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On September 21, 2020, the U.S. Office of the Comptroller of the Currency (OCC), the regulatory agency charged with overseeing banks, published an interpretive letter clarifying national banks’ and federal savings associations’ authority to hold “reserves” on behalf of customers who issue certain stablecoins. Generally, a stablecoin is a type of cryptocurrency designed to have a stable value as compared with other types of cryptocurrency, which frequently experience significant volatility. One type of stablecoin is…

On September 15, 2020, the U.S. Securities and Exchange Commission announced charges against Unikrn Inc., an operator of an online eSports gaming and gambling platform for conducting an unregistered initial coin offering (ICO) of digital asset securities. Unikrn agreed to settle the charges by paying a $6.1 million penalty, substantially all of the company’s assets, to be distributed to investors through a Fair Fund. According to the SEC’s order, between June and October 2017, Unikrn raised approximately…

INX Limited, a Gibraltar-based private company formed in 2017, announced on August 24 that the U.S. Securities and Exchange Commission (SEC) declared as effective INX Limited’s Form F-1 registration statement. A Form F-1 is the registration required for foreign companies seeking to issue securities under U.S. federal law. This approval marks the first instance in which the SEC has cleared a full registration statement for a public offering of crypto-tokens. The SEC has previously approved…

On August 13, 2020, the U.S. Securities and Exchange Commission announced charges against Virginia-based Boon.Tech and its chief executive officer Rajesh Pavithran for fraud and registration violations in connection with a $5 million initial coin offering of digital asset securities.  According to the SEC’s from November 2017 to January 2018, Boon.Tech and Pavithran raised approximately $5 million by selling Boon Coins to more than 1,500 investors in the U.S. and worldwide to raise funding to…

On July 22, 2020, the Office of the Comptroller of the Currency (“OCC”) issued an interpretive letter confirming that national banks and savings associations may provide cryptocurrency custody and related services. National banks have long provided safekeeping and custody services for a wide variety of customer assets, including both physical objects and electronic assets, and the extension of these services to cryptocurrency is a modern form of these traditional activities. In the letter, the OCC…

In December 2019, a federal grand jury in the District of Columbia indicted Larry Dean Harmon for conspiracy to launder monetary instruments, in violation of the District of Columbia’s Money Transmitters Act (MTA). He was charged in connection with his alleged operation of Helix, an underground tumbler for bitcoin. As described in the indictment, Helix “enabled customers, for a fee, to send bitcoins to designated recipients in a manner which was designed to conceal and…

On July 22, 2020, the U.S. Department of Justice announced that Kais Mohammad, a.k.a. “Superman29,” agreed to plead guilty to federal criminal charges that he operated an illegal virtual-currency money services business that exchanged up to $25 million – including on behalf of criminals – through in-person transactions and a network of Bitcoin ATM-type kiosks. According to his plea agreement, from December 2014 to November 2019, Mohammad owned and operated Herocoin, an illegal virtual-currency money…

Just yesterday, we reported on a lawsuit brought against the U.S. Internal Revenue Service for allegedly obtaining information improperly from Coinbase about its accountholders. Now, the Block is reporting that the IRS has entered into a contract with Coinbase to use its Coinbase Analytics blockchain tracing software. The one-year contract, for $124,950, commences on July 23, 2020. According to the report, the IRS had signaled its intention to buy a software license from Coinbase in…

We previously reported that, in July 2019, the IRS announced that it had begun sending the now infamous letters to taxpayers who, supposedly, may have failed to properly report income and pay taxes associated with cryptocurrency transactions. About 10,000 of these Letter 6173 were sent. On tax day (July 15 this year) the IRS was sued in connection with these letters. The complaint alleges that Plaintiff James Harper opened an account with Coinbase in 2013. …

On July 13, 2020, the U.S. Securities and Exchange Commission charged California-based Abra (a crypto investment app maker) and a related firm in the Philippines for offering and selling security-based swaps to retail investors without registration and for failing to transact those swaps on a registered national exchange. In a parallel action, the U.S. Commodity Futures Trading Commission issued an order filing and settling charges against both companies for entering into illegal off-exchange swaps in…