Category

SEC

Category

In a decision dated March 24, 2020, Judge Kevin Castel of the Southern District of New York granted a preliminary injunction request by the U.S. Securities and Exchange Commission preventing the distribution to purchasers of $1.7 billion worth of cryptocurrency called “Grams.” In 2018, Telegram sold “interests in Grams” to 175 entities and high-net-worth individuals. These “Gram Purchase Agreements” entitled the initial purchasers to receive an allotment of Grams upon launch of the TON Blockchain.…

On March 20, 2020, the district court unsealed the file in a case that U.S. Securities and Exchange Commission brought against three individuals accused of bilking investors inside and outside the U.S. The case was initially filed under seal because the Commission sought, and obtained, an asset freeze and other emergency relief to halt an ongoing securities fraud (as claimed by the Commission). The SEC’s complaint alleges that Florida residents Robert Dunlap and Nicole Bowdler…

In a January 14, 2020 filing with the U.S. Securities and Exchange Commission (SEC), Bitwise Asset Management requested the withdrawal of its application for a cryptocurrency-linked exchange traded fund (ETF). This came after the SEC had rejected Bitwise’s proposal in October 2019. On February 26, 2020, the SEC issued an Order that rejected the request by Wilshire Phoenix for a Bitcoin-based ETF. The SEC’s reasoning was similar to what it had said in 2019 with…

On February 19, 2020, the U.S. Securities and Exchange Commission announced that it had settled charges against blockchain technology startup Enigma MPC for conducting an unregistered offering of securities in the form of an initial coin offering (ICO). Enigma, based in San Francisco and Israel, has agreed to return funds to harmed investors and to other relief. According to the SEC’s order, Enigma raised approximately $45 million from sales of its digital assets (called ENG…

Hester Peirce, who is a Commissioner of the U.S. Securities and Exchange Commission (SEC) and affectionately referred to as Crypto Mom, formally proposed, during a speech on February 6, a safe harbor from certain U.S. securities laws aimed at cryptotoken network developers. The proposed safe harbor would provide network developers with a three-year exemption from certain aspects of U.S. securities laws with respect to token transactions so long as certain conditions are met. Ms. Peirce…

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…

On December 18, 2019, the U.S. Securities and Exchange Commission announced that it had settled charges against blockchain technology company Blockchain of Things Inc. (BCOT) for conducting an unregistered initial coin offering of digital tokens. According to the SEC’s Order, BCOT raised nearly $13 million to develop and implement its business plans, including developing its blockchain-based technology and platform.  As noted in the SEC’s Order, BCOT explained that its platform was intended to allow third-party…

On October 11, 2019 the U.S. Securities and Exchange Commission announced that it has filed an emergency action and obtained temporary restraining order against two offshore entities conducting an alleged unregistered, ongoing digital token offering in the U.S. and overseas that has raised more than $1.7 billion of investor funds. According to the SEC’s complaint, Telegram Group Inc. and its wholly-owned subsidiary TON Issuer Inc. began raising capital in January 2018 to finance the companies’…

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…