Earlier this month, Telegram Inc. announced that it was abandoning its development of the Telegram Open Network (TON). The move comes after the SEC won a preliminary injunction against Telegram in the Southern District of New York in March that blocked Telegram from launching TON and its native cryptocurrency, the Gram. The Court determined that … Continue Reading
Intro and Background: Technology innovation tends to happen at a rapid pace, as companies take on a “fail fast” approach to ensure that products are responsive to market demands. If technology advances at the speed of sound, the legal structures and regulations often struggle to keep up. In the blockchain and digital asset space, an … Continue Reading
On October 11, 2019 the U.S. Securities and Exchange Commission (SEC) filed an emergency action in the United States District Court for the Southern District of New York, and obtained a temporary restraining order against Telegram Group Inc. and its wholly-owned subsidiary, TON Issuer Inc. According to the SEC’s complaint,[1] the two offshore entities were … Continue Reading
In a recent decision, the U.S. District Court for the Southern District of New York invalidated Western Express Bancshares, LLC’s (Western Express) U.S. Patent No. 8,498,932 relating to a method of transferring funds through a bankcard. The court’s decision nixed Western Express’ assertion of patent infringement claims against Green Dot Corporation (Green Dot) for the … Continue Reading
Miami International Holding Inc. et al. (MIAX) attained five victories within two weeks before the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office. In successive final written decisions issued in October, the PTAB declared that five Nasdaq patents related to electronic securities trading systems are invalid under 35 U.S.C. Section … Continue Reading
Reed Smith Partner Herb Kozlov and Counsel Jeff Silberman recently appeared on a segment of “Innovators with Jane King” to discuss the United States regulatory landscape and future outlook regarding digital assets. The segment can be found here.… Continue Reading
On June 21, 2019 the Financial Action Task Force (the “FATF”), published its long-awaited Guidance for a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers (the “Guidance”). The FATF is tasked with setting standards and promoting effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related … Continue Reading
On June 5, 2019, a Financial Industry Regulatory Authority (FINRA) panel handed down its first enforcement action against a funding portal. DreamFunded, a crowdfunding platform, was banned from FINRA membership, and Manny Fernandez, DreamFunded’s CEO, was barred from association with any FINRA funding portal member. DreamFunded and Fernandez were further ordered to cover $15,900 in … Continue Reading
On April 3, 2019, the U.S. Securities and Exchange Commission (SEC) took a first step toward providing greater clarity on the key question of how to evaluate whether transactions involving issuance or sales of digital tokens are sales of securities subject to U.S. securities laws and regulations. To read the full client alert, please visit … Continue Reading
The Commodity Futures Trading Commission (“CFTC”) held a public meeting of the Technology Advisory Committee (“TAC”) on March 27, 2019. The TAC is sponsored by CFTC Commissioner Brian Quintenz and Daniel Gorfine, Director of LabCFTC, is the Designated Federal Officer. The TAC, comprised of industry business, technology, and legal minds, meets periodically to discuss pressing … Continue Reading
Quadriga “Loses” Keys to Stored Digital Assets Quadriga, Canada’s largest cryptocurrency exchange, is unable to gain access to about $145 million (USD) of bitcoin and other digital assets following the sudden death of Gerald Cotten, its co-founder and CEO, in December 2018. According to Quadriga, Cotten stored those digital assets in a “cold wallet” on … Continue Reading
After several successful trials over the last year, Israel’s largest cargo shipping company, Zim, has implemented a blockchain platform for electronic bills of lading. According to Zim, this technology could replace paper bills of lading and further improve other activities which rely on physical means of transfer. Zim recently conducted several transactions in which bills … Continue Reading
On November 28, 2018, the United States District Court for the Southern District of California denied the U.S. Securities and Exchange Commission’s (SEC) request for a preliminary injunction against Defendants Blockvest, LLC (Blockvest) and Blockvest’s founder and chairman Reginald Buddy Ringgold, III (Ringgold). Securities and Exchange Commission v. Blockvest, LLC, et al.[1] The SEC alleged … Continue Reading
On Friday, November 16, 2018, the U.S. Securities and Exchange Commission (SEC) announced that it settled two cases against digital token issuers. The settlements, one with CarrierEQ Inc. (AirFox) and the other with Paragon Coin Inc. (Paragon), are the first time that the SEC has imposed civil penalties on companies solely for offering digital tokens … Continue Reading
In March of this year, the NFA issued a notice reminded futures commission merchants (“FCM”), introducing brokers (“IB”), commodity pool operators (“CPO”) and commodity trading advisors (“CTA”) that trade in, solicit or accept orders in virtual currency products (spot and derivatives) of their ongoing obligation to notify the NFA of such activities by amending the … Continue Reading
Most companies considering an Initial Coin Offering to U.S. purchasers have resigned themselves to the fact that their proposed token or coin offering is likely to be considered an offering of securities by the Securities and Exchange Commission (“SEC”) and must be made in compliance with U.S. securities laws. The logical next question then becomes … Continue Reading
Governor John Kasich signed a bill into law on Friday, August 3, 2018, adding Ohio to the list of U.S. states enacting blockchain legislation. Introduced last October and passed by the House at the end of June, SB 220 legally recognizes records or contracts and signatures secured through blockchain technology. Specifically, the bill amends Section … Continue Reading
On July 18, 2018, Acting Director Mick Mulvaney of the Consumer Financial Protection Bureau (“CFPB”) announced that Paul Watkins will head the CFPB’s new Office of Innovation. According to the press release, the office, which Mulvaney created to focus on consumer-friendly innovation, “will focus on creating policies to facilitate innovation, engaging with entrepreneurs and regulators, … Continue Reading
CFTC Customer Advisory On Monday, the Commodity Futures Trading Commission (“CFTC” or “Commission”) issued its fourth virtual currency customer advisory, Customer Advisory 7756-18, as part of its outreach effort to educate market participants. Titled, Use Caution When Buying Digital Coins or Tokens, the advisory warns customers of the risks of speculation of future value and … Continue Reading
Last week, the Market Oversight and Clearing and Risk Divisions of the Commodity Futures Trading Commission (“CFTC” or “Commission”) issued Staff Advisory No. 18-14 regarding virtual currency derivative product listings. The advisory serves as guidance to exchanges and clearinghouses in the context of listing derivative contracts based on virtual currency under Commission Regulations 40.2 (self-certification) … Continue Reading
This week, the Massachusetts Secretary of State ordered five companies, 18Moons, Across Platforms, Mattervest, Pink Ribbon, and Sparko, to cease and desist from engaging in initial coin offering (“ICO”) campaigns as part of an ongoing government investigation of token sales. The companies allegedly offered and sold unregistered securities in violation of the Massachusetts Uniform Securities … Continue Reading
The City of Berkeley, California will be the first U.S. city to explore blockchain-based financing to tackle social issues such as affordable housing. Mayor Jesse Arreguin and Council member Ben Bartlett are collaborating with the UC Berkeley Blockchain Lab and San Francisco-based financial startup Neighborly for the Berkeley Blockchain Initiative (“BBI”) to develop a tokenized … Continue Reading
On February 9, 2018, the Hong Kong Securities and Futures Commission (“SFC”) released a statement which, among other things, informs the marketplace that the SFC sent letters to seven Hong Kong cryptocurrency exchanges warning against listing instruments that qualify as “securities” under the Securities and Futures Ordinance (“SFO”) without a required license.[1] Additionally, the SFC … Continue Reading
On January 30, 2018, dissatisfied crypto token purchasers filed a class action lawsuit against Paragon Coin, Inc. (“Paragon”) and founders Jessica VerSteeg and Egor Lavrov, alleging that the Paragon initial coin offering (“ICO”) violated the federal securities laws.[1] This lawsuit follows those filed by plaintiffs against Centra, Tezos, ATBCoin, BitConnect, and Xunlei in connection with … Continue Reading
