Digital Currency & Blockchain Quarterly Litigation Update

Topic 1: SEC Chair Paul Atkins Signals More Transparent Wells Process With More Robust Protections

Key Takeaway: If implemented as described in remarks by U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins, the refreshed Wells process could provide earlier, more substantive insight into the SEC’s theories and evidence — creating a more meaningful opportunity to shape outcomes before enforcement actions are formally authorized.

In prepared remarks at the Fordham School of Law on October 7, 2025, SEC Chair Paul Atkins announced plans to “refresh” the SEC’s Wells process, framing it not as a discretionary courtesy but “as an extension of due process and fundamental constitutional” protections. Chair Atkins emphasized that the Wells process should meaningfully test the accuracy and legal soundness of enforcement staff’s proposed charges before matters reach the Commission.

Chair Atkins set forth specific key changes and expectations, including:

• Greater information sharing: Chair Atkins noted that enforcement staff are expected to provide respondents with “sufficient information” to understand proposed charges and the evidentiary basis for them, including, when appropriate, “testimony transcripts and key documents.” He emphasized that the Wells process “should not be a ‘gotcha’ game.” Atkins acknowledged limits to this transparency — for example, identities of whistleblowers and the existence of parallel criminal matters — but he emphasized a default of greater transparency.
• More realistic timelines: Chair Atkins stated that “going forward,” potential respondents and defendants will receive at least four weeks to prepare Wells submissions.
• Senior-level engagement: Senior enforcement leadership will continue to meet with defense counsel before recommendations are made to the Commission, though Chair Atkins remarked that potential respondents and defendants should not expect unlimited meetings.
• Earlier dialogue: Chair Atkins also encouraged substantive engagement earlier in investigations, not just at the Wells stage, arguing that earlier communication can conserve agency and respondent resources.
• White papers: Chair Atkins further noted the continued value of the “white paper” process, instead of a Wells submission, in which a potential defendant may be obligated to make a public disclosure of a Wells notice or to reduce the cost of responding to SEC concerns.

Chair Atkins highlighted “that Wells submissions can and do change the trajectory of enforcement actions” as a means of furthering the “objective […] to get to the truth of the matter.” He also signaled a broader recalibration of enforcement priorities, criticizing past cases that consumed disproportionate resources relative to investor harm (e.g., technical books-and-records violations). But Chair Atkins also signaled that combating fraud remains a top agency priority and that the SEC will still bypass the Wells process in matters requiring urgent action, such as ongoing fraud.

Although Chair Atkins did not directly address crypto industry complaints about opaque Wells notices under prior leadership, his remarks implicitly responded to those concerns — particularly criticisms that industry participants receiving Wells notices were not told which digital assets or transactions allegedly violated federal securities laws.

Relatedly, Chair Atkins reaffirmed the SEC’s renewed practice of allowing firms to seek “waivers from collateral consequences” (such as “bad actor” disqualifications) during settlement discussions, describing this as a “close cousin to the Wells process.” Both initiatives reflect a shift toward rewarding enforcement staff for judgment and case quality.

Topic 2: SEC Issues No-Action Relief Concerning DePIN, Tokenized Securities, and Rewards Programs

Key Takeaway: The SEC has issued several additional no-action letters from the Division of Corporation Finance and the Division of Trading and Markets that provide further information about engaging in digital asset market innovation in a compliant manner. These letters emphasize that the SEC under Chair Atkins is continuing to engage proactively and cooperatively with market participants, presenting a marked shift from the prior administration’s culture of regulation by enforcement.

Fuse No-Action Letter
On November 24, 2025, the Division of Corporation Finance issued a no-action letter to Fuse Crypto Limited, an energy technology group focused on accelerating the decentralization of electricity grids. In response to Fuse’s final incoming letter, the no-action letter states that the SEC would not recommend an enforcement action if Fuse markets and distributes its FUSE token “‘solely for consumptive use as a means of interacting with’ the Fuse Network.” As described in the incoming letter, the FUSE token functions as a reward for users who maintain Fuse’s distributed infrastructure and can be redeemed for discounts and rebates associated with the cost of participating on the Fuse Network. The FUSE tokens’ redemption value “will be based on the average market price of the Tokens on third-party” trading platforms “at the time of the redemption,” which Fuse argued “will act to limit demand for [FUSE] on the secondary market and to support the orderly and stable trading of the” FUSE tokens for consumptive purposes.

DTC No-Action Letter
On December 11, 2025, the Division of Trading and Markets issued a no-action letter to the Depository Trust Company (DTC) stating that the SEC would not recommend an enforcement action against DTC for the development and launch of a pilot program for its securities tokenization services and also provided relief for noncompliance with certain securities regulations in connection with the rollout of the pilot program. Under the pilot program described in its request letter, DTC would debit eligible securities from the participant’s book-entry account and credit them to an account on DTC’s centralized ledger. DTC would then mint tokens to the participant’s registered wallet. Under the pilot, the tokens may be transferred directly between registered wallets, with all movements tracked by DTC’s off-chain LedgerScan system. The pilot program is expected to launch in the second half of 2026, with the no-action relief in force for the three years that follow the launch.

MegPrime No-Action Letter
On January 15, 2026, the Division of Corporation Finance issued a no-action letter to MegPrime Holding LLC, a fintech platform powered by its digital currency, the MegPrime (MP) token. The no-action letter states that the SEC would not recommend an enforcement action if MegPrime markets and distributes MP token solely for a consumptive use as part of a payments and rewards-oriented program. The MegPrime no-action request describes the token as a reward solution that is “intended to address the monthly household budget affordability needs of its users.” It will be marketed as a crypto asset that will provide users with rewards if they spend the token with specific merchants in connection with ordinary household needs. The tokens will be earned and redeemed through the use of a payment card, which is linked to the blockchain via MegPrime’s app. The tokens will be available for purchase on MegPrime’s website and on the secondary market.

Topic 3: SEC Investor Advisory Committee Meeting and Subsequent Guidance Reflect a Coordinated Tokenization Framework

Key Takeaway: The SEC’s Investor Advisory Committee (IAC) held a virtual public meeting in December 2025 that underscored how firmly tokenized securities now sit within the SEC’s market structure agenda. In light of subsequent SEC guidance and the recent DTC no-action relief, the meeting reads as part of a broader, coordinated effort to integrate tokenized securities into the existing regulatory scheme. For industry participants, the message is increasingly clear: tokenization is being accommodated through adaptation of traditional securities regulation, not wholesale departures from it.

The SEC’s IAC held a virtual public meeting on December 4, 2025, focused on market structure modernization, investor protection, and emerging technologies — most notably the tokenization of equities. Viewed against recent regulatory developments, including the guidance on tokenized securities jointly issued by several SEC divisions, the guidance on broker-dealer custody issued by the SEC’s Division of Trading and Markets, and the DTC’s no-action letter (described in more detail in the previous topic, “SEC Issues No-Action Relief Concerning DePIN, Tokenized Securities, and Rewards Programs”), the discussion reflects an SEC that is moving beyond abstract debate toward pragmatic implementation, while remaining anchored to traditional market structure principles.

In prepared remarks for the IAC meeting, Chair Atkins framed the discussion around modernizing market infrastructure while preserving core investor protections. He stated that distributed ledger technology could improve issuance, settlement, shareholder communications, and proxy mechanics, but he also emphasized that innovation must operate within a framework that maintains fairness and transparency in US capital markets. That framing aligns closely with the SEC’s subsequent guidance and the DTC no-action process, which contemplate distributed ledger technology-based systems operating alongside — rather than outside of — registered intermediaries and established clearance and settlement models.

Commissioner Hester Peirce highlighted the need for regulatory flexibility and experimentation, cautioning against reflexively applying legacy market structure rules in ways that could foreclose innovation. Her prepared remarks reflect a view that tokenization should be evaluated based on economic substance and investor outcomes rather than on technological form alone.

Striking a more skeptical tone, Commissioner Caroline Crenshaw warned that many “tokenized” or “wrapped” equity products may not represent true one-to-one ownership interests. She raised concerns about investor confusion, pricing integrity, liquidity, and whether calls for exemptive relief risk undermining long-standing investor protections.

The meeting reflected growing SEC engagement with tokenization as a market structure issue, not merely a crypto-specific phenomenon. While there was openness to innovation, the dominant theme was that tokenization does not justify weakening core securities law protections. The discussion underscored an internal SEC tension between modernization and continuity: how to accommodate new technology without recreating the fragmentation and investor risks that existing market rules were designed to address.

Topic 1: CFTC Brings Civil Crypto Fraud Action Following Criminal Conviction

Key Takeaway: The Commodity Futures Trading Commission (CFTC) reinforces that civil crypto enforcement actions may still proceed after criminal convictions.

On December 19, 2025, the CFTC filed a civil enforcement action in the U.S. District Court for the Northern District of Oklahoma against Travis Ford — the CEO, co-founder, and head trader of Wolf Capital Crypto Trading LLC, a cryptocurrency investment firm — and the company itself, alleging violations of the “anti-fraud and registration provisions of the Commodity Exchange Act.”

The CFTC complaint alleges that, from approximately October 2022 through at least December 2024, Ford and Wolf Capital engaged in a fraudulent scheme through which they solicited individuals to participate in an unregistered commodity pool, promising daily returns between 1% and 3.5% on deposited funds. The CFTC alleges that the defendants represented that they would generate these returns by trading digital asset commodities — including Bitcoin and ether as well as Bitcoin futures, both manually and automatically through trading “bots” — and encouraged participants to recruit others through a referral program to qualify for higher daily returns. According to the complaint, although the defendants engaged in some trading activity, they misrepresented trading performance by (1) selectively disclosing only profitable trades; (2) failing to disclose losses; and (3) overstating portfolio values. The complaint further alleges that the defendants paid more than $2 million in purported “returns” using funds deposited by other participants, “in the manner of a Ponzi scheme.”

The CFTC seeks injunctive relief, civil monetary penalties, and remedial ancillary relief, including “a trading and registration ban, restitution, disgorgement, rescission, and pre- and post-judgment interest.” The court granted Ford an extension until April 17, 2026, to respond to the complaint and entered a clerk’s entry of default against Wolf Capital on January 22, 2026. 

The civil action follows related criminal proceedings against Ford: In December 2024, he “was charged with one count of conspiracy to commit wire fraud for his involvement in a cryptocurrency investment scheme that defrauded approximately 2,800 investors out of $9.4 million.” In January 2025, Ford pleaded guilty to that charge, and in November 2025, he was sentenced to 60 months’ imprisonment, as well as three years of supervised release, and ordered to pay forfeiture and restitution.

Topic 1: Members of ASI Alliance Sue Ocean Protocol DAO and Its Founders for Fraud

Key Takeaway: A new class action filed in the U.S. District Court for the Southern District of New York (SDNY) alleges that Ocean Protocol founders orchestrated a fraudulent scheme by falsely representing that their organization operated as a decentralized autonomous organization (DAO) committed to developing open-source artificial intelligence (AI), when in reality they planned to convert hundreds of millions of “Community Tokens” for personal financial gain at the expense of token holders. The action will test how breach of contract, New York General Business Law, and common law fraud and conspiracy claims are presented in cases regarding token mergers and DAOs.

On November 4, 2025, plaintiffs Fetch Compute, Inc., Seth Ian, Greg Graves, and Victor Larivee filed a class action complaint in the SDNY against Ocean Protocol Foundation, Ltd., Ocean Expeditions, Ltd., OceanDAO, and its co-founders and control people, alleging violations of fraud, civil conspiracy, breach of contract, breach of covenant of good faith and fair dealing, promissory estoppel, and violations of the New York General Business Law.

The complaint alleges that, in mid-2024, the defendants along with Fetch.ai and SingularityNET, formed the Artificial Superintelligence (ASI) Alliance, which “was comprised of individuals and organizations who prioritized the goal of developing decentralized AI in an ethical and acceptable manner.” The ASI Alliance published a Vision Paper outlining “the Platforms’ joint mission ‘to merge their tokenomic networks’ to ‘create the world’s largest open source, independent AI research and development foundation – with a unique focus to create decentralized Artificial Superintelligence.’” The ASI Alliance was formed by combining tokens issued by three platforms through a “token merger,” whereby Ocean ($OCEAN) and Singularity ($AGIX) token holders converted their tokens to Fetch ($FET) tokens. These tokens traded as a combined token under the $FET ticker as a result. As part of the ASI Alliance, the defendants announced the designation of approximately 700 million $OCEAN tokens as Community Tokens that “could only be distributed as autonomous rewards through incentive programs designated by the Alliance to foster community engagement.” The defendants allegedly promised the community that the ASI Alliance would retain this community-incentive designation after the conversion to $FET tokens.

The plaintiffs allege that the defendants had a different mission for joining the ASI Alliance. In particular, the complaint details the following five-step scheme that the defendants executed beginning in June 2025 that ultimately led to the defendants withdrawing their $OCEAN tokens from the ASI Alliance, converting them to $FET, selling their $FET, and then withdrawing from the ASI Alliance.

1. Specifically, the defendants allegedly misled existing token holders to convince them to vote for Ocean’s admission to the ASI Alliance.
2. The defendants then caused Ocean Expeditions to be incorporated in June 2025, with Bruce Pon, one of the defendants and the co-founder of Ocean Protocol Foundation, as sole director.
3. Then, instead of reserving 700 million $OCEAN tokens as Community Tokens, the defendants transferred more than 660 million $OCEAN Community Tokens from Ocean Protocol Foundation to Ocean Expeditions.
4. Thereafter, beginning around July 1, 2025, Ocean Expeditions converted approximately 660 million $OCEAN Community Tokens into approximately 286 million $FET tokens and then sold the vast majority of those $FET tokens on the open market, depressing $FET token values.
5. After this, the defendants allegedly caused Ocean Protocol Foundation to “abruptly exit the Alliance on October 9, 2025.” The defendants then announced that all remaining unconverted $OCEAN tokens “could be freely traded.” This drove up $OCEAN prices while further depressing $FET token values. 

These actions allegedly breached the defendants’ covenant with token holders that Community Tokens would be reserved as rewards for building the ASI Alliance and achieving community goals via the decentralized and automated reward system. The lawsuit claims that the defendants likely reaped more than $100 million in ill-gotten gains while leaving hundreds of thousands of victims holding significantly depressed tokens.

A recent court order adjourning the initial pretrial conference until after the resolution of the defendants’ motion to dismiss the complaint, indicates that the defendants intend to challenge the court’s personal jurisdiction over them. The briefing will likely touch on issues significant to jurisdiction over DAOs in federal court. The defendants’ deadline to respond to the complaint is February 24, 2026.

Topic 2: Coinbase Insiders Hit With Suit (Again) Based on Alleged Compliance Failures and Corporate Misrepresentations

Key Takeaway: Another suit against Coinbase stemming from its alleged mismanagement of anti-money laundering (AML) and Know Your Customer (KYC) processes, cybersecurity failings, and its corporate misrepresentations about both has been filed, this time in Delaware. In this action, the shareholders sue certain insiders derivatively for breaches of fiduciary duty, unjust enrichment, and corporate waste, seeking the return of approximately $4.2 billion and corporate reform in their prayer for relief.

On November 24, 2025, a shareholder derivative action was filed in the Delaware Court of Chancery against Coinbase Global, Inc.’s current and former directors and officers, asserting claims for breach of fiduciary duties (e.g., candor, good faith, loyalty, and oversight), unjust enrichment, and waste of corporate assets between April 2021 and May 2025.

The shareholder complaint (similar to the securities action filed in May 2025 in the U.S. District Court for the Eastern District of Pennsylvania)¹ alleges that, despite strong public statements regarding adherence to “global and local regulations,” Coinbase “flouted” AML and KYC rules by permitting customer onboarding without appropriate due diligence and accumulating backlogs of high-risk customers requiring enhanced due diligence, including at its UK subsidiary CB Payments Ltd. The shareholders assert that these issues came to light on February 25, 2022, with disclosure of a New York State Department of Financial Services (NYDFS) investigation and were confirmed on January 4, 2023, with a NYDFS consent order requiring a $50 million civil penalty and an additional $50 million compliance investment. This was preceded by a UK regulatory action and fine for breaches of UK regulations regarding inadequate design, testing, and monitoring of controls. Both actions also detail how the disclosure of a material cybersecurity incident and an SEC investigation into whether Coinbase misstated user numbers caused an approximately 7.2% drop in stock on May 15, 2025. However, a key difference is that the Delaware action contains redacted information that indicates that the plaintiffs had access to audit committee records and board meeting minutes and materials. Such materials appear to have been provided to the plaintiffs by the defendants’ counsel.

The complaint seeks disgorgement of profits and compensation allegedly obtained through the alleged wrongdoing and waste of corporate assets (alleged to be worth approximately $4.2 billion in profits). The shareholders’ prayer for relief also includes requests for Coinbase shareholder permission to nominate at least five candidates for election to the board; “a proposal to ensure the establishment of effective oversight of compliance with applicable laws, rules, and regulations”; and the award of attorneys’ fees. No further information relating to the briefing schedule has been made public, but this complaint will likely be the subject of a motion to dismiss. In the Pennsylvania action, the parties were heard on the motion to dismiss that action in January 2026, and a decision has not been issued.

In Adam Grabski ex rel. Coinbase Global, Inc. v. Marc Andreessen, et al., another action pending in the Delaware Court of Chancery adding to the actions against Coinbase, Chancellor Kathaleen St. Jude McCormick found, on January 30, 2026, that a suit against Coinbase would not be dismissed at the request of a special litigation committee put together by Coinbase, due to the lack of independence of one of the two committee members. The case will proceed as a result.

Topic 3: Meme Coin Issuers May Still Be Subject to Liability Under Securities Laws

Key Takeaway: The SEC Division of Corporation Finance’s guidance regarding meme coins will not shield meme coin issuers from potential liability under securities laws, particularly if their projects are highly centralized or tied to the efforts of a single promoter.

On December 2, 2025, Judge Paul G. Byron of the U.S. District Court for the Middle District of Florida granted summary judgment in part in favor of a proposed class of plaintiffs in an investor suit stemming from the “Let’s Go Brandon” meme coin.

LGBCoin, LTD launched its token (LGBCoin) in October 2021, attempting to capitalize on the viral “Let’s Go Brandon” meme associated with then-President Joe Biden, in relation to a reporter at a NASCAR race mistakenly characterizing an expletive chant about Biden to be a cheer in support of race winner Brandon Brown. In January 2022, the LGBCoin Foundation was separately incorporated, naming LGBCoin as “its sole director or owner.” Defendant James Koutoulas, as the sole director of LGBCoin, had authority over the finances of both entities. In November 2021, LGBCoin (through Koutoulas) attempted to drum up public interest in the coin by entering into several partnerships with major media outlets, engaging influencers to serve as promoters of the coin, and negotiating a sponsorship agreement with NASCAR and professional driver Brandon Brown. These efforts caused the value of the coin to increase to an estimated $570 million at the end of December 2021. But following the December 30, 2021, news that the sponsorship agreement with NASCAR and Brown had fallen through, the value of the tokens fell precipitously, resulting in the instant lawsuit.

The plaintiffs originally filed this action against defendants LGBCoin and its founder, Koutoulas, alleging, among other causes of action, that Koutoulas violated Section 12(a)(1) of the Securities Act of 1933 by offering or selling LGBCoin without filing a registration statement. The plaintiffs’ third amended complaint also brought a claim against Koutoulas, LGBCoin, LTD, the LetsGoBrandon.com Foundation doing business as LGBCoin Foundation, and Patrick Brian Horsman, who is the managing partner and co-founder of Coral DeFi, LP, a decentralized finance (DeFi) and cryptocurrency investment platform, for violations of state and federal securities laws, as well as a conspiracy to commit securities fraud. The plaintiffs’ other causes of action, which they assert against various defendants and NASCAR, include Florida common law claims for unjust enrichment, negligent misrepresentation, and promissory estoppel.

The court’s summary judgment opinion focused on Koutoulas and LGBCoin’s joint motion for summary judgment as to the Section 12(a)(1) count asserted against Koutoulas. The court ultimately denied Koutoulas and LGBCoin’s motion and partially granted and partially denied the plaintiffs’ cross-motion for summary judgment.

In the order, the court first addressed LGBCoin’s argument that the plaintiffs lacked standing to pursue a Section 12(a)(1) claim because they alleged that they purchased their meme coins on secondary market trading platforms, rather than purchasing the tokens directly from the defendants. The defendants relied on SEC v. Ripple Labs, Inc. when arguing that a purchaser who buys on the open market without any connection to the defendant’s efforts cannot satisfy the “reliance” or causation necessary to bring a claim under Section 12. The court rejected this argument, reasoning that Ripple “expressly refused to address whether secondary market sales may constitute investment contracts” covered by Section 12(a)(1). Instead, the court found that the plaintiffs had sufficiently established “that they suffered injuries as a result of Defendants’ decisions related to the ownership and control of the [LGBCoin] Foundation, including the promotion of LGBCoin.” This departure from Ripple is significant, as it supports the notion that secondary market transactions confer plaintiffs standing under Section 12(a)(1). However, the high degree of centralization here with LGBCoin may distinguish this case from Ripple and other cases in the crypto space. While Ripple Labs raised investment capital through multiple funding rounds in which it sold stock to investors and issued millions of shares of common stock, and while the cryptocurrency XRP was highly liquid and widely traded for many years on multiple exchanges, Koutoulas was the sole owner and director of LGBCoin.

The court also rejected the plaintiffs’ arguments about the persuasive authority of the SEC Division of Corporation Finance’s “Staff Statement on Meme Coins.” The defendants argued that the statement, which addresses and rejects the exact type of claim the plaintiffs make here, was entitled to Skidmore deference — meaning that courts should give weight to agency interpretations that are persuasive and consistent with existing law. The court rejected this argument and refused to consider the statement, explaining that it had “no legal force or effect.”

The court’s analysis largely hinged on the application of the test articulated in SEC v. W.J. Howey Co., which determines whether an offer or sale constitutes an “investment contract” under the securities laws. The court articulated the test as having three requirements: “(1) an investment of money, (2) in a common enterprise, (3) with the expectation of profits to come solely from the efforts of others.” Judge Byron found that there was no material dispute of fact that the first two prongs were established, granting partial summary in the plaintiffs’ favor on that basis. Regarding the third prong, however, the court determined that a material issue of fact exists and thus denied summary judgment. The court split discussion of this prong into two separate inquiries: whether the plaintiffs (1) “ever had a reasonable expectation of profits and (2) whether Plaintiffs relied on the managerial efforts of Defendants.”

When considering whether token purchasers had a reasonable “expectation of profits” stemming from the coin, the court weighed the plaintiffs’ argument that they viewed LGBCoin as an investment against “several non-investment reasons for purchasing LGBCoin” that were advanced by the defendants. Some of the defendants’ cited reasons included “‘fight[ing] back against cancel culture,’ ‘help[ing] bring our Conservative party into the 21st century,’ and ‘donating to charity.’” The court ultimately denied summary judgment for either party after finding that “there is a dispute over whether Defendants’ promotional materials for LGBCoin attracted Plaintiffs with an expectation of profits or motivated Plaintiffs by a desire to obtain LGBCoin as a meme coin for advocacy of conservative values.”

Finding a material dispute of fact as to whether the plaintiffs had established an “expectation of profits,” the court determined that it need not further consider at this time whether such an expectation was based upon the “efforts of others,” instead leaving that determination for the jury.

Barring settlement, the case is now set to proceed to the trial stage, with all pretrial motions due by May 26, 2026, and with the jury trial scheduled to commence on July 6, 2026. 

Topic 4: Crypto Mining Patent Dispute Settled After USPTO Director Reverses PTAB Ineligibility Finding

Key Takeaway: U.S. Patent and Trademark Office (USPTO) Director Review can meaningfully reshape crypto patent disputes even after an initial Patent Trial and Appeal Board (PTAB) finding of patent ineligibility.

In May 2023, Upstream Data Inc., a Canadian cryptocurrency mining company, filed suit against its Coloradan competitor Crusoe Energy Systems LLC, alleging infringement of U.S. Patent No. 11,574,372, which covers a blockchain mining system powered by stranded natural gas at remote oil and gas facilities. The patent, which was issued in February 2023, was filed by Upstream’s founder Stephen Barbour to protect his novel invention at the intersection of environmental and cryptocurrency mining concerns, namely using waste gas from oil and gas wells to power Bitcoin mining operations.

The complaint alleged that Crusoe’s “Digital Flare Mitigation” systems infringed upon the patent by using similar technology to capture flare gas and convert it to electricity for cryptocurrency mining at remote wellsites. Upstream sought damages and injunctive relief for both direct and willful infringement.

Crusoe moved to dismiss in July 2023, arguing that the patent claims are system claims requiring that “every item listed” in the system be “owned or controlled by a single entity.” Crusoe contended that, as the owner of the alleged infringing product, Upstream did not own or control critical elements of the claimed system, including the blockchain database or the peer-to-peer network on which the blockchain resides. Rather than litigate the motion, the parties agreed to stay the case pending the USPTO’s decision on Crusoe’s petition for post-grant review of the patent.

In January 2025, the PTAB issued a final written decision in the post-grant review proceeding, finding that claims 1 and 24 of the patent were unpatentable under 35 U.S.C. § 101. However, in March 2025, USPTO Acting Director Coke Morgan Stewart initiated a sua sponte Director Review of that decision and, in April 2025, reversed the patent board’s findings, determining that the two challenged patent claims were valid. In its decision, the rehearing panel found that the board had “misapprehended the nature of claims 1 and 24 in characterizing the subject matter of those claims as being directed to an abstract idea.”

Following the USPTO director’s decision, the parties reached a settlement. On October 31, 2025, Upstream filed a notice to voluntarily dismiss the case with prejudice, with each party bearing its own costs, expenses, and attorneys’ fees. The terms of the settlement agreement, including any settlement amount, were not disclosed.

Topic 1: SEC and CFTC Signal New Era of Coordinated Crypto Regulation Under Project Crypto

The SEC and CFTC’s decision to jointly advance Project Crypto reflects a recognition that fragmented oversight is increasingly mismatched with how digital asset markets operate in practice. By committing to coordinated use of existing authorities while preparing for future legislation, the agencies are signaling a more unified and durable federal approach to regulating crypto markets, with meaningful implications for token classification, trading venues, derivatives, and emerging market infrastructure.

Topic 2: Momentum Returns to Crypto Market Structure and Tax Reform Efforts

While comprehensive market structure reform remains unresolved, recent legislative activity suggests that crypto regulation is no longer stalled outright. Incremental progress on market structure and tax issues has renewed industry optimism that Congress will maintain a focus on digital asset legislation, with the longer-term objective of increasing regulatory certainty for market participants.