South Korea is one of the world’s largest markets for cryptocurrency trading and we have previously reported here and here on steps taken by that government in the cryptocurrency space. Reuters reported today that South Korea is not going to go as far as China, which has blocked virtual coin platforms. The country’s finance minister said that the government has no plans to shut down cryptocurrency trading. Rather, the government will act through regulating the…
The U.S. SEC announced today that it had obtained a court order to halt and freeze the assets of what is likely one of the largest initial coin offerings ever. The complaint alleges that AriseBank used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months. According to the SEC press release, “AriseBank and its principals sought…
We previously reported how, in the Tezos litigation, the court denied a temporary restraining order that sought to enjoin the defendants from selling, transferring, converting, or otherwise disposing of any assets collected or derived from an ICO, holding that plaintiff had failed to show that he is likely to suffer irreparable harm in the absence of injunctive relief. Today, in connection with the class action against BitConnect, (Paige v Bitconnect, case 3:18-cv-0058-JHM W.D. Ky 1-30-18),…
Last Friday, Coincheck, which calls itself the leading Bitcoin and cryptocurrency exchange in Asia, acknowledged that it had been hacked and that 500 million of its NEM tokens (valued at about $530 million) had been taken from Coincheck’s digital wallets. This hack now surpasses the 2014 Mt. Gox hack as the largest one in history (to date). Interestingly, Coincheck has identified and published 11 addresses where all of the stolen coins ended up. Each one…
Propy, a California-based blockchain startup, announced that it is partnering with the city of South Burlington, Vermont, to use blockchain technology to record real estate conveyance documents. The goal will be to do away with hard copy registry altogether and enhance efficiency because, under the current system, it is necessary to drive to South Bulrington to do a title search. Of course, carried to its ultimate conclusion, if land registry records were entirely on the…
At a blockchain conference in Thailand, a Chinese official indicated that that the blanket ban on ICOs in China might be relaxed in 2018 in favor of other types of regulation.
The CFTC disclosed today that, on January 16, in a case initially filed under seal, the CFTC sued and froze the assets of the creators of a supposed cryptocurrency called “My Big Coin” who allegedly took $6 million from unwitting buyers and used it to fund shopping sprees and pay off earlier investors. My Big Coin Pay Inc. — a Nevada corporation whose product, the CFTC noted, sounded similar to Bitcoin — its founder Randall…
In a speech at the Securities Regulation Institute yesterday, U.S. SEC Chairman Clayton delivered some pretty blunt (and, according to the Commissioner, “stern”) words to lawyers and other professionals. He said that market professionals need to act responsibly and hold themselves to a higher standard; in the realm of ICOs, he said, “they can do better.” Talking specifically about lawyers, he commented: First, and most disturbing to me, there are ICOs where the lawyers involved…
Among the many areas of law that will have to continue to evolve around cryptocurrencies is the tax law. In the United States, as far back as 2014, the Internal Revenue Service issued Notice 2014-21 which clearly stated that virtual currency is treated as property for U.S. federal tax purposes. That meant, among other things that: Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on…
We have previously discussed the position taken by the U.S. SEC with respect to cryptocurrencies. But the US Commodity Futures Trading Commission (CFTC) also has a role to play. On September 17, 2015, the CFTC brought its first cryptocurrency action against an unregistered Bitcoin trading platform. Coinflip, Inc. d/b/a Derivabit (Coinflip) and its chief executive officer Francisco Riordan were charged operating a facility for the trading or processing of commodity options (offering to connect buyers and…