Degen Lawyer's Newsletter

22nd August, 2023

GM. Welcome to Degen Lawyer's Newsletter, where we bring you your weekly dose of legal insights, and regulatory updates in the emerging tech and law space. Our expert lawyers serve up curated analysis, hot takes, and expert commentary, sprinkled with a healthy dose of the wacky and meme worthy. Enjoy!

In this week’s edition:

1. Updates from around the world

2. Courtroom Watch - US Court’s view on AI and copyright

3. Weekly Explainer- What are ‘mixers’?

4. Article in Spotlight- Key Legal Considerations for Web 3 Companies

5. News under Focus - India/ Russia 🚀 to the 🌕️ .

Updates From Around The World

• SEC’s request for appeal in Ripple Case granted (On Some Seriously Shaky Legal Grounds)

  Judge Torres has granted SEC’s request to file a motion for an appeal in the SEC v. Ripple case. The SEC’s grounds for the request were that the ruling will have significant effects on other pending cases. However, Ripple argued (rightfully we might add) that this hardly constitutes a ground for an appeal, especially as it is not a question of law and this would just delay all other legal proceedings unnecessarily. Ripple Labs has until September 1st to file its official written response to the request. The SEC/Ripple Saga, the gift that just keep on giving!

• Tornado Cash sanctioned by Government

  You remember that time when there was all the rage about America adding a ‘software programme’ to the Sanctions List? That was weird right? Well, it turns out Tornado Cash did in fact go to court, they argued that the sanctions violated their First Amendment rights. And Lo and Behold, the Federal Court sided with the Treasury Department and it’s decision to impose sanctions on the mixer. The Department stated that Tornado cash was vital in laundering over $7 billion worth of virtual currency for cybercriminals, including North Korea's Lazarus Group - If you have wondered how Kim Jong Un affords those pointy rockets, read about the N. Korea and the Ronin Bridge Attack, trust me, its worth it. (To learn more about Mixers check out this weeks explainer!)

  

• The Travel Rule coming to the UK

  Nope, don’t start making Christmas plans to London just yet, this is the crypto travel rule. From September 1st, all UK crypto businesses will be required to share customer information when making transfers (both nationally and internationally). This is a global Financial Action Task Force (FATF) recommendation that helps identify suspicious transactions and prevent money laundering and terrorist financing. Businesses will need to comply with the rule even when using third-party vendors. This is a huge positive step, global compliance, is necessary for crypto to flourish. Most countries, like India, have already adopted this rule.

• Coinbase received First Crypto Future Approval - Coinbase and Crypto both really needed this Win!

  The Futures Commission Merchant (FCM) has granted Coinbase the first approval for Crypto Futures Trading in the US. Retail investors can now buy/sell futures contracts in BTC and ETH. It’s estimated the global derivatives market makes up about 75% of all crypto trading, pushing it into the mainstream means increased adoption from consumers and institutional investors. This has been a long time coming. Outcome: Your grandma can now have exposure to Apple, Reliance and BTC all using the same trading platform.

Courtroom Watch

US Court’s view on AI and Copyright Protection

AI’s rise to glory has also raised a number of legal and ethical questions. One, in particular, is whether AI-generated work can be copyrighted.

Recently in a ruling that could have major implications for the future of AI and copyright, a US federal judge has ruled that AI-generated artworks are not eligible for copyright protection.

Some background on the case:

Stephen Thaler, the CEO of Imagination Engines, a neural network company., had attempted to register a number of AI-generated artworks with the U.S. Copyright Office, but the Office refused to do so.

Thaler argued that AI meeting authorship criteria should be recognised as an author. As a result, the ownership of the work should belong to the owner of the AI system. The judge disagreed. She found that copyright law requires that works be created by humans in order to be eligible for protection. She pointed to previous cases that had upheld this principle, such as Burrow-Giles Lithographic Company v. Sarony, which held that a photograph could not be copyrighted if it was taken by an animal.

The judges’ stance is that AI is simply a tool that can be used to create art, but it is not the author of the art itself.

The judge's ruling is a significant victory for copyright owners. It affirms the principle that copyright law is intended to protect the creative works of humans, not the creations of machines.

Questions that still remain unanswered:

1. The ruling leaves open the question of whether AI-generated work can be protected by other forms of intellectual property. These issues require clarification from either the legislature or the court.

2. The ruling could have a chilling effect on the development of AI-generated art. If artists know that their work is not eligible for copyright protection, would they still use it as extensively?

3. As AI becomes more advanced, AI-generated work will become more common. Could this ruling make it difficult for AI companies to protect their IP in any other field if they use AI Tools?

It seems like when it comes to questions surrounding AI, we are often left with more questions than answers.

Weekly Explainer

What is a cryptocurrency mixer?

A crypto mixer, also known as a tumbler, is a platform that mixes the crypto of many users together making it hard to track. This is done by pooling the crypto from multiple users, and then randomly re-distributing it to different users.

Some mixers are Tornado Cash, Yo!Mix, Mixero etc.

FAQs to break it down for you (Pun very much intended)

1. How do mixers work?

   Generally, mixers work like this:

   • You deposit crypto in the mixer’s pool

   • The mixer mixes your crypto with other users’ crypto in the pool

   • The mixer withdraws the ‘mixed origin’ crypto from the pool and transfers it to your new desired address.

2. Why are they used?

   Mixers give users more privacy over their crypto and make it difficult to track their funds, this is especially useful when one wants the utmost privacy or in countries where crypto is banned

3. Are they illegal?

   The legality of cryptocurrency mixers varies from country to country. In the United States, cryptocurrency mixers are not illegal per se, but Tornado Cash was sanctioned by the Treasury Department.

4. Is it safe to use mixers?

   There is no guarantee that using a mixer is safe. Some mixers have been known to be scams, and others have been hacked. It is important to do your research before using any cryptocurrency mixer.

   
   To learn more about such concepts, visit our resource page linked below or follow us on Instagram where we put up videos explainers.

Article in Spotlight

Key Legal Considerations for Web 3 Companies

Below is a snippet, for the complete article, check out our blog post.

1. Legal Entities in Web 3

There’s a startling lack of use of legal entities to do business in Web3. Whether you are an artist creating NFTs or selling virtual spaces- the benefit of working with legal entities for Web3 ventures is liability protection.

2. Appropriate Customer Policies

Whatever your product, whether it is an NFT project or a DeFi platform it is vital that terms are properly drafted.

3. IP and Fair Use in Web 3

If you create original content, then you have a copyright on that content and you have the right to decide what to do with this content.

4. NFT and Security

Tokens and Security Law As the Web3/digital currency/NFT spaces mature, there are several questions involving security law and NFTs.

5. Legalities around DAO’s

Legality around DAO are still evolving. Organizations that want to create a DAO to do something good for the community should also consider creating a legal entity first and then wrapping the DAO with an LLC or corporation before moving forward with the DAO project.

News under Focus!

India v. Russia - Space Race?

The Indian Space Research Organisation's (ISRO) and the Russian space agency Roscosmos are in a battle to become the first to land a spacecraft on the lunar south pole! This brings back memories of the space race of the 60’s (without the underlying cold war tensions, please)

Rough terrain makes a south pole landing particularly difficult, thus making the first landing historic! Both countries were vying for this glory!

Why is the South Pole hot property all of a sudden?

You see the south pole has water ice, this could help support a future lunar colony, mining operations and eventually life on Mars!

What’s happening on the Indian side?

The Indian spacecraft - Chandrayaan-3 has been marvelled for many things, amongst which is the nifty little fact that the whole mission cost less than some notable movies - Including Gravity (Yup the movie about a failed George Clooney space mission), and Interstellar (the one with a successful space mission but failed dad mission - Too soon?)

What happened to the Russian Spacecraft?

Russia’s Luna-25 spacecraft crashed into the Moon after it spun into an uncontrolled orbit on Sunday. Even though India launched its mission first, the Russians took a shorter route to the Moon in hopes of beating India to the punch. But alas.

This is India’s second attempt at a lunar South Pole landing, in 2019 it tried and failed.

Follow our Instagram for updates on how this plays out as we explore how the change to India’s Space Policy contributed to (hopefully a successful) landing:

Thank you for reading!

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