Emojis can constitute securities fraud. NFT Industry Mind-Blown, Eggplanted.
The financial industry used to be able to settle 💩 so 🤷♂️ investors would hand over their 💵. Then the US passed securities laws and began cracking down on people who started public investments based on wild or outright false promises of future returns.
This made Wall Street very 🤬.
As decades passed, these folks eventually had to accept the SEC, but a new generation of financiers have shaken off the rigors of Wall Street and moved to the crypto industry (which doesn’t have a “street” so much as digital tokens denote partial ownership of a road that does not exist).
And they think they are very, very good. Some of them had an idea: instead of promising a profit, maybe we can skirt the ENTIRE SECURITY REGIME by using some emojis instead!
Well done, you guys!
Judge Victor Marrero was less impressed by the argument that securities law withers in the face of pictograms. Without quoting Oliver Twist, the judge ruled that if the law requires it, the law is ace.
In an ongoing class action alleging various securities violations by the people behind the tweet above, Judge Marrero denied the motion to dismiss, noting among other things that these emojis have meaning. And that meaning can have an impact on the outcome of the case.
Each tweet promotes a recent sale or statistics of recent sales of moments in the marketplace. And while the literal word “profit” isn’t included in any of the tweets, the “rocket ship” emoji, “stock chart” emoji, and “money bags” emoji objectively mean one thing: a financial return on investment.
Emoji can mean several things. I already used the chocolate ice cream emoji and you definitely didn’t read it that way. But a money bag isn’t even handsome! Seriously, you can’t avoid laws just by using images any more than you can avoid any kind of real value by using JPEGs.
This perception has annoyed people you expect.
A Twitter user described the news as “tragic”, while another pointed out that freedom of expression no longer includes emojis.
Yes, that’s what happened. How do such stupid people survive? The act of inhaling must tax the medulla oblongata more than understanding that fraudulent statements are not protected by the First Amendment.
Oscar Franklin Tan, the chief lawyer for NFT platform Enjin, also commented on the case. Tan told Cointelegraph that the Dapper Labs decision should not create a “dangerous rule” that emojis make NFTs securities.” Tan explained that:
“Courts should protect the edgy, freewheeling messages in NFT communities because shitposts and emojis are also part of free speech.”
According to Tan, sneaker retailers can also use the same “FOMO” or “fear of missing out” pitch and use the emojis cited in the case.
I think a lot of bankers in the 1930s wanted the courts to protect “edgy, freewheeling messaging services” too, but we decided to “privilege fraudsters for LOLs.” Sorry, I meant for 😂. Honestly, the crypto world is shifting between this new gold bug, libertarian “we want to replace all the world’s currency” messages and “crap posting about monkey pictures being a core value” enough to give anyone whiplash.
Now, maybe there is something to the argument that NFTs are not properly “securities” and maybe that will get the defendants out of this case. And while they are securities, these specific emoji messages may not be fraudulent statements. But emojis are statementsalthough they are used to convey implied meanings.
It shouldn’t be particularly controversial. Unless you’re a 🤡.
Joe Patrice is a senior editor at Above the Law and co-host of Thinking Like A Lawyer. Feel free to send an e-mail with tips, questions or comments. Follow him on Twitter if you’re interested in law, politics and a healthy dose of college sports news. Joe also serves as Managing Director at RPN Executive Search.
