August 12, 2022
Volume XII, Number 224
August 12, 2022
– Inside Out: Is a Recent Crypto Asset Insider Trading Case a Prelude…by: Alexandra C.Scheibe and Daniel L.Woodard
– NLRB & DOJ Announce New Partnership by: Rebekah K.Herman and Robert T.Dumbacher
– The Merge Is Upon Us: What It Means for Ethereum by: Jason H.Finger and Wai L Choy
– OFAC Blocks Smart Contract Mixer By Adding Tornado To SDN List by: Vincent P.(Trace) Schmeltz III and Adetayo Osuntogun
– Cybersecurity Issues Affecting the Energy Industry [PODCAST] by: David Markey and Joel Meister
– Post-Dobbs Abortion Enforcement: Nebraska Uses Facebook Messages as…
by: Sarah M.Hall and Elena M.Quattrone
– Ohio State Board of Professional Conduct Says Lawyers Can Hold Crypto…by: Edmund P.
Daley and Cory S.Flashner
– SEC Proposes Disclosures For Funds And Asset Management Advisors…by: Peter Wright and Scott L.Beal
– Delaware Supreme Court Holds Novel Pre-Closing Dividend Transaction…
by: Kristin P.Housh and Eugene Choi
– D.C.
Circuit Affirms NLRB Vulgar Graffiti Ruling by: Joshua S.Fox and Alyssa M.
Cook
– CDC Updates Quarantine, Isolation, and Close Contact Guidance: Is It…by: Christine Bestor Townsend
– OFAC Sanctions Cryptocurrency Mixing Service for Allegedly…by: Kara M.Bombach and Kyle R.
Freeny
– Federal Trade Commission Initiates Privacy Rulemaking to Curb…
by: Steven A.Augustino and John J.Heitmann
– California Energy Commission Releases Milestone Offshore Wind Energy…
by: S.Keith Garner and Daniel S.
Maroon
– Despite Decriminalization Of Adult Recreational Use Of Marijuana,…by: Keith Paul Bishop
– Betriebsratstätigkeit als Ehrenamt by: Dr.
Gudrun Germakowski and Lukas Deutzmann
– The Proposed Inflation Reduction Act Moves to the House After the…by: William J.Sanders and Scott S.Ahroni
– Priority Visa Services Resume After 5 Month Suspension (UK) by: Carine Elliott
– Tax Law Changes in the Inflation Reduction Act of 2022 (H.R.
5376) by: Amit Kalra, PC and Andrew W.Ratts
– MUST READ: A $25k Per Violation Super TCPA Is in The Works in…by: Eric J.Troutman
– NASA Still In The Game As Russia Announces Possible End To…by: Ronnie L.Miller and Al Maloof
– Final Episode | Markets Under Pressure Strategies for Restructuring…
by: McDermott Will & Emery
– COVID-19 Fraud Update by: D.Jacques Smith and Randall A.Brater
– US Executive Branch Update – August 12, 2022 by: Stacy A.Swanson
– Monkeypox Declared a National Public Health Emergency by: McDermott Will & Emery
– Top Five Labor Law Developments for July 2022 by: Jonathan J.Spitz and Richard F.Vitarelli
– Episode Two | Managing Capitalization Structures and Investor…
by: McDermott Will & Emery
– Episode One | Workforce Management Solutions in an Uncertain Economic…by: McDermott Will & Emery
– Navigating Volatile Markets in the Digital Health Ecosystem |…by: Stephen W.Bernstein
– BETO Achieves Major Biofuel Technology and Production Milestone by: Lynn L.
Bergeson and Carla N.Hutton
– Car Accidents and Third-Party Liability by: Taylor B.Rodney and Jeremy M.
Wilson
– California Appellate Court Rules That Purely Digital Retail…by: David Raizman and Nicholas Marfori
– FCA future gazing by: Chris Webber
– CDC’S COVID-19 Guidance Changes… Again by: Jenifer M.Bologna and Katharine C.Weber
– Senate Democrats Reach Agreement to Pass Inflation Reduction Act by: David S Miller and Amanda H Nussbaum
August 11, 2022
– Crypto Assets in the Voyager Bankruptcy: Can Customers Recover? by: Mark E.Dendinger and Robert G.
Burns
– Businesses That Use Consumer Data or Data Products (Everyone?) Take…by: Jeffrey D.Neuburger
– JPML Declines to Create MDL for Data Breach Cases by: Kristin L.
Bryan and Marissa Black
– Ethylene Oxide Update: Second Risk Review Process Resolves EPA-OIG…by: Madeleine Boyer and Robert Brager
– OIG Issues Favorable Advisory Opinion For Federally Qualified Health…by: Amy J.
Dilcher and Arushi Pandya
– New Mexico Proposes Regulations Addressing Gross Receipts Tax…by: Eric Carstens and Stephen P.
Kranz
– Shanghai Administration for Market Supervision Announces Success in…by: Aaron Wininger
– New Massachusetts Law Creates Expanded Definition of Racial…by: Mark W.Batten and Alexandra (Lexie) Rueckle Reynolds
– New York Financial Regulator Brings First AML and Cybersecurity…
by: Seetha Ramachandran
– Tax Provisions in the Inflation Reduction Act of 2022 by: Timothy L.Voigtman and Raj Tanden
– FTC Seeks Public Comment Regarding Data Privacy and Security…by: Hunton Andrews Kurth’s Privacy and Cybersecurity
– Twilio Hit with Social Engineering Smishing Scheme by: Linn F.Freedman
– Payment Processor Agrees to Refund Customers After FTC Alleges…by: Moorari Shah and A.J.
S.
Dhaliwal
– ACTS Retirement Services Faces Class Action over Data Breach by: Kathryn M.Rattigan
– EPA Updates Safer Chemical Ingredients List, Adding 22 Chemicals and…
by: Lynn L.Bergeson and Carla N.Hutton
– Connecticut Banking Commission Releases Advisory on Money Transmission by: Moorari Shah and A.J.S.Dhaliwal
– Webinar Recap: Double Your Close Rate in Half the Time – Client…by: Sarah Bottorff
– Significant New Clean Energy and Climate Act becomes law in…by: Jed M.Nosal and Colleen McGlynn
– Privacy Tip #340 – Smishing Scams Reminder by: Linn F.
Freedman
– Regulators Remind Auto Industry of Servicemember Protections by: Moorari Shah and A.J.S.Dhaliwal
– PTO Issues Notice on Duties of Disclosure and Reasonable Inquiry by: Bernard P.
Codd
– FDA Publishes Industry Guidance on Shell Egg Rule by: Food and Drug Law at Keller and Heckman
– EEOC States Employers Must Show Business Necessity to Test Workers…by: Susan F.Wiltsie and Katherine P.Sandberg
– Federal Circuit Rules Inventors Must Be Natural Human Beings by: Matthew Horton and Austin J.Kim
– Instructional Technology & Expert Witness Success – Episode 43 by: Adam Bloomberg
– Impact of COVID-19 on Pharmacist Scope of Practice: Before and After…by: Richard H.Hughes IV and Kala K.
Shankle
– Speeding Up the Process – New Deadlines and Ability to Fix Errors –…by: Danielle L.Dietrich
– BREAKING: The FTC Issues Advanced Notice of Public Rulemaking for…by: Kristin L.Bryan and Kyle R.Fath
– Federal Court Rules Tax-Exempt Independent Schools Must Comply with…
by: Kathleen E.Dion and Sabrina M.Galli
– A Tip Sheet about Tips: What Employers Need to Know About the New…by: David C.
Berger
– AI Can’t Hold Patents Because They Require an “Inventor” to Be a “…by: Data Privacy & Cybersecurity Robinson Cole
– Hydro Newsletter – Volume 9, Issue 7 by: Melinda M.
Meade Meyers and Michael A.Swiger
– FAA Issues Task Order for UTM Project at Griffiss International…
by: Kathryn M.Rattigan
– Virtual ‘Try On’ Features: Do They Create Biometric Privacy Concerns…by: Marlén Cortez Morris and Zachary V.Zagger
– DFARS Compliance: Top Keys to Success in 2022 by: Dr.Nick Oberheiden
– Multi-Million Dollar Demand in New York TCPA Suit: Lumico Life…by: Sean S.Kay
– Monkeypox in the Workplace: An Update on the Fast-Moving Developments…
by: Katherine Dudley Helms and Valerie N.
Butera
– Maine Court Approves Consent Decree on Long-Running RCRA Suit,…by: J.Michael Showalter and James D.Cromley
– CFTC’s Historic Enforcement Action Impacting the Oil Industry &…
by: Les Jacobowitz and Madeline Roe
– Rage against the Machine: Inventors Must Be Human by: Amol Parikh
– Hospital Price Transparency Rules: First Fines Issued by: McDermott Will & Emery
– Seattle Repeals Hazard Pay for Grocery Employees Ordinance by: Laurence A.Shapero
– Too Little Too Late: No Tenable Misappropriation Claim Based on 11-…
by: Tessa Kroll
– NLRB Signals New Push for Consequential Damages Is Intended to Make…by: Paul Salvatore and Joshua S.
Fox
– No Incentive Awards for Class Representatives — Eleventh Circuit…by: Richard S.Davis and Christina M.Kennedy
– The Acronyms of Divorce Part II – CMC (Case Management Conference)…
by: Jennifer Weisberg Millner
– Don’t Dew It: Second Circuit Cans Likelihood of Confusion Argument by: Vincent Li.PhD
– Equal Employment Opportunity Commission Puts End to Pandemic…by: James M.
Reid, IV and Trinea M.
Henderson
– 3 Ways Legal Billing Software Reduces Write-Downs by: Dan Bowman
– FTC Reaches Agreement with NLRB to Further Protect Labor Markets by: E.John Steren and Patricia M.Wagner
– Coveralls Don’t Cover Up Govcon Fraud: Apparel Manufacturer Settles…by: Eva Gunasekera and Renée Brooker
– US Executive Branch Update – August 11, 2022 by: Stacy A.
Swanson
– Biden Administration Seeks to Clarify Patient Privacy Protections…by: Alaap B.Shah and Allen R.Killworth
– In the Weeds? Humira “Patent Thicket” Isn’t an Antitrust Violation by: Alexandra Lewis
– Additional-Insured Endorsements Might Not Protect You, Despite what…by: Michael G.
Nicolella
– Examining the Uyghur Forced Labor Prevention Act and Department of…by: James K.Kearney and Michael J.Sullivan
– Two Senate Recycling Bills Pass Unanimously by: Sheila A.Millar and Anushka N.
Rahman
– FCA Publishes Final Rules for Reform of the Appointed Representative…by: Matt Hancock
– Colorado Employers—Get Ready for a Wave of New Laws by: Rebecca M.
Lindell and Abigail S.Wallach
– Why More Than One Commodity May Not Be Commodities by: Keith Paul Bishop
– U.S.Government Pursues More Aggressive Action to Curb Espionage at…by: J.
Scott Maberry
– General Assemblies in Germany – Virtual or Physical? by: Dr.Kai Mertens
– Colorado Department of Labor and Employment Releases a Slew of New…by: Rebecca M.Lindell and Abigail S.
Wallach
– California Voters Will Decide PAGA’s Fate at the Ballot Box in 2024 by: Jennifer B.Rubin and Mike C.Flesuras
August 10, 2022
– Senate Democrats Pass Long-Awaited Drug Pricing Reforms in Budget…by: Bridgette A.Keller and Stephnie A.John
– Busted Episode 3: Melissa King and the Sandhogs by: Jonathan Michael Thomas and Andrew A.Howell
– D.C.Circuit Court of Appeals Decision Put’s FERC’s Revised…
by: Phil Mone and Xena Burwell
– China Issues Security Assessment Measures of Data Cross-border…by: Ruiqi Guo and Yuanmei Lu
– September 2022 Visa Bulletin – A Frosty End to the Fiscal Year as All…by: Immigration & Nationality Law Practice
– DOL Proposes Significant Changes to the QPAM Exemption – What You…by: Neal S Schelberg and Steven D Weinstein
– Examiner-Initiated Interviews by: Scott E.Baxendale
– Employment Law in the Metaverse (US) by: Laura Lawless and Melissa Legault
– FDA Issues Draft Guidance on Diversity and Inclusion in Clinical…by: George Hajduczok, J.D., Ph.D., F.A.H.A.and Lisa L.
Smith
– EPA Issues Supplemental Proposed Rule to Add DINP Category to TRI…by: Lynn L.Bergeson and Carla N.Hutton
– NIST Publishes New Draft Guidance on HIPAA Security Rule by: Hunton Andrews Kurth’s Privacy and Cybersecurity
– The Seventh Circuit Asks, “What’s Wrong With Having Lots of Patents…by: Siegmund Y.
Gutman and Christopher E Ondeck
– Congress Aims to Expand Patent Eligible Subject Matter by: Derek E.Clements
– Preparing for the European Unitary Patent System by: Alexander R.Karana
– Estate Planning Marketing: Tips & Tricks to Grow Your Practice by: Cate Giordano
– Class Action Litigation Newsletter | Summer 2022 by: Christopher S.Dodrill and Phillip H.Hutchinson
– Reminder: Amendments to Colorado Noncompete Law Take Effect Today by: Erik W.
Weibust
– CFIUS Clearance: Duddell Street Acquisition Corp.(U.S.); Maso…by: Peter C.Alfano III
– Mexican Supreme Court of Justice Rejects Contradiction of Criteria in…by: Abraham Díaz
– Immigrants are Falling Prey to Social Media by: Raymond G.
Lahoud
– Honoring Our PACT Act Signed Into Law: Camp Lejeune Water…by: Lynwood P.
Evans
– Nelson Mullins Tax Report – Senate Passes Inflation Reduction Act by: C.Wells Hall, III and Maurice D.Holloway
– Employment Law This Week: Pay Data Collection Study, Colorado Non-…by: George Carroll Whipple, III
– Massachusetts High Court Decides Intrastate Delivery Drivers Are…
by: Christopher M.Pardo and Elizabeth L.Sherwood
– The SEC’s Latest CCO Case and the Ongoing Need for a Framework by: Brooke D.Clarkson and Thomas J.
Krysa
– Ensuring Energy Security Section in The Inflation Reduction Act of…by: Laurie B.Purpuro
– Everybody’s Working on the Weekend (Well, Not Everybody) — Fifth…
by: Anne R.Yuengert and J.
William Manuel
– Ninth Circuit Reverses Ruling in Copyright Infringement Case…by: Jana S.Farmer and Leia Leitner
– California Court of Appeal Holds Online-Only Business Websites Are…by: Philippe A.Lebel and Dylan K.
Tedford
– New FCA Consumer Duty Confirmed and Explained by: Paul Anderson
– NASEM Report on the Importance of Chemical Research to the U.S….by: Lynn L.Bergeson and Carla N.Hutton
– FDA Petitioned for Front-Of-Pack Nutrition Labeling by: Food and Drug Law at Keller and Heckman
– Keeping it real – the quest for reason in whistleblowing cases (UK) by: David Whincup
– Do You Have a College Student? Important Healthcare, Financial, and…by: John H.Ramsey and Kerry L.
Spindler
– EPA Will Hold Webinar on PFAS Strategic Roadmap: Research Tools and…by: Lynn L.Bergeson and Carla N.Hutton
– The Supreme Court Rules That § 1782 Does Not Apply to Private…by: Shin Y.Hahn and Neil A.F.
Popović
August 09, 2022
– Energy & Sustainability Litigation Updates — August 2022 by: Jacob H.Hupart
– New “Close Contact” and “Infectious Period” Definitions Modify…
by: Blake E.
Guerrero and Reilly C.Moore
– MICHIGAN MINI TCPA: Proposed House Bill No.6307 by: Brittany A.Andres
– US Executive Branch Update – August 9, 2022 by: Stacy A.Swanson
– The Performance Review Episode 17: Destination Arbitration: Viking…
by: Philip Person and Ryan Bykerk
– Developments in Employee Screening for Real Estate Industry by: Kristina H.Vaquera and Shaun M.Bennett
– U.S.Senate Passes the Inflation Reduction Act, Committing $370…by: James M.
Auslander and Eric L.Christensen
– Favorable Winds for Offshore Development – Inflation Reduction Act…by: Peter R.
Knight and John P.Casey
The Merge Is Upon Us: What It Means for Ethereum
As of this writing, the Ethereum “Merge,” one of the most anticipated events in blockchain history, is finally expected to occur in September 2022.
The “Merge” will shift the Ethereum blockchain (native token ETH, or ether) from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism that uses over 99.9% less energy.Technically, the Merge involves transitioning the current Ethereum proof-of-work Mainnet protocol (the blockchain used for ETH-based transactions) to the Beacon Chain proof-of-stake network.As a result, transactions will be conducted on the new proof-of-stake network and new ETH tokens will be minted by nodes on the network staking a fair amount of ether tokens into a pool to secure the network and validate transactions.Post-Merge, the practice of ether cryptomining on the Ethereum 2.0 network will end, either forcing miners to pivot to mining on Ethereum Classic or find a new endeavor.
While the move to Ethereum 2.0 is being closely-watched, akin to the countdown to the New Year’s Eve Times Square ball drop, it’s a little more complicated and more of a series of actions (and accompanying benefits) that will happen over time.The Merge is but the first step in a series of five (notably followed by upgrades titled ‘the Surge,’ ‘the Verge,’ ‘the Purge,’ and ‘the Splurge’) that intend to make Ethereum faster, more scalable, more powerful, more energy efficient and more robust.
Proof of Work vs.Proof of Stake: What’s the Difference?
PoW and PoS are the two major consensus mechanisms that cryptocurrencies use to verify new transactions, add them to the immutable blockchain ledger and create tokens.
Decentralization requires many computers, each using energy, to participate in the verification process.PoW and PoS are the two methods by which the computers agree on the legitimacy of a transaction.As discussed in Part I and Part II of prior posts on blockchain and ESG issues, the PoS model is faster and considerably more energy efficient than the PoW model.
Proof of work, the original blockchain consensus mechanism, was a method of cryptographic proof popularized by the advent of Bitcoin (and the 2008 release of Satoshi Nakamoto’s noteworthy paper about the technology underlying it).Blockchains using PoW consume large amounts of energy, as virtual miners around the world race to solve a complex cryptographic problem to secure the network and win the right to update the blockchain.Winners are rewarded with the network’s currency.In other words, PoW networks reward miners for security.
Practically speaking, this PoW consensus mechanism incentivizes miners to invest in expensive computing equipment, which in turn results in investments in places to store and cool equipment, and the consumption of massive amounts of energy to power their systems, or rigs.
On the other hand, Proof of Stake – the predominant consensus mechanism used by some other blockchains (and after the Merge, Ethereum) – is much less energy intensive, to the tune of 99.99% less than PoW blockchains.PoS “validators” are the analog of PoW miners: validators secure the network in exchange for a cryptocurrency reward.While PoW miners use their intensive computing power and energy in the race to validate transactions and secure the network, PoS “validators” dedicate their own stake of cryptocurrency to the network.
Contrasted with PoW, PoS does not require high-powered computers and intensive energy consumption because any user can act as a validator by using a computer to create a node.PoS nodes only use marginally more energy than a laptop.In addition, PoS is faster, more scalable, and can process more transactions per second than PoW.
How Do You Transition an Immutable Blockchain?
As an asset, ETH’s market capitalization currently stands at about $200B; however, the network itself supports many more billions of assets.Consequently, the Merge required years of careful planning, testing and execution to mitigate the technical risks involved with the massive transformation.
This first step is aptly named ‘the Merge’ because two independent, parallel blockchains will be merged: the main Ethereum blockchain will merge with the Beacon Chain.
The Beacon Chain, known as the consensus layer, was launched on December 1, 2020 and runs parallel to the live Mainnet.The Beacon Chain is responsible for controlling PoS.
Even though it is live, the Beacon Chain does not yet process Mainnet transactions; rather it runs in parallel and reaches consensus by agreeing on active validators and their account balances.
The Beacon Chain allows users to begin staking their ETH and become validators, which is a necessary step to preparing the Beacon Chain for transaction validation.
When the Mainnet merges with the Beacon Chain, the Beacon Chain will become the consensus layer.So, instead of mining blocks in a PoW model, as on Ethereum Mainnet, the Beacon Chain’s PoS validators assume the role of processing transactions and proposing blocks.In short, verifiers will stake substantial capital in the form of ETH, instead of pure mining computer power, to validate new blocks on the Beacon Chain.Under a PoW model, an attacker interested in controlling the network would need to deploy more than 51% of the computing power of the network (i.e., a so-called 51% attack), while in a PoS model, an attacker would have to stake more than 51% of the staked ETH tokens, meaning the more tokens staked by the verifiers, the more secure the network.As a reward for verifying a transaction, the validator is rewarded with ether; on other hand, block verifier misbehavior or inactivity will be met with economic penalties and a potential “slashing,” or loss, of their staked ether.
The Merge will be different than a hard fork, which is when a change of protocol results in two different branches or versions of the blockchain network.For example, after 2016’s The DAO hack, which was a decentralized autonomous organization created on the Ethereum network that suffered an exploit due to vulnerabilities in its underlying smart contract code, with the hacker siphoning off of $150 million of investor tokens, the Ethereum network deployed a hard fork to essentially undo the theft, which created an entirely separate blockchain (now called Ethereum Classic).
In the case of the Merge, however, Ethereum will continue as a single blockchain, so all user transactional history will be merged.As a result, all transaction history currently stored on Mainnet will not be lost, and therefore users do not need to take any action to protect their assets.
What are the Impacts?
A common misconception is that the Merge will materially lower Ethereum’s transaction fees (i.e., gas fees) through the incorporation of sharding.Sharding is the splitting of a network into smaller pieces, or shard chains, and allow more scalability for applications and the so-called “rollup” of multiple transactions into a single transaction, thus reducing latency and increasing network speed.However sharding was delayed until the Surge in lieu of focusing on the transition to PoS.
Thus, a substantial drop in gas fees will not occur until the Surge.
The Merge will have several effects on ETH and the Ethereum blockchain.First, the PoS consensus mechanism is expected to cut energy consumption by 99.9%.Less energy is required to secure the network, so ETH issuance (the amount of newly created ETH minus the amount of ETH burned) as a reward will be cut to .43% of total supply, from 4.3% per year.Whereas PoW requires expensive investment and overhead, which demanded significant rewards to compensate miners for providing security, the opportunity cost of capital is PoS validators’ overhead.In other words, because less energy is required to secure the network, validators do not require as much compensation which results in lower fees and lower issuance.
Simply put, PoS validators require less compensation, therefore requiring lower ETH issuance.
Decreased energy consumption is certain to pique the interest of ESG advocates and investors alike.Indeed, there has been much discussion over how the Merge will affect the price of ether, as there may be several market forces that will determine the ultimate effect, including how the end of PoW mining will affect the price, how successful the Merge is, and whether the new, greener PoS Ethereum 2.0 will attract additional interest or investment in ETH (or projects that run on the Ethereum network) by organizations that formerly eschewed ether due to climate change and ESG considerations.
One other hotly contested issue is whether the Merge turns ETH into a security.The answer depends, of course, on whom you ask.Note: back in 2018, a former SEC Division of Corporation Finance Director delivered a speech and stated that offers and sales of ether at that time were not securities transactions, while in an interview in June 2022, SEC Chair Gary Gensler stated that Bitcoin was the “only one” token he could confirm was not a security, but a commodity.The Howey test determines whether a transaction qualifies as an “investment contract.” Under this metric, an investment contract is: (1) an investment of money (2) in a common enterprise (3) with the expectation of profit (4) solely to be derived from the efforts of others.
If a transaction is an investment contract, then it qualifies as a security under the Securities Act of 1933 and Securities Exchange Act of 1934.The debate centers on whether validators are pooling funds such they are engaging in a “common enterprise” and whether the rewards offered by ETH amounts to an “expectation of profit.” Both sides agree that there is an open question regarding who the “issuer” is in a decentralized system like Ethereum.
In any case, one also might ponder if the SEC, already embroiled in a contested action against one well-known digital asset issuer over what the agency considers an unregistered offering, would want to engage over Ethereum 2.0.
The Merge and the remainder of Ethereum’s roadmap present exciting opportunities and innovations, but it remains to be seen how these changes will impact the ecosystem.As the Ethereum ecosystem continues to evolve, users, developers, and investors will focus on these monumental changes, and their consequences, with the hope that they continue to positively impact the industry, users and the climate..
