By Legit. | Legal News

Fraud, WeWork & plant-based leather





Subscribe to our newsletter

By subscribing, you agree with Revue’s Terms of Service and Privacy Policy and understand that Legit. will receive your email address.

Legit. | Legal News
Legit. | Legal News
Good Monday afternoon. We’re back after our two-week break!
In today’s issue:
  • Insider trading on the dark web.
  • WeWork is going public.
  • Reinventing leather.

Fake Insider Trading is Bad, Too.
MillionaireMike in the flesh. Image: Giphy
MillionaireMike in the flesh. Image: Giphy
The SEC has charged a SpaceX engineer with insider trading on the dark web.
The backstory. In the spring of 2017, an account with the moniker ‘MillionaireMike’ started listing ‘insider tips’ for sale on the dark web. The catch? MillionaireMike didn’t actually have any insider information to sell.
When James Roland Jones – the man behind the moniker – realized no one would pay him for his own stock tips, he came up with an alternative plan: pretend his tips, which were based on an combination of research and gut instinct, were the result of leaked information from Wall Street.
Far from a savvy inside trader, Jones was, at best, a scammer with dumb luck. His tips were basic: a stock would go up, or it would go down. Sometimes he sold tips for the same stock in both directions, promising to give the ‘loser’ the next tip for free in exchange for a good review.
By the time Jones was busted by an undercover FBI agent, he’d pocketed $27k in bitcoin.
Now… Jones has pleaded guilty to conspiracy to commit securities fraud in the first ever dark web fraud case.
The SEC has realized lots of illegal things happen on the dark web – bravo!
But is this really the case they want to mark their inaugural foray into the murky world of underground marketplaces? A case that hinges on insider trading… without any actual insider information?
I’m deferring to my fave ex-lawyer Matt LeVine on this one. Sure, Jones swindled a lot of people but, as Matt points out, these people were willing participants in illegal trading (!) and, in some ways, deserved to be swindled.
In any case, it’s too little too late for the SEC. Per Wired, insider trading peaked on the dark web in 2018:
  • “Today, insider trading activity is relatively scarce on the dark web… perpetrators have likely migrated to more secure encrypted channels instead.”
WeWaited. WeWork(ed).
Image: Axios
Image: Axios
In what feels like a major case of déjà vu, WeWork is going public.
Recap. Ex-CEO Adam Neumann’s first attempt to take WeWork - excuse me, The We Company - public crashed and burned in the fall of 2019. The company’s S-1 filing revealed the (hilarious) portrait of a laissez-faire company improv’ing its way through, well, everything.
The filing began with an epigram:
“We dedicate this to the energy of we - greater than any one of us, but inside all of us.”
It then very unsuccessfully tried to convince everyone WeWork was a tech company, made clear WeWork had no path to profitability and, to put the icing on the cake, called Adam a big risk.
In the aftermath, WeWork’s value plummeted from $47bn to $2.9bn. Adam Neumann was quickly stripped of his titles and Softbank had to swoop in to bail the company out.
Now… the former venture darling, valued at a decent-but-still-kinda-low $9bn, is getting a second chance at going public.
  • It’s merging with blank cheque company BowX Acquisition Corp in a SPAC deal.
Is WeWork a reformed company? Meh.
Although its mission statement is no longer to “elevate the world’s consciousness,” it lost $3.2bn last year and is still posing as a hybrid space-and-software-and-services business.
So take this less as a heartfelt story of WeWork redemption and more as a sign we’re SPAC-ing way too much. TechCrunch explains it best:
  • “SPACs are circling, hungry for a deal so they won’t have to return collected capital to their original backers.”
Zoom out. After 12 months of FOMO, the UK is thinking about liberalising its SPAC rules to lure tech companies across the pond.
The Leather Revolution
Carmen Hijosa, founder of Ananas Anam.
Carmen Hijosa, founder of Ananas Anam.
As fashion houses call time on their love affair with leather, brands are clamouring to trademark plant-based alternatives.
The backstory. Raising livestock for leather requires huge amounts of feed, pastureland, water and fossil fuels - a Molotov cocktail of environmental doom and gloom.
Up until recently, our solution was ‘vegan leather.’ Sounds great in theory; the fashion industry patted itself on the back and pumped thousands of dollars into marketing campaigns that wooed customers with promises of sustainability.
Peek behind this self-congratulatory veneer, though, and the story is very different. Vegan leather is made mostly from plastics that take years to biodegrade, fuelling the micro-plastic pollution currently infiltrating our waterways. 
So brands are stepping in to reinvent leather - again. This time, they’re trying to recreate the appearance, durability and texture of leather with obscure plant-based ingredients.
Some examples:
  • Hermes will release a bag made from Sylvania, a lab-grown leather alternative made from mushrooms, by the end of 2021.
  • Frumat has trademarked a Tommy Hilfiger-backed alternative fabric made from the waste of apples grown in Italy.
  • Spanish company Ananas Anam has trademarked a fabric made from the parts of a pineapple leaf farmers would otherwise leave to rot or burn.
Leather has been long overdue for reinvention, and brands are each rushing to present their plant-based alternative as the fix to our leather woes. The result? An influx of cleantech patents the IP industry has facilitated.
Further reading: a great paper on how the inadequacy of IP rights in the fashion industry led to the rise of fast fashion - and the domino effect this had on global sustainability.
  • The trial for Derek Chauvin, the former police officer charged with the murder of George Floyd, begins today.
  • The Supreme Court will decide whether Goldman Sachs shareholders can bring a lawsuit in a major fraud case today.
  • Apple faces a South Asian bias lawsuit.
  • EU slaps sanctions on four Chinese officials over Uyghur abuses.
  • #FreeBritney movement prompts lawmakers to consider changing conservatorship laws.
  • Theranos 2.0: the founders of the microbiome-testing company, uBiome, are charged with $60m fraud.
  • Long read: a Yale psychiatrist’s tweet about Dershowitz, her dismissal, and a lawsuit.
Did you enjoy this issue? Yes No
Legit. | Legal News
Legit. | Legal News @anniamirza

The free weekly email bringing you fast, fun, digestible legal news.

In order to unsubscribe, click here.
If you were forwarded this newsletter and you like it, you can subscribe here.
Created with Revue by Twitter.