BitMEX is one of the world’s largest cryptocurrency trading platforms. Last year, the U.S. District Court for the Southern District of New York entered a Consent Order that the U.S. Commodities Futures and Trading Commission agreed to with five companies charged with operating BitMEX. The order required the BitMEX entities to pay a $100 million civil monetary penalty. (read more here). Earlier this year, the three co-founders of the company plead guilty to violating the Bank Secrecy Act…
In its first enforcement action in the cryptocurrency arena in 2022, on January 3, 2022, the United States Commodity Futures Trading Commission (CFTC) entered an Order filing and simultaneously settling charges against Delaware-registered Blockratize, Inc., which operated its business under the name Polymarket. The Order finds that, beginning in approximately June 2020, Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as “event markets.” According to the…
BitMEX is one of the world’s largest cryptocurrency trading platforms. On August 10, 2021, the U.S. District Court for the Southern District of New York entered a Consent Order that the U.S Commodities Futures and Trading Commission agreed to with five companies charged with operating BitMEX. The order requires the BitMEX entities to pay a $100 million civil monetary penalty and provides that up to $50 million of the penalty may be offset by payments…
Depending on the particular branch of the U.S. government one is talking to, cryptocurrency can be property (IRS), a security (SEC) or a commodity (CFTC). On April 20, 2021, the U.S. House of Representatives passed a bill aimed at remedying this situation. The bipartisan Eliminate Barriers to Innovation Act will establish a digital asset working group to ensure collaboration between regulators and the private sector to foster innovation. The new law will require the SEC and CFTC to…
On January 26, 2021, federal prosecutors in New York unsealed a criminal complaint against 24-year old Jeremy Spence (aka “Coin Signals”). As alleged, Spence took cryptocurrency worth over $5 million from more than 170 individual investors after making false representations in connection with these cryptocurrency funds. The allegations in the complaint allege the following scheme: From November 2017 through April 2019, Spence solicited investors in various cryptocurrency investment pools that Spence had created and managed. …
On October 21, 2020, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the United States Commodity Futures Trading Commission issued an Advisory to futures commission merchants (FCMs) regarding the holding of virtual currency in segregated accounts. The advisory provides guidance to FCMs on how to hold and report certain deposited virtual currency from customers in connection with physically-delivered futures contracts or swaps. The Advisory also provides guidance that FCMs should follow when designing…
On September 28, 2020, the U.S. Commodity Futures Trading Commission filed a civil enforcement action against Laino Group Limited (which did business under the name PaxForex) a company registered in St. Vincent and the Grenadines. The CFTC’s complaint charges the defendant with engaging in unlawful retail commodity transactions and failing to register as a futures commission merchant (FCM). According to the complaint, from at least March 2018, PaxForex offered or engaged in unlawful retail commodity transactions in litecoin,…
On July 13, 2020, the U.S. Securities and Exchange Commission charged California-based Abra (a crypto investment app maker) and a related firm in the Philippines for offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a registered national exchange. In a parallel action, the U.S. Commodity Futures Trading Commission issued an order filing and settling charges against both companies for entering into illegal off-exchange swaps in…
The CFTC has issued new guidance on “actual delivery” of virtual currencies. The CFTC has long held that commodities must be physically delivered within 28 days of the contract of sale to fall outside of the regulation of contracts under the Commodities Exchange Act. In this new guidance, the CFTC concludes that possession and control of the digital asset must transfer to the buyer within 28 days to satisfy the requirements of actual delivery. In…
On May 7, 2020, the U.S. Commodity Futures Trading Commission brought suit in federal court in Florida against Daniel Fingerhut of Miami, Florida, and three companies that he worked with, Digital Platinum, Inc. (DPI), a Florida corporation, Digital Platinum, Ltd. (DPL), an Israeli company, and Huf Mediya Ltd. (Huf) a Bulgarian company, as well as the control persons of all three entities, Tal Valariola and Itay Barak. According to the Complaint, beginning in at least October 2013 and continuing through August 2018,…