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On February 26, 2024, Republican Senator Ted Cruz, along with fellow Republican Senators Bill Hagerty, Rick Scott, Ted Budd and Mike Braun introduced the CBDC Anti-Surveillance State Act. The Federal Reserve acts as the U.S. central bank. The proposed legislation states that no Federal Reserve Bank may “issue a central bank digital currency or any digital asset that is substantially similar, under any other name or label, directly to an individual.’’ This same prohibition was…

We have been following for years (see here) the steps that the United States Internal Revenue Service has taken to sensitize taxpayers to the need for them to properly report sales of cryptocurrency. There did not, however, seem to be any criminal cases brought for failure to do so. That is why the federal indictment against Frank Ahlgren III that was made public earlier this month was interesting. Unlike prior cryptocurrency criminal tax cases, which…

On January 16, 2024, the United States Internal Revenue Service and Treasury Department announced the delay of the reporting requirements for businesses who receive USD 10,000 or more in digital assets, pursuant to section 6050I. Section 6050I obligates any person who receives USD 10,000 or more in cash, in the course of their trade or business, in a single or multiple related transactions, to report such to the IRS using Form 8300. Form 8300 requires…

One of the issues that we, and much of the rest of the crypto community, have been following for many years is the battle between the crypto industry and the SEC on the issue of whether crypto assets are securities. In November 2022, a federal district judge in New Hampshire held that the LBRY token was a security. On July 13, 2023, a federal district judge in the Southern District of New York ruled that Ripple Labs’…

CoinList Markets LLC is a currency exchange. When its customers open accounts, there is a Know-Your-Customer (KYC) process which requires individual applicants to provide, among other things, their country of residence and address. CoinList maintained several sanctions compliance measures, including screening new and existing customers against Office of Foreign Assets Control (OFAC) and other sanctions lists. By spring of 2021, CoinList’s onboarding protocols also included an automated process through which an application was meant to…

We previously reported on the indictment of Shakeeb Ahmed. According to the charging documents and other filings and statements made in court, the facts were as follows: In July 2022, Ahmed carried out an attack on a cryptocurrency exchange, the Crypto Exchange, by exploiting a vulnerability in one of the Crypto Exchange’s smart contracts and inserting fake pricing data to fraudulently cause that smart contract to generate approximately $9 million dollars’ worth of inflated fees…

SEC v. Crowd Machine, Inc. was a lawsuit that the United States Securities and Exchange Commission brought against Crowd Machine Inc. (“CMI”), and others, for CMI’s making materially false and misleading statements in connection with an initial coin offering of Crowd Machine Compute Tokens (CMCTs). Rather than using the ICO proceeds for the stated purpose, Defendants diverted more than $5.8 million in ICO proceeds to gold mining entities in South Africa. The SEC also alleged…

We have previously written about the SEC’s case against LBRY, which offered a video sharing application. Its native token, LBC, was meant to be used by content creators and audience members on LBRY’s “content marketplace,” which billed itself as an alternative to YouTube. LBRY had a real business and real customers. But the SEC sued LBRY, claiming that it had conducted an unregistered offering of digital asset securities. LBRY tried to fight back aggressively, noting that…

We have been writing for years about what had become an almost quixotic quest for U.S. SEC approval of a spot Bitcoin ETF (see one such post here). The D.C. Circuit’s decision in the Grayscale case (see post here) was a clear repudiation of the SEC’s position and infused the industry with hope that such approval might finally be forthcoming. Though it has not happened yet, this post provides an update on this topic. There…

On September 7th, 2023, the U.S. Commodity Futures Trading Commission (“CFTC”) announced settlement orders against three operators of decentralized finance (“DeFi”) protocols: Opyn, Inc. (“Opyn”), Deridex, Inc. (“Deridex”), and ZeroEx, Inc. (“ZeroEx”). The announcement is a clear message that the CFTC will be asserting jurisdiction in the DeFi space, and may be as much a signal to the SEC as it is a message to the DeFi industry that the CFTC is claiming crypto regulatory…