Crypto Goes Corporate: Litigation Sure To Follow

May 26, 2021  |  The Insider: White Collar Defense and Securities Enforcement

Until recently, cryptocurrencies appeared to be far from the kind of institutionally sound investments that would be attractive to CFOs looking to diversify a corporate portfolio.  Once seen as gimmicks for unsophisticated retail investors, many of whom purchased cryptocurrencies based on obscure internet nomenclature, nonsensical children’s songs, or even notable hip-hop artists, few would expect the notoriously volatile electronic currencies to find their way into corporate treasuries.  The joke appears to be over, or perhaps is just beginning to turn stale.  As executives have sought to stash excess corporate cash into electronic currencies, the novelty assets are now an increasingly popular option to add to corporate ledgers.  With this expansion into uncharted territory, however, comes additional risks, from both private litigation and regulatory scrutiny.  Likewise, as with any novel asset, CFOs must balance their desire to invest creatively with the concerns of wary shareholders.  On these fronts, cryptocurrencies present potential pitfalls for those charged with charting companies through modern-day legal and regulatory shoals.

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