Almost five years ago, we reported on the SEC’s first-ever case against celebrities for touting ICOs. In 2022, Kim Kardashian paid $1.26 million in connection with her touting on social media a crypto asset security (she received about $250,000 for a post on Instagram). On August 4, 2023, in the SEC’s most recent touting case, singer Austin Mahone consented to a judgment under which he paid about $46,000 for illegal touting. The simple concept behind…
Quantstamp is a Blockchain security firm that raised funds through an initial coin offering (ICO). According to the SEC, in August 2017, Quantstamp released a White Paper with respect to its upcoming offering of a crypto asset called QSP, which described Quantstamp’s plans to develop a protocol on the Ethereum blockchain that would provide automated security audits of smart contracts (the “Protocol”). The White Paper also described Quantstamp’s plans to implement a governance system “after the…
On July 13, 2023, Judge Analisa Torres of the United States District Court or the Southern District of New York issued an Order on competing motions for summary judgment in the closely followed SEC v. Ripple Labs, Inc. litigation. As the first court decision to broadly address the question of whether a cryptocurrency itself is a security, as the SEC has maintained it is in most circumstances, the Order may have broad implications to the state of…
In November 2022, U.S. District Judge Paul J. Barbadoro of the District of New Hampshire held that LBRY, Inc. had conducted unregistered offerings of securities in violation of § 5 of the Securities Act with respect to its offer of sale of its LBC token. That token was meant to be used by content creators and audience members on LBRY’s “content marketplace,” which billed itself as an alternative to YouTube. On July 11, 2023, the judge…
BlockFi is a wealth management and trading firm for cryptocurrency holders that first commenced operations in 2017. In July 2021, we wrote about BlockFi’s bumpy road to going public, even though its valuation had just hit $5 billion. In February 2022, the SEC announced that BlockFi had agreed to pay $100 million in fines ($50 million to the SEC and $50 million to 32 states) to settle charges that it failed to register the offers…
The pace of the SEC’s crypto crackdown ramped up in early June 2023 with the Commission’s highest profile actions against crypto trading platforms since the crypto market turmoil at the end of 2022. The SEC’s actions place crypto trading platforms and the market as a whole on extremely uncertain regulatory footing in the US, and the frustration from the industry is palpable. The SEC’s enforcement activity comes immediately on the heels of promising legislative efforts from Congress,…
As we have discussed often in this space, Chairman Gary Gensler of the United States Securities and Exchange Commission has repeatedly expressed his view that most cryptocurrency tokens are unregistered securities and that, in his view, existing securities laws are clear enough for cryptocurrency firms to comply with them. The crypto industry has a different view and, among other things, has bemoaned the practice of the SEC’s labeling of certain tokens as investment contracts through…
Coinme is a company that started by making cryptocurrency transactions available through ATM machines. It originally used its own ATMs but, in January 2019, abandoned that business model and used, instead, the kiosks of the coin counting company, Coinstar. On April 28, 2023, the U.S. Securities and Exchange Commission announced settled charges with Coinme, its subsidiary Up Global, and CEO Respondent Neil Bergquist for conducting unregistered offers and sales of securities in the form of…
On April 14, 2023, the United States Securities and Exchange Commission (“SEC”) reopened the comment period and provided supplemental information on proposed amendments to Rule 3b-16 under the Securities Exchange Act of 1934 (“Exchange Act”) which defines certain terms used in the definition of “exchange” in Section 3(a)(1) of the Exchange Act.. The reopening is primarily intended to address the significant comments received by the SEC in response to the initial proposal, many of which…
On April 17, 2023, the U.S Securities and Exchange Commission charged crypto asset trading platform Bittrex, Inc. and its co-founder and former CEO William Shihara. with operating an unregistered national securities exchange, broker, and clearing agency. It also charged Bittrex, Inc.’s foreign affiliate, Bittrex Global GmbH, with failing to register as a national securities exchange in connection with its operation of a single shared order book along with Bittrex. The complaint was filed in federal court…