In February 2018, the UK Treasury Committee launched an inquiry into digital currencies. In the course of its inquiry the Committee received oral and written evidence from a number of key players in the crypto space, including representatives from Ripple, CryptoUK and Blockchain, together with evidence from the FCA (the UK financial services regulator), the Bank of England and HM Treasury. Earlier than expected, the Treasury Committee published its crypto-assets report and conclusions and recommendations…
Last week we reported that FINRA brought its first-ever disciplinary action in the cryptocurrency space. But there were also two other first-of-their-kind enforcement actions last week by the U.S. SEC. On September 11, the SEC announced its first-ever enforcement action finding an investment company registration violation by a hedge fund manager based on its investments in digital assets. The SEC entered an Order finding that Crypto Asset Management LP (“CAM”) offered a fund that operated…
On Tuesday, September 11, a New York Federal Judge rejected a defendant’s argument that he cannot be prosecuted because the digital coins he sold were not securities. Maksim Zaslavskiy is accused of making materially false and fraudulent representations in connection with two investment schemes and ICOs for REcoin Group Foundation, LLC (“REcoin”) and DRC World, Inc. (“Diamond”). Zaslavskiy claimed that REcoin and Diamond did not involve securities and were therefore beyond the reach of the…
Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC) has released its 2018-2019 to 2021-2022 corporate plan (the Plan), articulating the regulator’s short and medium term strategic vision and focus. Cryptocurrencies, ICOs and blockchain featured as part of the Plan, reflecting their growing relevance for ASIC in protecting investors and markets. In summary, the Plan: acknowledges the significant impact that blockchain and distributed ledger technologies (DLT) are likely to have on Australia’s financial services…
In March 2018 the European Commission issued a proposal for a regulation on crowdfunding service providers (“CSPs”) (the “Proposal”) as part of its broader FinTech action plan. CSPs operate online platforms which facilitate investments in innovative companies, start-ups and other unlisted firms companies by private investors. The Proposal plans to enable CSPs to offer their services across Europe more easily and also to improve access to CSP services across the EU. On 10th August 2018,…
On August 14, the U.S. Securities and Exchange Commission (the “SEC”) recently obtained permanent officer-and-director and penny stock bars against the founder of a company who perpetrated a fraudulent ICO to fund oil exploration and drilling in California. According to the SEC’s order, David T. Laurance and Tomahawk Exploration LLC attempted to raise money through the sale of blockchain-based digital tokens called “Tomahawkcoins.” The SEC’s order finds that the defendants’ promotional materials used inflated projections…
The Australian Securities and Investment Commission (“ASIC”) has released further guidance on initial coin offerings (“ICOs”) and cryptocurrency compliance through its updated Information Sheet 225 (“Info 225”). ICOs are a new form of internet based capital-raising using cryptocurrencies to purchase digital coins or tokens known as ‘crypto-assets’. With regulation struggling to keep pace with this growing area of the financial services market, Info 225 gives greater clarity on the legal status of ICOs and crypto-assets in Australia. Info…
Thailand has moved closer to being among one of the first jurisdictions in the Asia-Pacific region (and globally) to facilitate ICOs through targeted regulation. According to a member of the Securities and Exchange Commission of Thailand (“SEC”), as reported by the Bangkok Post, five ICO projects are to be cleared by the regulator and permitted to move forward with their ICO plans (out of 50 ICO projects that applied for regulatory approval). This comes after…
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…
Lithuania becomes the latest jurisdiction to release guidance in relation to ICOs. On 8 June 2018, the Lithuanian Government released new Guidelines to deal with what it referred to as an “explosion of ICOs” in the country. Lithuania heralds itself as a leader in FinTech and has published the ICO Guidelines as a step towards more “certainty and transparency in the regulatory, taxation [and] accounting” requirements of ICOs, and also, importantly, to encourage the crypto…