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…
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…
On July 11, 2023, the Unites States Attorney’s office for the Southern District of New York announced that it had arrested Shakeeb Ahmed and charged him with wire fraud and money laundering in connection with his attack on a decentralized cryptocurrency exchange (the “Crypto Exchange”). Although the indictment did not identify the exchange, based on the facts described in the indictment, it has been reported that the hack was against Crema Finance, a decentralized cryptocurrency platform…
About two years ago, we wrote a post about actions being taken by the U.S. Internal Revenue Service (“IRS”) in connection with its concern that cryptocurrency owners were underreporting or failing to report gains. One such action was the use of John Doe summonses. The IRS issues a John Doe summons when it wants to obtain information about a group of unidentified taxpayers where it suspects many are non-compliant. If successful, a John Doe summons…
On June 27, 2023, the Official Committee of Unsecured Creditors (the “Committee”) in the BlockFi Chapter 11 bankruptcy reorganization case filed an Objection to the company’s Plan and essentially requested that the company be liquidated. The Official Committee is made up largely of 600,000 individual customers of BlockFi. The Committee based its position on the contention that the “the ‘reorganization’ case is over.” As it states, the Debtors’ investment bankers ran an extensive M&A process,…
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…
On June 8, 2023, Judge Orrick of the Northern District California entered an Order and Default Judgment in a case the U.S. Commodity Futures Trading Commission (“CFTC”) brought against the Ooki DAO. The case has garnered a lot of attention because of issues it raised concerning whether a DAO (a decentralized autonomous organization) could be held liable for violating the law. Indeed, the CFTC issued a Statement that said: [I]n a precedent-setting decision, the court…
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…
There has been much publicity over the lawsuit brought against celebrities such as Tom Brady and Larry David for their endorsement of FTX. In that case, the judge refused a request to serve Shaquille O’Neal through social media platforms, including Twitter, based on O’Neal’s allegedly taking steps to avoid service. But there is a similar case in Miami, assigned to district judge Cecilia M. Altonaga, brought against Tom Nash and other social media influencers in…
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…