Crypto is Back in Court
Welcome back to Not Billable, your weekly dose of legal insight and trends. Put the timesheet down and get ready to read about a massive crypto lawsuit, the FTC joins the fight over Junk Fees, and the Florida Bar discusses AI client consent.
Also, we're happy to announce Lawtrades' new Teams feature, which allows busy in-house departments to tag in their internal teammates to help post roles and manage their legal professionals.
Crypto Crackdown
Crypto is back in court. Early on Thursday, New York Attorney General Letitia James announced that her office filed suit against crypto companies, Gemini (the crypto trading platform), Genesis Global, and Digital Currency Group. Here is what happened:
According to the complaint, Genesis launched an investment program called Gemini Earn (which was heavily promoted by both Genesis and Gemini). Earn was marketed as being a high-yield investment program where Gemini customers could profit by passively investing their cryptocurrencies with Genesis. Clearly the marketing paid off because Genesis held several billion dollars in Earn investor assets.
Things start to turn in November of 2022. At that time, Genesis announced it was suspending all withdrawals of Earn, leaving those investors with more than
In short, Gemini solicited money from the public with false assurances that Earn was a highly liquid investment and that Genesis was creditworthy based on Gemini's ongoing risk monitoring. Apparently the reality of the situation was that Genesis posed a high risk of default an Gemini knew it. Genesis' CEO and Digital Currency Group's founder also both concealed the true financial condition of Genesis.
WASN'T FTX INVOLVED?
Kinda. FTX's sister company, Alameda apparently accounted for nearly 60% of Genesis' outstanding loans to third parties at one point in time. However, in 2022, Genesis did recall nearly $2 billion in loans.
That wasn't the only name that sounds familiar. Both Cameron and Tyler Winklevoss were referenced in the complaint, as they created Gemini and were acting president and CEO at the time.
Needless to say this case is high profile and raises more questions about the future of crypto and crypto regulations. Something to key an eye on for sure.
Product Update!
The more the merrier! Today we're announcing a new feature called on Lawtrades Teams! Now you can invite your coworkers to your company dashboard to help each other hire, share favorite freelancers, and consolidate billing and payments.
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FTX v. Junk Fees
Like the CFPB, the FTC is cracking down on “junk fees.” What are junk fees? Effectively hidden surcharges (like a temporary inflation fee).
In it's proposed rule, the FTC “would ban businesses from running up the bills with hidden and bogus fees, ensure consumers know exactly how much they are paying and what they are getting, and help spur companies to compete on offering the lowest price.” Further, per the proposed rule, businesses would have to include all mandatory fees when telling consumers a price. It would also include an enforcement mechanism that would allow “the FTC to secure refunds for harmed consumers and seek monetary penalties against companies that do not comply with its provisions.”
According to the FTC in their proposed rule, junk fees are present in a number of different industries, including at restaurants, prepared food and grocery delivery services, and hotels. These fees take the form of “service fees,” “hospitality fees” “kitchen fees,” “equity fees,” “economic impact fees,” and so on and so forth.
Other agencies (like the CFPB referenced above) are also taking shots at companies charging junk fees. U.S. Transportation Secretary Pete Buttigieg has already stated that he has secured commitments from major U.S. airlines to provide free rebooking, meals, and hotels when they are responsible for stranding passengers and was working to working to stop airlines from forcing parents to pay to sit next to their kids and requiring them to disclose hidden fees for things like extra bags.
Expect more agencies to take aim at these fees over the next several months (as well as a final rule from the FTC).
Can I Use AI?
Legal ethics surrounding AI use is a question many are discussing. In fact, at least one bar association is opening contemplating whether client consent is necessary for a lawyer to use AI tools. Early last week, the Florida Bar (through it's Board Review Committee on Professional Ethics) indicated that it would be considering an advisory opinion on the issue. Will no proposed rule has been released, it has been made clear that the following would be addressed:
1.Whether a lawyer is required to obtain a client's informed consent to use generative AI in the client's representation;2.Whether a lawyer is required to supervise generative AI and other similar large language model-based technology pursuant to the standard applicable to non-lawyer assistants;3.The ethical limitations and conditions that apply to a lawyer's fees and costs when a lawyer uses generative AI or other similar large language model-based technology in providing legal services, including whether a lawyer must revise their fees to reflect an increase in efficiency due to the use of AI technology and whether a lawyer may charge clients for the time spent learning to use AI technology more effectively;4.May a law firm advertise that its private and/or inhouse generative AI technology is objectively superior or unique when compared to those used by other lawyers or providers; and5.May a lawyer instruct or encourage clients to create and rely upon due diligence reports generated solely by AI technology?
A meeting to address this rule will be held on Thursday, November 30, 2023, from 1-3 p.m. at the Henderson Beach Resort in Destin, Florida. Expect a lot of proposed comments from legal professionals eager to integrate AI into their law practice and lawyers skeptical of AI use.
What are you thoughts on AI use in the legal profession? Shoot us an email and let us know.
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