Crypto Brief

Lowenstein Crypto advises leading digital asset and cryptocurrency projects, exchanges, and trading firms. Our practice covers regulatory advice, transactions and structuring advice, investigations, and adversarial matters including commercial disputes, bankruptcy, and related litigation. As these markets continue their rapid growth and market participants continue to evolve and mature their businesses, we are providing this weekly digest as a resource that highlights and summarizes a selection of key recent legal regulatory developments.

Senators Request That SEC Investigate $TRUMP

On August 3, Sens. Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) sent a letter to Securities and Exchange Commission (SEC) Chair Paul Atkins urging the SEC to investigate President Donald Trump’s $TRUMP memecoin for potential fraud and unjust enrichment. The letter cites reporting that nearly 1 million investors collectively lost over $3.81 billion on the coin, which has depreciated by roughly 98 percent from its all-time high, while Trump personally earned approximately $636 million through trading fees, benefiting regardless of whether the token’s price rose or fell. The senators express concern that the scheme may constitute an illegal “rug pull,” in which a token issuer raises assets from the public and then gradually extracts value while leaving investors with worthless tokens, a pattern they argue is consistent with the $TRUMP coin’s trajectory and one the SEC has previously pursued enforcement actions against. Noting that the SEC is charged with fighting fraud in financial markets, including when potential wrongdoers have powerful political connections, the senators call on the agency to exercise its investigative authority to detect any illegal fraud or unjust enrichment facilitated by the coin. See here for a copy of the letter. 

Senate Banking Committee Minority Staff Releases Shortfall Analysis for Clarity Act

On August 5, the U.S. Senate Committee on Banking, Housing, and Urban Affairs minority staff released its analysis of the updated Digital Asset Market Clarity Act (Clarity Act), concluding that the bill falls “dangerously short” of five minimum standards necessary for a strong crypto regulatory framework. Specifically, the minority staff found the bill (1) creates loopholes in securities laws by allowing blockchain-based assets to escape SEC authority through self-certification, potentially undermining protections for pensions and retirement accounts; (2) exempts decentralized finance platforms from counter-illicit finance responsibilities and fails to close gaps exploited by cartels, terrorists, and sanctioned actors; (3) permits banks to engage in highly risky crypto activities using taxpayer-insured deposits and fails to prevent stablecoin interest payments that could drain community bank deposits; (4) does not effectively prohibit presidential profiteering from crypto ventures and renders its limited conflict-of-interest provisions unenforceable; and (5) weakens consumer and investor protections by carving crypto assets out of traditional securities, antifraud, and state enforcement frameworks while failing to preserve private rights of action. See the analysis here.

Blockchain Association Sends Letter to Senate Responding to the NSA’s Understanding of DeFi 

On August 3, the Blockchain Association sent a letter to Senate Majority Leader John Thune and Minority Leader Charles Schumer in response to the National Sheriffs’ Association’s (NSA) July 31, 2026 letter urging the Senate to reject the Clarity Act. The Blockchain Association contends that the NSA’s letter fundamentally misconstrues the legislation, incorrectly claiming that it exempts decentralized finance platforms, mixers, bridges, software developers, and user interfaces from anti-money laundering and sanctions obligations. To the contrary, the Blockchain Association argues, the Clarity Act imposes substantial Bank Secrecy Act and sanctions compliance obligations on customer-facing intermediaries, including registered digital commodity brokers, dealers, and exchanges, while directing the SEC and the U.S. Treasury to regulate persons who control nominally decentralized protocols. See the letter here.

DOJ Charges NFT Marketplace Founder With Securities and Wire Fraud 

On August 5, the U.S. Attorney’s Office for the Southern District of New York announced an indictment charging Taj Tarsha, founder of Few and Far Limited, with securities fraud and wire fraud arising from a non-fungible-token marketplace and token offering. Prosecutors allege that Tarsha raised more than $10 million from at least 67 investors through simple agreement for future tokens (SAFTs) covering approximately 95 million FAR tokens, represented that the funds would be used to develop the marketplace and token, and instead misappropriated investor assets for personal online gambling, speculative cryptocurrency purchases, compensation, and other personal expenses. See the press release here.