The U.S. Commodity Futures Trading Commission announced on April 20 that it had issued an Order of Designation to Bitnomial Exchange, LLC located in Chicago, Ill., granting it status as a designated contract market (DCM). As a result, Bitnomial joins a small number of other companies able to offer Bitcoin futures and option contracts. According to Bitnomial’s press release, “The approval allows Bitnomial to tackle a confluence of generational shifts in financial markets: First, a…
The U.S. Commodity Futures Trading Commission (CFTC) filed a complaint, on April 16, in the U.S. District Court for the Middle District of Florida, charging defendants Alan Friedland of Florida and his Florida-based companies, Fintech Investment Group, Inc. (Fintech) and Compcoin LLC, with fraudulently soliciting more than $1.6 million from their customers in connection with a leveraged or margined off-exchange foreign currency (forex) scheme. According to the complaint, starting in at least 2016 and proceeding through 2018, Friedland and his companies fraudulently…
Last December, the Commodity Futures Trading Commission (CFTC) issued a public call for feedback to “better inform the Commission’s understanding” of the Ethereum network and the cryptocurrency ether. The CFTC said input would better inform the agency in the event that market participants submit proposals to list new cryptocurrency-based futures or derivatives products. The CFTC has already recognized the trading of Bitcoin-based derivatives. Speaking at the Yahoo! Finance All Markets Summit on Thursday October 10, and as reported by…
On March 11, 2019, the U.S. Commodity Futures Trading Commission (CFTC) announced that it had entered into a Consent Order resolving a CFTC action against 1pool Ltd., located in the Marshall Islands, and its chief executive officer and owner, Patrick Brunner, for illegally offering retail commodity transactions that were margined in bitcoin, failing to register as a futures commission merchant (FCM), and failing to meet its supervisory duties by not having the required anti-money laundering…
House bills with bipartisan support would direct regulators to examine new ways to oversee digital assets and protect them from manipulation, as some lawmakers strive to make financial technologies more mainstream. One bill, the “U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2019” (H.R. 923), would direct the Commodity Futures Trading Commission (“CFTC”), consulting with the Securities and Exchange Commission and other agencies, to report to committees including Senate Banking and House Financial Services…
LabCFTC, the FinTech engagement arm of the Commodity Futures Trading Commission (CFTC), this week released a primer on smart contracts that provides examples of contract logic, describes a decentralized blockchain, and details applications. The primer also highlights potential operational and regulatory challenges and risks. The primer acknowledges that a smart contract potentially can be a binding legal contract subject to a variety of legal frameworks. Among them are the CFTC, federal and state securities, tax,…
On September 27, the US Securities and Exchange Commission (SEC) filed charges against an international securities dealer and its Austria-based CEO for allegedly violating the federal securities laws in connection with security-based swaps funded with Bitcoins. According to the SEC’s Complaint, 1pool Ltd. a/k/a 1Broker, registered in the Republic of the Marshall Islands, and its CEO Patrick Brunner, solicited investors from the United States and around the world to buy and sell security-based swaps. Investors…
The U.S. Commodity Futures Trading Commission (CFTC) announced the filing of a Complaint in the U.S. District Court for the Eastern District of New York charging Defendants Blake Harrison Kantor, who frequently uses the alias Bill Gordon, and Nathan Mullins, and the entities Blue Bit Banc, Blue Bit Analytics, Ltd. with operating a fraudulent scheme involving binary options and a virtual currency known as ATM Coin. The district court, on April 17, 2018, entered a…
As early as September 2015, the CFTC took the position that virtual currencies such as Bitcoin are commodities. See In re Coinflip, Inc., No. 15-29 (C.F.T.C. Sep. 17, 2015). Based on that jurisdiction, in January, the CFTC brought a suit against Patrick K. McDonnell, of Staten Island, New York, and CabbageTech, Corp. d/b/a Coin Drop Markets (CDM). McDonnell brought a motion challenging the jurisdiction of the CFTC. In a decision yesterday, the district court held that,…
In a speech yesterday, Sigal Mandelker, the under secretary for terrorism and financial intelligence for the US Department of the Treasury, pushed for stronger regulation of cryptocurrency. She stated that Treasury regulates virtual currency exchangers as money transmitters and requires them to abide by Bank Secrecy Act obligations. Of specific concern is that these exchanges be mindful of the anti-money laundering (AML) and combating the financing of terrorism (CFT) obligations. She said: Virtual currency businesses…