Law And More

In Crypto, It's Come to This: Babel Finance, After Freezing Withdrawals, in Pickle for Debt Repayments

"Babel Finance, the distressed crypto lender which froze withdrawals on Friday, said it won a reprieve on debt repayments as it battles to survive a tumultuous slump in cryptocurrency markets." - Bloomberg, June 20, 2022 

Obviously, Babel Finance, headquartered in Hong Kong, is facing severe liquity pressures. It is not known if and when it will allow withdrawals. There are reports that it is in talks with large institutions about taking over some of the debt. 

Likely more crypto players will be caught up in similar crises. The Winklevoss Twins admit they don't see a turnaround in crypto in the new future. Their firm Gemini has conducted layoffs.

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Crypto: Remember When They Gushed to Us Dinos About Their Gains ...

Today, bitcoin closed at $21,685.02, documents The Wall Street Journal. But earlier in the day it was coasting down to the $20,000 layers of loser hell. Since its peak at $67,802.30 in November 2021, the market value is down 68%.

Of course, in financial (as well as legal) trouble are the Winklevoss Twins. Their Gemini empire is laying off and there is no projection of things getting back any time soon.

So here we dinos are. Not that we are doing so hot in our stocks and bonds. But if we had diversified we likely didn't already lose and probably won't lose so much as the crypto crowd. How they gushed about their ability to build wealth quickly in the blockchain economy. I had done some video scripting for them. Like the Silicon Valley tribes they had their own language. And their own snobbery. 

Will that digital asset niche return? If it does it will be highly regulated. The demand for that from investors who have been hit so hard will bombard all branches of federal government. 

Reflection: Will those who assume they have discovered a new mode of wealth creation learn not to crow? 

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Let Us Not Praise Utopias

"Crypto firms Celsius, Binance halt withdrawals as bitcoin plummets" - The Hill, June 13, 2022

It wasn't so long ago that crypto, that decentralized digital asset created on blockchain platforms, had been hailed as a financial utopia. The bliss ranged from freeedom from government control to the potential of becoming quite wealthy. 

Well, as ordinary people are losing so much money, they likely don't care too much about how crypto was to enhance their beings. 

The counterculture of the late 1960s and the early 1970s made comparable promises of a far better world. That was all quite blissful until freedom turned sour with developments such as the Manson Family murders. The severe recession around 1974 finished that all off. 

Will a severe recession in 2023 finish off the utopia part of crypto? It could survive not only as a digital assets. It could be integrated into mainstream financial transations. 

But let's hope we embrace the realities associated with crypto.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She helps businesses conjure up magic in their storytelling. One client said, "She makes shipping containers ‘sexy.’"

The Dismal State of Crypto, According to Financial Times

Here are today's headlines in the Financial Times:

Bitcoin tumbles as crypto lender Celsius halts withdrawals

World’s leading digital token sinks to lowest level since 2020 as market comes under mounting pressure

Luna crash sends a chill through decentralised finance market

 

opinion content. Markets Insight. Regulate stablecoins. Please!

 

But, my stocks and bonds aren't doing too hot, either.

 

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She helps businesses conjure up magic in their storytelling. One client said, "She makes shipping containers ‘sexy.’"

Crypto Players & Their Lobbyists

"Crypto lending platform BlockFi, which earlier this year paid a record fine to the U.S. Securities and Exchange Commission to resolve regulatory charges, is the latest company in the nascent digital currency industry to hire lobbyists." - Reuters Legal, June 10,2022.

The law firm it hired is Arnold & Porter. The mindset of that firm is that it is more effective for crypto companies to do an outreach for their interests individually versus through an industry association. The law firm will focus on regulatory and tax issues.

Coinbase is using as lobbyists law firms Wilmer Cutler and Dorr & Steptoe.

In 2021, the crypto industry spent $9 million on lobbying, documents Public Citizen. 

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She helps businesses conjure up magic in their storytelling. One client said, "She makes shipping containers ‘sexy.’"

Crypto in Retirement Investing High Risk - That's Janet Yellen's Assessment (but will she be heard)

Given the newness of digital assets and their volatility, it seems unthinkable that investment managers would include them in retirement investments. But, as Bloomberg Law reports, that's what Fidelity Investments announced it would do with workplace retirement accounts it was managing. 

That was last April. The Department of Labor has opposed it. And US Treasury Secretary Janet Yellen went on record indicating that for the average investor crypto in a retirement account is highly risky. She also sees a role for Congress to regulate what kinds of assets are to be allowed in tax-favored retirement accounts.

Yellen makes sense. However, her brand has taken a bad ding. She admitted she had been wrong on inflation. And inflation is eating us alive. With no end in sight. So, she will probably be ignored on crypto. For insight on crypto as investment we are more apt to listen to Goldman Sachs. This is at a time, as the recent Pew Research poll found, that only two out of every 10 Americans trust government.

Yet government has such control over our money and everyday lives. This reality could explain why conservative ideology, which favors very limited government, can sound so persuasive. 

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She helps businesses conjure up magic in their storytelling. One client said, "She makes shipping containers ‘sexy.’"

Those All-American (elite) Boys Cameron & Tyler Winkelvoss - The Legal Unraveling and More

"Crypto exchange Gemini Trust Co. lacked proper safeguards that resulted in retirement-account holders losing around $36 million in Bitcoin and Ether when the master key got hacked, IRA Financial Trust said in a new lawsuit [in U.S. District Court for the Southern District of New York]. [Allegedly] Gemini, a crypto exchange founded by Cameron and Tyler Winkelvoss, made false representations about two-factor authentication and other protections that were supposed to safeguard customer accounts..." - Bloomberg Law, June 6, 2022.

The lawsuit is "IRA Financial Trust v Gemini Trust Co." Here is, thanks to Bloomberg Law, is a copy of the complaint.

In addition, both IRA and Gemini are facing class action lawsuits from customers whose accounts had been hacked. 

But there is even more legal trouble for Gemini. As Bloomberg Law reported earlier, the US Commodity Futures Trading Commission sued Gemini. That was allegedly for misleading the regulator for derivatives. That was allegedly in order to establish the first-ever regulated Bitcoin futures contract. 

There are more troubles for the Winklevoss Twins. Those of business ones. 

Like others in the crypto industry, their enterprise has hit a rough patch. As TechCrunch reports, the two leaders don't anticipate any let-up in the market turbulence any time soon. Meanwhile, Gemini has laid off 10% of the workforce. Its competitor Coinbase has even gone so far as snatched-back job offers.

At one time the Twins represented stern rectitude. In "The Social Network," they were the good guys, but plenty nerdy. Mark Zuckerberg was the bad now, but cool. Now, one wonders what the two are really about.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She helps businesses conjure up magic in their storytelling. One client said, "She makes shipping containers ‘sexy.’"

 

Let's Think About Outrage - "Molotov Cocktail" Lawyers Plead to More Charges, Will Lose Thier Licenses

"Urooj Rahman, 33, and Colinford Mattis, 34, had pleaded guilty last October to possessing a destructive device and expressed regret ... Under revised agreements, the defendants were charged with conspiracy to commit arson and possess an explosive device, with prosecutors recommending sentences of 18 to 24 months." - Reuters Legal, June 2, 2022.

The game is about getting a reduced sentence. However, they will still lose their licenses to practice law. They will appear before US District Judge Brian Cogan in Brooklyn. 

Many watchers of this saga of the "Molotov Cocktail" Lawyers, which dates back to the protests generated by the death of George Floyd, felt empathy for the two activists. In New York City they threw the Molotov Cocktail at an empty police car. It's assumed their outrage got the better of them. 

In Forbes, Paul Weiss partner and man of color Ted Wells Jr. makes the observation that outrage can lead to change. That reflection had been on the second anniversary of Floyd's death. 

But outrage is tricky business, isn't it.

In the counterculture of the late 1960s and 1970s it also provoked violence. Most of that had been against property.

I vividly recall feeling conflicted as I walked the streets of university town Ann Arbor, Michigan, during that time. I was a doctoral student at the University of Michigan. 

Yes, I was also an activist and, yes, I had lost a part-time job because of striking for the rights of black students. But I couldn't get the correlation between power to the people and the smashed windows of the Ann Arbor Bank. However, I did understand the promotional tactic of Theatre in the Streets. Boarded-up windows provide great staging during a revolution. So, of course, so many of us were overwhelmed with inner turmoil. And we were dropping like flies into some form of psychotherapy. 

Gradually, in those three years of therapy, I began to question the consequences of outrage. 

That's why I feel deep sadness for where apparent outrage took Rahman and Mattis. Let's hope their supporters can help them find a way back  to what we consider "normalcy."

For me, it required years to "outgrow" the political ideologies of the counterculture. But that I did. And when blockchain was positioned and packaged as a new path to power to the people I didn't buy in.

Power is also a tricky entity.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She helps businesses tell their unique stories. Complimentary consultations.

Labor Dept Looks Very Smart About Crypto Caution in Retirement Plans - But Those of Us Over-50 Even in Traditional Investments Also Are Reeling

"Crypto markets lost more than $270 billion just weeks after the department’s Employee Benefits Security Administration issued strongly worded guidance (CAR No. 2022-01) all but banning retirement plans from offering crypto assets." - Bloomberg Law, May 17, 2022

During the crash even stablecoins lost their ability to peg 1 to 1 to the dollar. 

Now the caution of the Labor Dept looks very smart. It had classified crypto in terms of investing for retirement as "speculative and volatile." And it had warned fund managers that it would probe the inclusion of crypto in retirement accounts. 

This, of course, is at a time when retirement accounts in general are taking a hit even when carefully and traditionally balanced with stocks and bonds. The whole idea of creating, preserving, and growing wealth for retirement is undergoing a paradigm shift.

Should we over-50 be in alternate investments - that is, if we have the funds to enter that territory? Also, we are focusing on those really safe harbors such as certificates of deposit. 

Could retirement- that is the old-fashioned notion of no longer working for income - become restricted to those who had enough money to do alternate or were just lucky? 

I have no plan to retire ever. But we know the joke about planning. Humans do that and the gods laugh.  I am focused on retirement investing as a way to make ends meet should my health go kaput. 

Connect with Editor-in-Chief Jane Genova janegenova374@gmail.com. 

Law Firms - Crypto Litigation Exploding

"Crypto has generated more than 200 class action lawsuits and other private litigation as of this month, up more than 50% since the start of 2020, according to Morrison Cohen, which tracks the activity. Half of all crypto litigation are class actions or private suits, according to the firm’s data." - Bloomberg Law, May 17, 2022.

Most of the litigation involves business failures which could generate bankruptcies, commercial matters, and employment. And litigation as well as other kinds of legal actions probably will increase as the SEC and Commodity Futures Trading Commission beef up regulations and enforcement. At a recent speech, SEC head Gary Gensler said his organization is the "cop on the beat."

The kind of lawyer most in demand is the one with government experience. Yes, that's the revolving door. And, for that expertise law firms are competing with the crypto industry itself. For instance, Binance, the largest global crypto exchange, is hiring more than 30 lawyers. All of them have the option of operating totally remote. In addition, lobbying firms in the crypto niche have recruited former government players. Those know how government thinks and have a good handle on how government might behave. 

Also the practices are primarily multi-disciplinary since the issues touch on myriad points of law.

Law firms ranging from Jenner Block to Morrison & Foerster are adding crypto partners. Last year, at Latham & Watkins, 700 of their lawyers focused on crypto work.

Connect with Editor-in-Chief Jane Genova at janegenova374@gmail.com. She assists law firms and their vendors with communications projects. Complimentary consultations available. No selling.