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On July 21, 2021, U.S. Securities and Exchange Commission Chairman Gary Gensler spoke at an American Bae Association event. His main topic was security-based swaps. But at the end of his prepared remarks, the Chairman went out of his way to comment about the intersection of security-based swaps and financial technology, including cryptoassets. With respect to initiatives to offer crypto tokens or other products that are priced off of the value of securities and operate…

One of the poster-children for the ICO craze in late 2017-18 was an iced-tea company in Long Island, New York known as the Long Island Iced Tea Co. 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. (LBC) and announced that it was shifting its business operations from soft drink production to activities related to blockchain technology. The rebranding with…

On June 24, 201, the United States Department of Justice brought a criminal bill of information against Michael Yusko III. According to the DOJ, under U.S. federal law, any business that engages in “the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means” is deemed to be a money…

We previously reported how, on April 3, 2020, multiple class-action law suits were filed in the Southern District of New York against a host of crypto exchanges and token issuers, including Block.one. One of those cases was dismissed, which led to five others then being withdrawn. The case against Block.one has now been settled. At the height of the ICO craze in 2017-18, Block.one raised a record $4 billion in its ICO, much of it…

If you happened to prepare your own tax return this year or at least looked at the top of the first page, you might have noticed that the IRS has literally moved cryptocurrency transactions to the top. We recently published an article in Bloomberg’s Tax Management Memorandum that looked at the aggressive moves the IRS is taking with respect to cryptocurrency. We looked at the disparate ways that the various U.S. government agencies define cryptocurrency,…

According to the Coinbase website, “staking” is “the process of actively participating in transaction validation (similar to mining) on a proof-of-stake (PoS) blockchain. On these blockchains, anyone with a minimum-required balance of a specific cryptocurrency can validate transactions and earn Staking rewards.” On May 26, 2021, a Tennessee couple sued the IRS seeking a refund for taxes they paid on Tezos tokens that they earned through staking. As explained in their complaint: The Tezos public…

The U.S. Securities and Exchange Commission announced on May 28, 2021 that it had filed an action against five individuals alleging that they promoted a global unregistered digital asset securities offering that raised over $2 billion from retail investors. These activities relate to BitConnect, which shut down its business in early 2018, shortly after, as we reported, the Texas State Securities Board issued a cease and desist letter. At that time, the regulator alleged that…

One of the byproducts of the initial coin offering craze was class action lawsuits that alleged that the underlying tokens were securities and that the securities law were violated because the offerings for those alleged securities did not comply with the securities laws. The US Securities and Exchange Commission continues to pursue cases for the improper sale of unregistered tokens. Not surprisingly, with the recent advent of the popularity of NFTs (non fungible tokens), a…

It has been widely noted that the new Chairman of the Securities and Exchange Commission in the U.S., Gary Gensler, is much more tech savvy that his predecessor. Gensler has taught at MIT on topics such as blockchain technology, digital currencies, financial technology, and public policy. Last week, Gensler addressed his views on the regulation of cryptoassets in two public appearances. On May 6th, Gensler testified before Congress for the first time as Chairman. …

This blog has previously reported on the numerous enforcement actions taken by the U.S. Securities and Exchange Commission against unregistered token sales. History, was made, however, on May 3, 2021 when INX Limited announced that it had officially closed its IPO with an estimated $85 million in gross proceeds from token sales, received from over 7,200 institutional and general public (retail) investors. INX is the world’s first company to debut and successfully complete an SEC-registered IPO of…