ShipChain was a company engaged in developing a logistics tracking and management platform using the Ethereum blockchain technology. During the height of the ICO craze in late 2017, ShipChain raised more than $27 million in an ICO. On December 22, 2020, the U.S. Securities and Exchange Commission ordered ShipChain to cease and desist and to pay a $2.05 million penalty. As the Order explained, ShipChain first launched its ICO in October 2017, and the ICO continued through…
There has been talk over the past month about the possibility of the Trump administration issuing certain requirements relating to crypto-wallets. Just the rumors led to pushback. On November 25, 2020, for example, Coinbase CEO Brian Armstrong tweeted explanations of why he believed this was a bad idea and how the additional friction of such reporting requirements would kill many of the emerging use cases for crypto. He added, “Just like the U.S. benefited enormously…
The Financial Crimes Enforcement Network (āFinCENā) is a bureau of the U.S. Department of the Treasury whose mission is to safeguard the financial system from illicit use and to combat money laundering and promote national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities. In prepared remarks to the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference, Kenneth Blanco, FinCEN Director, announced a new 314(b) Fact Sheet issued on December…
On December 2, 2020, three members of the U.S. Congress issued a press release concerning the introduction of the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act, which they touted as a consumer protection statute. The proposed legislation seeks to increase the oversight and regulation of stablecoins. The STABLE Act would: Require any prospective issuer of a stablecoin to obtain a banking charter;Require that any company offering stablecoin services must follow the appropriate banking regulations under the…
On November 19, 2020, the U.S. Securities and Exchange Commission issued a no-action letter to IMVU, Inc in connection with the sale of its VCOIN token. IMVU describes itself as the worldās largest avatar-based social platform with a global network of over seven million monthly active users. These users create 3D avatars to meet new friends, interact, and play games in virtual environments online and through IMVUās app. IMVUās No-Action Letter Request to the SEC argued that…
A mutual legal assistance treaty (MLAT) is an agreement between countries for the purpose of gathering and exchanging information in an effort to enforce public or criminal laws. It is often used to target crimes such as money laundering and drug trafficking. On November 4, 2020, the U.S. Department of Justice announced that, under an MLAT request from Brazil, it had seized virtual currency worth an estimated $24 million. According to documents filed in the…
Earlier this week, crypto-currency watchers noticed that there had been movement of about 70,000 Bitcoin from an account that had been dormant for many years. That mystery has now been solved. The U.S. Department of Justice announced on November 5, 2020 that it had seized the account. At the time of the seizure, the Bitcoin were worth more than $1 billion. According to the allegations of the civil forfeiture complaint, from 2011 until October 2013…
Under U.S. tax law, cryptocurrencies are treated like property. As a result, each time someone buys, sells or exchanges a digital asset, it is considered a taxable event and the capital gains tax applies. The Internal Revenue Service is of the view that many reportable transactions go unreported. One method it is adopting to try capture such taxes is that, starting in 2020, the very first question on the standard 1040 Form is whether “at…
On October 21, 2020, the Division of Swap Dealer and Intermediary Oversight (DSIO) of the United States Commodity Futures Trading Commission issued an Advisory to futures commission merchants (FCMs) regarding the holding of virtual currency in segregated accounts. The advisory provides guidance to FCMs on how to hold and report certain deposited virtual currency from customers in connection with physically-delivered futures contracts or swaps. The Advisory also provides guidance that FCMs should follow when designing…
Central bank digital currencies (“CBDC”) has been one of the hottest topics of 2020. We reported recently that the Bahamas planned to roll out its e-currency in October. China has probably been the most aggressive in developing plans for a future launch of a CBDC, the digital yuan. On October 9, 2020, the BIS and seven central banks released a report concerning the issuance of CBDCs. The report, Central bank digital currencies: foundational principles and core features, was…