Chief Legal Architect and a co-founder of Caffrey.AI
Steven Lofchie is the Chief Legal Architect and a co-founder of Caffrey.AI, an AI platform built for law firms, banks, and the financial regulatory industry. He is also a partner at Norton Rose Fulbright, where he advises financial institutions on securities laws, the Commodity Exchange Act, and broker-dealer regulation. Ranked by Chambers USA every year since 2007, he is the author of “Lofchie’s Guide to Broker-Dealer Regulation,” long considered the leading treatise on the subject.
Recent Articles & Comments
Here are excerpts from pages 16-17 of the enforcement action (in reverse order for clarity).
[Defendant] KuCoin describes its leveraged tokens as “unit share[s] of a leveraged fund.” KuCoin is the manager of these “leveraged funds” and the creator of the leveraged tokens. In that capacity, KuCoin finances and oversees the leverage of the fund and charges management fees that vary according to market conditions. Customers may buy and sell KuCoin’s leveraged…
The custody rules around clearing are going to be very challenging for broker-dealers to implement.
There are a lot of questions that the SEC still has to resolve. For example, in a world where a broker-dealer's custodial requirements must be calculated daily (assuming is revised to require daily calculations), and the FICC demands margin from broker-dealers on a schedule that is inconsistent with the ability of broker-dealers to obtain margin from their customers, a broker-dealer…
Here are excerpts from pages 16-17 of the Ku-Coin enforcement action (though I reversed the order of the excerpts for clarity).
KuCoin describes its leveraged tokens as “unit share[s] of a leveraged fund.” KuCoin is the manager of these “leveraged funds” and the creator of the leveraged tokens. In that capacity, KuCoin finances and oversees the leverage of the fund and charges management fees that vary according to market conditions. Customers may buy…
It's an interesting strategy for the coin developers to take the battle to the SEC on very favorable facts: the tokens are given away for free and the business is of a type that anyone would hope is successful. Now it's the SEC's move.