Game Over – Insert Coin | Gemini 3 Pro Nano Banana 2

By: Moish Peltz

I hope all of my friends are safe in the middle east. This week brought a wave of regulatory action on stablecoins, a major courtroom loss for Binance, and growing signs that AI is forcing the legal profession to confront new questions about liability, privilege, and fairness. Meanwhile, prediction markets are testing the boundaries of morality.

In this issue:

• 🎮 NY AG sues Valve over loot boxes (three years too late?)
• 🏦 OCC drops landmark stablecoin rules as the GENIUS Act takes shape
• ⚖️ Binance can’t escape U.S. courts — arbitration bid blocked
• 🤖 AI meets the courtroom: privilege risks, liability frameworks, and AI-assisted arbitration
• 🎰 Prediction markets face state pushback and insider trading crackdowns
• 🚔 $580M seizure and a $328M Ponzi charge headline crypto enforcement

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1. 🎮 The Hot Take: NY AG vs. Valve

• New York AG sues Valve for loot box gambling — three years after entering tolling agreements. AG Letitia James filed suit against Valve (Counter-Strike, Steam) for allegedly promoting illegal gambling through loot boxes, targeting a $4.3B virtual skins market and accusing the company of addicting children to slot-machine-style mechanics. The complaint itself reveals the wrinkle: the parties had been under tolling agreements continuously since April 5, 2023 (meaning the parties have been negotiating for nearly three years (before the AG filed suit just weeks after those agreements lapsed on February 6, 2026). (Complaint) (Reuters)
• 🖊️ Editor’s Note: This one is hard to take seriously. If loot boxes were causing real, ongoing harm to children, the time to act was 2023 (or perhaps during the 2021-2022 NFT craze) not after three-plus years of tolling. Filing the day the agreements lapse looks less like consumer protection and more like a negotiation that broke down, or worse, politically motivated. The AG tacking on commentary about Valve’s “violent games” fueling gun violence only adds to the impression that this is political posturing dressed up as enforcement.

2. Stablecoin Regulation Enters a New Phase

• OCC’s GENIUS Act proposal could reshape who issues stablecoins (and how). The Office of the Comptroller of the Currency unveiled a landmark rule proposal to implement the GENIUS Act, opening public comment on federal stablecoin oversight. This is the most concrete step yet toward a national stablecoin framework. (The Block) (Law360). Further, stablecoin yield may be off the table under new federal restrictions. The proposal seeks to kill branded stablecoin-as-a-service platforms to “reduce the probability of deposit flight.” (Bloomberg)
• SEC gives broker-dealers a friendlier capital treatment for stablecoins. The SEC now allows broker-dealers to apply just a 2% “haircut” to stablecoins on their balance sheets — a signal that regulators view certain stablecoins as relatively low-risk assets. (CoinTelegraph)

3. Crypto Litigation & Enforcement

• Binance can’t force U.S. investors into arbitration A New York federal judge blocked Binance’s attempt to compel arbitration in a proposed securities class action, finding Binance’s 2019 amendment to its terms of service was not enforceable, keeping the door open for U.S. plaintiffs to pursue claims in court. (CoinTelegraph) (Law360) (Court Opinion & Order)
• U.S. strike force seizes $580M in crypto linked to Chinese crime networks. A coordinated federal operation froze and seized over half a billion dollars in digital assets tied to illicit Chinese operations — one of the largest crypto enforcement actions to date. (The Block)
• Florida man charged with running a $328M crypto Ponzi scheme. Another day, another massive crypto fraud allegation — this time involving a Florida-based operator accused of running a classic Ponzi using investor funds. (CoinDesk)
• Jane Street faces insider trading claims tied to Terraform’s collapse. New allegations suggest Jane Street’s trading activity may have accelerated Terra/Luna’s 2022 death spiral, raising questions about market maker liability in crypto markets. (CoinDesk)

4. AI & the Law: Liability, Privilege, and Fairness

• The Claude-Native Law Firm I enjoyed Zach Shapiro’s article on how he uses AI in his legal practice (as the title predicts, relying primarily on Claude). While I also enjoy using Claude, I also really like Harvey’s feature set for my legal practice (which wraps Opus 4.6, plus some other stuff). I plan on discussing this further because I think there’s a lot of misunderstanding in the market. (Zach Shapiro on X)
• U.S. liability law is becoming AI’s de facto regulator. With Congress stalled on comprehensive AI legislation, tort law and product liability are stepping in as the primary check on AI deployment — a trend every in-house team should be watching. (Law360)
• New ruling flags privilege risks when lawyers use AI to draft documents. A court ruling is guiding attorneys on how AI-generated documents may affect attorney-client privilege — raising real stakes for firms integrating generative AI into workflows. (Law360)
• AI-assisted arbitration needs guardrails before it goes mainstream. As AI tools creep into arbitration proceedings, commentators warn that without safeguards, efficiency gains could come at the cost of due process. (Law360)
• AI agents are getting their own crypto wallets — and that creates new legal questions. Electric Capital argues that autonomous AI agents transacting on-chain will force regulators to rethink identity, liability, and custody frameworks. (CoinDesk)
• How fast will AI agents rip through the economy? Ezra Klein explores the macroeconomic implications of autonomous AI agents, asking whether the economy can adapt fast enough to absorb a productivity shock of this magnitude. (NYT)

5. Prediction Markets Under Fire

• Coinbase says states are “gaslighting” on prediction market regulation. Coinbase’s head of litigation accused state regulators of inconsistent enforcement, arguing that prediction markets are being unfairly targeted despite operating in legal gray zones. (CoinDesk)
• Polymarket defends war betting as “invaluable” — critics disagree. The prediction platform is standing by its decision to let users bet on armed conflict, calling it a public information good. The ethics debate is far from settled. (The Verge)
• Kalshi fines MrBeast editor and politician for insider trading on its platform. In a first-of-its-kind enforcement action, the prediction market platform sanctioned users for trading on non-public information — signaling that these platforms are taking self-regulation seriously. (The Verge)
• CFTC issues formal enforcement advisory on prediction market insider trading. Following the Kalshi cases, the CFTC’s Division of Enforcement issued an advisory flagging that trading on non-public information in event contracts may violate the Commodity Exchange Act — giving the Kalshi self-enforcement story a federal regulatory backbone. (CFTC)

6. Crypto Policy & Market Moves

• Blockchain Association pitches comprehensive crypto tax plan to Congress. BA presented a framework for how digital assets should be taxed, aiming to influence upcoming legislative sessions. (Blockchain Association’s Principles on Digital Asset Tax Policy)
• SEC greenlights 24/7 trading of tokenized mutual funds. WisdomTree received exemptive relief to offer round-the-clock trading of a regulated tokenized fund — a milestone for tokenized securities. (The Block)
• Magic Eden shuttering Bitcoin and EVM marketplaces. The NFT platform is sunsetting its multi-chain wallet and closing non-Solana marketplaces — a sign of continued NFT market slumber. (Blockspace)
• Ransomware attacks surged 50% in 2025, but victims are paying less. Chainalysis data shows attacks are up sharply, yet ransom payments declined — suggesting better preparedness or a harder line from victims. (Chainalysis Crypto Ransomware 2026 Report)
• South Korea’s tax office leaked a wallet seed phrase and lost $4.8M. In a spectacular operational failure, Korean authorities publicly exposed the seed phrase for a seized crypto wallet, and someone promptly drained it. (CoinTelegraph) (Web3 Is Going Great)

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That’s the week. Loot boxes are gambling, stablecoins are getting a rulebook, and AI is lawyering up faster than the lawyers can keep up. Stay sharp out there.

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

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Block & Order Weekly Docket | Week of February 23 – March 1, 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.

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