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ICO

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The U.S. SEC’s continued effort to try to walk a tightrope regarding regulation of ICO’s was on display again yesterday.  Chairman Clayton has famously said that “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security.”  Yet, during testimony yesterday,  William Hinman, the director of the SEC’s Division of Corporation Finance, stated his division is “striving for a balanced approach,” and repeated the oft-voice concern that they…

In a speech on new technologies on Friday, Hong Kong Securities and Futures Commission (SFC) deputy chief Julia Leung reiterated previous concerns of risks associated with ICOs.  She acknowledged that innovative technologies such as blockchain have the potential to improve efficiency and financial inclusion, but warned “that does not entitle anyone to conduct fundraising from the public in violation of securities law.”  More frankly, she noted that ICOs: [A]re dubious, if not downright frauds.  The…

The Texas State Securities Board issued a report summarizing its a four-week investigation of securities offerings tied to virtual currencies.  They opened 32 investigations in the period commencing December 18, 2017.  Among the findings: No promoters were registered to sell securities in Texas, a violation of the Texas Securities Act; 30 promoters were broadly using websites, social media, and onlineadvertising to market to Texans; Seven promoters were offering securities tied to a new cryptocurrency; At…

A class action lawsuit was brought today on behalf of investors in Nano f/k/a RaiBlocks (XRB), alleging, according to the plaintiffs’ lawyers, that Nano and key members of its core team violated federal securities laws and that, in their push to introduce XRB to a wide market of investors, recklessly directed investors to open accounts and place their assets with a little known, and severely troubled, Italian cryptocurrency exchange called BitGrail.  On February 9, 2018,…

The U.S. Securities and Exchange Commission announced today that it charged two co-founders of a purported financial services start-up with orchestrating a fraudulent initial coin offering (ICO) that raised more than $32 million from thousands of investors last year. Criminal authorities separately charged and arrested both defendants. The SEC’s complaint alleges that Sohrab “Sam” Sharma and Robert Farkas, co-founders of Centra Tech., Inc., masterminded a fraudulent ICO in which Centra offered and sold unregistered investments…

The office of Massachusetts Secretary of State announced today that it had halted ICOs from five companies, claiming that the sale of digital tokens amounts to the unregistered offering of securities.  Mattervest Inc, Pink Ribbon ICO, Across Platforms Inc, Sparkco Inc and 18 Moons were all ordered to  stop sales of their coins.  The firms, which were all either incorporated in Massachusetts or named the state as their principal place of business, were offering and…

Reuters reported that, starting tomorrow,  Twitter will ban cryptocurrency ads.  The prohibition will cover advertising of ICOS and ads by cryptocurrency exchanges and cryptocurrency wallet services, unless they are public companies listed on certain major stock markets.  Facebook banned ads promoting cryptocurrencies in January.  Earlier this month, Google announced that its ban of  cryptocurrency-related content, including ICOs, wallets, and trading advice, would go into effect in June.

The global frenzy around cryptocurrencies has seen prices fluctuate dramatically over the past year, leading to a growing interest among Malaysian investors. The Central Bank of Malaysia (BNM) has repeatedly maintained its position that digital currencies are not legal tender in Malaysia, and has advised the public to be cautious of the risks that come with them. While there are no specific Malaysian regulations governing cryptocurrencies or their exchanges, the Malaysian Anti-Money Laundering, Anti-Terrorism Financing…

Initial Coin Offerings are now mushrooming in Germany as well.  Besides the recent Savedroid ICO, the local Frankfurt news section of the Frankfurter Allgemeine Zeitung recently  mentioned at least three more transactions that are in the process of being launched. Like its many European counterparts, the German regulator BaFin is very skeptical regarding blockchain-based coin (“token”) sales and has issued a number of warnings to consumers. More recently, on 20 February 2018, the BaFin published…