Insights
Publications

Branding Concerns Rise Amid Cryptocurrency Proliferation

10/9/2018 Articles

New cryptocurrencies and tokens have been popping up all over the place, leading the SEC to set up an initial coin offering (ICO) section on its website and to promote recent enforcement actions in the digital currency space. The proliferation of new tokens offers a growing opportunity for cross-over and cooperation between different federal agencies. The SEC representative at a recent Bar Association of San Francisco panel last week noted that the SEC’s cyber unit is currently looking at dozens of new cryptocurrency or crypto market enforcement actions, including quite a few with the local U.S. Attorney’s office where fraud is implicated.

Recent cyber unit enforcement actions have addressed fraud and alleged dishonesty in conjunction with fundraising and ICOs, but don’t really focus on distributed ledger or blockchain technology applications. Cases have been brought against founders who ran into trouble regarding misrepresentations of their currency’s security, ICO registration status, financial projections, coin backing by other investments, and even executive biographies. These recent enforcement actions, and in some cases criminal charges, stem not from a unique feature of a distributed ledger, but rather the SEC’s long-standing interest in policing representations made to shareholders and investors.

The abundance of new tokens is not only implicating securities and criminal enforcement interest, it’s finding its way into other more conventional litigation arenas well, including, in a case currently pending before Judge Oetken in SDNY, trademark infringement in an Lanham Act suit: Alibaba Group Holding Ltd. vs. Alibabacoin et al. In the Alibaba case the Chinese behemoth plaintiff is suing, and has sought an injunction against, Alibabacoin, a post-ICO company now allegedly in the process of rebranding to ABBCoin. A few weeks ago and across the country in our backyard, Judge Breyer granted Telegram Messenger’s motion for a preliminary injunction against a defendant who had applied for a trademark for GRAM, the name Telegram had already given to its forthcoming cryptocurrency. Judges are applying conventional trademark infringement analyses to these disputes, and they show the way in which cryptocurrency facts have already permeated the more conventional litigation and enforcement landscape.

As both the Alibabacoin and the GRAM outcomes show, the bigger companies are likely to push emerging currencies to rebrand rather than get dragged into pitched battles over brand identity. But if there is no such thing as bad press, perhaps the initial lift from an association with a big name company will make it worth the litigation risk. Any such association—or litigation for that matter—could draw the SEC’s or other enforcement agencies’ attention. That would be an unwelcome side effect, but likely one that simply goes into the cost-benefit analysis the emergent crypto offerors should be doing anyway.

Firm Highlights

Publication

Cybersecurity Regulation: Key Takeaways From an Unusual FTC Order That Will Follow CEO for a Decade

The FTC recently issued a proposed order that would settle an enforcement action against Drizly, LLC and its co-founder and CEO, James Rellas, arising from data breaches in 2018 and 2020 that affected over...

Read More
Publication

Uber’s Former Chief Security Officer Found Guilty of Obstruction For Coverup of Data Breaches

On October 5, 2022, after a monthlong jury trial, former Uber Chief Information Security Officer Joseph Sullivan was found guilty of obstructing proceedings of the Federal Trade Commission (FTC) and misprision of a felony...

Read More
News

Who’s Who Legal 2023 Recognizes Farella Lawyers

Six Farella Braun + Martel lawyers have been recommended by Who’s Who Legal 2023 as leading practitioners in their fields. Who’s Who Legal – Environment 2023 James Colopy Robert Hines David Lazerwitz Chris Locke...

Read More
Publication

A Primer for Corporate Directors: Maximizing Internal Investigation Effectiveness and Efficiency

In corporate America and across the globe, allegations of wrongdoing within companies are increasingly common, and the high cost of internal investigations continues apace.  In 2021, in an anonymous survey of more than 1,330...

Read More
News

Farella Names Carolina de Armas and Hilary Krase As Leadership Council on Legal Diversity Pathfinders

Carolina de Armas and Hilary Krase
Read More
News

Farella Braun + Martel Attorneys Named to 2023 Northern California Super Lawyers and Rising Stars

Thirty-eight Farella Braun + Martel lawyers were named to the Super Lawyers and Rising Stars lists of top attorneys in Northern California for 2023. 2023 Farella Northern California Super Lawyers: Carly Alameda – Business...

Read More
Publication

Maximizing Internal Investigation Effectiveness & Efficiency

In corporate America and across the globe, allegations of wrongdoing within companies are increasingly common, and the high cost of internal investigations continues apace. Companies are now also routinely investigating allegations beyond violations of...

Read More
News

Farella Lawyers Recognized in The Best Lawyers in America® 2024 Edition

Read More
News

Chambers USA 2023 Recognizes Farella Braun + Martel Lawyers, Practices

Farella Braun + Martel is pleased to announce that Chambers USA has recognized 16 lawyers and six practice areas in the legal directory’s 2023 edition. Individual California and Western U.S. Rankings: Sarah Bell &ndash...

Read More