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Last week we reported that FINRA brought its first-ever disciplinary action in the cryptocurrency space.  But there were also two other first-of-their-kind enforcement actions last week by the U.S. SEC. On September 11, the SEC announced its first-ever enforcement action finding an investment company registration violation by a hedge fund manager based on its investments in digital assets.  The SEC entered an Order finding that Crypto Asset Management LP (“CAM”) offered a fund that operated…

On August 22, the Securities and Exchange Commission (“SEC”) issued three separate orders rejecting multiple applications which would have allowed the listing and trading of  Bitcoin exchange-traded funds (“ETFs”).  Two of the orders involved NYSE Arca, Inc., an exchange headquartered in Chicago.  NYSE Arca submitted proposed rule changes which would allow it to list shares on behalf of two Proshares ETFs and five Direxion ETFs.  The third order involved a proposed rule change by the…

Unikrn is an esports gambling startup associated with that raised approximately $31 million through an initial coin offering (“ICO”) in October 2017.  Mark Cuban was one of the notable investors in Unikrn.  The company’s token, UnikoinGold, was marketed as a method of currency to be used on the Unikrn gambling platform, which allows users to bet on esports.  At one point in early January UnikoinGold was worth as much as $2.47, though the tokens are…

On August 14, the U.S. Securities and Exchange Commission (the “SEC”) recently obtained permanent officer-and-director and penny stock bars against the founder of a company who perpetrated a fraudulent ICO to fund oil exploration and drilling in California. According to the SEC’s order, David T. Laurance and Tomahawk Exploration LLC attempted to raise money through the sale of blockchain-based digital tokens called “Tomahawkcoins.”  The SEC’s order finds that the defendants’ promotional materials used inflated projections…

Last year, the SEC rejected an application by Cameron and Tyler Winklevoss for what would have been the first-ever Bitcoin ETF.  The group made some changes and resubmitted their application in June.  In a release yesterday, the SEC rejected the revised request as well. The exchange that sought to list the Winklevoss’s ETF had argued that Bitcoin trading is too decentralized across the globe for fraudsters to manipulate the price.  The SEC found that the…

On July 2, the U.S. Securities and Exchange Commission charged two men with the illegal sale of securities related to UBI Blockchain Internet, Ltd. (“UBIB”).  The SEC alleges that T.J. Jesky and Mark F. DeStefano made approximately USD 1.4 million by selling shares in UBIB over a 10-day period in December 2017 and January 2018.  The sales stopped when the SEC temporarily suspended trading in UBIB stock earlier this year due to concerns about the…

In our article for Bloomberg Law, we discuss the legal questions arising out of the announcement by William Hinman (SEC Director of the Division of Corporate Finance) that ether and bitcoin—the popular cryptocurrencies—would not qualify as securities.  Numerous news organizations, as well as FinTech and cryptocurrency blogs, jumped on the announcement, reporting it as a major clarification regarding the legal status of cryptocurrencies and initial coin offerings.  Unfortunately, there is a real risk that, rather…

Last month we reported on an SEC decision to take additional time to consider whether to approve a request to list five Bitcoin-related exchange-traded funds (ETFs) on one of the New York Stock exchange markets.  That pattern is now being repeated.  On December 4, 2017, NYSE Arca, Inc. filed with the SEC a proposed rule change to list and trade the shares of the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF.  On March…

On June 6, U.S. SEC Chairman Jay Clayton was interviewed on CNBC about Bitcoin and cryptocurrencies.  He said, in effect, that “cryptocurrencies, these are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin… that type of currency is not a security.” As a securities lawyer and SEC defense counsel, I thought this was an absolutely correct statement of law, and refreshing candor from the SEC Chairman.  What has concerned me over…

On June 4, 2018, the U.S. SEC named Valerie A. Szczepanik as its first ever Crypto Czar.  According to the press release, in this newly created advisory position, Ms. Szczepanik will coordinate efforts across all SEC Divisions and Offices regarding the application of U.S. securities laws to emerging digital asset technologies and innovations, including ICOs and cryptocurrencies.