OpenAI Faces Increased Penalties After Allegations of Willful Infringement
Recent developments in the copyright lawsuit against OpenAI might lead to bigger payouts to rightsholders. The company had to hand over internal Slack messages and emails to a New York district court. The contents of these messages? Discussions about deleting a dataset of pirated books.
This could be determined as intentional destruction of evidence. In fact, Judge Ona Wang previously established that OpenAI has improperly withheld materials. If it’s decided that the company committed willful infringement, damages could reach $150,000 per work instead of $750 –$30,000.
OpenAI first said it deleted the data due to non-use, later revising that explanation, claiming they’d misspoken. Time will tell what influence this evidence has on the case, but the situation shows how quickly risk rises when AI firms handle copyright content and the impact of their response when scrutiny begins.
Implications for brokers and their clients:
- Ensure AI insurance policies explicitly cover intellectual property risks.
- Make sure IP infringement from third-party AI tools is covered.
- Obtain coverage for costs associated with legal defense, regulatory investigations, and crisis management.
Source: Futurism. (October 14, 2025). OpenAI in Danger After Authors Suing It Gain Access to Its Internal Slack Messages.
7 New Lawsuits Accuse ChatGPT of Driving Users to Suicide and Psychosis
IP infringement is perhaps the least of OpenAI’s concerns at the moment. Seven new lawsuits have been filed against the company, alleging that ChatGPT played a direct role in the suicide and psychosis of multiple users.
One case involves Joshua Enneking, a 26-year-old man from Florida. Extensive chat sessions with the AI allegedly led him to buy a gun, write a final note to his family (which the model helped him draft), then take his own life.
The complaint asserts that ChatGPT validated his belief that being male made him “unlovable,” guided his logistical planning for death, and intentionally refrained from alerting human authorities, despite OpenAI’s claims that there’s a system is in place for doing that.
The new lawsuits argue that OpenAI rushed the release of its GPT-4o model to stay ahead of competitors, deprioritizing safety testing. They argue that it has limited guardrails against talk of severe mental illness or self-harm and a willingness to appease any request. A prime example is when Enneking asked it to insult him, and it responded with a detailed passage that harshly criticized him to the core.
Matthew P. Bergman, founding attorney of the Social Media Victims Law Center claims that OpenAI “designed GPT-4o to emotionally entangle users” and “prioritized market dominance over mental health, engagement metrics over human safety, and emotional manipulation over ethical design. The cost of those choices is measured in lives.”
Implications for brokers and their clients:
- AI firms should verify whether tech E&O and product liability policies cover claims arising from alleged design flaws in AI systems, like failure to respond appropriately in self-harm scenarios.
- Evaluate whether existing policies cover liabilities arising from failures to implement safeguarding mechanisms.
- Obtain cyber liability insurance that responds to the latest risks in case exploits affect AI outputs.
Source: The San Francisco Standard. (November 8, 2025). ‘The only redemption there is’: How ChatGPT allegedly guided a young man to commit suicide.
$15 Billion in Crypto Seized in Historic Enforcement Action
A multinational criminal network based in Southeast Asia, led by Chen Zhi and known as the Prince Group, has been dismantled in an historic enforcement action by US and UK authorities.
The group orchestrated large-scale pig butchering scams (where victims are groomed into investing in fake cryptocurrency platforms) while operating an extensive crypto mining business through Warp Data Technology in Laos.
The Chainalysis Reactor graph below shows how Chen Zhi’s wallets received inflows indirectly from a mining pool.
Over several years, the Prince Group laundered billions of dollars of illicit crypto proceeds through a complex network of over 100 shell companies, including casinos and financial entities such as the Huione Group, which processed more than $98 billion for a range of illicit actors (shown below), with a total of $4 billion laundered.
The group also perpetrated forced labor and violent intimidation to maintain control over their operations throughout Cambodia and neighboring countries.
The US Department of Justice seized $15 billion in bitcoin linked to the group, the largest cryptocurrency forfeiture in history, and sanctioned 146 individuals and entities tied to the network.
In addition, the UK’s Office of Financial Sanctions Implementation sanctioned Byex Exchange which has links to the Prince Group. The graph below shows the exchange’s interaction with the Huione Group and various scam technology vendors.
Implications for brokers and their clients:
- Cryptocurrency firms should have protection against claims arising from errors or omissions in their services which may inadvertently facilitate money laundering or violate AML / KYC regulations.
- Considering the heightened regulatory scrutiny across the sector, ensure policies cover legal costs and fines from regulatory investigations or enforcement actions relating to AML compliance failures.
- Consider specialized crime and cyber insurance designed for the crypto sector.
Source: Chainalysis. (October 14, 2025). DOJ Seizes $15 Billion in Bitcoin as U.S. and U.K. Target Massive Southeast Asian Crypto Scam Network.
DeFi Governance Under Fire: Ocean Protocol Lawsuit Exposes Gaps in Oversight and Transparency
On November 4, 2025, Fetch.ai filed a lawsuit against Ocean Protocol, accusing it of misusing community funds and executing unauthorized token trades. More than 263 million FET tokens (representing over 10% of the circulating supply) were released into the market in a manner that was considered to lack transparency.
The project allegedly concentrated decision-making and token control in the hands of a small group. The result is a collapse in trust among stakeholders and a ripple effect across markets.
The case raises questions about DeFi governance standards. Regulators are taking note of the weaknesses exposed, like unclear token-allocation rules, opaque treasury management, and poor accountability mechanisms. The result may be tighter token management rules in Asia.
Implications for brokers and their clients:
- Secure tech E&O insurance that covers failures in smart contract logic, token issuance, or other operational errors in blockchain systems.
- Obtain crime insurance to cover theft, fraud, or unauthorized movement of assets or tokens, regardless of who initiates it.
- Obtain D&O insurance to protect individuals facing allegations of poor oversight or decision-making.
Source: OneSafe. (November 10, 2025). Fetch.ai Lawsuit: A Wake-Up Call for DeFi in Asia.
Bank of England Reveals Framework for Stablecoins
The Bank of England has published a proposal to regulate sterling-backed stablecoins as they become more integrated into the UK’s payment infrastructure. Under the draft framework, a stablecoin issuer becomes classified as systemic if its usage in payments or settlements is significant enough to threaten broader financial stability.
Once designated systemic, issuers would face rigorous rules. At least 40% of reserves would have to be held as cash deposits at the BoE, with the remaining reserves investable in short-term UK government debt.
Limits would also be placed on holdings. Individuals would be capped at £20,000 per coin and businesses up to £10 million, but larger exemptions might apply if operational needs require that.
The BoE states that these measures would minimize the risk of sudden runs on a single token that could affect the broader financial system.
The consultation period runs until February 10, 2026, with rules expected to be finalized in the second half of next year.
Implications for brokers and their clients:
- Obtain coverage that protects against penalties and other costs tied to regulatory breaches like incorrect reporting or failing to meet reserve requirements.
- Ensure D&O policies cover cases of alleged mismanagement and poor oversight of reserves.
- Work with digital asset insurance providers that have sector-specific regulatory expertise.
Source: CryptoDnes. (November 10, 2025). Bank of England Targets Systemic Stablecoins in Landmark Regulation Push.
New Wave of Regulations Set to Reshape Ohio’s Cannabis Market
Since adult-use was legalized in Ohio in November 2023, the market has grown substantially, and more disruption is in store due to upcoming regulatory reforms. The DCC has now approved the sale of pre-rolls in licensed dispensaries, and in a few weeks, Rules Package 7 will be released for review, which includes rules on testing standards.
Other changes pertain to Sub Bill 56. Changes would include:
- Addressing potency limitations for marijuana concentrates.
- Revising licensing procedures.
- Limiting the delivery of licensed marijuana products to medical patients only.
- Unifying licensing, enforcement, and operational standards for medical, adult-use, and homegrown marijuana.
- Capping the number of licensed dispensaries at 400.
- Clarifying rules on transportation, packaging, and consumption.
- Updating patient and caregiver rights for medical cannabis.
- Enacting restrictions on possession, transfer, and transport of homegrown marijuana.
- Expanding the enforcement authority of the Department of Public Safety and the Ohio Investigative Unit.
Implications for brokers and their clients:
- Given the extent of the changes, companies operating in Ohio should ensure that policies offer adequate coverage for regulatory scrutiny and the associated costs.
- As the market is still stabilizing, firms should ensure policies cover business interruption from regulatory shutdowns.
- Seek insurance providers with deep expertise in state regulations affecting cannabis companies.
Source: Cannabis Industry Journal. (November 10, 2025). The State of Ohio’s Cannabis Legal Landscape.
