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On June 30, 2017, the SEC and the U.S. Attorney brought parallel civil and criminal fraud charges against Renwick Haddow, the owner of an unregistered broker-dealer entity named In Crowd Equity Inc., and two corporate entities named Bitcoin Store, Inc. and Bar Works, Inc. (SEC Litigation Release, US Attorney Press Release) In

On November 14, 2016, the SEC convened four panels of individuals at the forefront of the FinTech industry to address the rapid growth of recent innovations in FinTech. Panelists addressed how these innovations impact four main areas: investment advisory services; trading, settlement, and clearance activities; capital formation; and investor protection. The over-arching theme of the

U.S. District Judge Alison Nathan of the Southern District of New York issued a decision yesterday finding that bitcoins are money under the plain meaning of Section 1960, the federal money transmission statute. In July 2015, Anthony Murgio and two others defendants were arrested and charged with operating an illegal bitcoin exchange – Murgio

Despite much hype over the ruling by a Florida court that bitcoin is not money, the likeliest outcome of Monday’s decision will be legislative amendments to Florida’s money transmitter laws, rather than the sweeping impact envisioned by some.

Florida state Judge Teresa Pooler dismissed charges on Monday against a man accused of  money laundering and

The SEC announced yesterday a settlement with Bitcoin Investment Trust (BIT) and SecondMarket, Inc. (SecondMarket).  According to the Administrative Order, the SEC claims that BIT and SecondMarket redeemed BIT shares during an ongoing distribution and, therefore, violated Rules 101 and 102 of Regulation M.
Continue Reading SEC Settles Charges With FinTech Companies in Unlawful Redemption of Bitcoin Investment Trust Shares During Distribution

The Financial Stability Oversight Council (FSOC) recently published its Annual Report, providing insight into its perspective on market developments and emerging threats. The FSOC, which includes representatives from the Treasury Department, the Federal Reserve, the Commodity Futures Trading Commission and the Securities and Exchange Commission, recognized that distributed ledger systems offer opportunities to lower transaction costs and improve efficiencies. However, the FSOC also acknowledged that certain risks are inherent, and therefore careful regulatory coordination is necessary.
Continue Reading Financial Stability Oversight Council Identifies Distributed Ledgers as Innovative, Yet Posing Certain Risks

Federal authorities announced this week a settlement with Ripple Labs Inc. and its subsidiary, XRP Fund II, resolving an investigation by FinCEN and the Department of Justice into violations of the Bank Secrecy Act.  The settlement generally calls for the company to pay $700,000 in fines and forfeitures, to move Ripple Trade (a version of the open source wallet software operated by Ripple Labs) to a registered Money Services Business, and to make changes to the AML compliance programs at Ripple Labs and its subsidiaries.
Continue Reading Federal Authorities Announce Settlement with Ripple Labs Inc. Resolving Investigation

The New York State Department of Financial Services (“NYDFS”) released its revised proposed BitLicense regulatory framework earlier today. Once the revised framework is published in the New York State Register, it will trigger a new thirty-day public comment period. Further analysis will be available on the Virtual Currency Report in the coming days, but proposed

The U. S. Attorney for the Southern District of New York, Preet Bharara, has issued several recent statements signaling a steady pursuit of criminal conduct related to bitcoin.  First, on Thursday, November 6, 2014, Trendon Shavers was arrested and charged with one count of securities fraud and one count of wire fraud in connection with what Mr. Bharara describes as the “first federal criminal securities fraud case involving a bitcoin-related Ponzi scheme.”  Notably, this criminal case follows a civil action against Mr. Shavers that was filed by the SEC in July 2013, and allowed to proceed in Texas federal court in August 2013.  According to the criminal complaint filed in New York federal court, Mr. Shavers – who runs a company called Bitcoin Savings and Trust – allegedly raised more than 764,000 bitcoin from investors between September 2011 and September 2012.  Mr. Shavers allegedly told investors that he would engage in a bitcoin market arbitrage strategy (i.e., lending bitcoin to others for a fixed period of time, trading bitcoin via online exchanges, and selling bitcoin locally via private off-market transactions).  In return for the investors’ bitcoin, Mr. Shavers promised up to one percent per day.  According to the U.S. Attorney, however, Mr. Shavers failed to execute the claimed market arbitrage strategy, failed to honor investors’ redemption requests, and failed to deliver the agreed upon rates of interest.
Continue Reading New York Federal Prosecutor Intensifies Scrutiny of Illegal Bitcoin Activity

In another installment of the continuing saga surrounding the shuttering of the Silk Road online marketplace and arrest of its alleged creator and operator, Ross William Ulbricht, a Southern District of New York judge denied Ulbricht’s motion to dismiss the four-count indictment against him.
Continue Reading Silk Road’s Ulbrecht Fails in Dismissal Bid, Court Strengthens Federal Bitcoin Enforcement