On October 21, 2020, the United States District Court for the Southern District of New York (SDNY) entered a final judgment on consent against Kik Interactive Inc. (Kik) after the Court previously determined that Kik failed to comply with the registration requirements of the Securities Act of 1933[1] (Securities Act) as previously alleged by the … Continue Reading
The cryptocurrency and digital-asset ecosystem in the Asia-Pacific region has seen rapid growth over recent years and is generating opportunities for novel business models, but is also giving rise to various types of fraud. While fraud risk in this sector is being mitigated by service providers such as cryptocurrency exchanges and digital-wallet operators implementing practical … Continue Reading
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
Last week (28 November 2019), the European Banking Authority (EBA) released the final version of its report entitled ‘EBA Guidelines on ICT and security risk management’ (the Guidelines) (link here) on the mitigation and management of financial institutions’ (FIs) information and communication technology (ICT) and security risks. We highlight below some of the key takeaways. … Continue Reading
On 19 November 2019, the Basel Committee on Banking Supervision (BCBS) published its report on open banking and its implications for banks and banking supervision. The report builds on the BCBS’ previous findings on open banking and application programming interfaces (APIs) in its 2018 report (“Sound practices on the implications of FinTech developments for banks and bank supervisors”). We … 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
In Securities and Exchange Commission v. ICOBox et al,[1] the Securities and Exchange Commission (“SEC”) alleges that defendant ICOBox and its founder, Nikolay Evdokimov violated Sections 5(a) and 5(c) of the Securities Act by selling $14.6 million in unregistered securities within and outside the United States. ICOBox bills itself as an ICO[2] incubator that provides … Continue Reading
Howard Womersley Smith, a Partner in Reed Smith’s FinTech practice recently published an article regarding EBA Outsourcing Guidelines and Operational Resilience, and gives his suggestions on what FinTech companies should be prioritizing in this current market. Read the full article on FinTech Futures.… Continue Reading
On 31 July 2019, the United Kingdom Financial Conduct Authority (“FCA”) published its final guidance on the types of cryptoassets that fall within the FCA’s current regulatory framework, clarifying the resulting obligations for firms and regulatory protections for consumers (“PS 19/22” or “the Policy Statement”).[1] The Policy Statement provides market participants welcome pointers as to … 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 July 8, 2019 the U.S. Securities and Exchange Commission (the “SEC”) and the Financial Industry Regulatory Authority (“FINRA”) (both, the “Regulators”) published a Public Statement titled, “Joint Staff Statement on Broker-Dealer Custody of Digital Asset Securities” (the “Joint Statement”). The Joint Statement follows many months of discussions with certain digital asset securities industry participants … Continue Reading
On 3 July 2019, the United Kingdom Financial Conduct Authority (the “FCA”) published its consultation paper on a proposed ban on the sale, marketing and distribution to retail clients of derivatives that reference certain types of cryptoassets (“CP 19/22”).[1] Background… 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
The UK Jurisdiction Taskforce (UKJT) recently published a consultation paper requesting submissions from stakeholders working with, or interested in, cryptoassets, distributed ledger technology (DLT) and smart contracts. Submissions will inform a legal statement by UKJT which will aim to settle questions on the legal status of cryptoassets and smart contracts. UKJT is drawn from industry, government and … Continue Reading
R. Raphael & Sons plc (Raphaels) has received fines totalling £1,887,252 from the FCA and PRA for repeated failings in relation to inadequate systems and controls supporting the oversight and governance of its outsourcing arrangements. Raphaels outsourced certain functions that supported payment services for its prepaid and charge card programmes in the UK and Europe to … 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
Background – the European Banking Authority (EBA) issued at the end of Feb 2019 its revised Guidelines on Outsourcing arrangements (Guidelines). These are the first wholesale update since 2006 when the guidelines applied exclusively to credit institutions. They now apply to a broader range of in-scope financial institutions (FIs). Timings – the Guidelines will apply … 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
As detailed in a prior post on this blog, the United States District Court for the Southern District of California previously denied the U.S. Securities and Exchange Commission’s (SEC) request for a preliminary injunction against Blockvest, LLC and its founder and chairman Reginald Buddy Ringgold, III (Ringgold). Recently, upon reconsideration, the court changed course, finding … 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
