request for a 60-day hold on their litigation stemming from the agency’s enforcement action against the exchange. Following on the heels of this news, LEJILEX—a crypto company which had preemptively sued the SEC for regulatory clarity—saw their litigation against the SEC postponed as to any decisions for the time being. 

Insight: The SEC has been taking a much more open stance with regard to working with cryptocurrency companies and protocols since the change of administration. Although it remains to be seen what will become of these lawsuits, these may be preemptive moves to do away with litigation ahead of the agency offering some sort of regulatory clarity. They could also just be a show of good faith—it’s hard to scry the tea leaves with moves like these. We would also look to Commissioner Hester Peirce’s recent statement on memecoins to offer some additional color here. Nevertheless, it would be prudent for crypto companies to try to meet with the SEC’s crypto task for—taking meetings now—to glean some insight into where regulation is potentially heading.

A Second Pump.Fun Lawsuit

Late in January, another civil action against the memecoin exchange Pump.Fun was initiated by purchasers of tokens on the platform. Much of this class action suit focuses on new tokens compared to the prior suit, then delves into a Howey test analysis, similar to the previous suit, in attempt to prove that the memecoins at issue are securities. The class then alleges violations of Section 12(a) of the Securities Act. The case is filed as Aguilar v. Baton Corp., No. 1:25-CV-00880 (Jan. 30, 2025 S.D.N.Y.).

Insight: A second memecoin suit has emerged—it was only a matter of time (and perhaps more are to come with the recent news out of Argentina). However, it remains to be seen whether these tokens can actually be classified as securities: are all four Howey prongs even present here? Bloomberg’s Matt Levine wrote on this topic recently, reaching the conclusion that these tokens are not securities: “With memecoins — which are not even securities — this is even more clear. People want to buy memecoins because Dave Portnoy tweeted about buying them. . . . There is nothing else going on here, so there is nothing for anyone to be deceived about; if there are no material facts, then nobody can be deceiving anyone about any material facts.” It remains to be seen if courts will agree with this analysis, but for the time being, market participants should be prepared for the possibility of litigation if listing or creating these tokens until regulatory clarity emerges.

The Mempool: Noteworthy Reads and Listens:

• Robert Schwinger’s Blockchain’s Fourth and Fifth Amendment privacy paradoxes: NRF’s Robert Schwinger has written an article on how the Fourth and Fifth Amendments have been interpreted with regard to the blockchain. Examining two major cases from the First and Sixth Circuits, Schwinger explores the courts’ reasoning as to why the Fourth and Fifth Amendments appear to offer little recourse as to third parties, here crypto exchanges, providing information about users to the IRS.
• DeFi Education Fund on DOJ’s DeFi Actions: a16z crypto and DEF’s Miller Whitehouse-Levine and Amanda Tuminelli have written about the DOJ’s approach to DeFi, noting how difficult the Department has made operating DeFi protocols through its heavy-hand toward DeFi protocols in cases like United States v. Storm, which saw prosecution of Roman Storm for creating the protocol Tornado Cash. The article explains that one of the core issues in DeFi is control—and as such, DeFi enables a user to “retain[] control over their digital assets[.]” The user never has to “cede control over their assets to a third party.” This argument tracks with some of the Fifth Circuit’s logic in Van Loon v. Treasury, and makes for an interesting question courts will no doubt increasingly confront as DeFi grows in popularity.

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.