The Impact of the Corporate Transparency Act on Businesses

By: Ivana de la Rocha*

PDF Available

Privately-held companies in the U.S. have long enjoyed a great degree of privacy concerning their internal activities, especially as it pertains to the identities of their owners. However, the Corporate Transparency Act (CTA) will change this upon its implementation. The CTA, also known as the Counter Terrorism and Illicit Finance Act, is a federal law passed by Congress that will become effective on January 1, 2024.[1] The Act is an expansion of anti-money laundering laws and is intended to aid in the prevention of money laundering, corruption, terrorist financing, tax fraud, and concealment of illicit money through the use of shell companies in the U.S.[2] Privately-owned companies will be required to report to the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) information concerning the identity of their beneficial owners.[3] Prior to the CTA, there were no uniform beneficial ownership information (BOI) reporting requirements in the U.S., which hampered the abilities of law enforcement to investigate entities that were being used for felonious purposes.[4]

The scope of the CTA is intentionally broad. An entity is subject to the reporting requirement if it qualifies as a reporting company.[5] A reporting company can be either a domestic or foreign company. A domestic reporting company is defined as a corporation, limited liability company (LLC), or any entity created by filing with a Secretary of State or equivalent official.[6] On the other hand, foreign reporting companies are defined as any entity that is a corporation, LLC, or other entity formed under the law of a foreign country that is registered to do business in any state by filing with a Secretary of State or equivalent official.[7] However, the CTA provides twenty-three specific exemptions to the reporting requirement. The most notable of these exemptions includes large operating companies. A large operating company is defined as any company that meets all the following requirements: employs more than twenty full-time employees; demonstrates more than $5 million in annual revenue; and has an operating presence in the U.S.[8]

A reporting company is required to report BOI to FinCEN for each of its beneficial owners and company applicants. A beneficial owner is defined as someone who either owns or controls twenty-five percent or more of the ownership interests of the company or who directly or indirectly exercises substantial control over the company.[9] For each beneficial owner, the reporting company must report the following BOI to FinCEN: full legal name, date of birth, residential address, and identifying number (i.e., passport number or unexpired driver’s license number) together with a copy of the document.[10] If there are any changes in the BOI, or identities of the beneficial owners, then the reporting company must file an updated report with FinCEN within thirty days of the change.[11] Additionally, a company applicant is anyone who directly files the documents that create the company and they must also have their information reported to FinCEN.[12]

The information reported to FinCEN will not be made public and will not be subject to disclosure.[13] FinCEN will be required to keep BOI secure in a restricted-access database. However, the following government agencies will have access to BOI: federal agencies engaged in national security; the Department of Treasury in connection with its official duties; and state and local law enforcement agencies in connection with investigations.[14] In addition, financial institutions may request certain BOI to assist in anti-money laundering compliance activities with the reporting company’s consent.[15]

The CTA will have a significant impact on businesses in the U.S. Companies will need to take the time to accurately report their beneficial owners and update the information when necessary. This will require additional resources and compliance efforts that may be costly for some businesses. In particular, small businesses are most likely to bear the brunt of the Act’s implementation. Small businesses will face additional costs in terms of filing fees and increased paperwork. They must also make sure their beneficial ownership information is accurate and up to date, which can be time consuming and difficult especially without the necessary resources or staff to comply with all the requirements. However, as the first federal law regarding disclosure of ownership of private companies, the CTA is nonetheless a significant step forward in combating money laundering, terrorist financing, and other illicit activities. While the Act may place additional burdens on businesses, the benefits of improved security and transparency likely outweigh the imposed costs.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59,498 (Sept. 30, 2022) (to be codified at 31 C.F.R. § 1010.380).

[2] Matthew Erskine, Get Ready for the Corporate Transparency Act, Forbes (Jan. 17, 2023, 11:14 AM),

[3] Id.

[4] Beneficial Ownership Information Reporting Rule Fact Sheet, Fin. Crimes Enf’t Network (Sept. 29, 2022),

[5] Id. 

[6] Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. at 59,537.

[7] Id. at 59,538.

[8] Id. at 59,542.

[9] Beneficial Ownership Information Reporting Rule Fact Sheetsupra note 4.

[10] Id. 

[11] Id.

[12] Id. 

[13] Fact Sheet: Beneficial Ownership Information Access and Safeguards Notice of Proposed Rulemaking (NPRM), Fin. Crimes Enf’t Network (Dec. 15, 2022), 

[14] Id.

[15] Id.

Less Food and Higher Costs: Corporations Are Behind the Rising Costs at Grocery Stores

By: Paul A. Abdou*

PDF Available

With egg prices increasing by over 32.2 percent, there is no doubt that the American family is paying more at the grocery store than ever before.[1] More Americans are relying on food stamps and skipping meals.[2] While many solely attribute this increase to inflation, corporate greed is also to blame.[3] Food companies also fault rising food prices on “inflationary pressures” like labor costs, transportation setbacks, and higher livestock feed prices.[4] Yet, inflation has surpassed the price of wages, and the price of agricultural products has decreased.[5]

While food prices have risen, so have corporate profits, which have hit their highest level in seventy years.[6] Tyson Foods has more than doubled its profits since the first quarter of 2021, and General Mills has raised its prices five times since 2021, allowing for a ninety-seven percent increase in profits.[7]

So, if food companies have nearly increased profits by one hundred percent, why have consumer prices increased to the point where families cannot afford groceries? The reasoning starts back in the 1970s. In the 1970s, changes in antitrust legislation allowed food companies to buy their competitors, creating an “oligopolistic” market where the top four companies control forty percent or more of the market.[8] With the top four companies controlling the market, there is no competition, and the American family has no choice but to buy from them. The lack of competition and choice allows these monopolistic corporations to pass off inflation costs to the consumer while increasing food prices without consequences, known as “excuseflation.”[9]

Government intervention is the only solution to combat these monopolistic food suppliers and monstrous prices. Congress must pass legislation to curb the corporations’ greed. The House of Representatives passed the Lower Food and Fuel Costs Act, but the Act did not pass the Senate.[10] Enacting similar legislation that prevents the four major food corporations from implementing “excuseflation” would lower food costs. Another solution to prevent corporate greed is price control.[11] However, it is essential to note that such price control must be temporary while Congress focuses on legislation to break up the four major food corporations. In the 1970s, President Richard Nixon’s first use of price control slowed inflation and food price increase; however, constant use of price control and freezing reverted to high inflation and elevated food prices.[12] Therefore, price control must be temporary and limited. 

To decrease food prices, there must be government action. The consumer cannot fight against the four major food corporations alone; American families need to eat. But if the government does not intervene quickly, more and more Americans will have to choose between putting food on the table or keeping the lights on.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] U.S. Dep’t of Agric., Food Prices and Spending, USDA Econ. Rsch. Serv. (Feb. 23, 2023),

[2] Whizy Kim, Prices at the Supermarket Keep Rising. So Do Corporate Profits., Vox (Mar. 17, 2023, 6:00 AM), 

[3] Inflation has increased to a staggering 8.3 percent in 2022 compared to 2.3 percent in 2011. Id.Monthly 12-Month Inflation Rate in the United States from February 2020 to February 2023, Statista (Mar. 16, 2023),

[4] Kim, supra note 2. 

[5] Id.

[6] Id.

[7] Tyson Foods is the largest meat producer in the United States; General Mills owns well-known brands such as Annie’s, Betty Crocker, Chex, and Bisquick. Id.

[8] Claire Kelloway, U.S. Food Prices Are Up. Are the Food Corporations to Blame for Taking Advantage?, Time (Jan. 14, 2022, 7:00 AM), 

[9] Id.; see also Tracy Alloway & Joe Weisenthal, How ‘Excuseflation’ Is Keeping Prices – and Corporate Profits – High, Bloomberg (Mar. 9, 2023, 5:30 AM),

[10] Brian Zahn, DeLauro: Food Cost Crisis Requires Ending Corporate Greed, Increasing Resources, New Haven Register(Jan. 19, 2023),

[11] Charles Riley, Should the Government Control the Price of Food and Gas?, CNN Bus. (Jan. 18, 2022, 7:01 AM), 

[12] Id. 

Winds of Change: The Rise of the Chinese Yuan and Its Potential Impact on the Global Financial Market

By Zisheng Xing*

PDF Available

Ever since the Bretton Woods Agreement established the international monetary system after World War II, the U.S. dollar has been the world’s primary reserve and transactional currency for international trade.[1] International Monetary Fund statistics show that U.S. dollars account for sixty percent of the world’s foreign exchange reserves today.[2] Nearly fifty percent of the world’s international loans and global debt securities are denominated in dollars, and in foreign exchange markets, dollars are involved in almost ninety percent of all currency trading.[3] This dominant position grants the United States financial power in the global market and improves the effectiveness of U.S. economic sanctions against those who violate human rights, as well as those who disrupt world peace.[4]

However, the winds of change are felt through the air, as China and France conducted the first liquefied natural gas trade using the e-CNY, China’s digital fiat, on March 29, 2023.[5] This marks a significant first step for the rise of the Chinese yuan as a global transactional and reserve currency and raises concerns that these winds may evolve into a raging storm that will topple dollar supremacy in global finance.[6] But will these winds evolve into the furious tempest that scholars fear? Or will they die down into a meek spring breeze? Likely neither.

For the foreseeable future, the yuan is unlikely to seriously threaten the supremacy of the dollar simply because, historically, the global market’s acceptance of a dominant international currency has been very slow. It had taken the United States several decades after it had surpassed the British Empire as the world’s biggest economy to replace the pound sterling with the dollar as the dominant reserve currency, and currently China’s gross domestic product is only two-thirds of that of the United States.[7] 

In addition, the success of the United States in the global financial market is the result of a combination of foreign policy, historical developments and a liberal market system that China is either unwilling to or yet unable to replicate. The current dollar dominance is sustained on several key factors: (1) the stability of U.S. monetary and financial policies, (2) the relative lack of U.S. barriers to cross-border capital flows, (3) the depth and liquidity of globally accessible markets for U.S. treasuries and other U.S. financial instruments, and (4) the reliance of global financial market participants on the U.S. rule of law.[8] By contrast, the lack of transparency and predictability on the role of the government in the market and the Chinese government’s own caution against liberalizing the country’s capital accounts have caused investors to be hesitant to settle transactions in yuan.[9] In a nutshell, the yuan will not be able to topple the U.S. dollar without significant reforms in market freedom and governmental transparency in China.

That being said, the yuan may indeed evolve into a local powerhouse firmly rooted in a regional economy of developing and sanctioned countries. A yuan-based regional economy may allow China to step in as a substitute source of financing to sanctioned countries such as Iran and Russia and facilitate transactions between these countries through the Cross-Border Interbank Payment System (“CIPS”), the People’s Bank of China’s (“PBoC”) own cross-border settlement system.[10] Recently, the yuan had already replaced the dollar as the most traded currency in Russia since the beginning of the Russo-Ukraine War in 2022.[11]

Countries that extensively engage with China in business may also contemplate a switch to the yuan as a transactional currency. Since the beginning of the “Belt and Road” Initiative (“BRI”) in 2013, it is estimated that China has invested a total of $932 billion on developmental projects across the world, mostly in developing countries, a figure projected to rise to $1.2-1.3 trillion by 2027.[12] Countries heavily involved in trading with China are incentivized to transact directly in yuan, saving the step of converting to the dollar. Pakistan had already begun replacing the dollar with the yuan for transactions with China, and recently, Brazil and China had signed a deal allowing the two countries to exchange goods using the yuan.[13]  

Recent developments show a trend towards the gradual de-dollarization of the world and a slow move away from a post-World War II U.S. financial dominance to a more diversified world economy. While there are concerns about the increasing impact of authoritarianism in the wake of China’s rise in financial influence, such developments also provide the opportunity for self-sufficient regional economies more responsive to local financial needs.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Kimberly Amadeo, Bretton Woods System and 1944 Agreement, The Balance (May 26, 2022),

[2] Rebecca M. Nelson & Martin A. Weiss, Cong. Rsch. Serv., IF11707, The U.S. Dollar as the World’s Dominant Reserve Currency (2022).

[3] Id.

[4] See, e.g., Infographic – Impact of Sanctions on the Russian Economy, European Council (Mar. 17, 2023), (Since a new round of sanctions were imposed on Russia after the Russo-Ukraine War began in 2022, it is estimated that Russia’s gross domestic product (GDP) dropped by 2.2% to 3.9% and is expected to decline by 3.3% to 5.6% in 2023. Russia’s inflation in 2022 reached almost 14%).

[5] Nicholas Say, China & France Complete First LNG Gas Trade Using Chinese CBDC, Blockonomi (Mar. 31, 2023),

[6] Sergio Goschenko, China Makes Advances in Ditching the US Dollar for Settlements — Inks Deal with Brazil and Completes First Yuan LNG Purchase, (Mar. 31, 2023),; Andrew Ackerman, U.S. Lawmakers Look to Digital Dollar to Compete with China, Wall St. J. (Aug. 8, 2022, 7:00 AM),

[7] See Cong. Rsch. Serv., supra note 2; Jianguo Xu, Developments and Implications of Central Bank Digital Currency: The Case of China e-CNY, 17 Asian Econ. Pol’y Rev. 235, 248 (2022).

[8] Darrell Duffie et al., Digital Currencies: The US, China, and the World at a Crossroads, 5 (Darrel Duffie & Elizabeth Economy eds., Hoover Inst. Press 2022).

[9] Cong. Rsch. Serv., supra note 2. 

[10] See Emily Jin, Why China’s CIPS Matters (and Not for the Reasons You Think), Lawfare: China (April 5, 2022, 8:01 AM),

[11] China’s Yuan Replaces Dollar as Most Traded Currency in Russia, Bloomberg (Apr. 3, 2023, 5:50 AM),

[12] Nedopil Christopher, China Belt and Road Initiative (BRI) Investment Report H1 2022, Green Finance & Development Center, FISF Fudan University 5 (2022); Inside China’s Plan to Create a Modern Silk Road, Morgan Stanley (Mar. 14. 2018),

[13] Muhammad Tayyab Safdar & Joshua Zabin, Pakistan and the Belt and Road: New Horizons for a Globalized RMB, The Diplomat (Sept. 4, 2020),; Goschenko, supra note 6.

True Hollywood Story: Investors Sue Celebrities for Bad Investment Advice

By Roshin Bhangoo*

PDF Available

The FTX crypto platform fiasco is a prime example of how individuals can exploit new, rapidly expanding (and not widely understood) securities in the financial sector. FTX’s is perhaps the biggest cautionary tale in crypto trading, and its CEO, Samuel Bankman-Fried, has become a household name synonymous with Wall-Street scams. However, FTX did not rise to prominence on its own. Household, A-list celebrities promoted the platform and appeared in ads to skyrocket FTX to the hottest investment on Wall Street. Names include: Tom Brady & Giselle Bundchen, Larry David, Shaquille O’Neal, Steph Curry, Kevin O’Leary, and more.[1] After the FTX scam was exposed, investors filed a class action lawsuit against FTX’s celebrity endorsers alleging the celebrities misled unsophisticated investors to invest in the “Ponzi scheme” by not properly disclosing their financial relationship to the company.[2] But should celebrities be responsible for the investment decisions of average consumers? A district court in Florida will attempt to answer this question and set a precedent for celebrity involvement in crypto companies in the future.

This is not the first instance where celebrity involvement in crypto-related companies has been called into question. Last year, billionaire Mark Cuban was named in a class action lawsuit for his promotion of a crypto platform that eventually filed for bankruptcy.[3] Like in the FTX class action, the lawsuit argued Cuban failed to disclose his compensation for promoting the platform and that the accounts sold by the platform are securities.[4] In another instance, reality TV superstar Kim Kardashian paid $1.26 million to the SEC for failing to disclose that she was paid $250,000 to publish an Instagram post promoting an Ethereum-based token.[5] SEC Chair Gary Gensler stated, “[W]hen celebrities . . . endorse investment opportunities, including crypto asset securities, it doesn’t mean that those investment products are right for all investors . . . . Ms. Kardashian’s case also serves as a reminder to celebrities . . . that the law requires them to disclose to the public when and how much they are paid to promote investing in securities.”[6] Because Kardashian settled the case, the question of whether cryptocurrencies are securities was left open.

The FTX class action lawsuit hinges on whether the FTX yield-bearing accounts which investors bought are securities.[7] If they are, the lawsuit alleges the named celebrities violated both Florida’s Securities and Investor Protection Act and Deceptive and Unfair Trade Practices Act by failing to disclose compensation for their promotion of the platform. To determine whether the crypto accounts are securities, the court will likely apply the Howey Test.[8] The test is simple: “whether the scheme involves an investment of money in a common enterprise to come solely from the efforts of others.”[9] Its application to this case is cloudy. The SEC believes cryptocurrency passes the test and is a security, but it is also true that there isn’t a national exchange on which crypto is traded, nor does it seem likely profits are made by the sole efforts of others. Regardless of how the Florida District Court finds on this issue, the question remains: should celebrities be responsible for the investment decisions of average consumers?

Most investors have been told to “invest at your own risk” at some point. It is common knowledge celebrities are paid for appearing in commercials and endorsing products. Would being informed of the compensation a celebrity received for endorsing a relatively new, extremely volatile, and not easily understood investment vehicle really make someone think twice before putting their money down? It may be that “unsophisticated investors” who have lost money in these sham companies are looking for someone to blame without taking responsibility for their own decisions. On the other hand, celebrities who have made fortunes selling products to their fans (directly or indirectly) should have a duty to not blindly promote something which may cause those fans to lose their shirts. The FTX case will show how this issue is legally decided and will hopefully encourage celebrities and investors alike to take responsibility for their decisions and to do a little more homework.

* J.D. Candidate, Class of 2023, Sandra Day O’Connor College of Law at Arizona State University.

[1] Brian Contreras, Have Celebrities Learned Their Lesson from the FTX Debacle?, L.A. TIMES (Jan. 18, 2023),

[2] Zoe Guy, Celebrity Crypto Ambassadors Sued over FTX Crash, VULTURE (Nov. 17, 2022),

[3] Anita Ramaswamy, Mark Cuban, Mavericks in Hot Water over Voyager ‘Ponzi Scheme, TECHCRUNCH (Aug. 11, 2022),

[4] Id.

[5] Press Release, U.S. Sec. and Exch. Comm’n, SEC Charges Kim Kardashian for Unlawfully Touting Crypto Security (Oct. 3, 2022),

[6] Id.

[7] Michael A. Mora, Miami Judge to Weigh Whether Crypto Platform FTX’s Investment Product Is a Security, LAW.COM (Jan. 20, 2023),

[8] See SEC v. WJ Howey Co., 328 U.S. 293 (1946).

[9] Id. at 301.

Sunny Dispositions: Solar Panel Installations and Effects on the Arizona Real Estate Market

By Kelsey Fischer*

PDF Available

Every homeowner can attest that a highly determined sales group will come knocking at your door several times a week. This determined sales group is the solar energy business group, which sells solar panel units and the installation of such units. There has been a clear rise in interest in using renewable energy to reduce America’s carbon emissions. Renewable energies (solar, wind, geothermal, water, etc.) are both carbon-free and generate electricity without burning fossil fuels. Solar panels have become increasingly popular for numerous reasons.

The increase in solar panels as an energy source is primarily due to the fact that climate change poses a severe threat to the earth’s population.[1] Secondarily, the amount of fossil fuel energy available has fallen, so there has been a need for other energy sources. Lastly, solar panels have become increasingly desired due to government incentives.

Solar energy has been able to grow fast and is now becoming cost-competitive with fossil fuels.[2] Originally, most U.S. solar power came from utility-scale solar. However, more recently, residential- and commercial-scale solar (also known as distributed solar) has increased.[3] This increase in distributed solar is partially due to the fact that utility-scale solar requires a lot of land (which harms wildlife), a lot of financial resources up front, and a need for high-voltage transmission lines (which can lead to wildfires).[4] However, distributed solar reduces the concerns around land capacity needed for energy outcomes, decreases the financial up-front cost, and nearly eliminates all other social concerns as distributed solar does not require costly and dangerous transmission lines.

Both the federal and state governments have created several incentives due to the clear benefits of solar power, and specifically for distributed solar. In Arizona, installing solar panels can earn property owners both a federal and state tax credit. The federal government allows property owners to deduct twenty-six percent of the cost of installing a solar energy system from their federal taxes.[5] Additionally, Arizona residents can claim credit through the Renewable Energy Production Tax Credit. After installation, Arizona homeowners when filing personal income tax can get a reimbursement of twenty-five percent of the cost of their solar panels, up to $1,000.[6]

These tax credits are a positive reinforcement for homeowners to buy into solar. However, there are also negative consequences for those that do not buy into solar. The main negative consequence is that electric companies in Arizona are increasing their prices. In 2020, the U.S. Energy Information Administration placed Arizona as having the fourth-highest electricity prices in the western United States.[7] However, from 2020 to 2021, Arizona’s average electricity price increased by 6.0%.[8] There was another increase in 2022, and in 2023, SRP announced an additional 4.7% increase.[9]

These negative reinforcements, in combination with the positive incentives from the government, are further pushing property owners into solar, as solar allows owners to reduce their utility purchases and possibly even sell back excess energy to utility companies. There are many reasons to purchase solar, with the core ones being to save the environment and to save money.

The rise of solar panels throughout Arizona raises the question of the overall effects on the real estate market post-installation. There are several different things to consider. First, are developers or homeowners are taking on the costs? Second, are the systems leased or purchased? Due to increased utility prices, real estate developers may choose to implement solar during construction. This means that to accurately sell their properties to consumers, developers need to stay informed about solar technology and the products it requires.[10] Developers need to be able to explain how solar is a benefit to purchasers and that there is value in the property as it is cost-efficient and can save money on future utility bills.

When the purchaser is an individual property owner, the effects and costs are different. This is partially because owners can purchase or lease solar systems. When owners purchase solar, they have the possibility to save quite a bit of money. While there are costs on the front end (the costs of installation), there is arguably more benefit on the back end in the form of utility cost savings and increased home values.[11] However, distributed solar is still relatively new, and therefore, an increase in home value is detrimental to real estate agencies being informed on all things solar. Additionally, homebuyers are only informed of these benefits if agents inform them. As for statistics on the actual increase in home value from a solar installation, researchers found in 2017 that “solar panels owned by a home seller add 4 to 6 percent to the value of a home sale, often less than the cost of the panels.”[12]

If homeowners do not purchase solar, they can instead lease panels from third-party companies.[13] When homeowners lease panels, they are able to save on utilities, and one would assume there would be an increase in home value given the commodity of having solar. However, leased solar panels present some complexities in the sale of the house.[14] Leasing solar panels add an additional step in which the solar panel lease has to be signed over to the new homeowner.[15] Adding an additional lease on top of purchasing a home scares home sellers who do not know that the process is relatively simple and painless. In 2017, due to the perceived complexity of solar panel leases, houses that had leased solar panels actually sold for less than those without solar.[16]

Clearly there are strong advantages to solar—it can not only save the environment but the wallets of Arizonians. However, with more houses becoming a part of the solar movement, whether their panels are purchased or leased, there needs to be an increase in education around solar power. There seems to be a lack of information and training in the real estate market on the effects solar can have. Not enough real estate agents and appraisers understand the solar industry.[17] If they do not understand the solar industry, the true value of a house with solar, and the value of solar itself, cannot be calculated, resulting in lost revenues for solar companies. The Arizona real estate industry faces rising prices and a steadily increasing population. If the real estate industry wants to thrive in the face of inflation and population increase, there needs to be an educational movement about the reality of solar.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Camilo Mora et al., Broad Threat to Humanity from Cumulative Climate Hazards Intensified by Greenhouse Gas Emissions, 8 NATURE CLIMATE CHANGE 1062, 1062 (2018).


[3] Id.

[4] Id.

[5] 26 U.S.C. § 48.

[6] Income Tax Credit for Residential Solar Devices, ARIZ. DEP’T REVENUE, (Mar. 16, 2022).

[7] Jennifer Pullen, Soaring Prices: What Does that Mean for Electricity Costs, MAKING ACTION POSSIBLE (Jan. 31, 2022),

[8] Id.

[9] Dani Birzer, Electric Bill Going Up for SRP Customers, AZ FAM. (Sept. 12, 2022),

[10] Solar Energy Tech. Off.,Solar Energy Guide for Homebuilders, U.S. DEP’T ENERGY,

[11] Jacob Marsh, Zero-Down Solar Financing Options: Which Is Best for You?, ENERGYSAGE (Sept. 1, 2020),

[12] Ryan Randazzo, Solar Can Raise Home Values—If You Own the System, AZ CENTRAL (July 17, 2015),

[13] Brian Palumbo, Comment, Looking in the Side-View Mirror: Assessing the Current and Future State of the Solar Energy Industry as It Reaches the Mainstream, 41 COLUM. J. ENV’T L. 183, 192 (2016).

[14] Solar Energy Tech. Off., Homeowner’s Guide to Going Solar, U.S. DEP’T ENERGY,

[15] Randazzo, supra note 12.

[16] Id.

[17] Id.

Dog Eat Dog World: The First Amendment and Trademark Implications of VIP Products v. Jack Daniel’s

By Matthew Holt*

PDF Available

For over fifteen years, VIP Products (“VIP”) has sold rubber dog toys resembling an assortment of well-known beverage bottles and cans. These toys are known as the “Silly Squeakers” collection, and in July 2013, VIP released the Bad Spaniels dog toy.[1] This toy was designed to resemble the bottle of the classic Jack Daniel’s Old No. 7 whiskey bottle. The Bad Spaniels toy features the image of a spaniel over the words “Bad Spaniel” and also has the words “The Old No. 2 On Your Tennessee Carpet” where the Jack Daniel’s bottle has “Old No. 7 Brand Sour Mash Whiskey.”[2] Additionally the Bad Spaniels toy, instead of Jack Daniel’s labeling of “40% ALC BY VOL.” and “(80 PROOF),” has “43% POO BY VOL.” and “100% SMELLY” on the rubber bottle-shaped toy.[3] Over the past nine years, VIP and Jack Daniel’s Products, Inc. (“JDPI”) have been locked in a legal battle in which JDPI has alleged that VIP is infringing upon its trademark rights and has diluted its mark via tarnishment.

The Federal District Court of Arizona ruled on summary judgment that VIP was infringing on the Jack Daniel’s trademark using a likelihood of confusion test from Kendall-Jackson Winery, Ltd. v. E. & J. Gallo Winery, 150 F.3d 1042, 1046- 47 (9th Cir. 1998). This ruling enjoined VIP from “sourcing, manufacturing, advertising, promoting, displaying, shipping, importing, offering for sale, selling or distributing the Bad Spaniels dog toy.”[4] The Ninth Circuit then took the case on appeal and ruled in favor of VIP on the matters of trademark infringement and dilution by vacating and remanding the case regarding the trademark infringement ruling and reversing on the issue of dilution.[5] On March 22, 2023 the Supreme Court heard oral arguments in the matter of Jack Daniel’s Properties, Inc. v. VIP Products LLC. The issues that the Court will decide are “(1) Whether humorous use of another’s trademark as one’s own on a commercial product is subject to the Lanham Act’s traditional likelihood-of-confusion analysis, 15 U.S.C. § 1125(a)(1), or instead receives heightened First Amendment protection from trademark- infringement claims; and (2) whether humorous use of another’s mark as one’s own on a commercial product is “noncommercial” and thus bars as a matter of law a claim of dilution by tarnishment under the Trademark Dilution Revision Act, 15 U.S.C. § 1125(c)(3)(C).”[6]

This case is very important due to the future implications for First Amendment rights regarding parodies of trademarks. The case has evoked such passionate thoughts on both sides that there have been thirty amicus briefs filed from parties such as the Solicitor General, the International Trademark Association, law professors and other legal scholars, multiple global companies, and many others.[7] The reason so many parties have an interest in how this plays out comes down to what it could mean for companies and parody artists alike. Humorous parody is a form of expression that has been protected from infringement or dilution claims as “expressive” works or “noncommercial speech,” even when used on products that are sold.[8] This case could potentially put a damper on artists’ abilities to create parodies for products. However, an argument could be made that a brand’s image is also important, and works of parody that dilute the value of the brand or cause confusion to the source of the product could be a problem for companies.

Courts test trademark infringement by evaluating the potential infringement under a likelihood of confusion analysis.[9] However, since the ruling in the Rogers case, the Ninth Circuit has instituted a separate test for matters of parody. This is a two-prong test in which the court must decide whether the mark is either “not artistically relevant to the underlying work” or “explicitly misleads consumers as the source or content of the work.”[10] JDPI contends that this test should not apply here because the Lanham Act never establishes a “heightened standard” for expressive or humorous works.[11] JDPI also brings up that multiple circuits have either not adopted or have been unable to agree on when Rogers applies.[12] Its argument here carries some weight in that there does not seem to be a standard application for this test, nor is there a standard scope of items or products to which it applies.

Within the thirty amici briefs, there are varying opinions to what the test’s scope should be. Some argue it should only apply to book or movie titles; others argue it applies to any good that projects some kind of speech.[13] I think this plays a large part in why the Supreme Court granted certiorari, since this is an opportunity for the Court to clear up inconsistencies across the circuits. On the opposite side of JDPI’s claims, VIP brings forth arguments that the Rogers test is the appropriate measure for deciding whether infringement occurred in cases of parody and expression. VIP points to the various adoptions and refinements of the Rogers tests in some circuits to back up the notion that First Amendment expression is more important than trademark infringement when using marks expressively.[14]

As for the dilution claim, JDPI claims that pursuant to a prior Supreme Court case, Congress can “categorically prohibit trademark uses of a mark to protect the owner’s investment of ‘time, effort, and expense’ in the mark’s reputation.”[15] It claims that the dilution statute is designed to protect brands from harm coming from “incompatible associations.”[16] Here it cites the associations consumers would have between “whiskey, toys, and poop,” which JDPI argues would have a negative effect on its brand, even if the speech was positive.[17] VIP counters this by pointing out the potential damage to free speech if the court adopts JDPI’s perspective on the dilution claim. VIP discusses how a parody is specifically designed to poke fun at or disparage a brand and its reputation.[18] Furthermore, VIP points out that JDPI has given its mark meaning beyond source identification, and, pursuant to prior Ninth Circuit cases, has lost its “right to control public discourse.”[19]

Both sides present valid concerns, one worried about preserving decades of goodwill and brand building and the other wanting to protect free speech rights of parodists and society at large under the First Amendment. Ultimately, both sides present quality arguments as to why their interests should receive preferential treatment and how the precedent set could be detrimental to their industries and constitutional interpretations. Their arguments are correct in that the implications of the ruling could create new landscapes for trademark law and free speech in the world of parody. The importance of free speech protection to this iteration of the Court is an important stance for it to take, but the Court has shown unwillingness to make a decision regarding how far First Amendment protections go.[20] I am uncertain of how this case will shake out, but one thing I am sure of is that this case involving a simple dog toy will have implications for years to come and will make waves in the world of trademark law and free speech.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] VIP Prods. Ltd. Liab. Co. v. Jack Daniel’s Props., 953 F.3d 1170, 1172 (9th Cir. 2020).

[2] Silly Squeakers® Liquor Bottles: Bad Spaniels, MYDOGTOY.COM,; Old No. 7, JACK DANIEL’S,*1exn8sf*_up*MQ..&gclid=CjwKCAjwiOCgBhAgEiwAjv5whJL91_j1LAOyAkmPEetnMBZs CXq0c1WTCvVufdpFaPHos2OXFXpUnRoCAbAQAvD_BwE.

[3] Id.

[4] VIP Prods., LLC v. Jack Daniel’s Props., No. CV-14-2057-PHX-SMM, 2016 U.S. Dist. LEXIS 133387 (D. Ariz. Sept. 27, 2016).

[5] VIP Prods., 953 F.3d at 1176. See VIP Prods. LLC v. Jack Daniel’s Props., No. CV-14- 02057-PHX-SMM, 2021 U.S. Dist. LEXIS 232410 (D. Ariz. Oct. 8, 2021) (Upon remand, the District Court ruled for VIP on summary judgment regarding the trademark infringement claim after applying the standard from Rogers, as instructed by the Ninth Circuit.).

[6] Jack Daniel’s Properties, Inc. v. VIP Products LLC, SCOTUSBLOG, (last visited Mar. 22, 2023).

[7] Id.

[8] Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989); Mattel, Inc. v. MCA Records, 296 F.3d 894 (9th Cir. 2002).

[9] Lanham Act 15 U.S.C. § 1125(a)(1).

[10] Rogers, 875 F.2d at 999.

[11] Reply Brief for Petitioner at 3, Jack Daniel’s Properties, Inc. v. VIP Products LLC, No. 22- 148 (U.S. Mar. 10, 2023).

[12] Id. at 5.

[13] Id. at 7-8.

[14] MGFB Props., Inc. v. Viacom Inc.54 F.4th 670, 679 (11th Cir. 2022) (“the legislative history of the Lanham Act’s latest amendment states that the Rogers test ‘appropriately recognizes the primacy of constitutional protections for free expression.’” (quoting H.R. Rep. No. 116-645, at 20 (2020))).

[15] Reply Brief for Petitioner, supra note 11, at 21 (citing SFAA 483 US at 534-35).

[16] Id. at 20.

[17] Id.

[18] Brief of Respondent at 53, Jack Daniel’s Properties, Inc. v. VIP Products LLC, No. 22-148 (U.S. Mar. 10, 2023).

[19] Mattel Inc. v. Walking Mountain Prods., 353 F.3d at 907 (9th Cir. 2003) (quoting Mattel v. MCA at 900).

[20] Jane E. Kirtley, Mocking the Police Got an Ohio Man Arrested and the Supreme Court Won’t Define the Limits of Parody, OHIO CAP. J. (Mar. 1, 2023), See Novak v. City of Parma, 33 F.4th 296 (6th Cir. 2022).

What’s the “Sitch” On “Stitch”? Jury Says TikTok Did Not Violate the Lanham Act with Their “Stitch” Editing Feature

By Elizabeth J. Porter*

PDF Available

The seven-day trial over whether TikTok owes $116 million for trademark infringement concluded on Thursday, March 9 and the jury returned a verdict in defendant TikTok’s favor.[1] The question before the jury was whether TikTok’s use of the word “Stitch” in conjunction with a video editing feature on the social media platform infringes on the mark “Stitch Editing” owned by a boutique video editing house.[2]

TikTok started marketing an editing feature in 2020 that allows users to splice the first few seconds of other videos onto the beginning of their own videos, which they called “Stitch.”[3] The app automatically includes “#stitch” with every video posted using the feature.

Stitch Editing Ltd. filed suit against TikTok Inc. and its China-based parent company, ByteDance Ltd., alleging that TikTok marketed its program using a font “that mimics the same way the Stitch mark is used in the marketplace.”[4] Stitch Editing has had a registered trademark on the phrase “Stitch Editing” since 2015, according to the U.S. Patent and Trademark Office (“USPTO”).[5] The registration covers editing of “music, television programs, films, commercials, internet videos, and video programs.”[6] While Stitch Editing never registered a trademark for the word “Stitch” alone, it asserts common law rights because it is often referred to by the one word and has been using it commercially.[7]

Throughout the complaint, Stitch Editing refers to itself as simply “Stitch”, further bolstering its common law claims to the word.[8] It also pointed to evidence of use of the word “Stitch” on its websites,[9] in credits, and on social media. Specifically, in a music video it edited featuring Beyonce, which has over 400 million views on YouTube, the company is credited as “Stitch.”[10]

TikTok argued that the word “Stitch” is generic in connection with video editing and thus is not protectable under trademark law.[11]

The lawsuit demands an injunction against TikTok using the term “Stitch” as well as compensation for corrective advertising, punitive damages, and reasonable royalties. The parties failed to settle, and the trial started on March 1, 2023.[12]

On cross examination, the CEO of Stitch Editing admitted that none of his clientele were actually confused about the company’s association with TikTok and that it hadn’t lost out on jobs to TikTok.[13] However, Stitch Editing had two experts who testified to finding significant confusion among customers about whether the companies were affiliated. One expert surveyed likely direct purchasers of Stitch Editing’s services—advertising and marketing professionals—and found a net confusion of 32.2 percent. The other expert focused on relevant non-purchasing consumers who watch short online videos and found a net confusion rate of 23.5 percent. The experts testified that the generally accepted minimum threshold for confusion is fifteen percent and thus, their findings support a jury finding of likelihood of confusion.[14]

TikTok rebutted this survey evidence with its own expert. Professor Itamar Simonson of Stanford University testified that only 1.3 percent of respondents thought there was a connection between the two companies. Simonson said his survey was much more reliable than those presented by the plaintiffs’ experts because those experts had respondents do a matching game which led them to make assumptions while Simonson’s survey allowed respondents to answer with their own words and ostensibly allowed less room for error.[15]

Simonson further disagreed with the plaintiffs’ application of the survey results and offered the following critique: “They said that anything under 15% confusion indicates lack of confusion. I tend to not accept that particular threshold because I believe that is determined by the so-called trier of fact, which is not me. But clearly the 1.3% is well below the 15% that [Stitch Editing’s experts] considered.”[16]

The jury agreed seemingly agreed with Simonson and returned a verdict in favor of TikTok.[17]

This case highlights the importance of protecting intellectual property rights, particularly trademarks. A trademark is a word, phrase, symbol, or design that identifies and distinguishes the source of the goods or services of one party from those of others.[18] Trademarks are crucial to building brand recognition and consumer loyalty, and they can be valuable assets for businesses.

To establish federal common law trademark rights in the United States, a business or individual must show that they have been using a particular mark in commerce to distinguish their goods or services from competitors.[19] While federal registration with the USPTO is not required to establish trademark rights, it can provide significant benefits, such as a presumption of validity and nationwide priority.[20]

The ultimate question that the jury had to decide is whether the marks are confusingly similar. Stitch Editing had the burden of proving that TikTok’s use of the word “stitch” is likely to cause confusion, mistake, and deception as to the origin, sponsorship, or approval of its products or commercial activities.[21] There is not a requirement to prove actual confusion, though it is beneficial if plaintiffs present evidence of actual confusion.[22]

This is not the first time that a social media platform has been accused of trademark infringement when rolling out a new feature. In 2020, the cable network Reelz filed a lawsuit against Instagram alleging trademark infringement over the use of the word “reels.”[23]

Though the jury did not find liability here, both this case and the Instagram case facially appear to be close calls. One can assume that both TikTok and Meta (Instagram’s parent company) have sophisticated counsel who would run a trademark search before rolling out a new product or feature. The question is, did the companies hold a good faith belief that the marks and services were sufficiently distinct to not generate a likelihood of confusion, or did they simply move forward feeling secure in their ability to defend a lawsuit? Either way, this small trend of brands battling over trademark use online has interesting implications for the future of trademark law and branding.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Craig Clough, Jury Clears TikTok in $116M TM Suit over ‘Stitch’ Edit Feature, LAW360 (Mar. 9, 2023, 4:57 PM EST),

[2] Craig Clough, TikTok Owes over $116M For Stealing ‘Stitch’ TM, Jury Told, LAW360 (Mar. 1, 2023, 11:10 PM EST),

[3] Press Release, TikTok, New on TikTok: Introducing Stitch (Sep. 3, 2020),

[4] Clough, supra note 2.

[5] STITCH EDITING, Registration No. 4742447.

[6] Id.

[7] Clough, supra note 2.

[8] Complaint at 20, Stitch Editing Ltd. v. TikTok, Inc., 21-cv-00626-CAB-BGS (S.D. Cal. Apr. 12, 2021).

[9] See STITCH EDITING, supra note 5.

[10] See Naughty Boy, Naughty Boy ft. Beyonce, Arrow Benjamin – Runnin’ (Lose it All) [Official Video], YOUTUBE (Sept. 17, 2015), (credits for Stitch Editing’s involvement say “Editor: Leo King @ Stitch”).

[11] Clough, supra note 1.

[12] Clough, supra note 2.

[13] Gina Kim, TikTok Feature Didn’t Confuse Stitch Clients, Jury Hears, LAW 360 (Mar. 2, 2023, 11:04 PM EST), _updates.

[14] Craig Clough, TikTok Jury Hears Surveys Found Confusion Over Stitch TM, LAW360 (Mar. 3, 2023, 10:50 PM EST),

[15] Craig Clough, TikTok Expert’s Survey Finds No Confusion with Stitch Editing, LAW360 (Mar. 7, 2023, 10:30 PM EST),

[16] Id.

[17] Clough, supra note 1.

[18] 1 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 3:1 (5th ed. 2022).

[19] 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 16:1 (5th ed. 2022).

[20] 6 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 32:134 (5th ed. 2022).

[21] 15 U.S.C. § 1114.

[22] 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 23:12 (5th ed. 2022).

[23] Bill Donahue, Instagram Says Nobody Will Confuse ‘Reels’ for ‘Reelz,’ LAW360 (Nov. 23, 2020, 5:54 PM EST),

TikTok Time Out: The Push to Ban the App Due to Privacy Concerns

By Melynda Meyrick*

PDF Available

The social media app known as TikTok in the United States was first developed by Chinese company ByteDance in 2016 and was officially launched worldwide in August 2018.[1] Since its release, the app has blown up, with millions of users downloading, posting, and subscribing to content on the platform. With TikTok’s increasing popularity and ability to share content worldwide in a matter of seconds, content creators have learned to monetize their creations through the app. The ability to monetize content created and shared on the app only led to an increase in daily posts and users. While sharing dance videos, memes, or making money through TikTok all appear harmless, there has been an escalation in privacy concerns about what data is being with the Chinese government by the app’s creators.

Due to such privacy concerns, in 2022 Missouri Senator Josh Hawley proposed a law to ban the downloading and use of TikTok on all federal government devices.[2] The bill successfully passed both Houses of Congress and was officially signed into law by President Biden in December 2022.[3] The new law, coined the No TikTok on Government Devices Act, has only sparked further debates revolving around TikTok’s data privacy.

In line with the No TikTok on Government Devices Act, on February 6, 2023, Texas Governor Greg Abbott revealed his plan to ban TikTok from all state-issued electronic devices that are capable of internet connectivity.[4] Governor Abbott’s plans even extended as far as prohibiting government workers from conducting any state-related activities on personal devices that had the app downloaded. Governor Abbott stated that TikTok’s privacy threats were a result of the app being “owned by a Chinese company that employs Chinese Communist Party members, harvest[ing] significant amounts of data from a user’s device, including details about a user’s internet activity.”[5] Texas is not the only state that believes Governor Abbott’s sentiments. South Dakota, Oklahoma, Florida, Tennessee, and twenty-four other states have begun moving to ban TikTok from all state-government devices as well.[6]

The majority of the leading the charge to ban TikTok are Republican states. Due to the inherent political tensions between China and the United States, questions have come to light about the true intentions the Republican states and their political leaders pushing to ban TikTok. While it is impossible to fully know the politicians, TikTok was recently forced to fire four employees that accessed the personal data of two American journalists who had written pieces on the company in an attempt to find their sources.[7] Although only four employees were seemingly involved, the situation exposed the fact that accessing personal information is in fact possible through the app, validating American government officials’ privacy concerns. Additionally, in early February a Chinese “spy” balloon was shot down over the coast of South Carolina by U.S. fighter jets.[8] The publicization of the balloon incident sparked politicians to use it as evidence of why TikTok needs to be banned. In fact, Florida Congressman Mario Diaz-Balart described TikTok as “a Chinese Communist Party balloon in everybody’s home.”[9] Although it does not appear that there was a direct connection between the Chinese balloon and TikTok itself, the occurrence has only lit the fuel to ban the app.

The worry over TikTok’s data privacy and security involving China has even seeped beyond the government and into schools. Public universities across the country, such as in Mississippi, Texas, Iowa, and Oklahoma, have begun banning access to TikTok while on university Wi-Fi.[10] Although these bans do not prevent faculty or students from having the app on their devices, or from accessing it using personal cellular data, it has been viewed as an annoyance to students that live on campus and are therefore almost always on the university’s Wi-Fi, especially for those that cannot afford cellular data or other alternatives.[11]

Due to these continuously rising privacy concerns, TikTok and ByteDance have begun taking steps to refute these allegations and concerns. One-way TikTok representatives have started trying to change perspectives and stall TikTok-related legislation is by increasing the time, effort, and funds dedicated to lobbying. ByteDance’s general counsel stated that this shift is to “accelerate our own explanation of what we were prepared to do and the level of commitments on the national security process.”[12] While it is too soon to know how effective these lobbying efforts have been, ByteDance has already spent upwards of $5.4 million dollars on lobbying efforts, an amount expected to only increase.[13] Another way TikTok is attempting to refute privacy concerns is through the creation of their Transparency and Accountability Center (“TAC”) in Culver City, California. TAC’s purpose is to give individuals an insider perspective on just how TikTok operates, with a focus on the app’s content moderation and recommendations policies, both of which have come under scrutiny in the past.[14] TAC’s creation is relatively new, yet it is already garnering skepticism from those that believe it’s just for show due to the recent ramp-up of privacy concerns. TikTok has expressed its plan to open similar centers across the world to give more users the ability to explore the centers, develop a deeper insight into TikTok’s operations, and hopefully, assuage the concerns over data privacy.[15]

As of now, the future of TikTok in the United States remains uncertain. On March 23, TikTok CEO Shou Zi Chew will testify before the House Energy and Commerce Committee.[16] He is expected to answer questions on consumer privacy, data security, and any relationship TikTok has with the Chinese Communist Party via ByteDance. Shou Zi Chew’s appearance is intended by TikTok to “set the record straight”[17] but how U.S. government officials interpret his answers may determine whether TikTok’s timeout in the United States is temporary or permanent.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Elizabeth Atkins, A Complete History of TikTok—From Launch and Banning Controversy, to Best Viral Trends, METRO (Feb. 13, 2021),

[2] Conor Murray, Will TikTok Be Banned from the U.S.? Here’s Where It Stands, FORBES (Feb. 7, 2023), the-us-heres-where-it-stands/?sh=5c38d4d73d2b.

[3] Id.

[4] Mack DeGeurin, Texas Is Banning TikTok from State Government Devices, GIZMODO (Feb. 7, 2023),

[5] Id.

[6] Id.

[7] Todd Sprangler, ByteDance Fires Employees Who Improperly Accessed Data on U.S. TikTok Users, Including Two Journalists, Company Says, VARIETY (Dec. 22, 2022),

[8] Lon Harris, Chinese Spy Balloon Reminds Every Politician to Talk a Lot More About Banning TikTok, DOT.LA (Feb. 8, 2023),

[9] Id.

[10] Murray, supra note 2.

[11] Cecil Hannibal, Amid TikTok Bans, Should You Be Concerned About Using the App?, WAPT (Feb. 7, 2023), app/42787708.

[12] Murray, supra note 2.

[13] Id.

[14] Karissa Bell, Can TikTok Convince the US It’s Not A National Security Threat?, ENGADGET (Feb. 7, 2023),

[15] Id.

[16] Murray, supra note 2.

[17] Id.

The GDPR Can Act as a Guide for the Implementation of the California Privacy Rights Act

By Isabella Goldsmith*

PDF Available

Change has come for data privacy and security laws in California with the California Privacy Rights Act (“CPRA”), which went into effect on January 1, 2023.[1] The European Union (“EU”) has implemented and enforced similar data privacy laws since 2018, making it the leading example for regulations on personal data acquisition.[2] Laws like the CPRA do not instantly result in a seamless transition among the company using the data, the consumers giving the data, and the state body as the regulator of the data privacy laws. Companies operating in states that are now following the EU’s lead and creating stricter data protection laws should be cognizant of the friction that was seen between European tech companies and the implementation of the European General Data Protection Regulation (“GDPR”).[3] Exercising the GDPR substantially changed how businesses used tech stacks within regulatory guidelines. Companies operating in California, one of the technological capitals of the world, should begin implementing similar changes to avoid violating privacy laws while using these tech stacks.

A tech stack is “the combination of technologies a company uses to build and run an application or project.”[4] Tech stacks are commonly used in applications or programs that require several different technological functions to operate, such as operating systems, data storage, servers and load balancing, and monitoring and performance tools.[5] One basic example is a service used for data storage and querying.[6] Data storage services allow the app to store user data as well as data about how the program or application is used.[7]

The European Union has thus far been the global leader and innovator in data privacy regulations.[8] With an emphasis on consumer protection, the GDPR is the “toughest privacy and security law in the world.”[9] The GDPR focuses on the regulation of personal data, data privacy, and security, and enforcing these regulations on any organization that targets or collects data from anyone within the EU.[10] After the GDPR was implemented in 2018, IT infrastructure was met with complications in continuing the use of tech stacks because highly integrated systems of technology often relied on the easy acquisition and movement of consumer data.[11]

After the EU’s implementation of the GDPR, tech companies that used tech stacks to operate their applications or programs found it difficult to comply with the privacy regulations when the component parts of the stack were interdependent and used for efficiency of data collection.[12] Because these services can come from different tech companies, it is essential that both the overarching program or application and then every component of the tech stack comply with the applicable privacy regulations.

A large-scale empirical study performed on 400 E-commerce firms found that flexibility in stack compilation resulted in greater success after a change in regulation.[13] Flexibility, which the study described as using new combinations of technologies for stacking purposes, was found to improve the likelihood of compliance under new regulations.[14] Specifically for data storage, it may be easier to use a novel or smaller company to store data so that it is easier to manage the overview of its distribution and to assure compliance.[15]

The CPRA expanded regulations to include most businesses that share data, including service providers, contractors, and third parties that are located in California.[16] The data privacy rights protect California residents’ personal data.[17] Therefore, any business that operates or targets consumers in the state will need to ensure its stacks comply with these stringent data privacy rules.[18] CPRA-affected businesses should begin working to incorporate the previously cited flexibility elements. Consumers’ control over their data is a primary focus of the regulatory changes made in the CPRA, and, therefore, any part of the “back end,” or data storing processes, of the stack will likely be under great scrutiny. To follow the flexibility model set out by the study, California businesses could aim to implement more “creative” and flexible tech stacks, which may allow for lesser change within the entire stack because the sum of the stack will not be accustomed to a certain regulatory scheme and have to change all at once. For example, if the same three stacked components are regularly used together by most applications, a large regulatory change would likely result in disruption to the entire stack because of how interconnected it is. By choosing a less interconnected system, fewer components of the stack may be impacted at once.

The newness of the CPRA will undoubtedly resurface the issue of how tech companies continue to stack technological services to create applications. To protect themselves from heavy fines and disruption of business practices, California companies should look at the GDPR’s impact on EU businesses for guidance on how to comply without losing valuable time and resources.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] Michael Twomey, Doing Business in California? The California Privacy Rights Act Is Coming . . ., KANE RUSSELL COLEMAN LOGAN (Oct. 11, 2022),,effect%20on%20January%201%2C%202023.

[2] Ben Wolford, What is GDPR, the EU’s New Data Protection Law?, GDPR.EU, (last visited Feb. 28, 2023).

[3] Natalie Burford, Andrew Shipilov, & Nathan Furr, How GDPR Changed European Companies’ Tech Stacks, HARVARD BUS. REV. (Feb. 8, 2023),

[4] What Is a Tech Stack?, HEAP, (last visited Feb. 28, 2023).

[5] What Is a Tech Stack? Technology Stack in a Nutshell, DAC.DIGITAL (Mar. 21, 2022),

[6] HEAP, supra note 4.

[7] Id.

[8] Adam Uzialko, How GDPR Is Impacting Business and What to Expect in 2023, BUS. NEWS DAILY (Feb. 21, 2023),

[9] Wolford, supra note 2.

[10] Id.

[11] Burford, Shipilov, & Furr, supra note 3.

[12] Id.

[13] Natalie Burford, Andrew V. Shipilov, & Nathan R. Furr, How Ecosystem Structure Affects Firm Performance in Response to a Negative Shock to Interdependencies,43 STRATEGIC MANAGEMENT J., 30, 30–57 (2021).

[14] Burford, Shipilov, & Furr, supra note 3.

[15] Id.

[16] Hannah Beppel, Everything You Need to Know About the California Privacy Rights Act, ADP SPARK, the-california-privacy-rights-act.aspx#:~:text=The%20CPRA%20applies%20to%20your,nonprofit%20organizations%20or%20government%20organizations (last visited Mar 2, 2023).

[17] Twomey, supra note 1.

[18] Frequently Asked Questions, CA. CCPA, (last visited Feb. 28, 2023).

The Fall of Crypto Exchange FTX: Under the Noses of the SEC and CFTC

By Brayden Harn*

PDF Available

Within days, FTX went from a $32 billion valuation to filing bankruptcy.[1] Founder and CEO Sam Bankman-Fried was arrested on December 12 and extradited from the Bahamas, where the company was operating.[2] The complaint filed by the Securities and Exchanges Commission (“SEC”) alleges Bankman-Fried treated funds deposited by customers as a “personal piggy bank,” using them for real estate investments and political campaign donations.[3]

Similar to the house of cards TerraUSD was built on before its collapse, FTX promoted its own crypto token to be used for discounts on FTX trading or staking.[4] This strategy is somewhat common; numerous other crypto exchanges offer their own native tokens.[5] However, the way FTX used its own token was drastically different than other exchanges.[6] Prompting the beginning of the collapse, CoinDesk, a crypto news site, revealed undisclosed leverage and solvency concerns regarding FTX and its sister company Alameda Research.[7] Alameda Research, also owned by Bankman-Fried, had an investment foundation in FTX’s native token, FTT, in addition to a $5 billion position in FTT.[8] From the CoinDesk story, “The single biggest asset on Alameda’s $14.6 billion balance sheet were unlocked FTT, while the third biggest asset on the books was a $2.16 billion pile of FTT collateral.”[9] In addition to the revelation that Alameda and FTX were not separate companies and were overleveraged, native tokens are entirely unregulated and extremely susceptible to rapid market downturns.[10]

With so many previous crypto exchange collapses, it is remarkable how it continues to happen with some of the largest exchanges in the industry. The lack of regulatory oversight for FTX is twofold: the crypto industry as a whole is mostly unregulated, and U.S. regulations are not valid in the Bahamas, where FTX is principally operated.

Some people have distinguished Bankman-Fried’s conduct and the collapse of FTX as “an anomaly in an otherwise safe industry.”[11] Others view the collapse of FTX as evidence of a need for new regulation and greater regulatory oversight within the crypto industry. Senator Elizabeth Warren tweeted that “the implosion of FTX showed why the crypto industry needed SEC oversight.”[12] Brian Armstrong, CEO of crypto trading platform Coinbase, responded that “it was the SEC that had created the environment in which FTX could happen.”[13] Armstrong reasoned that FTX operated offshore, outside the reach of the SEC, because the SEC failed to create regulatory clarity in the United States.[14] In response to the FTX collapse, former Commodity Futures Trading Commission (“CFTC”) enforcement director Aitan Goelman said, “It’s a patchwork of global regulators—and even domestically there are huge gaps. That’s the fault of a regulatory system that has taken too long to adjust to the advent of crypto.”[15]

Near the beginning of 2022, the SEC conducted inquiries into how crypto exchanges, including FTX, were handling customer deposits.[16] Interestingly, the SEC’s inquiry into FTX was only concerned with a rewards program it offered to customers, which did not involve any use of the deposited crypto.[17] Meanwhile, it was revealed FTX was moving billions of dollars to Bankman-Fried’s Alameda Research company at that time.[18]

The lack of regulation in the crypto industry increases the risk for investors and related financial markets.[19] If FTX had been subject to the same regulations and level of scrutiny as traditional financial institutions, the flaws in its financial structure and operations would have been identified far sooner and may have prevented the damage caused.

* J.D. Candidate, Class of 2024, Sandra Day O’Connor College of Law at Arizona State University.

[1] MacKenzie Sigalos, Sam Bankman-Fried Steps Down as FTX CEO as His Crypto Exchange Files for Bankruptcy, CNBC (Nov. 11, 2022),

[2] Id.

[3] Id.

[4] Farran Powell, FTX Ex-CEO Sam Bankman-Fried Is Arrested, FORBES (Dec. 13, 2022),

[5] Id.

[6] Id.

[7] Nathan Reiff, The Collapse of FTX: What Went Wrong with the Crypto Exchange?, INVESTOPEDIA (Jan. 4, 2023),

[8] Id.

[9] Powell, supra note 4.

[10] Id.

[11] Peter Whoriskey & Dalton Bennett, Crypto’s Free-Wheeling Firms Lured Millions. FTX Revealed the Dangers., WASH. POST (Nov. 16, 2022),

[12] Id.

[13] Jason Abbruzzese & Daniel Arkin, FTX is in Freefall. Where Was the Oversight?, NBC NEWS (Nov. 15, 2022), rcna57098.

[14] Id.

[15] Chris Prentice, Angus Berwick, & Hannah Lang, How FTX Bought Its Way to Become the ‘Most Regulated’ Crypto Exchange, REUTERS (Nov. 18, 2022),

[16] Id.

[17] Id.

[18] Id.

[19] Whoriskey & Bennett, supra note 11.