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ICO

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On the 23rd and 24th November 2018, the Blockchain Leadership Summit was held in Basel, Switzerland. The participating leaders represented states (for example, Maltese Prime Minister Joseph Muscat), blockchain businesses, the finance sector, academia as well as various industries. Manuel Meyer and Yves Mauchle of Baker McKenzie Zurich held a workshop on structuring an initial coin offering. The first topic of the workshop was the regulatory categorization of the token based on its underlying economic…

On December 17 we published an article in Law360 describing the SEC’s busy November in which it secured three “firsts” in its crackdown on unlawful digital activity: (1) its first enforcement action against an entity for operating as an unregulated national securities exchange; (2) its first cases imposing civil penalties solely for ICO securities offering registration violations; and (3) its first cases charging touting violations involving ICOs.  By highlighting its own “firsts,” the SEC was…

Recent posts have discussed proceedings brought by the SEC in connection with ICOs that violated the securities laws.  But private plaintiffs can also bring suits alleging violations of securities laws based on a company’s failure to register a token as a security.  That is the claim being made in Solis v. Latium Network, Inc.  On December 10, 2018, the judge in that case decided that the allegations in the complaint were sufficient to survive a…

The U.S. SEC has shown it seriousness in cracking down on noncompliant ICOs by pursuing enforcement in a number of different ways.  We have reported on the SEC’s recent first-time enforcement action against an entity for operating as an unregulated national securities exchange and its recent first cases imposing civil penalties solely for ICO securities offering registration violations.  Yesterday marked another new first.  The cases brought against celebrities  DJ Khaled and Floyd Mayweather were the first…

On November 27, 2018, the U.S. District Court for the Southern District of California issued a decision that is already being reported as one holding that a token is not a “security.”  That is incorrect.  The court left for another day the issue of whether the token in question meets the securities law definition of a “security.”  It merely held that, for purposes of the request for a preliminary injunction, the court could not conclude that…

On Friday, November 16, the U.S. Securities and Exchange Commission announced that it had settled charges against two companies that sold digital tokens in ICOs.  Munchee, Inc. was the Commission’s first non-fraud ICO registration case and the Commission did not impose a penalty or include undertakings from Munchee, which stopped its offering before delivering any tokens and promptly returned proceeds to investors.  Friday’s cases are the first cases imposing civil penalties solely for ICO securities…

Last Friday, November 16, the U.S. Securities and Exchange Commission Division of Corporation Finance, Division of Investment Management, and Division of Trading and Markets issued a “Statement on Digital Asset Securities Issuance and Trading.”  The purpose was to note that, while the SEC encourages technological innovation, market participants must still adhere to the Commission’s well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated…

On October 24, 2018, the Japanese Financial Services Agency (JFSA) accredited the Japan Virtual Currency Exchange Association (JVCEA, established in March 2018) as a self-regulatory organization under the Payment Services Act (PSA). On the same day, an initial set of self-regulations and related guidelines came to effect, as prepared by the JVCEA. Going forward, it is anticipated that the JVCEA will cooperate with continued inspection and monitoring by the JFSA and will act to enhance…

On Monday 3 October, the European Parliament adopted a non-legislative Resolution on distributed ledger technologies (DLT) / blockchain. In the Resolution, the Parliament makes clear that it is keen to make Europe a leading player in the blockchain field. It discusses a range of blockchain use cases including: improving data efficiency and the reporting of clinical trials in the health sector; improving supply chain processes, such as facilitating the forwarding and monitoring of origin of…

On September 19,  2018, the Ukranian Parliament published a draft law which aims to set out the legal basis for the taxation of transactions involving virtual assets. The draft law defines the concept of “virtual assets,”  as well as concepts such as “cryptocurrency,”  “distributed ledger,” “token,” and “mining.” The draft law (available here in Ukrainian) seeks to introduce a separate taxation regime for transactions involving virtual assets. Thus, if a transaction involves a conversion of…