On Friday, the Office of Foreign Assets Control (OFAC) issued FAQ 551 stating that U.S. persons who deal in the prospective Venezuelan digital currency (the “Petro”) may be exposed to U.S. sanctions risk under Executive Order 13808. In December 2017, Venezuelan President Nicolas Maduro announced plans for the Government of…
On January 19, 2018, SEC Co-Enforcement Directors Stephanie Avakian and Steven Peikin and CFTC Enforcement Director James McDonald issued the following joint statement regarding virtual currency enforcement actions: “When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or…
In the wake of the SEC’s clarifying guidance in Munchee[1] regarding the application of the federal securities laws to initial coin offerings (“ICOs”), there has been increased activity among both federal and state regulators as they seek to deter what they deem to be sales of unregistered securities in the…
On December 15, 2017, Massachusetts Secretary of State William Galvin announced that his office’s Securities Division (“MSD”) would begin “aggressive policing” of cryptocurrency sales in Massachusetts. The MSD regulates the offering and sale of securities in Massachusetts. The MSD can seek a range of civil remedies for violation of the…
As published in Bloomberg BNA’s Securities Regulation & Law Report, December 18, 2017 An initial coin offering (“ICO”) does not happen on its own. Rather, there are companies and individuals that assist in successful token sales. These can include ICO consultants, marketing firms, board members, partners at private equity and…
On December 4, 2017, the Securities and Exchange Commission (the “SEC”) announced that it has filed charges against two individuals for their roles in the initial coin offering (“ICO”) of PlexCoin Tokens. The SEC charged Dominic Lacroix and Sabrina Paradis-Royer with engaging in an ongoing securities fraud and the unlawful…
On September 25, 2017, the Securities and Exchange Commission (SEC) announced the launch of its new Cyber Unit. Drawing on the existing cyber experience of the SEC’s Enforcement Division, and including personnel from around the country, the Cyber Unit will target cyber-related misconduct in the following areas identified by the…
Recently, the U.S. Commodity Futures Trading Commission (“CFTC”) granted LedgerX, LLC, registration as a derivatives clearing organization (“DCO”) under the Commodity Exchange Act, and with it, the right to clear fully collateralized digital currency swaps, subject to applicable law. It became the “first federally regulated Bitcoin options exchange and clearinghouse to list…
While the federal government has taken a variety of different positions in regulating distributed ledger technology, there are several important trends that are emerging in states’ regulation of such technology: 1) States are increasingly scrutinizing digital currencies. States are moving forward with regulating digital currencies, especially with respect to…
The U.S. Commodity Futures Trading Commission (CFTC), showing continued regulatory interest in digital currency companies, issued an Order and settled charges against Hong Kong-based digital currency exchange Bitfinex. The CFTC found that Bitfinex was offering illegal off-exchange financed retail commodity transactions in bitcoin and other cryptocurrencies, and failed to register…