“Crypto Hell” is Here. Gemini Nano Banana 3.

This week delivered the first crypto bank charter of the Trump era, a Senate stuck in “crypto hell,” and a $44 billion exchange blunder that somehow fixed itself overnight. Meanwhile, AI copyright lawsuits are stacking up, and state regulators aren’t waiting for Congress on prediction markets. Here’s what moved the needle.

What’s moving the needle:

– 🏦 Crypto banking gets its first Trump-era approval; stablecoin infrastructure accelerates

– ⚖️ AI copyright liability crystallizes—major publishers targeting Anthropic, OpenAI, others

– 🎰 Prediction markets clash with regulators as volumes spike; insider trading concerns mount

🎙️ THIS WEEK’S INTERVIEW: BEN GRAY, CHIEF LEGAL OFFICER AT KRAKEN

Kyle and Moish sit down with Kraken’s CLO Ben Gray for a wide-ranging conversation on the legal and regulatory landscape facing major crypto exchanges.

• How Kraken navigates global regulatory frameworks and adapts to emerging legislation like the Clarity Act and GENIUS Act
• The transformative role of AI in legal work, compliance operations, and due diligence at scale
• Real-world asset tokenization, DeFi governance, and why competitors are collaborating on policy

---

CRYPTO POLICY

• Erebor Lands First Crypto Bank Charter Under Trump. The first digital asset bank charter approved under the new administration signals aggressive regulatory shift. Erebor’s approval cuts through years of SEC/OCC friction and establishes a playbook for competitors seeking full banking rails. [CoinTelegraph]
• Senate’s “Crypto Hell” Bill Stalled—For Now. Bitcoin’s price moves have you feeling down? Well… you’re not the only one. A comprehensive market structure overhaul backed by Lummis stalled in committee despite broad support. The legislative gridlock gives crypto advocates breathing room but leaves fractured regulatory jurisdiction intact. [The Block]
• Lummis Commits to Bitcoin Tax Clarity; Exemption Push Gains Traction. Senator Lummis signaled willingness to meet with Treasury Secretary Scott Bessent’s office on Bitcoin taxation issues, including a de minimis exception. Expect bipartisan movement here. [Bitcoin Magazine]
• SEC Quietly Drops Biden-Era Enforcement Case. The incoming administration’s regulatory reset includes withdrawal of an enforcement action against American CryptoFed DAO, which also stated that it was converting to a Wyoming DUNA. [Law360]
• NY Prosecutors Sound Alarm on Apparent GENIUS Act Fraud Gaps; Meanwhile Tether Freezes $500 million . New York Attorney General Letitia James alleged dangerous loopholes in the GENIUS Act for crypto fraud prosecution (primarily related to Circle and Tether’s lack of willingness to freeze assets when requested by States). [CNN]. On the other hand, Tether complied with Turkish law enforcement and froze $500 million in alleged proceeds from fraud, demonstrating Tether’s willingness to cooperate with prosecution. [DL News]
• Fenwick’s FTX Settlement. Fenwick & West settled a 2023 lawsuit which accused the law firm of playing a critical role in the FTX fraud, including its creation and approval of the legal structures which enabled FTX to do business. Terms were not disclosed. [CoinTelegraph]

---

AI LEGAL WARS INTENSIFY

• Music Publishers Sue Anthropic for $3B—Copyright Reckoning Looms. A coordinated legal assault: major music publishers filed a landmark $3 billion copyright infringement suit against Anthropic, alleging unlicensed training data. This mirrors similar suits against OpenAI; the industry is weaponizing copyright to reshape AI liability. [TechCrunch]
• OpenAI Wins Attorney-Client Privilege Shield. A federal court ruled that OpenAI’s communications with external counsel enjoy full attorney-client protection, a significant legal win that protects the company’s internal deliberations from discovery. Game-changing decision about legal privilege and chatbots. [Law360]
• California Mandates AI Transparency for Attorneys. New California law requires AI tool disclosure in legal filings and client communications. Compliance burden is real; Anticipate similar mandates in NY, Texas, and federal courts? [Law360]
• Anthropic Enters Legal Tech—Quietly. Anthropic launched a legal-focused AI division targeting contract review and due diligence. The move hedges against litigation risk while capitalizing on enterprise demand for AI-powered legal work. [Artificial Lawyer]

MARKETS ON FIRE: LOSSES, RECOVERY & ACTIVISM

• Strategy’s $12.6B Bitcoin Loss—Largest Corporate Bet Gone Wrong. Strategy Global suffered the largest Bitcoin-related loss in corporate history after its aggressive accumulation bet imploded. The wreckage raises questions about treasury risk management in volatile digital assets. [The Block]. WSJ Exposes Crypto Hoarding Strategy. The Wall Street Journal documented DATs falling apart as margin calls force liquidations, and the potential for market manipulation cases brewing. [WSJ]
• Bithumb’s $44B Accounting Disaster—And Recovery Plan. The Korean exchange revealed a massive accounting error totaling $44 billion in overpaid Bitcoin credits; management says it’s resolved 99.7%. Investors remain skeptical about internal controls and market confidence is shaken (understandable given that the exchange created $44B in Bitcoin for 30 minutes). [Bitcoin Magazine]
• Crypto 401(k) Eligibility Under Fire. A Department of Labor review threatens to pull crypto options from retirement accounts, citing volatility and custody risks. A $2 trillion market wipeout is fueling the review; expect fierce industry pushback and potential legislative intervention. [CoinDesk]
• DAT Activism: Empery Digital & ATG Capital Push For Liquidation. Activist investors Empery Digital and ATG Capital (holding 10.4%) are agitating for board change at this digital asset treasury company. Tice Brown’s 9% stake demanded full Bitcoin liquidation; management responded with a poison pill. Expect a full-fledged DAT proxy fight. [Matt Levine / Bloomberg Money Stuff]

---

PREDICTION MARKETS: GROWTH VS. GOVERNANCE

• Nevada Issues TRO Against Polymarket—Jurisdiction Showdown. Just in time for the Super Bowl, Nevada regulators obtained a temporary restraining order against Polymarket over unlicensed derivatives activity. The move sets up a battle with the CFTC over who governs prediction market operators—states or feds? [CoinTelegraph]
• Coinbase Prediction Markets Clash With Nevada Regulator. Coinbase’s newly launched prediction market product drew immediate regulatory pushback from Nevada, which claims jurisdiction over derivatives trading. Expect litigation over regulatory turf within Q1. [The Block]
• Kalshi’s Surveillance Expansion Raises Insider Trading Red Flags. Prediction market platform Kalshi expanded real-time market surveillance tools and partnered with Solidus Labs and Wharton’s Daniel Taylor for insider trading detection. But as Matt Levine notes: prediction markets present a unique insider trading problem with unlimited market subjects and limited regulatory surface area. Levine comments that the “first 20 people arrested for prediction market insider trading will be very surprised.” [Bloomberg Money Stuff]

---

Questions? Insights? Your feedback shapes the docket. Reply or reach out.

—

Block & Order Weekly Docket | Week of February 2–8, 2026

For legal professionals navigating crypto, AI, and emerging technology law. The materials in this article are for informational purposes only and are not legal advice. Do not act upon this information without first seeking advice from an attorney licensed in your jurisdiction.

#CryptoLaw #AIRegulation #BlockchainPolicy #LegalTech #Web3 #DigitalAssets #CryptoPolicy