Good morning. The criminal fraud prosecution of FTX founder Sam Bankman-Fried largely sidesteps some of the uncertainty over the regulation of cryptocurrencies, legal experts say. Plus: Elon Musk says he's still no fan of Perkins Coie, and a New York state judge criticizes but won’t sanction lawyers for Donald Trump. Coming up: The U.S. Supreme Court today takes up the scope of attorney-client privilege, and a D.C. appeals court this week will weigh defamation-related claims against Trump. Lots more on tap this week, so let’s jump in. Thanks for reading!
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REUTERS/David 'Dee' Delgado |
The criminal charges against Sam Bankman-Fried, founder of the now-bankrupt FTX crypto exchange, largely sidestepped the compliance and enforcement debate in the U.S. over whether cryptocurrencies should be regulated as securities or commodities, legal experts told Luc Cohen.
Bankman-Fried pleaded not guilty to wire fraud conspiracy counts last month, after prosecutors accused him of stealing FTX customer deposits to pay debts from his hedge fund and of lying to equity investors about FTX's financial condition. Damian Williams (above), the top federal prosecutor in Manhattan who took office in 2021, has made enforcement of cryptocurrency-related financial crimes a centerpiece of his tenure. Bankman-Fried's defense lawyers did not respond to a request for comment.
Experts said the uncertainty over whether cryptocurrencies should be considered as securities is not relevant to most of the charges against Bankman-Fried. Former federal prosecutor Shane Stansbury, who teaches at Duke’s law school, told Cohen that the alleged crimes were “a pretty simple deception.” Stansbury added: "You really don't need to get into the weeds of how we view cryptocurrencies." Mark Kasten at Buchanan Ingersoll said: "Customers put money into the platform and the money was supposed to be used in a certain way. And according to the allegations in the indictment, it wasn't."
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Elon Musk told Reuters that hiring law firm Perkins Coie to defend Twitter in a California federal suit last week was a mistake that the company would not make again. Perkins Coie entered court appearances for Twitter in the case even though Musk has denounced the firm on the social media platform, including in a tweet last month related to its past work for former Democratic presidential nominee Hillary Clinton. (Reuters)
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Justice Arthur Engoron of New York state court criticized but declined to sanction lawyers for Donald Trump in a ruling that said the former Republican president, three of his adult children and the Trump Organization must face a lawsuit by the state's attorney general. (Reuters)
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Gibson Dunn is hiring a seven-lawyer team in the United Arab Emirates and opening an office in Abu Dhabi. The new team includes three former partners at Shearman & Sterling. The firm’s other UAE office is in Dubai. (Reuters)
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A New York state judge has denied law firm Kasowitz Benson’s early bid for a temporary restraining order in a fee lawsuit against spinoff rival Glenn Agre. Kasowitz sued the firm last month, claiming it was unfairly trying to keep a larger cut of the fees for its work for a former Kasowitz client. Glenn Agre fired back last week, accusing Kasowitz of making "misleading statements." A hearing is set for next month.
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REUTERS/Jose Luis Gonzalez |
An all-too-familiar class action defense has imperiled a novel case accusing crypto trading platform Binance U.S. of breaching securities laws by facilitating trades in Terra USD, the collapsed stablecoin. The class action was shrewdly framed, Alison Frankel writes, to evade the jurisdictional problems that have doomed many cases against non-U.S. crypto companies. But before plaintiffs lawyers can test their theory that Binance U.S. was an unregistered securities exchange, they will have to survive a classic defense: a motion to compel the case to arbitration. Frankel reports on the back-and-forth between Binance U.S. and plaintiffs lawyers from Freedman Norman on whether Binance’s user agreement even allows the court to decide whether the case can proceed.
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"I alone am responsible for my terrible decisions." |
—Reality TV star Jen Shah, speaking at her sentencing hearing after pleading guilty to running a telemarketing scam that bilked elderly victims of tens of millions of dollars. Shah, who projected a glamorous lifestyle on "The Real Housewives of Salt Lake City," admitted to luring thousands of elderly victims into draining their bank accounts and maxing out their credit cards to buy nonexistent “business services.” Shah was sentenced to 6-1/2 years in prison.
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Reuters video journalist Tom Rowe gives you an early view of the week ahead in legal news. Watch the video. |
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The U.S. Supreme Court will take up a closely watched legal industry dispute over the scope of attorney-client communication protections. The justices will hear from Munger Tolles’ Daniel Levin, who is leading a challenge to a grand jury subpoena served on an unidentified tax-focused law firm. Masha Hansford will argue for the DOJ. Levin and his team are contesting a 9th Circuit order that said the attorney-client shield doesn’t reach communication whose primary purpose is business advice. The communications at issue in the case “overwhelmingly involve client discussions with a nonlawyer accountant,” the DOJ told the court.
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The U.S. Supreme Court will consider the state of Ohio's claims that the Federal Labor Relations Authority cannot force the Ohio National Guard and other state militias to bargain with unions. The justices will review a 2021 ruling by the 6th Circuit that said the labor agency has the power to hear disputes between the National Guard and unions because its workers are considered federal employees. The DOJ’s Nicole Reaves will argue for the agency, and Ohio Solicitor General Benjamin Flowers will represent the state.
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In Los Angeles federal court, U.S. District Judge Dale Fischer will hear arguments from prosecutors seeking to keep former Girardi Keese chief financial officer Christopher Kamon detained pending trial on wire fraud. Kamon has been in custody without bond since Nov. 5. His defense lawyers at Skadden have denied he is a flight risk.
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Law professor Eugene Volokh, founder of the legal blog the Volokh Conspiracy, will go before the 1st Circuit to challenge a trial judge's decision that allowed a police officer to remain anonymous in a lawsuit over a statewide officer misconduct database. Volokh, a transparency advocate, argued in a brief that "allowing Doe to litigate pseudonymously would open the door" to "routine pseudonymization" that the appeals court has previously spurned. Various media organizations and other groups are friends-of-the-court backing him.
Court calendars are subject to last-minute docket changes. |
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On Tuesday, the D.C. Court of Appeals sitting en banc will hear oral arguments on whether Donald Trump acted within his authority as U.S. president when in June 2019 he rejected writer E. Jean Carroll's claim that he raped her in the mid-1990s. The 2nd Circuit in September asked the D.C. court, the highest local tribunal in the nation’s capital, to help it determine whether Carroll can continue to pursue a defamation claim against Trump. Eight judges, led by Chief Judge Anna Blackburne-Rigsby, will hear the case.
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Also on Tuesday, Trump Organization former chief financial officer Allen Weisselberg is scheduled to be sentenced, after pleading guilty in August to tax fraud and testifying against the former U.S. president's real estate company at trial. At the company’s trial in November, Weisselberg said the real estate company cleaned up its tax practices in anticipation of additional scrutiny after Trump entered the White House. The Trump Organization is scheduled to be sentenced on Friday in New York state court after being found guilty in December of tax fraud.
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On Wednesday, lawyers involved in freight rail shipper CSX’s antitrust case against rival Norfolk Southern will meet in Virginia federal court for a final pretrial conference ahead of a bench proceeding set to start later this month. Last week, Chief U.S. District Judge Mark Davis in the Eastern District of Virginia largely ruled against CSX, blocking the company from pursuing hundreds of millions of dollars in alleged damages over access to on-dock rails at a key Virginia port. Davis, however, said CSX would be allowed to argue for an injunction addressing the composition of a board of a joint-venture rail company also named as a defendant.
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On Friday, failed crypto exchange FTX will appear in U.S. bankruptcy court to address a dispute between its U.S.-based bankruptcy team and a separate Bahamian insolvency proceeding. FTX is challenging a Bahamian asset seizure that occurred around the same time as the U.S. bankruptcy filing, as well as the Bahamian liquidator’s effort to access the broader company's systems and records. The two sides will present evidence to U.S. Bankruptcy Judge John Dorsey in Delaware.
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Plaintiffs' firm Keller Rohrback represents Seattle's public school district in a new lawsuit in federal court accusing Meta Platforms, Google and other tech and social platforms of contributing to a worsening mental health crisis among students and directly affecting the schools' ability to carry out their educational mission. (Reuters)
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The 11th Circuit upheld the healthcare fraud conviction of wealthy businessman Philip Esformes, who ran a network of nursing homes and assisted living facilities in South Florida. Although Esformes' 10-year prison sentence was commuted by then-President Donald Trump, the appeals court ruling means he will still be liable for monetary penalties totaling $44 million. (Reuters)
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Amazon.com and its live-streaming subsidiary Twitch were sued in San Francisco federal court by an Israeli company formerly known as Emblaze for alleged patent infringement. A representative for Amazon declined to comment. (Reuters)
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A 5th Circuit panel asked Louisiana's top state court to decide whether a law protecting environmental whistleblowers from retaliation extends to workers who report illegal activity as part of their regular job duties. The U.S. appeals court certified questions to the Louisiana Supreme Court. (Reuters)
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Samsung Electronics and Nanoco Technologies settled Nanoco's patent lawsuit over Samsung's QLED televisions. The resolution came the same day a jury trial was set to begin. (Reuters)
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Alston & Bird added partners Eric Berardi in Atlanta and Gene Caiola in New York from Kilpatrick Townsend. They joined Alston’s real estate finance and investment group. (Alston)
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Akerman added M&A and private equity partner David Thompson in the firm’s Houston office. He previously practiced at Kirkland. (Akerman)
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Fox Rothschild brought on Boston-based partner Jack Siegal, who focuses on white-collar criminal defense and regulatory compliance. He was previously at McGlinchey Stafford. (Fox Rothschild)
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Withers added Jim Dossey and Paige Jones as Texas-based partners from their firm Dossey & Jones, which focused on matters including estate and tax planning. (Withers)
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Haynes and Boone hired Brandon Jones as a Fort Worth-based business planning and tax practice partner. He arrives at the firm from Winstead. (Haynes and Boone)
>> More moves to share? Please drop us a note at LegalCareerTracker@thomsonreuters.com. |
The U.S. Supreme Court is off to a slow start, which will make the second half more eventful, write Shay Dvoretzky and Emily Kennedy of Skadden Arps. The authors look at a series of pending cases affecting businesses, as the justices weigh lawsuit venues, the scope of liability and how companies communicate with their lawyers. Here’s a look at the key disputes.
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