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On September 15, 2020 the U.S. Securities and Exchange Commission (“SEC” or “Commission”) issued an order denying the SEC’s Division of Enforcement’s (the “Division”) motion to expedite enforcement proceedings against American CryptoFed DAO LLC (“CryptoFed”) an issuer of digital assets. CyrptoFed DAO had previously filed a Form 10 registration statement with the SEC seeking to register two classes of digital assets, the Ducat and Locke tokens, as equity securities under Section 12(g) of the Securities…

On September 16, 2022 the White House released its Comprehensive Framework for Responsible Development of Digital Assets (Framework) for how the administration plans to address digital assets as a part of its “whole-of-government approach”, which was first outlined in a March 9 Executive Order (EO) issued by President Joe Biden. In the short-term, the Framework does little to alter the regulatory uncertainty that has allowed many bad actors in the digital asset space to thrive while stymieing responsible growth. There are…

During the week of August 15, 2022, the Federal Reserve Board (“FRB”) included digital assets (or, as it refers to them, “crypto-assets”) in various internal and external notices, possibly signaling to the industry the emergence of a coordinated stance. While none of these communications alone provide much clarity, taken together we can begin to hear the FRB’s message: proceed, but with the utmost caution. August 15 – FRB Guidelines for approving reserve bank accounts…

The U.S. Securities and Exchange Commission has talked recently about an ever-increasing scope of its jurisdiction — such as with respect to NFTs — and recently brought its first insider trading case dealing with cryptocurrencies. But on August 16, 2022, the SEC brought a type of case that is similar to many others over that past five years. It sued Dragonchain Foundation, Dragonchain Inc., the Dragon Company as well as founder and chief developer Joseph Roets in…

On August 1, 2022 the US Securities and Exchange Commission brought a lawsuit alleging that Forsage was a fraudulent crypto scheme. According to the Complaint, Defendants Vladimir “Lado” Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikail “Mike” Sergeev, and Sergey Maslakov (the founders of Forsage) created, operated and maintained an online pyramid and Ponzi scheme through Forsage.io (“Forsage”), a website that allowed millions of retail investors in the United States and elsewhere to enter into transactions…

We wrote last week about the SEC’s recent insider trading lawsuit in which it identified nine tokens as “securities.” We made the following observation: “The potential implications of the SEC’s identifying these nine assets as securities are obvious. Securities exchanges must be registered with the SEC. There are undoubtedly numerous cryptocurrency platforms that sell the nine tokens and which are not so registered. Will the SEC next train its sights on those platforms?” It looks…

The SEC has brought numerous cases in which it alleged that specific tokens were “securities” and that their offerings violated the securities laws. Those cases were typically brought against the issuers. However, the SEC upped the ante in a lawsuit it brought on July 21, 2022 in which the SEC declared that nine cryptocurrencies were “securities,” but in a case not brought against the issuers. The lawsuit is the SEC’s first insider trading case dealing…

Earlier this month, the United States Department of Justice (DOJ) announced charges against six individuals, in four separate cases, involved in fraudulent crypto related schemes and thereby further highlighted its commitment to protecting investors and consumers. The schemes involved the following alleged fraudulent acts; NFT Fraud (United States v. Le Ahn Tuan): A Vietnamese national and co-conspirators created an NFT called “Baller Ape” and shortly after the first day of trading, engaged in what is…

We have followed for years the saga of the many applications for a spot Bitcoin ETF that have been denied by the U.S. Securities and Exchange Commission (SEC). See here and here. This included the hope, when current SEC Chairman Gary Gensler was originally appointed, that the SEC might view things differently, but it was not meant to be, as the string of denials continued. There was one bright spot, in October 2021, when the…

Washington based think tank Coin Center has brought a lawsuit against, among others, the United Sates Treasury Department and Internal Revenue Service regarding a reporting requirement included in last year’s major infrastructure legislation. We wrote at that time about the criticism of the bill with respect to the reporting burdens that were going to be placed on “brokers” of “digital asset” transfers. The Coin Center lawsuit focuses on the so-called Section 6050I reporting requirement, which…