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David Zaslowsky

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We previously reported that, in July 2019, the IRS announced that it had begun sending the now infamous letters to taxpayers who, supposedly, may have failed to properly report income and pay taxes associated with cryptocurrency transactions. About 10,000 of these Letter 6173 were sent. On tax day (July 15 this year) the IRS was sued in connection with these letters. The complaint alleges that Plaintiff James Harper opened an account with Coinbase in 2013. …

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…

On July 7, 2020, the Texas State Securities Board issued an Order against Mirror Trading International (MTI) to cease operations immediately, alleging the South African bitcoin and forex trading network is a multilevel marketing scam. According to the Order, Mirror Trading, controlled by Cornelius Johannes “Johan” Steynberg, is recruiting multilevel marketers to illegally sell fraudulent investments in a bitcoin and forex pool. Investors allegedly purchase the products by transferring bitcoin to Mirror Trading. Mirror Trading…

In the context of a search warrant in a criminal case, the Fifth Circuit Court of Appeals in the United States held that the virtual currency exchange Coinbase was like a “traditional bank.” The details of the case, U.S. v Gratkowski, Case No. 19-50492 (5th Cir. June 30, 2020), are as follows. Richard Gratkowski became the subject of a federal investigation when federal agents began investigating a child-pornography website. To download material from the website,…

On June 25, 2020, the U.S. Securities and Exchange Commission charged NAC Foundation, its Chief Executive Officer Marcus Andrade, and political lobbyist Jack Abramoff with conducting a fraudulent, unregistered offering of AML BitCoin, a digital asset security the defendants claimed was a new and improved version of bitcoin. The SEC alleges that Nevada-based NAC Foundation raised at least $5.6 million from more than 2,400 investors by selling tokens that could later be converted to AML…

The U.S. Securities and Exchange Commission announced on June 19, 2020 that it had filed an emergency action and obtained a temporary restraining order and asset freeze against two Pennsylvania-based brothers and three entities they control to stop an offering fraud and the misappropriation of investor proceeds. According to the SEC’s complaint, from at least July 2019 through May 2020, brothers Sean Hvizdzak and Shane Hvizdzak offered securities in a private fund that purported to invest in…

On June 5, 2020, the U.S. Securities and Exchange Commission unsealed a complaint it had filed on May 7, 2020 in Salt Lake City, Utah against Daniel F. Putnam, Jean Paul Ramirez Rico and Angel A. Rodriguez, as well as their company, MMT Distribution. The SEC also announced that it obtained an asset freeze and other emergency relief against the Defendants. The SEC’s complaint, alleges that, beginning in at least July 2017, Putnam operated a multilevel…

On May 28, 2020, the U.S. Securities and Exchange Commission announced charges against blockchain services company BitClave PTE Ltd. for conducting an unregistered initial coin offering of digital asset securities. In June 2017, BitClave began marketing the development of a platform called the BitClave Active Search Ecosystem (“BASE”). BitClave advertised that on BASE, once developed, customers would receive a digital asset the company created, CAT, in exchange for viewing and interacting with targeted ads. Around…

On May 22, 2020, the World Economic Forum’s Global Blockchain Council released the Presidio Principles. The WEF makes clear that the principles are intended to serve as a steering document for the community; they are not legally binding and are intended to be aspirational. The document calls on “all actors, including developers, governments, executives, international organisations, corporate boards, and others, to uphold these tenets as they build blockchain applications – and to self-direct their ecosystems…

We previously reported here and here about the case the U.S. Securities and Exchange Commission brought against Telegraph. In March, Judge Kevin Castel of the Southern District of New York granted the SEC’s preliminary injunction request preventing the distribution to purchasers of $1.7 billion worth of cryptocurrency called “Grams,” which were going to be allotted upon the launch of Telegram’s TON blockchain. Judge Castel then denied Telegram’s request that the injunction be limited so as not…