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…
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”…
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…
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 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…
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…
During a speech on November 8th at the 49th Annual Institute on Securities Regulation, Securities and Exchange Commission Chairman Jay Clayton discussed initial coin offerings, stating that he had “yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security,” seeming to indicate increased SEC…
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…
Protostarr, a block-chain based startup, has shut down its decentralized application and refunded its initial coin offering (ICO) participants following a request for information from the U.S. Securities and Exchange Commission (SEC). According to the company, on August 24, the SEC contacted Protostarr and asked the company to “volunteer a…