Former Louisiana deputy sheriff and Russian resident Steven Seagal agreed to a Cease and Desist (“C&D”) Order by the SEC, finding violations of the non-touting provisions of Securities Act § 17(b) and imposing civil penalties for acting as a Twitter and Facebook “brand ambassador” for cryptocurrency Bitcoiin2Gen without disclosing it was a paid endorsement.
The Order required Seagal to forego such opportunities for any issuer for three years, disgorge his endorsement fees and pay a civil penalty of a like amount over the coming year.
In 2017, the SEC’s Office of ...
As fintech and blockchain transactions continue to grow in popularity, they are receiving increased attention at the state level, whether through fintech sandboxes, crypto-friendly legislation, or other initiatives aimed to encourage fintech innovation and economic development. Below is a roundup of just some of the recent fintech activity at the state level:
- This week, New York entered into a Memorandum of Understanding with Israel on fintech cooperation. The agreement is intended to encourage fintech innovation in both New York and Israel by providing support to fintech ...
The Securities and Exchange Commission issued a Sources Sought Notice on January 31, 2019, seeking a private vendor "to support the goal of acquiring data for the most widely used blockchain ledgers."[1]
In the notice, the SEC did not specify or name the ledgers it wanted to acquire data from; however, the requirement that they gather data from the "most widely used" ledgers suggests that the SEC would want the vendor to be able to gather data from cryptocurrencies such as bitcoin and ethereum.
This step towards data gathering, likely in the realm of cryptocurrencies, is an interesting ...
According to an initial registration statement published on January 10, the cryptocurrency index fund provider Bitwise Asset Management has applied with the U.S. Securities and Exchange Commission ("SEC") to form a new bitcoin-backed exchange-traded fund ("ETF"). The Bitwise Bitcoin ETF Trust seeks approval to issue and redeem shares that trade on the NYSE Arca, Inc. stock exchange in blocks of 25,000 shares. If approved, the Bitwise Bitcoin ETF Trust will be the first of its kind.
Bitwise Asset Management's SEC Form S-1 states that the Bitwise Bitcoin ETF Trust will track the ...
In a November 16, 2018 Statement on Digital Asset Securities Issuance and Trading, the Securities and Exchange Commission (SEC) announced its current position on regulation of blockchain and other distributed ledger technologies. In its Statement, the SEC emphasized that "market participants must still adhere to our well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated form or using new technologies, such as blockchain."
The Statement relied on ...
On October 22, 2018, the United States District Court for the Southern District of New York granted Chinese e-commerce company Alibaba's application for a preliminary injunction against cryptocurrency startup Alibabacoin Foundation. The preliminary injunction entered in Alibaba Grp. Holding Ltd. v. Alibabacoin Found., No. 18 Civ. 2897, 2018 WL 5118638 (S.D.N.Y. Oct. 22, 2018) bars Alibabacoin Foundation from using Alibaba's protected marks to promote its novel cryptocurrency known as AlibabaCoin or Alibaba Coin.
Alibaba alleged that the defendants, a group of Dubai- and ...
This is Part 1 of a seven-part series of posts looking at some broad legal issues affecting crypto-currencies.
DLT vs Territorial Law.
Fiat currencies have declared value stemming from governmental regulation. And "governments" typically are territorial jurisdictions, exercising the fundamentally territorial concepts of law and regulation.
Cyber-currencies function on the blockchain, a distributed ledger technology ("DLT"). Because DLT is - and fundamentally must be - decentralized and distributed, it defies conventional notions of, and structures for, the ...
On July 26, 2018, the Securities and Exchange Commission issued a 92-page release disapproving of Bats BZX Exchange, Inc.'s ("BZX") proposed rule change which sought to list and trade shares of the Winklevoss Bitcoin Trust.[1] See generally Bats BZX Exch., Inc. Winklevoss Bitcoin Trust Order, Exchange Act Release No. 34-83723, 2018 WL 3596769 (July 26, 2018) [hereinafter SEC Release].[2] The Release explains that the Commission disapproved of the proposal because BZX failed to meet its obligations under Exchange Act Section 6(b)(5).
Section 6(b) of the Exchange Act sets forth ...
UBS is leading a team of banks developing a blockchain-based system to enable financial markets to rapidly settle transactions and make payments. On August 31, 2017, UBS announced that six additional banks have joined the group developing the system, which is set to launch in late 2018. The banks are collaborating to use blockchain technology to increase speed and efficiency in business transactions. To do so, UBS has developed a "Utility Settlement Coin" ("USC"), a digital cash equivalent of each of the major currencies backed by central banks, rather than a decentralized new ...