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BitMEX is one of the world’s largest cryptocurrency trading platforms. Last year, the U.S. District Court for the Southern District of New York entered a Consent Order that the U.S. Commodities Futures and Trading Commission agreed to with five companies charged with operating BitMEX. The order required the BitMEX entities to pay a $100 million civil monetary penalty. (read more here). Earlier this year, the three co-founders of the company plead guilty to violating the Bank Secrecy Act…

For those who have followed for some time the law that has developed around blockchain, there is a strong likelihood they associate the term DAO (decentralized autonomous organization) with the well-publicized hack that took place in 2016 with respect to one of the relatively early ICOs (initial coin offering) of an organization called Slock.it UG. The objective of that DAO — referred to as The DAO — was to operate a for-profit entity that would…

On April 7, 2022, the US Federal Deposit Insurance Corporation (FDIC) issued a Financial Institution Letter (“FIL”) requiring that all FDIC-supervised institutions that intend to engage in, or that are engaged in, any activities involving or related to crypto assets notify the FDIC. Because the overwhelming majority of U.S. banks are insured by the FDIC, the FIL means that nearly all banks must now disclose their crypto activities to the FDIC. The definition of crypto…

An earlier post discussed that BitMEX, one of the world’s largest cryptocurrency trading platforms, entered a Consent Order with the U.S Commodities Futures and Trading Commission under which it agreed to pay a $100 million civil monetary penalty. Subsequently, in February 2022, two BitMEX co-founders, Arthur Hayes and Benjamin Delo, pled guilty to violating the BSA in February 2022. On March 9, 2022, the third co-founder, Samuel Reed, pled guilty to violating the Bank Secrecy…

We previously reported about a case in which a Tennessee couple, the Jarretts, sued the U.S. Internal Revenue Service seeking a refund for taxes they paid on Tezos tokens that they earned through staking. On February 14, 2022, the IRS delivered the requested refund with interest, thinking that would end the lawsuit. But the Jarretts “rejected” the refund and argued that their lawsuit should continue. The IRS has now moved to dismiss the case. One…

On February 8, 2022, the U.S. government arrested Ilya Liechtenstein and Heather Morgan and charged them with conspiracy to launder the proceeds of 119,754 Bitcoin which had been stolen from cryptocurrency exchange Bitfinex in a 2016 hack. The present value of the theft is approximately $4.5 billion and the U.S. government has seized approximately 94,000 Bitcoin thus far. The seized Bitcoin is valued at $3.6 billion and represents the DOJ’s largest ever cryptocurrency seizure. The…

On January 20, 2022, the U.S. Federal Reserve issued its long-anticipated White Paper on the subject of central bank digital currency (CBDC). Not surprisingly, from the jump, the Fed made clear that this Paper was simply the starting point for opening a dialogue. The Fed said: The paper has been designed to foster a broad and transparent public dialogue about CBDCs in general, and about the potential benefits and risks of a U.S. CBDC. The…

On January 5, 2022, the United States Securities and Exchange Commission announced its first enforcement action of the year concerning a fraudulent initial coin offering. This is the latest in a long list of enforcement actions by the SEC targeting unregistered digital asset offerings. The SEC charged Australian citizen Craig Sproule and two companies he founded, Crowd Machine, Inc. and Metavine, Inc., with making materially false and misleading statements in connection with an unregistered offer…

In its first enforcement action in the cryptocurrency arena in 2022, on January 3, 2022, the United States Commodity Futures Trading Commission (CFTC) entered an Order filing and simultaneously settling charges against Delaware-registered Blockratize, Inc., which operated its business under the name  Polymarket.  The Order finds that, beginning in approximately June 2020, Polymarket had been operating an illegal unregistered or non-designated facility for event-based binary options online trading contracts, known as “event markets.” According to the…

As we have discussed previously, although there was hope when Gary Gensler was initially appointed Chairman of the Securities Exchange Commission that this would mean the SEC would take a different, more enlightened view on the issue of approving a spot Bitcoin ETFs, over the past couple of months, that hope was dashed when Chairman Gensler noted that he looked favorably only on futures-based Bitcoin ETFs.  Consistent therewith, on October 19, 2021, Pro Shares became…