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The U.S. Securities and Exchange Commission (SEC) Strategic Hub for Innovation and Financial Technology (FinHub) published a framework on April 3, 2019, for analyzing whether a digital asset is offered and sold as a security under the federal securities laws. The framework includes “common sense guidance” that provides greater detail and clarity regarding the application of the federal securities laws to digital assets and is intended to be “an analytical tool to help market participants…
Through their recent actions and statements, the Securities and Exchange Commission (SEC) has further clarified their position with respect to digital assets and ICOs. Following on from earlier enforcement efforts throughout 2017 and 2018, the SEC Enforcement Division settled cases with AirFox and Paragon, two issuers of unregistered securities in tokenized form, in addition to a settlement with the founder of a purported decentralized exchange, EtherDelta. The SEC Policy Divisions released a rare joint statement…
The following was posted on the Perkins Coie’s Asset Management ADVocate, to read the full post, please click here. EtherDelta Founder Sanctioned for Operating an Unregistered Securities Exchange By Michael S. Didiuk and Conor O’Hanlon on November 9, 2018 Posted in Compliance In this post we discuss how on November 8, the SEC announced an enforcement action charging the founder of a digital “token” trading platform for operating as an unregistered national securities…
On November 8, the SEC announced an enforcement action charging the founder of a digital “token” trading platform for operating as an unregistered national securities exchange. The SEC has previously brought enforcement actions relating to unregistered broker-dealers and unregistered ICOs, including some of the tokens traded on EtherDelta. Stephanie Avakian, Co-Director of the SEC’s Enforcement Division, commented that “EtherDelta had both the user interface and underlying functionality of an online national securities exchange and was…
Facebook has implemented a new policy regarding ads related to cryptocurrency. While Facebook previously banned all such ads, under the revised policy effective June 26, advertisers of cryptocurrency content may apply online for approval of their advertisement. “Cryptocurrency content” is considered by Facebook to include “any advertisements or content in any way related to cryptocurrency”. In the application, advertisers are asked about their relevant licenses, whether their company is traded on a public stock exchange,…
From Uncertainty toward Regulatory Clarity: Senior SEC Officials Provide Regulatory Clarity for Digital Assets Summary is below, please click here for the full alert narrative. On June 14, 2018, the Director of the Division of Corporation Finance of the Securities and Exchange Commission delivered a speech outlining the framework used by the SEC Staff in evaluating whether a given token sale qualifies as a securities offering.  The Director clarified that a token sale may qualify…
From Uncertainty toward Regulatory Clarity: Senior SEC Officials Provide Regulatory Clarity for Digital Assets Summary is below, please click here for the full alert narrative. On June 14, 2018, the Director of the Division of Corporation Finance of the Securities and Exchange Commission delivered a speech outlining the framework used by the SEC Staff in evaluating whether a given token sale qualifies as a securities offering.  The Director clarified that a token sale may qualify…
On Monday, April 2, 2018, the U.S. Securities and Exchange Commission (SEC) charged two co-founders of Centra Tech, Inc. (Centra), a purported financial services company headquartered in Florida, with conducting a fraudulent unregistered initial coin offering (ICO) that raised more than $32 million from thousands of investors from July to October 2017.  In a parallel action, the two co-founders were separately charged and arrested by the U.S. Attorney’s Office for the Southern District of New…
In a recently published letter to the Senate Finance Committee, FinCEN confirmed that when an ICO token is a “convertible virtual currency,” administrators or exchangers of the token would be “money transmitters” under existing FinCEN regulations and interpretations. Under the Bank Secrecy Act (BSA), a money transmitter must register with FinCEN as a money services business (MSB) and implement a risk-based anti-money-laundering (AML) compliance program. Pursuant to the BSA and its implementing regulations, an appropriate…
On February 6, 2018, the United States Senate Committee on Banking, Housing and Urban Affairs conducted a hearing entitled “Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission.” Hearing. The Chairman of the U.S. Securities and Exchange Commission (SEC), Jay Clayton, and the Chairman of the U.S. Commodity Futures Trading Commission (CFTC), J. Christopher Giancarlo, provided testimony. The hearing comes at a time when…