Blockchain and Digital Assets

Cravath represented Robinhood Markets, Inc. (“Robinhood”) in its Share Purchase Agreement (the “Share Purchase Agreement”) with the United States Marshals Service (the “USMS”), acting for and on behalf of the United States, pursuant to which Robinhood agreed to purchase 55,273,469 shares of the company’s Class A common stock (the “Shares”) from the USMS for an aggregate purchase price of $605,694,411.59, or approximately $10.96 per share. The transaction closed on August 31, 2023.

On July 25, 2022, Judge Danny Y. Chou of the Superior Court of the State of California, County of San Mateo, issued a decision holding that the automatic discovery stay pursuant to Section 77z‑1(b)(1) of the Private Securities Litigation Reform Act (the “PSLRA Stay”) applies not only in federal court, but also in state court. Judge Chou therefore granted Cravath clients Dfinity Foundation and Dfinity USA Research, LLC’s (together, the “Dfinity Defendants”) motion to stay discovery pending resolution of the Dfinity Defendants’ demurrer.

Cravath partner Sasha Rosenthal‑Larrea and associates Daniel M. Barabander and Leslie Liu co‑authored an article entitled “Understanding China’s Crypto‑Blockchain Dichotomy,” which was published to the website of Law360 on September 6, 2023. The article discusses China’s “nuanced and complicated” approach to crypto‑related technology, examining its efforts to restrict cryptocurrency use while supporting blockchain as a complementary technology to real economy sectors.

On September 1, 2023, The International Academy of Financial Crime Litigators published a working paper written by Cravath partners Benjamin Gruenstein and Evan Norris and associate Daniel M. Barabander entitled “Secret Notes And Anonymous Coins: Examining FinCEN’s 2019 Guidance On Money Transmitters In The Context Of The Tornado Cash Indictment.” The paper examines the recent indictment in the Southern District of New York against the founders of Tornado Cash, and specifically the charge that they conspired to operate a money transmitting business without registering with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). The paper reviews FinCEN’s 2019 guidance on what it means to be a money transmitter in the Web 3 context.

On July 31, 2023, Cravath published the latest edition of its Cravath Emerging Company and Venture Capital Insights newsletter, entitled “2023 Mid‑Year Market Update,” which provides an overview of global venture capital activity during the first half of 2023. The newsletter examines key sectors for VC investment during the period and current exit trends, including limited IPOs with M&A still providing stronger exit opportunities. This edition also offers insights on the Securities and Exchange Commission’s continued focus on regulation of digital assets and how recent bank failures in the U.S. could potentially impact venture debt availability.

On July 31, 2023, Cravath published the latest edition of its Finance & Capital Markets Quarterly Review, which provides an update on the bond, equity and loan markets and on restructuring activity during the second quarter of 2023. This edition also examines several recent litigation decisions, including in bankruptcy court, notable developments on digital asset regulation and a variety of SEC rulemaking, comment and enforcement updates.

Cravath of counsel Will C. Giles authored an article entitled “NY Banking Brief: All The Notable Compliance Updates In Q2,” which was published to the website of Law360 on July 13, 2023. The article outlines the most significant legislative and regulatory developments in New York financial services law in the second quarter of 2023, including those related to bank closures, the release of a proposed bill to regulate digital asset activities and the passage of legislation that would empower the New York State Department of Financial Services to regulate fees related to consumer bank accounts.