U.S. broker-dealer activity involving digital assets could implicate various FINRA rules in addition to federal and state securities laws and SEC rules. As most readers likely know by now, whether this activity is of interest to or subject to the jurisdiction of U.S. securities regulators (both federal and state) largely…
In a recent decision in Securities and Exchange Commission v. Telegram Group Inc. and TON Issuer Inc., the United States District Court for the Southern District of New York granted a motion for a preliminary injunction by the United States Securities and Exchange Commission (“SEC”), thereby preventing the distribution to purchasers of…
2019 was a year of significant regulatory and legal developments in digital currency + blockchain. The SEC issued its most comprehensive guidance to date with its Framework for “Investment Contract” Analysis of Digital Assets, followed that up with three “no action” letters for projects that in its view complied with…
On January 21, 2020, Grayscale Bitcoin Trust (the “Trust”) became the first digital currency investment vehicle to attain the status of an SEC reporting company. The Trust’s sponsor, Grayscale Investments, LLC (“Grayscale”), is a digital currency asset manager that offers cryptocurrency investment products that provide exposure to Bitcoin and Ethereum, among…
On December 13, 2019, the U.S. District Court for the Southern District of Florida granted the plaintiffs’ motion for default judgment in a putative securities class action against Centra Tech, Inc. (“Centra Tech”). The putative class action complaint alleged that the defendants violated Sections 12(a) and 15 of the Securities…
On November 1, 2019, the SEC issued a final judgment as to Veritaseum, Inc., Veritaseum, LLC, and their founder (Reginald Middleton) concerning the defendants’ conduct with respect to an ICO and the manipulation of cryptocurrency. The order was part of a settlement between the defendants and the SEC. Reginald Middleton…
On November 21, 2019, Mark S. Scott, a former partner at law firm Locke Lord LLP, was convicted of one count of conspiracy to commit money laundering and one count of conspiracy to commit bank fraud in connection with his work for OneCoin Ltd. Mr. Scott was found guilty following…
On October 9th, the IRS released a revenue procedure ruling and related FAQ, clarifying tax treatment related to cryptocurrency in certain instances. The ruling focused on tax treatment of hard forks and airdrops, and provided that in the event of a “hard fork”—where a cryptocurrency’s blockchain protocol is changed, or…
On October 6, 2019, alleged cryptocurrency investors filed a putative class action complaint in the U. S. District Court for the Southern District of New York, alleging that Bitfinex, Tether, and other defendants coordinated to manipulate the price of Bitcoin and disrupted the cryptocurrency market. The complaint brought claims for…
On July 26, 2019, the Internal Revenue Service (“IRS”) published a release announcing that it has begun to send notices to virtual currency traders that potentially failed to: (i) report income and pay the resulting tax from virtual currency transactions; or (ii) properly report their virtual currency transactions. In its…