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SEC

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For years, we have been writing about the reluctance of the U.S. Securities and Exchange Commission to approve a Bitcoin exchange-traded fund. See here and here. The stated concern of the SEC was whether the Bitcoin market was sufficiently resistant to market manipulation. However, as we recently reported, on February 12, 2021, Canada approved such an ETF. Indeed, it now has three: I Galaxy Bitcoin ETF (BTCX), Purpose Bitcoin ETF (BTCC), and the Evolve Bitcoin ETF (EBIT).…

Before the current run-up in cryptocurrency prices, there were the wild days of late 2017 into 2018. One of the poster-children for that craze was an iced-tea company in Long Island, New York known as Long Island Iced Tea. From approximately 2015 to 2017, the company’s principal business was ready-to-drink beverages. In December 2017, the company changed its name to Long Blockchain Corp. (LBCC) and announced that it was shifting its business operations from soft…

On February 17, 2021, the U.S. Securities and Exchange Commission announced charges against Coinseed, a company that purported to offer a mobile investment application that enabled users to invest in digital assets, and its co-founder and Chief Executive Officer, Delgerdalai Davaasambuu, in connection with Coinseed’s offer and sale of digital asset securities. According to the SEC’s complaint, from at least December 2017 to May 2018, Coinseed and Davaasambuu sold digital asset securities called “CSD tokens”…

The U.S. Securities and Exchange Commission announced on December 28, 2020 that it had filed an emergency action and obtained an order imposing an asset freeze and other emergency relief against Virgil Capital LLC and its affiliated companies in connection with an alleged securities fraud relating to Virgil Capital’s flagship cryptocurrency trading fund, Virgil Sigma Fund LP. The Commission’s action alleges that the fraud was directed by Virgil co-founder, 23-year-old Stefan Qin, an Australian citizen…

The U.S. Securities and Exchange Commission continued to the very end of 2020 to pursue companies that engaged in ICOs without proper registration. One December 23, 2020, the SEC settled charges against Texas-based blockchain startup company Tierion, Inc. for conducting an unregistered offering of securities in the form of a “token sale.” According to the SEC’s order, Tierion raised approximately $25 million through the sale of “Tierion Network Tokens” (TNT) in July of 2017. The…

ShipChain was a company engaged in developing a logistics tracking and management platform using the Ethereum blockchain technology. During the height of the ICO craze in late 2017, ShipChain raised more than $27 million in an ICO. On December 22, 2020, the U.S. Securities and Exchange Commission ordered ShipChain to cease and desist and to pay a $2.05 million penalty. As the Order explained, ShipChain first launched its ICO in October 2017, and the ICO continued through…

On November 19, 2020, the U.S. Securities and Exchange Commission issued a no-action letter to IMVU, Inc in connection with the sale of its VCOIN token. IMVU describes itself as the world’s largest avatar-based social platform with a global network of over seven million monthly active users. These users create 3D avatars to meet new friends, interact, and play games in virtual environments online and through IMVU’s app. IMVU’s No-Action Letter Request to the SEC argued that…

On September 21, 2020, the U.S. Office of the Comptroller of the Currency (OCC), the regulatory agency charged with overseeing banks, published an interpretive letter clarifying national banks’ and federal savings associations’ authority to hold “reserves” on behalf of customers who issue certain stablecoins. Generally, a stablecoin is a type of cryptocurrency designed to have a stable value as compared with other types of cryptocurrency, which frequently experience significant volatility. One type of stablecoin is…

On September 15, 2020, the U.S. Securities and Exchange Commission announced charges against Unikrn Inc., an operator of an online eSports gaming and gambling platform for conducting an unregistered initial coin offering (ICO) of digital asset securities. Unikrn agreed to settle the charges by paying a $6.1 million penalty, substantially all of the company’s assets, to be distributed to investors through a Fair Fund. According to the SEC’s order, between June and October 2017, Unikrn raised approximately…

On August 13, 2020, the U.S. Securities and Exchange Commission announced charges against Virginia-based Boon.Tech and its chief executive officer Rajesh Pavithran for fraud and registration violations in connection with a $5 million initial coin offering of digital asset securities.  According to the SEC’s from November 2017 to January 2018, Boon.Tech and Pavithran raised approximately $5 million by selling Boon Coins to more than 1,500 investors in the U.S. and worldwide to raise funding to…