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From AI legal battles to emerging crypto regulation, this edition of Risk Wrap highlights six developments shaping compliance, governance, and insurance exposure across high-risk industries.
OpenAI Faces First Wrongful Death Lawsuit Tied to an AI Chatbot
Another lawsuit has been filed against OpenAI, adding to a recent string of allegations that ChatGPT has caused severe psychological harm. The latest case accuses OpenAI and Microsoft of having responsibility in a murder and suicide.
56-year-old Stein-Erik Soelberg, who had mental health issues, engaged extensively with ChatGPT over months and the AI validated and amplified his paranoid delusions. The complaint claims that this culminated in Soelberg killing his mother and then himself in August.
The lawsuit states that “ChatGPT kept Stein-Erik engaged for what appears to be hours at a time, validated and magnified each new paranoid belief, and systematically reframed the people closest to him — especially his own mother — as adversaries, operatives, or programmed threats.” The claim states that ChatGPT convinced him that his mother and a friend had been conspiring to poison him with psychedelic drugs dispersed through air vents in his car.
The case is described as the first wrongful death lawsuit involving an AI chatbot that has targeted Microsoft, and the first to link a chatbot to homicide.
Implications for brokers and their clients:
- As AI regulations are still emerging, companies developing generative AI should work with specialist insurers who can offer bespoke policies to cover unique risk profiles.
- Given the potential for high-profile litigation to trigger investor lawsuits around inadequate risk controls, disclosures, and governance failures, D&O policies should explicitly address AI-related litigation and derivative actions.
- Cases linking AI systems to severe real-world harm can trigger intense media scrutiny and loss of public trust. Reputational risk insurance can help cover the costs of crisis communications and PR support.
Source: Al Jazeera (December 11, 2025). OpenAI sued for allegedly enabling murder-suicide.
Trump Poised to Fast-track Cannabis Rescheduling
President Trump is expected to sign an executive order this week that would fast-track the federal reclassification of cannabis. Multiple media reports state that it could be signed as soon as Thursday December 18. After that, the Drug Enforcement Administration would still need to decide whether to implement the change.
If cannabis becomes a Schedule III substance, its medical applications will finally be recognized, facilitating research and development and giving businesses better access to capital.
Trump’s consideration of signing the order has already boosted the share prices of cannabis companies.
Implications for brokers and their clients:
- Obtain policies that specifically address the risks tied to changing federal and state regulations, including coverage for costs associated with compliance shifts and licensing delays.
- As reclassification could expand R&D, ensure robust product liability coverage that protects against claims related to product safety and labeling.
- Given the volatility around policy shifts, source business interruption coverage safeguards against income loss from temporary closures, supply chain disruptions, or delays caused by regulatory uncertainty.
Source: Reuters (December 17, 2025). Trump to sign order easing restrictions on marijuana this week, media reports say.
EU Moves to Ease AI Act Implementation
The European Commission has proposed some amendments to the EU AI Act to ease implementation. The changes are set out in the Digital Omnibus on AI published in November and include:
- Delaying certain high-risk AI obligations until relevant standards and guidance are available.
- Introducing grace periods for some transparency requirements, including those for generative AI and deepfakes.
- Removing mandatory AI literacy requirements for providers and deployers.
- Expanding the European AI Office’s powers to directly supervise some general-purpose AI systems and AI embedded within large online platforms.
Existing prohibitions on manipulative or exploitative AI will remain the same.
Implications for brokers and their clients:
- Ensure cover responds to claims arising from AI system failures, incorrect or misleading outputs, and non-compliance with AI Act obligations, especially for high-risk systems.
- Obtain insurance that covers legal defense and investigation costs linked to AI Act enforcement.
- Partner with insurers who understand the EU AI Act in depth detail, ensuring policy wordings reflect real regulatory exposures.
Source: Digital Watch Observatory (December 10, 2025). EU AI Act changes aim to ease high-risk compliance pressure.
Significant Patient Risk Persists for Psychedelic Treatments in Clinical Settings
Psychedelic-assisted therapies are increasingly viewed as promising treatments for mental health conditions that are resistant to conventional approaches, but experts caution that the field’s growth shouldn’t come at the expense of clear risk assessment.
Adverse experiences after taking psychedelics include intense fear, grief, paranoia, feelings of insanity or isolation, sensations of dying, disturbing visions, physical distress, and functional impairment. Individuals with existing psychotic disorders are especially vulnerable, as psychedelic use may exacerbate their conditions.
Dr. Sara Tookey of True North Psychology has emphasized that even in controlled clinical contexts, the psychological risks can be significant. In a clinical trial of psilocybin for treatment-resistant depression, around 5% of participants experienced serious adverse effects, including suicidal ideation and self-injury (Compass Pathways, 2021). Comparable safety concerns have been observed in trials involving MDMA.
The effects aren’t always short-lived. A survey of 608 individuals who reported prolonged difficulties after psychedelic experiences found that 33% said their symptoms lasted for over one year, and 17% reported impacts lasting longer than three years (Evans et al., 2023). In another study, 16% of participants experienced a worsening of mental health that was clinically significant following psychedelic use (Marrocu et al., 2024).
Risk mitigation is critical for companies trying these therapies. This includes establishing thorough screening procedures, robust protocols for informed consent, a therapeutic setting that minimizes distress, and comprehensive insurance.
Implications for brokers and their clients:
- Product liability cover should explicitly address adverse mental health outcomes and allegations of inadequate screening, consent, or supervision.
- D&O insurance can protect leadership from claims alleging misrepresentation of risks, inadequate governance, or failure to implement appropriate clinical safeguards.
- Ensure policies cover the costs associated with regulatory investigations.
Source: True North Psychology (December 30, 2024). Beyond the Hype: A Balanced Look at Psychedelic Therapy Risks.
North Korean APTs Raise the Stakes for Crypto and Web3 Platforms
The cybersecurity risks facing web3 and crypto ecosystems have greatly escalated thanks to North Korean advanced persistent threat (APT) groups. Groups like UNC5342 and Blue Noroff use sophisticated tactics to exploit weaknesses in decentralized networks. One example is EtherHiding, where malicious payloads are embedded in smart contracts on public blockchains.
Social engineering is also prolific, often masked as fake job offers that compromise developers. The laundering of stolen funds through mixers, cross-chain bridges, and obscure chains complicates recovery efforts.
These campaigns erode market confidence in blockchain infrastructure, damage the reputations of affected platforms, and may slow the adoption of web3 technologies.
To counter these threats, there’s an urgent need for investment in blockchain analytics, human-centric security measures, and international cooperation.
Implications for brokers and their clients:
- Obtain cyber liability insurance that covers a wide range of threats.
- Choose insurers that offer robust incident response services and coverage for losses stemming from third-party dependencies, including support for forensic investigation and regulatory defense.
- Consider digital asset insurance that covers the costs of repairing reputational damage in case of an incident.
Source: Source: AInvest (December 15, 2025). The Rising Cybersecurity Threat to Web3 and Crypto Ecosystems: North Korean APT Campaigns and Their Financial Implications.
SEC Plans Innovation Exemption to Accelerate US Crypto Development
The SEC is preparing to change how it regulates crypto and fintech innovation, moving away from enforcement-led oversight towards a more adaptive framework. In early December, SEC Chair Paul Atkins said the agency’s rules must become ‘fit for purpose,’ emphasizing the need to support innovation without weakening investor protection.
A proposed “innovation exemption” would allow firms to launch on-chain products under conditional, supervised regulatory relief. This is intended to give companies a defined period to experiment while permanent rules are still being developed, helping to reduce compliance burdens and speed up the domestic rollout of blockchain services.
While the exemption would offer flexibility, it would still include safeguards like disclosure obligations and investor protection measures to ensure firms operate within clear risk limits.
The exemption could be completed by late 2025 or early 2026, pending review.
Implications for brokers and their clients:
- Ensure robust cyber liability and smart-contract failure coverage for losses occurring during SEC-supervised testing of on-chain products prior to full rulemaking.
- As firms operate under new and evolving regulatory frameworks, robust D&O coverage is critical for protecting leadership against claims related to governance and disclosures.
- Work with providers that have expertise in both web3 infrastructure risks and regulatory developments affecting the sector.
Source: JD Supra (December 16, 2025). The Payments Newsletter Including Digital Assets & Blockchain, December 2025.
