GameStop CEO Ryan Cohen agreed to pay a nearly $1 million civil penalty Wednesday to settle Federal Trade Commission (FTC) allegations that he unlawfully bought Wells Fargo securities.

The agency said that Cohen violated the Hart-Scott-Rodino Act, which requires investors to disclose purchasing large amounts of securities in a press release. Allegedly, Cohen did not disclose that he purchased more than 562,000 voting securities in the bank.

The disclosure would’ve given regulators the opportunity to review the deal for antitrust violations before it went through, the FTC said. Even though Cohen’s purchase of Wells Fargo securities was below the standard 10% threshold, it allegedly violated antitrust laws.

Cohen allegedly intended to influence Well Fargo’s business, the regulator said, advocating for a seat on the company’s board of directors in emails. At the same time, Cohen engaged in “periodic communications” with the bank’s leadership after he purchased the securities, suggesting steps that could be taken to improve the bank’s business, the FTC said.

Wells Fargo did not immediately respond to a request for comment from Decrypt. Cohen will pay $985,320, according to the FTC release.

Cohen joined GameStop’s board of directors in early 2021, and he was appointed chairman of the board six months after stepping into that role. Around a year ago, he was appointed CEO, taking over the reins of the video game retailer from Matt Furlong.

Meanwhile, GameStop’s share price has fallen 3% Wednesday to $19.55, adding on to a more than 13% decrease over the past month. Amid the online return of meme stock influencer Keith Gill, a.k.a. Roaring Kitty or DeepFuckingValue, GameStop’s stock price jumped to $48.75 in May.

Cohen, the founder and former CEO of the pet supplies company Chewy, said that GameStop’s leadership was “not here to make promises or hype things up” during a shareholder meeting in June. While the meeting was widely hyped amid the return of Roaring Kitty, it ultimately proved to be routine.

In the run-up, GameStop fans speculated that Gill could be appointed to the company’s board of directors. Yet the fabled meme stock influencer wasn’t even mentioned on the call.

Gill became the de facto face of a retail-led movement aiming to outsmart Wall Street short sellers in 2021. A meteoric rise in the company’s share price created a cult-like following toward the company, enshrining GameStop in internet culture as a widely popular meme stock.

GameStop’s shares have trended lower from their May peak as enthusiasm has cooled. The last time Gill flashed his positions in GameStop on Reddit was June 13, over three months ago.

A Twitter (aka X) post from Gill suggested that the influencer was interested in Chewy in June, with a subsequent SEC filing showing that he had purchased 9 million shares in the firm.

But that sentiment appeared to change when he posted a meme earlier this month that showed a character from the film “Toy Story 2” dropping a toy with a dog’s face superimposed on top. It was the same cartoonish dog image that Gill originally tweeted back in June.

The meme stock influencer’s online reappearance captivated the public’s interest earlier this year. A livestream that towed the line between performance art and financial advice amassed over 700,000 viewers, who were eager to hear Gill’s thoughts on GameStop.

During the live stream, Gill name-dropped Cohen, describing him as someone who could help the video game retailer modernize its business model away from selling gaming hardware.

“He seems to be taking the right approach, given this unique situation,” Gill said. “Let’s see where it goes from here.”

Edited by Andrew Hayward

Much of 2024’s meme coin bull run has been pushed by community takeovers. Projects worth hundreds of millions of dollars—such as Billy and Gigachad—ended up controlled by early investors who took the reins after the original developer decided to jump ship, ultimately pushing them to new heights.

Despite not creating the token in the first place, legal experts warn that members of community takeovers (CTOs) could face an array of serious legal issues.

“One of the biggest dangers [for community takeover teams] is going to be misleading marketing, unfair or deceptive trade practices, or maybe even criminal misrepresentation or fraud,” Charlyn Ho, founder and managing partner at Rikka Law, told Decrypt.

Degens all too often overhype projects they’re invested in. However, when that person is in charge of the project, they begin to risk falsely advertising the token. For this reason, Ho explained, it’s important for CTO teams to clearly explain the goal and what is set in stone.

“Some of the issues that have come up in the courts have alleged the founders of these projects, for example, have claimed that their coin was backed by a huge community of investors, but they knew it was not,” Ho added. 

For example, Terraform Labs was found guilty of defrauding customers due to stating that Chai—a popular payment app—was being to process and settle payments, despite it not actually being used as stated. That’s a very high-profile example, but Ho believes a similar situation could play out for meme coins.

It’s common for projects to claim that big Crypto Twitter influencers (such as Ansem) have bought into the project, despite no evidence for the claim. In this case, the CTO team could face potential legal trouble.

When a CTO team takes the reins, the original developer or token deployer has likely sold, deleted social accounts tied to the project, and ghosted. This prevents a formal transfer of power to the CTO team, which could cause issues when it comes to intellectual property (IP).

“Is it worth the risk of keeping the same name, the same logo, the same color palette?” said attorney and CEO of AR Media Andrew Rossow, in an interview with Decrypt. “The developer may not even care, but it has to be at least documented somewhere that there was a good faith effort in trying to contact or establish: Are we able to use this?”

This means that CTO teams may be infringing on the IP rights of the original developer—for example, if the original dev had used a photo of their pet dog for the project.

A notable example of this kind of IP skirmish is Shark Cat, where the owner of the Instagram-famous Nala Cat brand fought back after the cat was used without permission in a skyrocketing crypto project. The owner of Nala was unhappy with how their cat was being represented and fought for the project to stop operating. Ultimately, both Nala’s owners and the meme coin project came to a mutual agreement, giving the project an official license to the IP.

We’ve seen another similar example pop up recently when the creator of the iconic Keyboard Cat team gave an official license to two different unofficial meme coins that had used the IP without permission.

While those cases were fought outside of the courts and pertained to IP that the token creator or and CTO team both did not own, similar IP issues could arise if the deployer of a token decides they’re not happy with how their cat, frog, or dog is being depicted.

“[The token creator] would still own the name, image, likeness, and those rights associated with it for the dog, where they could say, ‘Hey, take it down,’” Rossow explained. 

Some CTO teams are actually led by the original deployer of a token. Those looking to launch a successful meme coin will create a fresh wallet, create the Pump.fun token, instantly sell, then log into a new wallet and start pushing the project under a different identity.

Primarily, this is to take advantage of the prominent CTO meta, where many degens won’t invest in a project if the dev wallet is still in the mix—due to distrust in a centralized figure. But does this remove any legal responsibility from the individual?

“If whomever creates this dumps their stuff but rejoins the community, not as the official founder but becomes part of the community,” Rossow told Decrypt, “[then] it would be very difficult—unless there is something registered under that person’s name—to say this one person is responsible for all of this.”

That said, if the individual is involved in illegal activity once rejoining the community, then they will be legally responsible.

“This is not a ‘shortcut’ against accountability,” lawyer and Chief Legal Officer at Bitget, Hon Ng, told Decrypt. “If the original creators’ actions are deemed manipulative, fraudulent, or otherwise illegal, they could still face legal consequences.”

By the letter of the law, CTO teams and meme coin developers could face legal consequences—but it’s another question whether these laws will actually be enforced. Attorney Jacob Martin thinks that due to the innate speculative nature of meme coins, it’s less likely that we’ll see serious legal action in this sector.

“It sure seems like meme tokens are going to face far less scrutiny as they are a bit clearer in the facts of where they sit in the stack,” Martin told Decrypt.

Edited by Ryan Ozawa and Andrew Hayward

Robinhood’s crypto arm has agreed to pay $3.9 million after being accused of preventing customers from withdrawing digital assets from their accounts over a four-year period.

On Wednesday, the California Department of Justice said it marked the first public action by the regulator against a crypto firm as it continues to exercise its authority under the banner of “protecting consumers.”

Findings from the California Department of Justice’s investigation revealed Robinhood Crypto LLC allowed users—between 2018 and 2022—to purchase crypto as commodities with the aim of short-term gains without delivering the actual assets.

Robinhood’s action was deemed a violation of California’s Commodity Code. At the time, customers could not withdraw their crypto, leaving them no choice but to sell it back to Robinhood in order to exit the platform, the department said.

Alongside the financial penalty, the settlement includes several conduct requirements. As per the settlement agreement, Robinhood must allow customers to withdraw crypto to their wallets and improve trading and order handling transparency.

The DOJ’s investigation also revealed Robinhood misled its users by falsely advertising that it would connect to multiple trading venues to ensure competitive prices. 

Robinhood did not always provide access to the best prices as promised, the department said, which added that the exchange also misrepresented its duties as a crypto custodian by assuring customers that it held all assets purchased on its platform when it in fact did not.

Some assets were instead stored with third-party venues for extended periods without disclosure rather than what was being advertised at the time.

In addition to its settlement requirements and changes to the way it handles users’ crypto, the platform must also now disclose any delayed settlements exceeding one week. 

It follows another legal action in Washington in July, where Robinhood Financial LLC agreed to pay $9 million to resolve allegations that its “refer-a-friend” program sent unwanted text messages, violating consumer protection laws.

Robinhood did not immediately return a request for comment.

Edited by Sebastian Sinclair