SEC

BitConnect and the Advent of State Securities Enforcement Over ICOs

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…

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Massachusetts Securities Regulator Announces "Aggressive Policing" of Cryptocurrency Firms

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…

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The Future of Bitcoin is Here (Literally): Crypto Derivatives Have Gone Mainstream!

Major derivatives market operators CBOE Holdings and CME Group have jumped into the digital currency fray within the last two weeks by launching cash-settled bitcoin futures contracts (1).  The exchanges recently cleared de facto regulatory hurdles when the Commodity Futures Trading Commission (CFTC) announced the completion of the exchanges’ “self-certification”…

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SEC Issues Warning Regarding Celebrity-Promoted Coin Offerings and Moves Swiftly Against Unregistered ICOs

The Securities and Exchange Commission (SEC) recently issued two warnings about investments sold on the basis of celebrity endorsements, including one relating to initial coin offerings (ICOs), and followed up with enforcement actions against unregistered ICOs. Investors can be misled by biased promotions. Receipt of cash or other consideration in…

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ICO Participant Liability - Could you be Liable for Assisting in the Sale of Unregistered Securities?

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…

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SEC Issues Cease and Desist Order and Further Guidance on ICOs

On December 11, 2017, the U.S. Securities and Exchange Commission (SEC) issued a cease-and-desist order to Munchee Inc. (Munchee), a company that was in the process of a $15 million initial coin offering (ICO), for selling unlicensed securities. The SEC found that the ICO targeted investors, with the expectation of…

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SEC Announces Cyber Enforcement Initiative: Distributed Ledger Technology, Initial Coin Offerings Under the Microscope

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…

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