Social media sites are transforming not only the daily lives of consumers, but also how companies interact with consumers. Here at Morrison Foerster, across all of our practice groups, we are seeing complex, cutting-edge legal issues arising out of social media. As with the Internet boom during the mid-to-late 1990s, social media is generating new legal questions at a far faster pace than the law’s ability to provide answers to such questions. In an effort to stay on top of these emerging issues, and to keep our clients and friends informed of new developments, Morrison Foerster publishes this blog devoted to the law and business of social media.<h2>ABOUT MORRISON FOERSTER</h2>Morrison Foerster is a leading global law firm that transforms complexity into advantage for its clients. Our clients include some of the largest financial institutions, banks, consulting and accounting firms, and Fortune 100, technology, and life sciences companies. Highlighting the firm’s commitment to client service, leadership in market-changing deals and impact litigation, and values-based culture, Morrison Foerster has been repeatedly recognized as one of the top 10 firms on The American Lawyer’s A-List. Year after year, the firm receives significant recognition from Chambers and The Legal 500 across their various guides, including Global, USA, Asia‑Pacific, Europe, UK, Latin America, and FinTech Legal. Our lawyers passionately care about delivering legal excellence while living our values. Morrison Foerster has a long-standing commitment to creating a culture that respects and celebrates differences, while providing an inclusive environment. The firm has achieved Mansfield Certification Plus since 2018 as a result of successfully reaching at least 30 percent women, communities of color, and LGBTQ+ lawyer representation in a notable number of current leadership roles and committees. The firm also has a long history of commitment to the community and society through providing pro bono legal services, including litigating for civil rights and civil liberties, improving public education and fostering the wellbeing of children, advocating for veterans, promoting international human rights, enforcing the right to asylum, and safeguarding the environment.

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Aaron is the chair of the firm’s Technology Transactions Group and co-chair of the Interactive + Digital Media Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals.Aaron’s practice focuses on advising both established and emerging companies in a variety of data- and technology-intensive sectors, including software, SaaS, cloud-based technology, digital media (social media, AR/VR, gaming, streaming media, AdTech), AI, healthcare, consumer electronics, e-commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on branding and marketing, trademark licensing, and content-related transactions, as well as the intellectual property aspects of mergers, acquisitions, asset spin-offs, and private equity investments.He has represented clients such as Autodesk, Meta, OpenAI, Splunk, Konami, Kaiser Permanente, SoftBank, Visa, and Yahoo, among others.Aaron has been recognized by numerous publications for his work on market-defining technology transactions. He is currently ranked by Chambers USA for “Technology Transactions.”Aaron also serves as co-editor of Socially Aware, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics. Aaron is also a sought-after speaker on new and emerging areas of law, and is a frequent presenter and panelist at conferences and legal services programs. In addition to his active practice, Aaron regularly provides pro bono assistance to various nonprofit and charitable organizations such as Common Sense Media and the Starlight Children’s Foundation. He is a member of the board of directors of California Lawyers for the Arts.While in law school at the University of California, Berkeley, Boalt Hall School of Law, Aaron served as executive editor of the California Law Review and was elected to the Order of the Coif. Following law school, Aaron served as law clerk to the Honorable William H. Orrick and the Honorable Martin J. Jenkins, both United States District Judges for the Northern District of California.

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Aaron is the chair of our Technology Transactions Group. He advises clients on a wide range of complex transactions involving intellectual property and technology, including structuring and negotiating strategic licensing, development, collaboration, procurement, and distribution deals. Aaron’s practice focuses on advising both established and emerging companies in a variety of data– and technology–intensive sectors, including software, SaaS, cloud computing, AR/VR, AI, gaming, healthcare, consumer electronics, social media, e–commerce, other online business models, and mobile applications. He also maintains an active practice counseling companies on the intellectual property aspects of mergers, acquisitions, asset spin–offs, and private equity investments.

Aaron P. Rubin

Lawrence Gallick is of counsel in the firm’s Austin office and a member of the Technology Transactions Group.Lawrence focuses his practice on technology transactions and licensing matters. His diverse experience includes advising on SaaS agreements, cross-licensing agreements, research and collaboration agreements, development agreements, and distribution agreements. He counsels a broad range of companies across the software, hardware, life sciences, biotech and FinTech spaces, as well as other entities including universities.He advises clients in connection with general corporate matters including contract negotiations, and leasing and technology placement agreements.Lawrence also serves as co-editor of <a href="https://www.sociallyawareblog.com/" target="_blank">Socially Aware</a>, the firm’s award-winning newsletter and blog devoted to the law and business of social media, and regularly publishes on various IP and technology-related topics.Prior to joining the firm, Lawrence was counsel at another major law firm. Before earning his law degree, Lawrence was a web consultant, project manager, and web developer in Portland, Oregon, where he managed and consulted on projects using industry methodologies and performed custom development and integration of content management systems.Lawrence was named a Super Lawyers “Rising Star” in 2015 and 2018–2022, and is licensed in both California and New York. Lawrence earned his J.D. from the University at Buffalo School of Law, where he was the electronic systems editor for the Buffalo Law Review and awarded the ABA-BNA Award for Excellence in the Study of Intellectual Property Law.

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Lawrence Gallick

Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster.Anthony advises clients on general commercial and transactional matters. He regularly advises companies on the IP aspects of their M&A transactions. His clients include technology, digital media and content for television and music, financial services, and communications companies with diverse intellectual property assets and issues.His practice focuses on the legal aspects of developing, licensing, and commercializing technology and intellectual property, as well as negotiating general commercial contracts, including outsourcing transactions, as well as content and data licenses. He regularly assists clients with legal issues relating to licensing and commercialization of digital media and content, digital content that is distributed over the Internet or streamed, mobile applications and social media, as well as the licensing of recorded music for distribution via digital platforms. Anthony is also experienced with issues relating to open-source software, software development, artificial intelligence and machine learning, cloud-based technology, and protection of proprietary information.Anthony has extensive experience working on matters involving disruptive technologies, such as blockchain. He has helped fintech clients with general intellectual property issues in connection with terms of service for online financial products and services.Anthony is an integral part of the outside pro bono legal team for nonprofit organizations based in New York, including advising clients on legal issues regarding entertainment, social media, privacy rights, and the negotiation of outsourcing and service agreements. Anthony received his J.D. from the University of Michigan Law School in 2009. He received his B.S. from Cornell University in 2004.

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Anthony Ramirez is a partner in the Technology Transactions Group in the New York office of Morrison Foerster. He advises clients on general commercial and transactional matters. His clients include technology, media, and communications companies with considerable intellectual property assets. His practice focuses on the legal aspects of licensing and commercializing technology and intellectual property, as well as negotiating general commercial contracts. He also regularly assists clients with legal issues relating to mobile applications and social media.

Anthony M. Ramirez

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Article courtesy of Morrison & Foerster’s Mobile Payments Practice On May 30, 2013, the California Department of Financial Institutions (CADFI) issued a cease a

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Bitcoin Receives Cease and Desist Order Evidencing Increased Regulatory Scrutiny of Virtual Currency

Bitcoin Receives Cease and Desist Order Evidencing Increased Regulatory Scrutiny of Virtual Currency | Socially Aware

Rick Fischer

Article courtesy of Morrison & Foerster’s Mobile Payments PracticeOn May 30, 2013, the California Department of Financial Institutions (CADFI) issued a cease and desist letter to Bitcoin Foundation, a not-for-profit organization established to standardize, protect and promote the use and adoption of Bitcoin. CADFI stated in its letter that Bitcoin Foundation “may be engaged in the business of money transmission without having obtained the license or proper authorization required by” California’s Money Transmission Act. CADFI’s issuance of the letter, the Financial Crimes Enforcement Network’s (FinCEN) recent guidance regarding virtual currencies and the subsequent asset seizures of prominent Bitcoin exchanges all reflect increased scrutiny of the use of virtual currencies.CALIFORNIA DEPARTMENT OF FINANCIAL INSTITUTIONS’ CEASE AND DESIST ORDERCADFI’s letter notes that Bitcoin Foundation may be in violation of California’s money transmitter licensing law (Cal. Fin. Code § 2030), as well as federal statutes that impose penalties for the failure to have a required state money transmission license and the failure to register as a money transmission business. (18 U.S.C. § 1960, 31 U.S.C. § 5330.)Section 2030 of the California Financial Code prohibits persons from engaging in “the business of money transmission in California without first obtaining a license from the Commissioner of Financial Institutions.” A person in violation of this statute may be subject to civil money penalties under § 2151, and possibly criminal prosecution under § 2152. The California Attorney General may also sue under §§ 17200, 17205 and 17206 of the California Business and Professions Code.In addition, CADFI noted that under 18 U.S.C. § 1960, it is a felony to own, control or conduct the business of money transmission without the appropriate state license, or without registering with FinCEN. Violations of this Section are punishable by “up to 5 years in prison and a $250,000 fine.” CADFI stated that this same activity without a license is also a “felony under California law, pursuant to [California] Financial Code § 2152(b).”CADFI requested that Bitcoin Foundation “advise [it] in writing within [20] days” of the date of the letter regarding the “steps [] taken to comply with [CADFI’s] order.” In addition, CADFI noted that “[n]othing in [its] letter is intended to affect any legal remedies, criminal or civil, which the State of California or the Commissioner might pursue for past or future violation of [the] laws [cited].”WHAT IS BITCOIN?Introduced in 2009, Bitcoin is a virtual currency that is controlled by a software algorithm (“Bitcoin Algorithm”) running on the Internet. Both the creation and transfer of Bitcoins is performed by this algorithm. Bitcoins are created by a procedure called “mining,” where users provide their computer resources to help the Bitcoin Algorithm process Bitcoin transactions. In exchange, users are compensated with Bitcoins. The Bitcoin Algorithm restricts the total number of Bitcoins to be “mined” to 21 million Bitcoins. Currently, there are approximately 11 million mined Bitcoins that are in circulation.Like other forms of currency, Bitcoins can be exchanged for goods and services. However, the value of a Bitcoin (how many goods or services can be exchanged for a Bitcoin) is volatile. This volatility is attributable to the fact that, unlike currencies like the U.S. dollar or the Euro, which are issued by their respective governing bodies, Bitcoins are not supported by any sovereign entity. As a result, the value of a Bitcoin is driven and determined by public perception.Since Bitcoin’s inception, the virtual currency has been gaining popularity and acceptance. Currently, several Bitcoin exchanges and payment websites allow users to exchange (buy and sell) Bitcoins with popular currencies, such as the U.S. dollar. In addition, some merchants, both online and in person, are beginning to accept Bitcoins as an alternative to traditional currencies for payment. The value of a Bitcoin has fluctuated from about $0.0025 since its inception to a high of about $266 on April 10, 2013. The current value is approximately $78 per Bitcoin.Why Do Individuals Use Bitcoin?A major reason why individuals may prefer to use Bitcoin transfers instead of traditional electronic transfers is for anonymity and privacy. Bitcoins are transferred from peer to peer without the need for an intermediary financial institution to process payments. The Bitcoin-transmitting party merely needs to know the receiving party’s Bitcoin address to execute a transfer. In contrast, when a traditional payment card is used to make a transaction, there typically are records identifying the transferor, transferee and the amount transferred. Because Bitcoin transfers do not rely on established payment systems to process transactions, Bitcoin transfers allow the transferor and transferee to remain anonymous.Concerns Driving Regulatory InterestIn issuing the cease and desist letter to Bitcoin Foundation, CADFI was likely concerned about the same aspects of Bitcoin that attracts its users—anonymity and privacy. Specifically, the concern regarding the anonymous aspects of Bitcoin is its potential for facilitating criminal activity, money laundering and illegal transactions. On the other hand, by classifying Bitcoin Foundation as a money transmitter and, by extension, classifying the transfer of Bitcoins as transmission of money, CADFI can subject Bitcoin Foundation to the same requirements as traditional money transmitters. The resulting mandatory record keeping could significantly diminish the anonymous aspects of Bitcoin, and in turn diminish the attractiveness of using Bitcoin for the transfer of funds related to criminal activity.CADFI’S ACTION COMES ON HEELS OF RECENT FINCEN GUIDANCEOn March 18, 2013, FinCEN issued interpretive guidance, entitled “Application of FinCEN’s Regulations to Persons Administering, Exchanging, or Using Virtual Currencies.” The guidance is intended by FinCEN to clarify the applicability of the Bank Secrecy Act (BSA) and its implementing regulations to persons creating, obtaining, distributing, exchanging, accepting or transmitting virtual currencies. The guidance addresses “convertible” virtual currency, which is described as a type of virtual currency that either has an equivalent value in real currency, or acts as a substitute for real currency.The guidance defines “users,” “administrators” and “exchangers” of convertible virtual currency and explains which of these participants in a virtual currency environment is a Money Services Business (MSB) for purposes of the BSA and FinCEN’s implementing regulations. Under the guidance, an administrator or exchanger that accepts and transmits a convertible virtual currency, or that buys or sells convertible virtual currency for any reason, is a money transmitter under FinCEN’s regulations (unless a limitation or exemption from the money transmitter definition applies). The guidance also explains that accepting and transmitting anything of value that substitutes for currency makes a person a money transmitter under the BSA’s implementing regulations.SEIZURES OF ASSETS OF BITCOIN EXCHANGESSince FinCEN’s virtual currency guidance was issued, U.S. regulators have seized assets of several virtual currency exchanges. Notably, on May 14, 2013, one of the world’s largest Bitcoin exchanges, Mt. Gox, had its U.S.-based assets seized by U.S. authorities.