U.S. Developments VanEck and SolidX to Offer Bitcoin ETF to Qualified Institutional Buyers On September 3, 2019, VanEck Securities Corp. and SolidX Management LLC announced that they are seeking to use Rule 144A of the Securities Act to issue shares in the VanEck SolidX Bitcoin Trust to qualified institutional buyers. According to a joint statement by the companies, the shares would be the first Bitcoin product for institutional investors that are cleared and would feature…

U.S. Developments Enforcement and Litigation Developments Craig Wright Faces Sanctions Craig Wright, the self-proclaimed inventor of Bitcoin, has been tied up in litigation since February 2018 related to his partnership with the late David Kleiman.  The case alleged that Wright worked to seize bitcoin owned by Kleiman after his death.  On August 27, 2019, in response to plaintiffs’ motion to compel, a magistrate judge ordered sanctions against Wright for his “continued non-compliance” with court orders…

U.S. Developments Veritaseum Founder Provides Response to Asset Freeze Order Responding to an emergency application filed by the Securities and Exchange Commission, Judge LaShann DeArcy Hall of the United States District Court for the Eastern District of New York issued an order on August 12, 2019, freezing Veritaseum accounts and digital assets and ordering founder Reggie Middleton to provide a response to the SEC’s allegations. On the day of the filing, defense counsel asked for…

Taxpayers should take prompt action to assess their situation, yet move carefully before making representations or filings to the IRS. Over the past month, the Internal Revenue Service (IRS) has sent letters to over ten thousand taxpayers that it believes may have failed to report virtual currency transactions (primarily Bitcoin-related) or may have omitted income derived from virtual currency transactions. These letters continue to receive significant press coverage from major financial outlets and may be…

U.S. Regulatory Kik Files Answer to SEC Complaint On August 7, Canadian messaging company Kik Interactive Inc. (“Kik”) filed its answer to the U.S. Securities and Exchange Commission’s (“SEC”) complaint filed in the Southern District of New York.  In its 131-page answer, Kik argues for a narrow reading of the Howey test and maintains that the SEC has taken quotes out of context and misrepresented documents and testimony in its treatment of the facts in…

U.S. Developments Regulatory Developments Commissioner Hester Peirce Speaks Before the SUSS Convergence Forum: Inclusive Blockchain Finance, and Emerging Technologies On August 1, 2019, Securities and Exchange Commission (“SEC”) Commissioner Hester Peirce gave a speech before the Singapore University of Social Sciences Convergence Forum: Inclusive Blockchain, Finance, and Emerging Technologies. In her remarks, she discussed the challenge U.S. regulators are facing in trying to address the cross-border trading of digital assets. She emphasized that this problem…

U.S. Developments Regulatory Developments SEC Issues Second No Action Letter for Blockchain-Based Project On July 25, 2019, the staff of U.S. Securities and Exchange Commission (SEC) issued its second ever no-action letter to a company planning to issue blockchain-based tokens. The letter was issued to Pocketful of Quarters (PoQ), a gaming start-up. PoQ seeks to issue an Ethereum-based ERC-20 stablecoin, “Quarters,” for use within its gaming platform. No action-letters are public letters from the SEC…