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Patrick Dennien

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On Tuesday, September 11, the Financial Industry Regulatory Authority (“FINRA”) took its first disciplinary action against an industry professional, charging a broker, Timothy Tilton Ayre, with securities fraud and the unlawful distribution of an unregistered cryptocurrency security, HempCoin. FINRA’s complaint alleges that Ayre attempted to lure public investment in his public company, Rocky Mountain Ayre, Inc., by issuing and selling HempCoin.  Ayre made a host of fraudulent statements about his company’s business and finances, as…

On August 22, the Securities and Exchange Commission (“SEC”) issued three separate orders rejecting multiple applications which would have allowed the listing and trading of  Bitcoin exchange-traded funds (“ETFs”).  Two of the orders involved NYSE Arca, Inc., an exchange headquartered in Chicago.  NYSE Arca submitted proposed rule changes which would allow it to list shares on behalf of two Proshares ETFs and five Direxion ETFs.  The third order involved a proposed rule change by the…

On July 16 the Financial Stability Board (“FSB”) published a report establishing a framework to monitor-crypto-asset markets.  The report sets out the metrics that the FSB will use to monitor crypto-asset markets in order to identify any emerging financial stability concerns in a timely manner. The FSB is an international body made up of national financial authorities, international financial institutions, and international standard-setting bodies, and monitors and makes recommendations about the global financial system. The…

On July 2, the U.S. Securities and Exchange Commission charged two men with the illegal sale of securities related to UBI Blockchain Internet, Ltd. (“UBIB”).  The SEC alleges that T.J. Jesky and Mark F. DeStefano made approximately USD 1.4 million by selling shares in UBIB over a 10-day period in December 2017 and January 2018.  The sales stopped when the SEC temporarily suspended trading in UBIB stock earlier this year due to concerns about the…

On June 25 U.S. federal Chief Magistrate Judge Andrea Simonton issued a Report and Recommendation concluding that Centra Tokens, issued by tech startup Centra Tech, were investment contracts and therefore securities.  There are reports in the press that this is the first time a US court has found that the issuance and sale of tokens through an ICO must comply with federal securities laws. The case in question, Rensel v. Centra Tech, Inc., is a…

In our article for Bloomberg Law, we discuss the legal questions arising out of the announcement by William Hinman (SEC Director of the Division of Corporate Finance) that ether and bitcoin—the popular cryptocurrencies—would not qualify as securities.  Numerous news organizations, as well as FinTech and cryptocurrency blogs, jumped on the announcement, reporting it as a major clarification regarding the legal status of cryptocurrencies and initial coin offerings.  Unfortunately, there is a real risk that, rather…

On June 11 Wells Fargo became the latest major U.S. bank—with JPMorgan Chase, Bank of America, and Citigroup—to put in place a prohibition against using its credit cards to purchase cryptocurrency.  Despite Wells Fargo’s attempt at a low-key implementation, the ban was quickly picked up by a raft of news organizations.  A spokesperson for Wells Fargo issued the following statement: “Customers can no longer use their Wells Fargo credit cards to purchase cryptocurrency.  We’re doing…

On May 29 the Securities and Exchange Commission (“SEC”) announced it had obtained a court order halting the ICO of BAR, a coin developed by Michael Stollery, commonly known as Michael Stollaire, and his firm Titanium Blockchain Infrastructure Services.  The SEC also obtained an order approving an emergency asset freeze and the appointment of a receiver for Titanium Blockchain. In its complaint, the SEC alleged that Stollaire lied about business relationships with the Federal Reserve…

In June 2015 New York leapt forward and introduced the BitLicense.  The BitLicense regulations prohibit companies from engaging in “virtual currency business activity” in New York, or with New York residents, without a license.  The idea is that the state will act as a gatekeeper for what is seen as high-risk business activity to ensure that companies dealing in virtual currency are structurally sound and have in place adequate protective measures, such as capital requirements…

What’s changed The U.S. Government is considering adding digital currency addresses affiliated with individuals and entities identified to the List of Specially Designated Nationals and Blocked Persons (“SDN List”).  This would put U.S. persons on notice that doing business with those digital addresses may be prohibited, increasing compliance considerations for businesses delving into the world of virtual currency. What it means for you On March 19, 2018, the U.S. Office of Foreign Assets Control (“OFAC”)…