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…
On November 1, 2021, the President’s Working Group on Financial Markets issued its long-awaited “Report on STABLECOINS.” The Working Group is an inter-agency group made up of the Treasury Department, the Federal Reserve, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. The Federal Deposit Insurance Company and the Office of the Comptroller of the Currency contributed to the Report as well. A stablecoin is a digital currency that is pegged to a…
We have written extensively about the efforts that go back to when, in 2013, Gemini founders Tyler and Cameron Winklevoss first sought to launch a Bitcoin ETF. The SEC has rejected numerous such applications since then, and many are pending now. Over the past month or so, however, Securities and Exchange Commissioner Chairman Gary Gensler had indicated that he was more favorably inclined to allow futures-based cryptocurrency ETFs (as opposed to those that invest directly…
On October 6, 2021, the U.S. Department of Justice announced the launch of the National Cryptocurrency Enforcement Team (NCET) “to tackle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors.” Crypto mixing and tumbling services help users reduce traceability by obscuring the sources of their funds. As part of this announcement, the DOJ asserted that cryptocurrency is the “primary…
We recently reported about how U.S. Securities and Exchange Commission chairman Gary Gensler has made numerous comments concerning increased regulation over various aspects of the cryptocurrency industry. That same theme was part of his prepared remarks to Congress on September 14, 2021. The Chairman remarked that there was not enough investor protection in crypto finance, issuance, trading, or lending. He said: “[A]t this time, it’s more like the Wild West or the old world of…
Although the heydays of the initial coin offering are now in the rearview mirror, the US Securities and Exchange Commission continues regulatory action against those accused of conducting ICO’s in violation of the securities laws. On September 8, 2021, the SEC charged Rivetz Corp., Rivetz International SEZC, and Steven K. Sprague, the head of both companies, with conducting an illegal, unregistered offering of securities through an ICO. According to the SEC’s complaint, between July and…
When President Biden appointed Gary Gensler to chair the U.S. Securities and Exchange Commission, many in the crypto community reacted positively. They thought that his MIT background, among other things, might usher in days of lighter regulation. But that has not been the case. For example, as we reported in July, he talked about more regulation of stablecoins and DeFi. And, the optimism that many had that the SEC would finally approve Bitcoin ETFs under…
It was big news when the U.S. Senate recently passed the $1 trillion infrastructure bill. One aspect of that bill was a revenue raising provision aimed at the cryptocurrency industry. In an article that was just published in Bloomberg’s Tax Management Memorandum, we look at the nuts and bolts of that provision, and take a deeper dive into the criticism of the bill by the cryptocurrency community, as well as the failed attempt to modify the bill…