Digital Currency + Blockchain Perspectives

In a recent decision in Securities and Exchange Commission v. Telegram Group Inc. and TON Issuer Inc., the United States District Court for the Southern District of New York granted a motion for a preliminary injunction by the United States Securities and Exchange Commission (“SEC”), thereby preventing the distribution to purchasers of $1.7 billion worth of cryptocurrency. That cryptocurrency, called “Grams,” was sold by Telegram Group Inc. (“Telegram”) in 2018 and due to be distributed to purchasers…
2019 was a year of significant regulatory and legal developments in digital currency + blockchain. The SEC issued its most comprehensive guidance to date with its Framework for “Investment Contract” Analysis of Digital Assets, followed that up with three “no action” letters for projects that in its view complied with the federal securities laws, and intensified its focus on initial coin offerings (“ICOs”) conducted in 2017 and 2018 with a series of settlements and enforcement…
Goodwin is pleased to announce that Nick Losurdo has re-joined the firm as a partner in its financial industry group, and a member of its digital currency and blockchain technology practice. Over the past 17 months, Nick has served as counsel to SEC Commissioner Elad Roisman. While at the SEC, Nick advised Commissioner Roisman on an array of legal, policy and regulatory matters, including proposed and final rulemaking, interpretations and exemptive relief, and enforcement matters.…
Speaking at the International Blockchain Congress in Chicago on February 6, 2020, SEC Commissioner Hester Peirce proposed a safe harbor from U.S. securities laws so that developers of blockchain protocols could offer and sell tokens for the purpose of developing functioning token networks and creating liquidity for users. Commissioner Peirce’s views are her own, and do not necessary represent the views of others at the SEC. However, Commissioner Peirce’s speech represents important first steps toward…
On January 21, 2020, Grayscale Bitcoin Trust (the “Trust”) became the first digital currency investment vehicle to attain the status of an SEC reporting company. The Trust’s sponsor, Grayscale Investments, LLC (“Grayscale”), is a digital currency asset manager that offers cryptocurrency investment products that provide exposure to Bitcoin and Ethereum, among other assets. The Trust holds Bitcoin in particular, and issues shares to investors that represent an ownership interest in the Trust.  The purpose of the…
Delaware amended the Delaware General Corporation Law (DGCL) and the Delaware Limited Liability Company Act (DLLCA) in 2017 and 2018, respectively, to permit corporations and limited liability companies to represent capital stock, record equity transactions, and communicate with equityholders via blockchain-based distributed ledgers. (S. 69, 149th Gen. Assembly, Del. 2017; S. 183, 149th Gen. Assembly, Del. 2018.)  The DGCL and DLLCA refer to these blockchain-based distributed ledgers as “Electronic Networks.”  Rather than treating an Electronic…
On December 18, 2019, the SEC issued an order instituting cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933, making findings, and imposing penalties and a cease-and-desist order with respect to Blockchain of Things Inc. (BCOT) in connection with an ICO allegedly conducted in violation of Sections 5(a) and 5(c) of the Securities Act. The order was part of a settlement between BCOT and the SEC. BCOT is a blockchain technology company…
On December 13, 2019, the U.S. District Court for the Southern District of Florida granted the plaintiffs’ motion for default judgment in a putative securities class action against Centra Tech, Inc. (“Centra Tech”). The putative class action complaint alleged that the defendants violated Sections 12(a) and 15 of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder in connection with the sale of unregistered securities. From July 23, 2017,…
On December 11, 2019, the SEC filed an enforcement action in the United States District Court for the Southern District of New York against UnitedData, Inc. d/b/a Shopin (“Shopin”) and its CEO (Eran Eyal) for violations of Sections 5(a) and 5(c) of the Securities Act for the sale of unregistered securities and violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder for material misrepresentations…
On November 1, 2019, the SEC issued a final judgment as to Veritaseum, Inc., Veritaseum, LLC, and their founder (Reginald Middleton) concerning the defendants’ conduct with respect to an ICO and the manipulation of cryptocurrency. The order was part of a settlement between the defendants and the SEC. Reginald Middleton formed Veritaseum, Inc., in 2014 and Veritaseum, LLC, in 2017 to develop software that permitted “peer to peer exchanges of value” using a blockchain. From…