On January 8, 2020, the SEC announced that it had charged Donald G. Blakstad and two entities he controlled with engaging in the fraudulent offer and sale of over $3.5 million of securities. The SEC’s complaint alleges that, between July 2015 and May 2019, Blakstad induced investors to purchase the securities of companies he controlled, including both Energy Sources International Corporation and Xact Holdings Corporation, by making materially false and misleading statements and omissions about…
We have previously reported on the SEC’s case against Longfin Corp and its founding CEO and controlling shareholder, Venkata Meenavalli. The SEC’s complaint alleged that Longfin and Meenavalli obtained qualification for a Regulation A+ offering by falsely representing in public filings that the company was managed and operated in the U.S. According to the complaint, Longfin and Meenavalli then distributed over 400,000 Longfin shares to Meenavalli’s affiliates, and misrepresented the offering to Nasdaq in order to meet…
A group of investors in Ripple’s cryptocurrency XRP filed an amended complaint exploiting recent guidance published by the Strategic Hub for Innovation and Financial Technology (FinHub) of the U.S. Securities and Exchange Commission (SEC). The SEC’s “Framework for ‘Investment Contract’ Analysis of Digital Assets” provides guidance for evaluating whether a particular cryptocurrency has the characteristics of an “investment contract” and therefore subject to registration under federal securities laws. The SEC’s “Framework” identifies each of the…
On June 21, 2019 a Connecticut federal judge certified a class of alleged victims of a cryptocurrency mining Ponzi scheme. Class certification is another step forward in providing legitimate avenues of restitution for those who have been defrauded by cryptocurrency schemes. The suit, led by Denis Marc Audet, alleges that GAW Miners LLC, ZenMiner LLC, and Stuart Fraser (who allegedly had control of the two companies) defrauded him and thousands like him in violation of…
We previously reported that, in November 2018, in a first of its kind case, the SEC charged celebrities DJ Khaled and Floyd Mayweather with touting violations involving ICOs. Without admitting or denying the findings, Mayweather and Khaled agreed to pay disgorgement, penalties and interest. One of the ICOs that they touted was Centra Tech. They were also sued for securities law violations in a civil case brought by Centra Tech investors. The case was based on…
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…
In an earlier post, we reported on the North American Securities Administrators Association (NASAA)’s Operation Cryptosweep, coordinated series of enforcement actions by state regulators to crack down on fraudulent cryptocurrency-related investment schemes. Under that operation, the Vermont Department of Financial Regulation issued, on June 4, a cease and desist order to LevelNet, of Irving, California, for violations related to the Vermont Uniform Securities Act. According to the department, LevelNet is conducting an ICO seeking to…
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 a press release issued on May 21, The North American Securities Administrators Association (NASAA)t announced one of the largest coordinated series of enforcement actions by state and provincial securities regulators in the United States and Canada to crack down on fraudulent ICOs, cryptocurrency-related investment products, and those behind them. NASAA members from more than 40 jurisdictions throughout North America participated in “Operation Cryptosweep,” which to date has resulted in nearly 70 inquiries and investigations…
Defendants in this case created a cryptocurrency called Alibabacoin and used the Alibaba name on its alibabacoinwallet.com websites, Facebook page, and phone applications. Online retailer Alibaba sued for infringement of its federally registered “Alibaba” mark. Despite finding it that there was subject matter jurisdiction under the Lanham Act (the US federal trademark statute), the court denied Alibaba’s motion for a preliminary injunction without prejudice to renewal upon a showing of personal jurisdiction. The court held…