Tag Archives: SEC

Berkeley to Use Blockchain for Tokenized Bonds

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 Councilmember 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 municipal … Continue Reading

Hong Kong Securities Commission Launches Inquiry Into Seven Crypto Exchanges

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

Securities Class Action Lawsuits Continue to Test the “Utility” Token Sale Model

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

SEC Scrutinizes Pumping of Blockchain-Related Securities

The U.S. Securities and Exchange Commission (“SEC”) is continuing to increase its scrutiny of companies that might be taking advantage of investor excitement for blockchain and cryptocurrency (ICO) deals to inflate their share prices and raise funds.  On January 8, 2018, the SEC suspended trading in the securities of Hong Kong-based UBI Blockchain Internet, Ltd. … Continue Reading

ICOs Must Remain Aware of Regulatory Enforcers

Digital assets, popularly referred to as “cryptocurrencies”, “coins”, and “tokens”, continue to provoke regulatory attention and create discord amongst regulators. Recent actions by the U.S. Commodity Futures Trading Commission (“CFTC”) and the U.S. Securities and Exchange Commission (“SEC”) demonstrate that activities by the issuers of tokens may draw scrutiny from either or both agencies. As … Continue Reading

Security Implications for Blockchain Technology Reviewed by SEC

On October 12, 2017, the U.S. Securities and Exchange Committee (“SEC”) held an Investor Advisory Committee (“IAC”) meeting to consider, among other things, blockchain technology and the implications for securities markets.1 The meeting covered a broad range of topics relating to blockchain and distributed ledger technology (“DLT”), including initial coin offerings (“ICO”), post-trade processing, and … Continue Reading

Regulatory Authorities Respond to Coin Offering Endorsements

Floyd Mayweather, a world famous boxing champion, recently used his Twitter and Instagram accounts to help a company raise more than $30 million in an initial coin offering (“ICO”).1 Other celebrities have similarly capitalized on their “influencer” status by promoting digital tokens to their Twitter and Instagram followers. Token issuers raised over $3 billion via … Continue Reading

CFTC and SEC Chairs Seek to Apply Existing Laws and Regulations to Digital Assets

Nine years after Satoshi Nakamoto circulated his whitepaper and introduced the world to bitcoin, regulated bitcoin derivatives are about to be introduced in the United States. CME Group recently announced that it will begin to offer bitcoin futures based on the CME CF Bitcoin Reference Rate later this year[1] and the Chicago Board Options Exchange … Continue Reading

SEC Files Complaint Against Trader Involving Bitcoin Conversion Scheme

On October 30, 2017, the U.S. Securities and Exchange Commission (“SEC”) filed a complaint in federal court against a day trader for allegedly committing fraud and market manipulation during which the trader utilized a digital currency exchange in a supposed attempt to cover his tracks. The SEC claims that defendant’s associate obtained unauthorized access to … Continue Reading

SEC Creates New Units Focused On Cyber Crimes That Will Cover Crypto Tokens

September 28, 2017 Two months after its Investor Bulletin stating that U.S. securities laws may apply to digital token sales, the Securities Exchange Commission (“SEC”) announced Monday two new initiatives to address cyber-based threats and protect retail investors.  The SEC’s press release outlined the creation of the Cyber Unit (“Unit”) and the Retail Strategy Task … Continue Reading

SEC Rejects Second Bitcoin ETF Due to Lack of Regulatory Oversight

On March 28, 2017, the U.S. Securities Exchange Commission (“SEC”) issued a second denial of a bitcoin exchange-traded fund (“ETF”), following its rejection of the Winklevoss Bitcoin Trust earlier this month (Reed Smith commentary is available here). SolidX Bitcoin Trust would hold bitcoin as its primary asset, together with smaller amounts of cash.  Theft of … Continue Reading

BATS BZX Exchange’s Proposal Disapproved by the SEC

On March 10, 2017, the U.S. Securities Exchange Commission (“SEC“) issued an order disapproving BATS BZX Exchange’s proposal to list and trade shares of the Winklevoss Bitcoin Trust. The proposal, if granted, would have established a bitcoin exchange-traded fund (“ETF“) that market participants could invest in through the BATS BZX Exchange platform. Read our full … Continue Reading

SEC Forum on FinTech Innovation Discusses Leveraging the Blockchain to Enhance Transparency, Verifiability and Governance in Corporate Processes

In a panel at the Securities and Exchange Commission’s recent forum on Innovation in FinTech, experts discussed blockchain’s potential role in corporate processes such as by providing an unalterable history of transactions, by tracking products and documents throughout their lifecycles, and by dividing the risks and costs of maintaining an authoritative system of record among … Continue Reading

Crowdfunding : trick or treat?

On Halloween eve, three years after authorization by the JOBS Act, the SEC finally adopted rules permitting small ventures and business startups to raise up to $1 million over a 12-month period by selling shares to the investing public through crowdfunding offerings conducted on Internet fundraising portals. Qualifying businesses and intermediary portals will be subject … Continue Reading
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