Crypto-versed lawyers will play an increasingly important role in Web3 firms — particularly as the industry braces for regulatory turbulence following the implosion of FTX, two legal academics believe.
Boston Law School professor and chief compliance officer at crypto exchange Bitstamp, Thomas Hook, told Cointelegraph that Web3 lawyers will soon become “business differentiators” because they’ll be faced with the tough task of helping firms navigate through legal and regulatory uncertainties.
This will ultimately determine how fast firms can take their products and services to market, Hook explained:
“Given the lack of clarity in many regulations and the complexity, Web3 companies will continue to need legal and compliance representatives to support them. These types of individuals are becoming business differentiators as they can help or hinder a business to get to market quickly in a legal and compliant manner.”
“Without them, companies could face setbacks as regulators are looking to get a handle on the industry,” Hook added.
Senior Research Fellow Dr. Aaron Lane of RMIT’s Blockchain Innovation Hub told Cointelegraph that in the current environment, Web3 companies should play it safe and resort to legal advice where appropriate.
“Entrepreneurs are used to making decisions under economic uncertainty but are not as good at operating under legal uncertainty.”
Lane explained that the quick pace of blockchain-based innovation as well as the over 50 independent digital asset bills introduced into the United States Congress in recent times further illustrates the need.
He believes that some of the best Web3 lawyers will come from the commercial law sector, which is a “crucial” foundation for lawyers in the crypto field.
“A good Web3 lawyer will be a good commercial lawyer. The best Web3 lawyers in the field today started out as commercial lawyers of one kind or another and I expect that core foundation will continue to be crucial.”
“Knowledge of the technologies that make up the Web3 stack will be increasingly in demand over the next decade,” Lane however stressed.
For now, however, the sector remains “very niche”, according to CryptoRecruit founder Neil Dundon.
Lane added that much of the legal representation for Web3 firms is offered by external counsel instead of in-house lawyers, who specialize more on cases relating to financial services and securities laws.
De Nederlandsche Bank (DNB), the Dutch central Bank, fined cryptocurrency exchange Coinbase 3.3 million euros ($3.6 million), due to non-compliance with local regulations for financial service providers, according to a Reuters report on Jan 26.
The exchange reportedly failed to obtain the necessary registration to offer services in the Netherlands prior to beginning operations in the country. The DNB said it took into consideration the size of Coinbase as a company and the fact that it has a “significant number of customers in the Netherlands.”
The authorities claimed Coinbase was non-compliant during the time period between November 2020 and August 2022.
In December 2022, the DNB targeted the cryptocurrency exchange KuCoin saying that it too was operating without a license and therefore offering services illegally.
In 2021 it targeted Binance Holdings Limited with similar allegations, for which the exchange paid more than 3 million euros in fines due to the violations.
Since the beginning of the year, Coinbase has been in the headlines for numerous reasons relating to its business operations.
On Jan. 10 it announced that it will be slashing 20% of its workforce due to operational restructuring. It was on this same day that the brother of the ex-manager of the crypto exchange was sentenced to 10 months in prison due to insider trading, which marked the first known case of its kind in the crypto industry.
A week later on Jan. 18 Coinbase announced that it will stop its operations in Japan due to the ongoing effects of the bear market trading slump.
Despite less than desirable developments from the exchange, around the same time as it closed up shop in Japan it was reported that Coinbase stock had a 69% surge from its all-time low.
Additionally, Cathie Wood’s ARK Investment added $17.6M in Coinbase stock since the start of 2023.
A complete list of the creditors owed money by the bankrupt cryptocurrency exchange FTX has been released, revealing a myriad of companies and government entities wrapped up in its collapse.
Late on Jan. 25, lawyers for FTX filed its creditor matrix to the United States Bankruptcy Court for the District of Delaware. The massive 115-page document details the names of its creditors in alphabetical order.
The list reveals the sprawling global web of companies from airlines, hotels, charities, banks, venture capital firms, media outlets and crypto companies along with U.S. and international government agencies all owed money by the fallen exchange.
The names of nearly 9.7 million (9,693,985) FTX customers with funds stuck on the exchange were however redacted from the document.
Notable crypto and Web3-related companies owed money by FTX include Coinbase, Galaxy Digital, Yuga Labs, Circle, Bittrex, Sky Mavis, Chainalysis, Messari and entities of Binance.
Big Tech players Apple, Netflix, Amazon, Meta, Google, LinkedIn, Microsoft and Twitter were also included as creditors. The New York Times, The Wall Street Journal and CoinDesk were among the media outlets mentioned.
The tax offices of multiple U.S. state agencies and the federal Internal Revenue Service (IRS) were listed. Other government entities in Japan, Australia and Hong Kong, among others, are also creditors.
FTX not only owes large entities but seemingly smaller businesses too, as a Nassau-based pest control business and a garden center appear on the list.
The company’s prior public relations company, M Group, appeared as a creditor. FTX hired the firm to represent them, but the company said it ceased work with FTX upon its bankruptcy.
The filing didn’t include what each entity was owed and inclusion on the list does not mean it had a trading account with FTX.
Earlier filings made in November by FTX’s lawyers speculated the exchange may have over a million creditors.
In a December tell-all Twitter thread, a previous FTX employee detailed the “moronically inefficient” luxury expenditures of the business.
Some entities on the list point to the company’s prior excessive expenditures, with Uber Eats and Doordash entities from all over North America and Australia on the list along with Airbnb and the names of multiple luxury hotels around the world.
This Daily Dose was brought to you by Cointelegraph.