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SEC

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On May 28, 2020, the U.S. Securities and Exchange Commission announced charges against blockchain services company BitClave PTE Ltd. for conducting an unregistered initial coin offering of digital asset securities. In June 2017, BitClave began marketing the development of a platform called the BitClave Active Search Ecosystem (“BASE”). BitClave advertised that on BASE, once developed, customers would receive a digital asset the company created, CAT, in exchange for viewing and interacting with targeted ads. Around…

We previously reported here and here about the case the U.S. Securities and Exchange Commission brought against Telegraph. In March, Judge Kevin Castel of the Southern District of New York granted the SEC’s preliminary injunction request preventing the distribution to purchasers of $1.7 billion worth of cryptocurrency called “Grams,” which were going to be allotted upon the launch of Telegram’s TON blockchain. Judge Castel then denied Telegram’s request that the injunction be limited so as not…

On April 24, 2020, the U.S. Securities and Exchange Commission brought suit in federal district court in California, charging Dropil, Inc. and its three founders, Jeremy McAlpine, Zachary Matar, and Patrick O’Hara, with defrauding investors in a fraudulent and unregistered initial coin offering (ICO) that raised more than $1.8 million from about 2500 investors. As the SEC announced, according to the complaint, from at least January to March 2018, Dropil sold DROP tokens, claiming that…

The U.S. Securities and Exchange Commission filed charges on April 2, 2020 against Texas resident and former pastor Larry Donnell Leonard, II, his wife Shuwana Leonard, and two related entities for defrauding hundreds of retail investors. The SEC’s complaint alleges that the Leonards and two companies they control, Teshuater, LLC and Teshua Business Group, LLC, targeted investors in the African-American community with three separate fraudulent offerings, raising nearly $500,000 from over 500 investors across the…

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…