According to experts, the groups receiving meme coins will face a legal entanglement

Much of the 2024 meme coin bull run was driven by community control. Projects costing hundreds of millions of dollars—eg Billy And Gigachad-After the original developer decided to jump ship, it was eventually taken over by early investors who took the lead in pushing it to new heights.

Despite not creating Talk in the first place, legal experts warn that members of community watchdogs (CTOs) could face a range of serious legal issues.

“One of the biggest risks [for community takeover teams] It could be deceptive marketing, unfair or deceptive business practices, or possibly criminal misrepresentation or fraud. Rika LawHe told him Decrypt.

The projects they invested in are very often Degens. But when that person leads the project, they start falsely promoting the token. For this reason, Ho explained, it's important for CTO teams to clearly articulate the goal and what's set in stone.

“Some of the cases that happened in the courts accused the founders of these projects, for example, that their coins were supported by many investors, but they knew that this was not the case,” he said.

For example, Terraform Labs was found guilty of defrauding customers by claiming that Chai – a popular payment app – was used to process and settle payments even though it was not being used as advertised. That's a very high-profile example, but Ho believes the same scenario could play out for meme coins.

Big Crypto Twitter influencers for projects (eg Let's hear) have bought into the project even though there is no evidence for the question. In this case, the CTO team may face a potential legal problem.

When the CTO team takes over, the original developer or tokenizer may sell out, delete social accounts associated with the project, and become malicious. This prevents a formal transfer of authority to the CTO team, which can cause problems when it comes to intellectual property (IP).

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

This means CTO teams may be infringing on the original developer's IP rights – for example, the original dev used a photo of their pet dog for the project.

A notable example of this type of IP conflict. Shark catThe owner of the Instagram-famous Nala Cat brand has fought back after her cat was used in a booming crypto project without permission. Nala's owner was not happy with how their cat was represented and fought to stop the project. In the end, both the owners of Nala and the Mem coin project have turned to A Mutual agreementOfficial license for the project

We saw another similar example pop up recently when the creator of the awesome Keyboard Cat team officially licensed two different unofficial mints that used their IP without a license.

Even if those cases were thrown out of court and related to IP that neither the token creator nor the CTO team owns, the token transferor is seeing their cat, frog, or dog.

“[The token creator] They still own the dog's name, image, likeness and the rights associated with it, and they can say, ‘Hey, take it down,'” Rosso explained.

Some CTO teams are actually led by the original token forwarder. People who want to start a successful meme coin create a new wallet, create a Pump.fun token, sell it immediately, then enter a new wallet and start pushing the project with a different identity.

Primarily, this is to be used by the popular CTO meta, where many devs won't invest in a project if the dev wallet is still in the mix – not trusting the central image. But this removes it Any Legal responsibility from an individual?

“If whoever creates this drops their stuff but joins the community, they become part of the community, not as an official founder,” Rosso said. Decrypt“,[then] If there is nothing registered in this person's name, it is very difficult to say that one person is responsible for all this.

This means that if the person engages in illegal activities after joining the community, they will be held accountable by law.

“This is not a ‘shortcut' against accountability.” A lawyer and Chief Legal Officer at Bitget; HonHe told him Decrypt. “If the original inventors' actions were fraudulent, fraudulent, or illegal, they could still face legal consequences.”

By the letter of the law, CTO groups and meme coin developers may face legal consequences – but whether these laws will actually be enforced is another question. A lawyer Jacob Martin Due to the inherently speculative nature of meme coins, he thinks we are unlikely to see serious legal action in this sector.

“Meme tokens seem to face a lot less scrutiny because they're a little more transparent about the facts of where they're stacked,” Martin said. Decrypt.

Edited by Ryan Ozawa and Andrew Hayward