Category: Enforcement Actions

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CFTC Files Charges in Bitcoin Ponzi Scheme

On September 21st, the Commodity Futures Trading Commission (CFTC) announced the filing of charges against Nicholas Gelfman and Gelfman Blueprint, Inc. (the “Defendants”) for fraud, misappropriation, and issuing false account statements in connection with solicited investments in Bitcoin.  According to the allegations asserted by the CFTC, the Defendants operated a Ponzi scheme, misappropriated funds from … Continue Reading

Beijing-Based Cryptocurrency Trading Exchanges Told to Announce Trading Halt

Under the impact of the Chinese government’s recent formal notices of halting ICOs, Notice 99 and Joint Notice released on September 2, 2017 and September 4, 2017 respectively [1], Beijing authorities have taken further actions and held meetings with Beijing-based trading platforms with regard to a trading halt on September 15, 2017, following Shanghai’s “verbal … Continue Reading

SEC and U.S. Attorney’s Office Bring Action Against Promoter of Bitcoin Store, Inc.

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 addition to filing the … Continue Reading

Blockchain Week in Review – October 14, 2016

Below is a summary of some of the significant legal, regulatory and industry actions that occurred over the past week. This alert is not intended to be a comprehensive list of all such developments, but rather a selection of publicly-reported news that may be of particular interest. U.S. Developments Regulatory Developments CFPB Declines to Make … Continue Reading

SEC Settles Charges With FinTech Companies in Unlawful Redemption of Bitcoin Investment Trust Shares During Distribution

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

CFTC Brings First Enforcement Action Against Unregistered Bitcoin Options Trading Platform

On September 17th, the Commodity Futures Trading Commission (“CFTC”) announced an enforcement order and settlement against an unregistered bitcoin options trading platform. The order is notable for six reasons: 1) It is the first official pronouncement from the CFTC that, “Bitcoin and other virtual currencies are encompassed in the definition [of a commodity under the … Continue Reading

FATF Issues 2015 Update on Last Year’s Virtual Currency Guidance

The Financial Action Task Force (FATF) has issued 2015 Guidance calling for a “risk-based approach” to virtual currencies.  This Guidance follows its 2014 initial Report on virtual currencies.  Since FATF’s 2014 Report, virtual currencies, the risks associated with them, and the individuals and entities using them have evolved substantially.  Law enforcement and regulatory agencies across … Continue Reading

Federal Authorities Announce Settlement with Ripple Labs Inc. Resolving Investigation

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 … Continue Reading

Texas Cease and Desist Order

On March 10, the Securities Commissioner of the State of Texas issued an emergency order against Balanced Energy, LLC (“BE”), ordering it to immediately cease and desist its sale of working interests in oil wells (“C&D”). The primary basis for the C&D appeared to be that the working interests constituted unregistered securities, and that by … Continue Reading

Mt. Gox’s Legal Problems Lead to Bankruptcy and Increased Scrutiny

On February 28, 2014, Mt. Gox, the oldest Bitcoin exchange, filed for bankruptcy reorganization under Japanese law, toppling from its place in the Bitcoin community to insolvency. This filing confirmed rumors of financial troubles spawned by Mt. Gox’s sudden suspension of trading on February 25 and focused increased legal scrutiny on Mt. Gox’s business practices. … Continue Reading

Two Florida Users of Localbitcoins.com Arrested for Money Laundering and Unlicensed Money Transmission

Two users of Localbitcoins.com, Pascal Reid and Michell Espinoza, were arrested last week in what appears to be the first case where bitcoin sellers have been prosecuted under state anti-money laundering and money transmission laws.  These arrests illustrate that under some state money transmitter laws, the direct sale of bitcoin can constitute money transmission—and that … Continue Reading

FinCEN’s Bitcoin Letter-writing Campaign

The Financial Crimes Enforcement Network, or FinCEN—the Treasury Department agency that oversees anti-money laundering efforts—has recently sent letters to several Bitcoin-related businesses saying that they may be engaging in money transmission without being registered with FinCEN.  Under FinCEN’s regulations, any entity engaging in money transmission must register as a “money service business,” or face potentially … Continue Reading

Government Brings Important Case Against Illegal Marketplace “Silk Road;” Government Acknowledges Lawful Uses of Bitcoin

The FBI cracked down on reputed underworld bazaar, “Silk Road,” on October 1, 2013, seizing the website and $3.6 million worth of Bitcoin assets, and arresting the website’s alleged operator, Ross William Ulbricht. Ulbricht is charged with using the website to participate in a narcotics trafficking conspiracy, a computer hacking conspiracy and a money laundering … Continue Reading

Bitcoin Under SEC Scrutiny: First Civil Prosecution Brought Against Alleged Virtual Currency Ponzi Scheme Company

On July 23, 2013, the SEC ventured into the electronic currency world by filing a civil complaint against virtual currency “trader” Trendon Shavers and his company, Bitcoin Savings and Trust, in the U.S. District Court for the Eastern District of Texas. In its complaint, the SEC alleged that Shavers carried out a Ponzi scheme by … Continue Reading
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