Digital Assets Recent Updates – April 2025

Client Alert | May 6, 2025

We are pleased to provide you with the April edition of Gibson Dunn’s digital assets regular update. This update covers recent legal news regarding all types of digital assets, including cryptocurrencies, stablecoins, CBDCs, and NFTs, as well as other blockchain and Web3 technologies. Thank you for your interest.

ENFORCEMENT ACTIONS

UNITED STATES

Oregon Attorney General Sues Coinbase
On April 18, Oregon Attorney General Dan Rayfield filed a lawsuit in state court against Coinbase alleging that the crypto exchange offers unregistered securities under Oregon law. The lawsuit largely parrots the theories the SEC recently abandoned in dismissing its enforcement action against Coinbase. In a blog post, Coinbase stated that “Oregon’s lawsuit, like the SEC’s, is meritless, and Coinbase will do whatever is required to beat it.” Coinbase Blog; Bloomberg Law; Complaint.
Long Island Man Gets 18-Year Term For $6 Million Crypto-Investor Fraud
On April 23, a federal court in the Southern District of New York sentenced Long Island resident Eugene William Austin, Jr. to 18 years in prison after a jury convicted him of fraud-related offenses, in connection with a scheme to defraud cryptocurrency investors. The court also ordered forfeiture of roughly $6 million and imposed restitution in an amount to be determined. Press Release.
FinCEN Identifies Cambodia-Based Huione Group as Institution of Primary Money Laundering Concern; Issues New Rule
On May 1, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a proposed rule that would prohibit U.S. financial institutions from opening or maintaining correspondent or payable-through accounts for or on behalf of Cambodia-based Huione Group because it has laundered illicit proceeds from cybercrimes. FinCEN said that Huione Group has been critical for laundering proceeds of cyber heists by the Democratic People’s Republic of Korea and for convertible virtual currency scams conducted by transnational criminal organizations in Southeast Asia. FinCEN.
SEC and DOJ File Charges Against Founder of Purported Crypto Investment Platform
On April 22, the SEC and federal prosecutors in the Eastern District of Virginia filed parallel cases against Ramil Palafox, founder of PGI Global, a purported Bitcoin investment platform, alleging that he misappropriated over $57 million of investor funds. The SEC’s complaint and the indictment allege that from January 2020 to October 2021, Palafox sold “membership” packages promising high returns from cryptocurrency investments but spent the money on luxury items instead. The complaint and the indictment further allege that Palafox ran a multilevel-marketing scheme, using remaining funds to pay other investors until the company’s collapse. Press Release; Law360.
SEC Dismisses Suit Against Dragonchain
On April 24, the SEC agreed to dismiss its enforcement action against blockchain platform Dragonchain and founder Joseph J. Roets. The SEC filed a joint stipulation in the U.S. District Court of Western District of Washington, citing the January 2025 launch of the SEC’s Crypto Task Force and its efforts to develop a regulatory framework for digital assets. The case was dismissed on April 25. The lawsuit, filed in August 2022, had alleged that Dragonchain sold unregistered securities via its DRGN tokens. Law360; CoinTelegraph.
SEC and Ripple File Joint Motion to Pause Appeals in XRP Case
On April 10, the SEC and Ripple Labs asked the U.S. Court of Appeals for the Second Circuit to pause their respective appeals in the agency’s ongoing enforcement action against the company. The Second Circuit granted the motion on April 16, holding the appeal in abeyance and requiring a status report from the SEC within 60 days. Joint Letter; CoinTelegraph; CoinDesk; Reuters.
SEC and Gemini Request Pause in Suit Over Gemini Earn Program
On April 1, the SEC and crypto exchange Gemini asked the district court for a 60-day stay of the regulator’s enforcement action while the parties discuss a potential resolution. The court granted the motion on April 2 and ordered the parties to file a joint status report on May 31. The SEC filed the action against Gemini and Genesis Global Capital, LLC in January 2023 alleging they offered unregistered securities; Genesis later agreed to a consent judgment in connection with bankruptcy proceedings. CoinTelegraph; Joint Letter.
Judge Denies SafeMoon CEO’s Motion to Dismiss Criminal Fraud Case
On April 18, U.S. District Court Judge Eric R. Komitee of the Eastern District of New York denied former SafeMoon CEO Braden Karony’s motion to dismiss his indictment, stating that a jury should assess his arguments regarding whether the charged conduct is extraterritorial and therefore not subject to U.S. law and whether SafeMoon’s token is a security. Karony faces charges of conspiracy to commit securities fraud, wire fraud, and money laundering. Trial is set for May 6. The indictment alleges that Karony, SafeMoon’s co-founder Kyle Nagy and former CTO Thomas Smith conspired to commit securities and wire fraud and money laundering in defrauding investors through a digital asset called SafeMoon. Former CTO Thomas Smith has pleaded guilty to related charges. Law360; Coin Telegraph.
Crypto Casino Founder Charged with Fraud and Misappropriation of Investor Funds
On April 13, Richard Kim, founder of cryptocurrency casino Zero Edge, was charged in the U.S. District Court in the Southern District of New York with securities fraud and wire fraud for allegedly stealing millions from investors between March 2024 and July 2024. According to the complaint, Kim raised $4.3 million from investors, promising to develop an online casino with on-chain games and a new cryptocurrency called “$RNG”, but instead allegedly used the investor funds for speculative cryptocurrency trades and gambling. He was arrested and released on a $250,000 bond. CoinDesk; Complaint.
Nova Labs Settles SEC Lawsuit Over False Client Claims
On April 23, Nova Labs, Inc., the creator of a decentralized wireless network known as the Helium Network, agreed to pay $200,000 to settle an SEC lawsuit filed in January 2025. The suit alleged that Nova Labs falsely claimed client relationships with various prominent businesses to sell preferred stock in a private placement. Nova Labs neither admitted nor denied the SEC’s allegations in its settlement. CoinDesk; Law360; Final Judgment.
CLS Global Sentenced for Running Fraudulent Wash Trading Scheme
On April 2, United Arab Emirates-based financial services firm CLS Global FZC LLC was sentenced in Massachusetts federal court for allegedly running a fraudulent “wash trading” scheme. The firm pleaded guilty to conspiracy to commit market manipulation and wire fraud and wire fraud in January. Additionally, CLS Global was ordered to pay approximately $428,059 in fines and seized cryptocurrency, and sentenced to three years of probation during which CLS Global cannot participate in U.S. cryptocurrency markets. CLS Global also entered into a separate agreement with the SEC over related civil claims. Press Release; Law360

INTERNATIONAL

ADGM Cancels HAYVN Licence, Imposes USD 8.85 Million Fine
On April 17, the ADGM Financial Services Regulatory Authority (“FSRA”) initiated an enforcement action against the HAYVN Group, a digital asset-focused financial institution, and its former CEO for regulatory breaches, including unlicensed virtual asset activity. The FSRA cancelled HAYVN ADGM’s license, banned the former CEO from ADGM’s financial sector, and imposed USD $8.85 million in fines across four related parties for misconduct including unlicensed virtual asset activity, AML failures such as not recording all of its client relationships and allowing client transactions to be routed through unregulated accounts, and providing false information to banks and the FSRA. ADGM.

REGULATION AND LEGISLATION

UNITED STATES

GOP Lawmakers Introduce Draft of Crypto Market-Structure Bill
On May 5, Republican lawmakers released a discussion draft of a bill that seeks to establish a comprehensive regulatory framework for digital assets. The bill provides for joint rulemaking by the SEC and CFTC, a pathway for digital-asset developers to raise funds under the SEC’s jurisdiction and a process for market participants to register with the CFTC for digital commodity trading. The bill would require digital-asset developers to provide accurate disclosures including relating to their digital asset’s operation, ownership and structure. Press Release; The Block.
New Hampshire Passes ‘Strategic Bitcoin Reserve’ Bill
On May 6, New Hampshire passed legislation allowing the state to invest up to 5% of the state’s public funds in precious metal and digital assets with a market cap of over $500 billion – a threshold that currently only permits Bitcoin. Business Insider.
President Trump Signs Resolution to Nullify Expanded IRS Crypto Broker Rule
On April 11, President Trump signed into law a resolution under the Congressional Review Act that nullifies a Treasury Department and IRS rule that would have subjected DeFi participants to onerous tax-reporting requirements for digital-asset transactions (the “DeFi Broker Rule”). The resolution not only effectively repeals the DeFi Broker Rule but also will prohibit the U.S. Treasury and the IRS from issuing a new rule that is “substantially the same” as the repealed rule absent new legislation. The resolution does not repeal the IRS’s July 2024 broker rule applicable to custodial digital asset trading platforms. Reuters; Bloomberg; CoinTelegraph; CoinDesk.
Paul Atkins Confirmed as SEC Chairman
On April 9, Paul Atkins was confirmed as the next Chairman of the SEC. Atkins served as an SEC commissioner under President George W. Bush and previously worked at the Commission during both Republican and Democratic administrations. Atkins founded a financial services consulting firm in 2008, Patomak Global Partners, which has advised clients on regulatory and compliance matters, including issues related to digital assets. Atkins was sworn in on April 21. SEC; New York Times.
SEC Staff Says Certain Reserve-Backed Stablecoins Are Not Securities
On April 4, the SEC’s Division of Corporation Finance issued guidance stating that the offer and sale of certain reserve-backed dollar stablecoins are not securities transactions. To qualify as a “Covered Stablecoin” under the guidance, the stablecoin’s value must be pegged to the U.S. dollar, and the stablecoin must be backed by dollars or other low-risk, liquid assets and be redeemable one-for-one for U.S. dollars at any time and in unlimited amounts, among other requirements. As is typical, the guidance states that it is nonbinding and does not have Commission-level approval. SEC.
SEC Staff Statement Urges Detailed Crypto Disclosures
On April 10, the SEC’s Division of Corporation Finance issued a staff statement providing the Division’s views about the application of certain disclosure requirements under the federal securities laws to offerings and registrations of securities in the digital-asset markets. The statement recommends that companies describe their business operations without overly relying on technical jargon and specify the business activity, “such as operating or developing a network or application, and the current stage of development” and how the issuer expects to generate revenue. With respect to risk factors for offerings and registrations of securities in the crypto asset markets, the guidance provides examples such as risks relating to technology and cybersecurity, price volatility, liquidity issues and potential registration requirements under state and federal laws. The statement also emphasizes that it “does not address all material disclosure items, and the disclosure topics addressed … may not be relevant for all issuers.” As is typical, the guidance states that it is nonbinding and does not have Commission-level approval. SEC; Coindesk.
DOJ Publishes Memorandum Announcing Shift in Enforcement Priorities and Disbandment of Crypto Enforcement Unit
On April 7, Deputy Attorney General Todd Blanche issued a memorandum (the “Blanche Memo”) announcing a shift in the Department of Justice’s enforcement priorities concerning digital assets. According to the memo, the DOJ “will no longer pursue litigation or enforcement actions that have the effect of superimposing regulatory frameworks on digital assets while President Trump’s actual regulators do this work outside the punitive criminal justice framework.” Instead, the focus will be on “prosecuting individuals who victimize digital asset investors, or those who use digital assets in furtherance of criminal offenses such as terrorism, narcotics and human trafficking, organized crime, hacking, and cartel and gang financing.” The memo also announced the disbandment of the National Cryptocurrency Enforcement Team. DOJ; Reuters; CoinDesk; New York Times.
Acting Chairman Pham Lauds DOJ Policy Ending Regulation by Prosecution of Digital Assets Industry and Directs CFTC Staff to Comply with Executive Orders
On April 8, CFTC Acting Chairman Caroline D. Pham praised the Blanche Memo, and directed CFTC staff to comply with the President’s executive orders and Administration policy. Consistent with the DOJ’s enforcement priorities, Pham has refocused the CFTC’s enforcement resources on cases involving combatting fraud and manipulation rather than regulating by enforcement. Specifically, Pham has directed CFTC staff not to charge regulatory violations in cases involving digital assets unless there is evidence that the defendant knew of the licensing or registration requirement at issue and willfully violated such requirement. CFTC.
Federal Reserve Retracts Crypto-Related Guidance for Banks
On April 24, the Federal Reserve Board announced that it withdrew guidance for banks related to their digital-asset and dollar-tokens activities. The agency rescinded a 2022 supervisory letter requesting state member banks to provide advance notification of digital-asset activities and a 2023 supervisory letter regarding the supervisory nonobjection process for state member bank engagement in dollar-token activities. These actions follow earlier comments from Fed Chair Jerome that the Fed does not intend to limit the bank sector’s interaction with digital assets. Federal Reserve; Cryptoslate; WSJ.
Illinois Lawmakers Advance Crypto Fraud Protection Measure
On April 10, Illinois state senators passed out of committee Senate Bill 1797, which requires crypto firms to register with the state and provide disclosures to protect consumers. It also empowers the Illinois Department of Financial and Professional Regulation to set and enforce guidelines for crypto companies. Sen. Mark Walker, one of the bill’s sponsors, emphasized the need for standards to prevent bankruptcy, fraud, and deceptive practices in the crypto industry. Illinois State Assembly; Cointelegraph.
Hidden Road Receives Broker-Dealer License Following Ripple Acquisition
On April 17, prime brokerage platform Hidden Road announced it received a broker-dealer license from the Financial Industry Regulatory Authority (FINRA), shortly after Ripple Labs agreed to acquire the firm for $1.25 billion. The license allows Hidden Road to offer FINRA-compliant prime brokerage, clearing, and financing services in fixed income assets. CoinDesk; Press Release.
CFTC Seeks Comments on 24/7 Trading and Perpetual Derivatives
On April 21, the CFTC issued a request for comment on the implications of extending the trading of CFTC-regulated derivatives markets to an effectively 24/7 basis, including the potential effects on trading, clearing and risk management which differ from trading during current market hours. 24/7 trading is already prevalent in digital assets markets. On the same day, the CFTC also requested comment on the characteristics of perpetual derivatives, the implications of their use in trading, clearing and risk management and the risks of such derivatives risks in connection with market integrity, customer protection, or retail trading. Perpetual derivatives are commonly traded on offshore digital asset exchanges. CFTC 24/7 Trading; CFTC Perpetual Derivatives.

INTERNATIONAL

European Securities and Markets Authority Publishes Official Translations of its Guidelines on Conditions for Qualification of Crypto Assets as Financial Instruments Under MiCA
On March 19, the European Securities and Markets Authority (“ESMA”) published the official translations of its guidelines on the conditions and criteria for the qualification of crypto assets as financial instruments (ESMA75453128700-1323) under Article 2(5) of MiCA. The guidelines clarify when MiCA or other rules apply to crypto assets. They are effective starting on May 18, 2025, and relevant authorities are required to update ESMA. ESMA.
Securities and Futures Commission and Hong Kong Monetary Authority Issue Circulars on Providing Virtual Asset Staking Services
On April 7, the Securities and Futures Commission (“SFC”) and the Hong Kong Monetary Authority (“HKMA”) issued circulars to SFC-licensed virtual asset trading platform (“VATP”) operators and authorized institutions to permit the offering of staking services. VATPs must obtain the SFC’s prior approval and agree to be bound by the SFC’s ‘Terms and Conditions for Staking Services’ before offering staking services. Broadly, other requirements to offer staking services include that VATPs must (i) maintain possession or control over all mediums through which clients’ virtual assets may be withdrawn from the staking service, (ii) implement policies, internal controls and operational rules to ensure that staked virtual assets are adequately safeguarded and (iii) manage operational risks and conflicts of interest. VATPs must also exercise skill, care and diligence when selecting a blockchain protocol for their staking service and when selecting its arrangement for participating in the validation process. VATPs must also ensure adequate disclosure of additional staking risks to their clients and obtain their written acknowledgement before providing them with staking services. SFC; HKMA.
Hong Kong SFC Revises Circular on SFC-Authorized Funds to Engage in Staking Activities Through VATPs and AIs
On April 7, the SFC revised an existing circular that was originally issued on December 22, 2023 delineating the requirements for authorizing investment funds with exposure to virtual assets of more than 10% of their net asset value for public offerings in Hong Kong. The fund manager must obtain the SFC’s prior approval before it can engage in staking activities for its managed SFC-authorized virtual asset fund, and the staking activities must be conducted through an SFC-licensed VATP or authorized institution, subject to a cap to manage fund liquidity. The fund manager must also ensure that the staking activities are consistent with the fund’s investment objective and strategy. SFC.
Monetary Authority of Singapore Consults on Prudential Treatment and Disclosure of Crypto Asset Exposures for Banks
On March 27, the Monetary Authority of Singapore (“MAS”) published a Consultation Paper seeking feedback on proposed amendments aimed at implementing standards promulgated by the Basel Committee on Banking Supervision (“BCBS”) on prudential treatment and disclosure of crypto asset exposures for banks. Specifically, the MAS has proposed to amend relevant MAS notices relating to capital, liquidity, large exposures and disclosure frameworks for banks to implement the BCBS’ standards on prudential treatment and disclosures for crypto asset exposures for banks. MAS.
Monetary Authority of Singapore Proposes Amendments to Anti-Money Laundering and Terrorism Financing Laws
On April 8, the MAS published a Consultation Paper seeking feedback on proposed amendments to MAS Notices on anti-money laundering and countering the financing of terrorism to take into account the latest money laundering, terrorism financing and proliferation financing developments. The amendments apply across the financial sector and are relevant to financial institutions including banks, insurers, capital markets intermediaries, payment service providers (including digital payment token or crypto asset service providers). Broadly, the proposed amendments reference the latest revised standards set by the Financial Action Task Force and cover topics ranging from risk assessments to the clarification of regulatory expectations on the filing of suspicious transaction reports. MAS.
Dubai Financial Services Authority Opens Tokenization Regulatory Sandbox for Expressions of Interest
On March 17, the Dubai Financial Services Authority (“DFSA”) called for expressions of interest to join its new Tokenization Regulatory Sandbox, with a deadline of April 24, 2025. The initiative forms part of the DFSA’s Innovation Testing Licence program and is aimed at firms offering tokenized financial products and services, including equities, bonds, sukuk, and fund units. The sandbox provides a controlled environment for testing tokenized investment solutions, offering a structured path to full regulatory authorization. DFSA.
Abu Dhabi Global Market and Chainlink Forge Alliance to Advance Tokenization Frameworks
On March 24, the Abu Dhabi Global Market (“ADGM”) signed a Memorandum of Understanding with decentralized network Chainlink to promote compliant tokenization and enhance blockchain innovation. The partnership will support projects under the ADGM Registration Authority by leveraging Chainlink’s technical expertise in blockchain interoperability and verifiable data solutions. Chainlink’s infrastructure has enabled over $19 trillion in transaction value globally and is trusted by leading financial institutions. Under the Memorandum of Understanding, ADGM and Chainlink will collaborate on regulatory dialogue and host educational initiatives focusing on blockchain, AI and tokenization. ADGM.

SPEAKER’S CORNER

New York Attorney General Letitia James Sends Letter to Congress Proposing Crypto Regulatory Framework
On April 10, New York Attorney General Letitia James sent a letter to congressional leaders warning that the lack of strong federal regulations on cryptocurrencies and digital assets increases the risk of fraud, criminal activity, and financial instability. She argued that federal regulations would bolster America’s national security, strengthen its financial markets and protect investors from cryptocurrency scams. James’s letter called for protections including “i) onshoring stablecoins to protect the U.S. dollar and the treasuries market, ii) requiring platforms to only conduct business with anti-money laundering compliant platforms, iii) providing for the registration of issuers and intermediaries to ensure accountability, transparency and basic protections to the public, iv) protecting against conflicts of interest, v) promoting price transparency, vi) requiring platforms and intermediaries to actively identify and prevent fraud and scams, and vii) disallowing digital assets in retirement accounts.” NY; Reuters.

OTHER NOTABLE NEWS

SoftBank, Tether and Cantor Fitzgerald Launch Twenty One Capital
On April 23, stablecoin issuer Tether, Bitfinex, SoftBank, and Cantor Fitzgerald announced the launch of Twenty One Capital, Inc., a Bitcoin investment vehicle. CCN.
HM Treasury and the UK Debt Management Office Publish Policy Paper on Pilot Digital Gilt Instrument
On March 18, HM Treasury and the UK Debt Management Office (“DMO”) released a policy paper detailing their pilot Digital Gilt Instrument (“DIGIT”). DIGIT is a new, short-dated, transferable security that will be held on a Distributed Ledger Technology (“DLT”) platform and issued within the Digital Securities Sandbox, operating independently from the Government’s standard debt issuance processes. The policy paper outlines the initial features of DIGIT and seeks input from financial sector firms to gauge investor demand and design preferences for further development. Additionally, it requests information from potential DLT suppliers to explore available technology options and the scope of services required for DIGIT issuance. Stakeholders are invited to submit their responses by April 13, 2025. HM Treasury.

The following Gibson Dunn lawyers contributed to this issue: Jason Cabral, Kendall Day, Jeff Steiner, Sara Weed, Sam Raymond, Nick Harper, Emma Li, Michelle Lou, Zachary Montgomery, Aliya Padhani, Henry Rittenberg, Nicholas Tok, and Apratim Vidyarthi.

FinTech and Digital Assets Group Leaders / Members:

Ashlie Beringer, Palo Alto (+1 650.849.5327, aberinger@gibsondunn.com)

Michael D. Bopp, Washington, D.C. (+1 202.955.8256, mbopp@gibsondunn.com

Stephanie L. Brooker, Washington, D.C. (+1 202.887.3502, sbrooker@gibsondunn.com)

Jason J. Cabral, New York (+1 212.351.6267, jcabral@gibsondunn.com)

Ella Alves Capone, Washington, D.C. (+1 202.887.3511, ecapone@gibsondunn.com)

M. Kendall Day, Washington, D.C. (+1 202.955.8220, kday@gibsondunn.com)

Sébastien Evrard, Hong Kong (+852 2214 3798, sevrard@gibsondunn.com)

William R. Hallatt, Hong Kong (+852 2214 3836, whallatt@gibsondunn.com)

Nick Harper, Washington, D.C. (+1 202.887.3534, nharper@gibsondunn.com)

Martin A. Hewett, Washington, D.C. (+1 202.955.8207, mhewett@gibsondunn.com)

Sameera Kimatrai, Dubai (+971 4 318 4616, skimatrai@gibsondunn.com)

Michelle M. Kirschner, London (+44 (0)20 7071.4212, mkirschner@gibsondunn.com)

Stewart McDowell, San Francisco (+1 415.393.8322, smcdowell@gibsondunn.com)

Hagen H. Rooke, Singapore (+65 6507 3620, hhrooke@gibsondunn.com)

Mark K. Schonfeld, New York (+1 212.351.2433, mschonfeld@gibsondunn.com)

Orin Snyder, New York (+1 212.351.2400, osnyder@gibsondunn.com)

Ro Spaziani, New York (+1 212.351.6255, rspaziani@gibsondunn.com)

Jeffrey L. Steiner, Washington, D.C. (+1 202.887.3632, jsteiner@gibsondunn.com)

Eric D. Vandevelde, Los Angeles (+1 213.229.7186, evandevelde@gibsondunn.com)

Benjamin Wagner, Palo Alto (+1 650.849.5395, bwagner@gibsondunn.com)

Sara K. Weed, Washington, D.C. (+1 202.955.8507, sweed@gibsondunn.com)

Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.

Digital Assets Recent Updates – April 2025

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