On August 6, 2021, the U.S Securities and Exchange Commission charged two Florida men and their Cayman Islands company with unregistered sales of more than $30 million of securities using smart contracts and decentralized finance (DeFi). The SEC said this was its first case involving securities using DeFi. According to the SEC’s order, Gregory Keough, Derek Acree, and their company Blockchain Credit Partners, offered and sold securities in unregistered offerings through DeFi Money Market (DMM)…
The New York State Department of Financial Services (DFS) is the department of the New York state government responsible for regulating financial services and products, including banking and financial services firms. On July 29, 2021 DFS Superintendent Linda A. Lacewell announced new action by DFS to promote diversity, equity and inclusion in the banking and non-depository financial industries. In the industry letter to New York-regulated banking institutions and New York-regulated non-depository financial institutions, DFS outlined its…
Early posts in this blog mentioned how former SEC Chairman Jay Clayton had famously told Congress in February 2018 that “I believe every ICO I’ve seen is a security.” His successor, Gary Gensler, resurrected those thoughts in his prepared remarks delivered on August 3, 2021 to the Aspen Security Forum: I think former SEC Chairman Jay Clayton said it well when he testified in 2018: “To the extent that digital assets like [initial coin offerings, or…
BlockFi is a wealth management and trading firm for cryptocurrency holders that first commenced operations in 2017. It has had a very busy few months. In March 2021, it reportedly closed a Series D funding that valued the company at $3 billion. Block recently reported that BlockFi is in talks to raise a new Series E funding round of $500 million, which would bring the company valuation to nearly $5 billion. It has also been…
On July 21, 2021, U.S. Securities and Exchange Commission Chairman Gary Gensler spoke at an American Bae Association event. His main topic was security-based swaps. But at the end of his prepared remarks, the Chairman went out of his way to comment about the intersection of security-based swaps and financial technology, including cryptoassets. With respect to initiatives to offer crypto tokens or other products that are priced off of the value of securities and operate…
On July 14, 2021, the U.S. Securities and Exchange Commission announced that it had settled charges against United Kingdom-based Blotics Ltd., the operator of Coinschedule.com, a once-popular website that profiled offerings of digital asset securities. The SEC’s order found that Blotics violated the anti-touting provisions of the federal securities laws by failing to disclose the compensation it received from issuers of the digital asset securities it profiled. Visitors to Coinschedule.com were presented with details about…
One of the poster-children for the ICO craze in late 2017-18 was an iced-tea company in Long Island, New York known as the Long Island Iced Tea Co. From approximately 2015 to 2017, the company’s principal business was ready-to-drink beverages. In December 2017, the company changed its name to Long Blockchain Corp. (LBC) and announced that it was shifting its business operations from soft drink production to activities related to blockchain technology. The rebranding with…
On June 1, 2019, the Financial Action Task Force (FATF) officially adopted what is known as the Travel Rule. Prior thereto, those that engaged in wire transfers of fiat currencies were already required to share a range of information about such transfers. The Travel Rule extended these anti-money laundering and counter-financing of terrorism (AML/CFT) obligations to cryptocurrency transfers valued at USD 1000 or more and applies to Virtual Asset Service Providers (VASPs) such as cryptocurrency…
On June 24, 201, the United States Department of Justice brought a criminal bill of information against Michael Yusko III. According to the DOJ, under U.S. federal law, any business that engages in “the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means” is deemed to be a money…
The Bank of International Settlements is owned by 63 central banks and serves as bank for central banks. One June 23, 2021, the BIS released one chapter of its full annual report, which will be released on June 29. From the title of the chapter, “CBDCs: An Opportunity for the Monetary System,” it is apparent that the BIS is very much in favor of CBDCs (central bank digital currencies) — not very surprising considering the…