Cryptocurrency has become a magnet for inventive entrepreneurs and companies looking for the next big thing. Meanwhile, investors have made poor decisions like spending $3 million on a physical copy of “Dune” only to find out if it cannot be tokenized into an NFT. See, Jessica Rizzo, Wired, “The Dune NFT Fiasco Is The Least of Crypto’s Legal Worries,” (Jan. 19, 2022). Crypto has also attracted pariahs seeking to take advantage of those investors. This attention to the business of cryptocurrency, hereinafter referred to as “crypto,” has resulted in additional regulatory scrutiny. SEC litigations and administrative proceedings related to crypto have skyrocketed from 18 in the five-year period from 2013 to 2017 to 79 in the last four years.

Although this growth may track the growing adoption and popularity of cryptocurrency, it is clear that the SEC will not ignore the growth of the technology by allowing it to develop in a regulatory safe harbor, as some have proposed. See, Hester M. Peirce, commissioner, Securities and Exchange Commission, Token Safe Harbor Proposal 2.0 (April 13, 2021).The future of crypto regulation is in the hands of rule-makers at the SEC. Even within the SEC, there are competing ideas influencing this development. See, Jennifer Schoenberger, Yahoo Finance, “SEC Commissioner Details Dissent on Policy Proposal for Regulating Crypto Exchanges” (Feb. 3, 2022). Meanwhile, and as the following examples of federal enforcement actions will show, the SEC’s view of cryptocurrency as a security is being shaped by litigation every day.

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