BakerHostetler has a sophisticated understanding of the blockchain and cryptocurrency space and is able to function well in a rapidly changing and complex market environment.
— Chambers USA 2023
We help clients navigate the broad array of legal issues presented by blockchain technology and the rise of digital assets, including cryptocurrencies and non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs) and peer-to-peer economies in interoperable environments (e.g., the metaverse). The only law firm with a practice group dedicated to Digital Assets and Data Management, BakerHostetler remains at the forefront of this burgeoning space.
Cryptocurrency Fund Receivership
- On Jan. 21, 2021, Robert A. Musiala Jr. was appointed as the court-ordered receiver by the U.S. Southern District of New York in the matter captioned SEC v. Qin, et al., 20 CV 10849 (LGS) (S.D.N.Y.), with BakerHostetler as counsel to the receiver. The receiver and his team are currently investigating a $90 million cryptocurrency fraud scheme, with a goal of identifying and securing assets for return to investors. The receiver team has been coordinating with the Securities and Exchange Commission (SEC), the Department of Justice (DOJ), and dozens of cryptocurrency-based and traditional financial institutions around the globe to recover assets related to the Qin fraud scheme.
Securities Law and Financial Services Regulation
- Assist dozens of clients in creating and launching blockchain protocols and platforms and integrating digital assets.
- Counsel multiple companies regarding the evolving regulatory landscape for token-generating events.
- Advise multiple cryptocurrency industry clients on Gramm-Leach-Bliley Act compliance; federal and state money services business registration; Bank Secrecy Act compliance; fair lending regulations; and consumer protection, privacy and cybersecurity matters.
- Serve as outside general counsel to a next-phase blockchain company, providing advice on IP, employment, corporate and other matters.
- Represent a blockchain startup in responding to an SEC subpoena related to a prior initial coin offering (ICO).
- Represent a startup seeking to build a blockchain-based securities exchange regulated under Regulation ATS.
NFT Retail and Peer-to-Peer Marketplace Launches
- Assess data collection requirements under applicable financial laws and the privacy risks of such collection related to indexing of Ethereum blockchain nodes via relational databases.
- Provide counsel regarding regulatory risks of various types of NFT sales and campaigns to assist clients in developing legally compliant NFT sales.
- Provide counsel regarding NFT media management best practices and risks, including data storage and IP issues.
- Represent an iconic brand in litigation involving NFT IP issues.
Clients include a major social media and communications company building out a global, interoperable, peer-to-peer marketplace to support NFTs and other digital assets; multiple national university sports teams launching NFTs associated with athletes’ IP; an environment-focused foundation building an NFT strategy; a major game and collectible company launching an NFT initiative; a digital media and event firm integrating NFTs into its business model; and multiple startups building NFT applications and designing niche NFT brands.
Protocol and Network Applications
- Provide protocol and network architecture design and regulatory compliance counsel to clients, including an Ethereum-based network consisting of a collective body of open-source codebases; internet protocols and implementation of software that promotes personal data ownership on a secure communications network; an Ethereum-based network for advanced P2P proxy re-encryption services underpinned by open-source software; an Ethereum-based protocol focused on reducing the environmental impact of proof-of-work networks; layer one Kusama and Polkadot parachain networks providing blockchain as a service technology; and a layer one Polkadot network providing a biometric-based consensus mechanism.
- Draft various contracts on behalf of clients and review/negotiate various contracts drafted by third parties as part of clients’ new and ongoing relationship with various technology vendors, as related to clients’ business models and technical platform.
- Advise on various data privacy law implications of technical platforms, including analyses related to the European Union’s General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), the Communications Decency Act, the Digital Millennium Copyright Act, the Clarifying Lawful Overseas Use of Data Act and applicable provisions of Title 18 of the U.S. Code.
- Advise on various aspects of potential tax implications related to issues of first impression involving revenue recognition events and smart contracts.
Investigations (ICOs, DeFi and Cryptocurrency Exchanges)
- Assist numerous clients subject to investigation, requests for information or subpoenas from/by the SEC and the DOJ, including clients that issued ERC20 tokens in an ICO and are subject to investigation by the SEC, witness to the DOJ’s investigation into BitMEX and witness to the SEC’s investigation into Uniswap.
- Respond to SEC inquiries and manage defense to SEC investigations, including response to document requests, SEC inquiries and settlement negotiations.
- Respond to DOJ inquiries, negotiate scope of response and compile tens of thousands of potentially responsive documents from 16 different sources, including email and hard drives; assess responsiveness of documents and produce under urgent timeline.
- Negotiate scope of response and deadline, and compile and review responsive documents and associated production.
- Provide government relations guidance to a prominent blockchain-enabled global payments company regarding federal and state legislative, regulatory and policy issues.
Digital Identity, Privacy and Data Protection
- Advise prominent blockchain digital identity companies on strategies for achieving compliance with the GDPR.
- Guide a digital currency platform services provider’s response to a multimillion-dollar cyber-theft of bitcoin, including:
- Incident Response
- Crisis communications
- Interactions with compromised exchange
- Client cybersecurity practices and personnel
- Pre-litigation counseling and preparation
- Advise a digital currency industry client on response to cyber-theft of data and attempted extortion.
- Provide patent prosecution and IP advice to a distributed ledger platform client.
- Prepare and file patent applications covering foundational blockchain technologies and application-level technologies layered on blockchain platforms.
- Collaborate with technologists to develop an IP strategy to protect emerging blockchain-based technologies, including trademark, patent, copyright and trade secret strategies.
Industry-Specific Blockchain Advice
- Represent a major U.S. cryptocurrency exchange in a tax controversy matter.
- Provide fund formation and ongoing outside general counsel services for a global blockchain consulting firm.
- Advise a high-net-worth individual on cryptocurrency asset recovery and tax compliance.
- Engage in discussions on blockchain solutions for the real estate industry with various stakeholders, including government entities, blockchain technology startups and industry representatives.
- Advise a major financial services company on developing and offering blockchain-enabled products and services, including on issues related to IP, technology transactions, cybersecurity and data protection.
- Counsel several advertising industry clients on the use of blockchain technology in adtech, including issues related to patents, incentive and reward programs, and use of cryptocurrencies.
- Participate in ongoing meetings hosted by a major global technology firm as related to blockchain supply chain solutions and other enterprise use cases.
- Participate on a panel of academic, technology and privacy/cybersecurity leaders advising tech and government sectors on the use of blockchain technologies to secure and streamline elections.
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