Fin-Tech, Blockchain, and Cryptocurrency Law Resource

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Cryptocurrency and Blockchain

Freeman Law is an innovative thought leader in the cryptocurrency and blockchain space. Blockchain and virtual currency activities take place in a rapidly-evolving regulatory landscape. Freeman Law is dedicated to staying at the forefront as these emerging technologies continue to revolutionize social and economic activities.

Digital Currency – Blockchains

Virtual and cryptocurrencies are built on blockchain technology—a technological innovation that allows for a distributed, decentralized digital ledger generally built upon cryptographic mechanisms and complex consensus protocols. From a legal perspective, many of the tax, regulatory, and other legal issues associated with blockchain technology and cryptocurrency require an understanding of this underlying technology.

 

Global Cryptocurrency Regulations

 

State-By-State Cryptocurrency Legislation

 

Cryptocurrency and Blockchain Tax Strategies

Cryptocurrencies involve unique tax considerations. Businesses and individuals need up-to-date guidance and insight regarding the tax law and its impact on virtual currency activities at the state, federal, and international levels. Freeman Law is positioned to advise clients on the latest cryptocurrency tax strategies and thinking.

Freeman Law also offers legal and regulatory guidance with respect to Initial Coin Offerings (“ICOs”). ICOs raise particular regulatory challenges and risks. Depending on the circumstances, an ICO may be classified as the issuance of a security subject to state or federal security regulations or a commodity subject to CFTC oversight. Investors and issuers need astute legal counsel regarding these risks and associated compliance measures.

Cryptocurrency and Blockchains Regulatory Compliance

Cryptocurrency and Blockchain transactions can raise a host of other regulatory compliance challenges as well. Cryptocurrency issuers and administrators may be subject to “money transmission” regulations at both the state and federal levels. FinCEN and state analog agencies administer “money transmission” regulatory regimes, which may include Anti-Money Laundering (“AML”) and Know-Your-Customer (“KYC”) compliance requirements. Violations and failures to properly register under these regimes may even give rise to criminal violations.

The cryptocurrency and blockchain regulatory landscape is rapidly evolving across jurisdictions. Compliance with this overlapping regulatory patchwork—at both the state and federal level—requires innovation and cutting-edge legal advisors


Freeman Law Technical Resources


Comprehensive Charts and Summaries

See our Freeman Law State-by-State Resources:  

State-By-State Digital Currency Laws and Regulations

Digital Currency Transmission Laws State-by-State

 

 

The Freeman Law Cryptocurrency Litigation Matrix

Case Name Date Case Citation Link to filings

In the Matter of Tierion, Inc.

12.23.2020

Release No. 33-10914 (SEC)

Link

SEC v. Qin

12.22.2020

20-cv-10849 (S.D.N.Y)

Link

SEC v. Ripple Labs et al.

12.22.2020

20-cv-10832 (S.D.N.Y)

Link

CFTC v. HDR Global Trading Limited

10.1.2020

20-cv-8132 (S.D.N.Y)

Link

CFTC v. Garcia

 9.11.2020

20-cv-3185 (S.D. TX)

Link

SEC v. Flik, et al.

9.10.2020

20-cv-3739 (N.D. Ga)

Link

SEC v. Millan, et al.

8.9.2020

20-cv-06575 (S.D.N.Y)

Link

See The Freeman Law Cryptocurrency Litigation Matrix for full listing.

 

 

Digital Currency – Federal Rules and Guidance: Regulatory Enforcement – AML/CFT

Date Agency / Government Entity Type of Guidance Main Issue(s) Addressed Title Description
4/18/2019 FinCEN Civil Penalty Regulatory Enforcement
– AML/CFT
In the Matter of Eric Powers, Assessment of Civil Money Penalty
Press Release: FinCEN Penalizes Peer-to-Peer Virtual Currency Exchanger for Violations of Anti- Money Laundering Laws
FinCEN assessed a $35,350 civil money penalty against Eric Powers for willfully violating the Bank Secrecy Act’s (BSA) registration, program, and reporting requirements, in the first enforcement action against a peer-to-peer exchanger of virtual currency. As “money transmitters”, peer-to-peer exchangers are required to comply with the BSA obligations that apply to money services businesses (MSBs). Powers failed to register as an MSB, had no written policies or procedures for ensuring compliance with the BSA, and failed to file suspicious activity reports (SARs) and currency transaction reports (CTRs).
4/8/2019 DOJ Prison Sentence Regulatory Enforcement
– AML/CFT
USA v. Campos, Docket No. 3:18- cr-13554 (S.D. Cal. Aug 09, 2018)
Order of Criminal Forfeiture
Jacob Burrell Campos, who pleaded guilty to operating an unregistered Bitcoin exchange on October 29, 2018, was sentenced to two years in prison and required to forfeit $823,357.
Press Release: Bitcoin Dealer Sentence to Two Years in Prison and Ordered to Forfeit Ill-Gotten Gains

For more, see our full resource for Digital Currency – Federal Rules and Guidance: Regulatory Enforcement – AML/CFT

 

Initial Coin Offering (ICO) Enforcement Actions

Subject Authority Date Action Description
Blockchain of Things, Inc. Securities and Exchange Commission (SEC) 12/18/2019 Enforcement Action Blockchain of Things, Inc. (BCOT) settled charges of conducting an unregistered securities offering from December 2017 through July 2018 that raised over $12 million, agreeing to pay a $250,000 civil penalty.
Cease and Desist Order, Securities Act Release No. 10736
Waiver Order
Block.one Securities and Exchange Commission (SEC) 9/30/2019 Enforcement Action Block.one settled charges of conducting an unregistered ICO that raised several billion dollars over approximately one year, agreeing to pay a $24 million civil penalty.
Cease and Desist Order, Release No. 10714
SEC Press Release
ICO Rating Securities and Exchange Commission (SEC) 8/20/2019 Enforcement Action ICO Rating, an unincorporated organization formed in September 2016 and based in St. Petersburg, Russia, provided review and rating services for entities conducting ICOs, without being registered with the SEC in  any capacity. The SEC ordered ICO Rating to cease and desist from violating Section 17(b) of the Securities Act by touting ICOs involving the sale of securities and to pay disgorgement of $100,572, prejudgment interest of $6,426, and a civil money penalty of $162,000.
Cease and Decease Order, Securities Act Release No. 10673

For more, see our full resource for ICO Enforcement Actions

Initial Coin Offering Private Lawsuits

Date Title/Docket Court Coin Name Description
4/4/2019 Silverman v. Payward, Inc. et al, Docket No. 1:19-cv-02997 (S.D.N.Y. Apr. 4,
2019)
U.S. District Court
Southern District of New York
N/A In a lawsuit over Kraken’s alleged breach of an employment agreement, the former head of institutional sales and trading for Kraken alleged that he engaged in cryptocurrency trading for Kraken in New York in April-December 2017, with trading desk profits during that period totaling approximately $19 million.
The claim that Kraken conducted cryptocurrency trading in New York may undermine the claims of the company and its CEO in a 2015 blog post and an April 2018 tweet that it had discontinued service in New York in 2015 to avoid the requirement to obtain a New York Bitlicense.
12/31/2018 Kaplan v. Compcoin LLC et al v. Harris et al, Docket No. 1:18- cv-07453 (E.D.N.Y. Dec. 31, 2018) U.S. District Court
Eastern District of New York
COMPCOIN An individual plaintiff accused Compcoin LLC, Fintech Investment Group Inc., and four of their executives of engaging in securities fraud when the solicited investments in an unregistered ICO selling COMPCOIN, which was claimed to represent trading power on an artificial intelligence network trading in foreign exchange markets.
11/1/2018 Beranger et al v. Harris et al, Docket No. 1:18-cv-05054 (N.D. Ga. Nov. 1, 2018) U.S. District Court
Northern District of Georgia
FLiK Plaintiffs residing in the United States, France, South Africa, the Netherlands, Russia, the United Kingdom, the Czech Republic, South Korea, Slovakia, Switzerland, and Greece sued Clifford Joseph Harris, Jr. (the rapper and actor known as “T.I.”), entertainment executive Ryan Felton, Tony Gallippi (co-founder of BitPay),  and actor Kevin Hart for securities fraud in the sale of FLiK Tokens in the ICO for FLiK, which was claimed to be developing a video streaming platform enabling self-distribution of films or television shows to a global audience. The plaintiffs alleged violation of Section 12(a) and Section 15(a) of the Securities Act and violation of the Georgia Uniform Securities Act against
T.I. and Felton.
9/20/2018 Blockchain U.S. District BCIO Blockchain Luxembourg S.A. and Blockchain
Luxembourg S.A. et al
v. Paymium, SAS a/k/a Blockchain.io et al, Docket No. 1:18- cv-08612 (S.D.N.Y. 20, 2018)
Court
Southern District of New York
(US), Inc. filed a complaint against Paymium and its founder Pierre Noizat for trademark infringement and unfair competition, to prevent Paymium from conducting an ICO branded as BLOCKCHAIN.IO and to recover damages from Paymium for damage to its BLOCKCHAIN trademark.

For more, see our full resource for Initial Coin Offering Lawsuits.

 

Initial Coin Offering Class Actions

Filing Date Title/Docket Court/Judge Plaintiff Firm Description
12/12/2018 Nirvana Capital Limited et al v. Mobile Gaming Technologies, Inc. et al, Docket No.
4:18-cv-07483
(N.D. Cal. Dec 12, 2018)
Northern District of California
Magistrate Judge Kandis
A. Westmore
Horizons Law & Consulting Group
Zeisler PLLC
Nirvana Capital Limited, a British Virgin Islands private limited company, and Winslow Strong, a U.S. citizen residing in the Commonwealth of Puerto Rico, filed a federal securities class action against Mobile Gaming Technologies, Inc., its directors and offices Mike Reaves, George Weinberg, Fred Hsu, and Does 1-10 for securities fraud in the ICO of CashBet Coins. The complaint alleged violations of
(1) Section 12(a)(1) of the Securities Act,
(2) Section 12(a)(2) of the Securities Act,
(3) Section 15(a) of the Securities Act, (4) Section 11 of the Securities Act, and (5) fraud.
11/7/2018 Zakinov et al v. Ripple Labs, Inc., et al, Docket No.
3:18-cv-06753
(N.D. Cal. Nov. 7, 2018)
Northern District of California
Judge William Alsup
Skadden, Arps, Slate, Meagher & Flom LLP Ripple Labs, Inc., XRP II, LLC, and individual defendants Bradley Garlinghouse, Christian Larsen, Ron Will, Antoinette O’Gorman, Eric Van Miltenburg, Susan Athey, Zoe Cruz, Ken Kurson, Ben Lawsky, Anja Manuel, and Takashi Okita requested the removal of the class action lawsuits Vladi Zakinov, et. al. vs. Ripple Labs, Inc. et al, Docket No. 18CIV02845 and David Oconer vs. Ripple Labs, Inc. et al, Docket No. 18CIV03332 to the U.S. District Court for the Northern District of California, after the consolidation of those lawsuits in the Superior Court of California, County of San Mateo and the removal of the class action lawsuit Avner Greenwald vs. Ripple Labs, Inc. et al, Docket No. 18CIV03461 from the Superior Court of California, County of San Mateo to the U.S. District Court for the Northern District of California.
10/25/2018 Avner Greenwald vs. Ripple Labs, U.S. Court of Appeals for the Ninth Circuit Scott+Scott Attorneys at Law LLP Ripple Labs, Inc. and individual defendants Bradley Garlinghouse, Christian Larsen, Ron Will, Antoinette O’Gorman, Eric Van
Inc., et al, Docket No. 18-80147 (9th
Cir. Oct. 25,
2018)
Miltenburg, Susan Athey, Zoe Cruz, Ken Kurson, Ben Lawsky, Anja Manuel, and Takashi Okita sought permission to appeal the remand of the class action by the U.S. District Court for the Northern District of California after the defendants’ successful removal of it to the District Court in Greenwald vs. Ripple Labs, Inc. et al, Docket No. 3:18-cv-04790 (N.D. Cal. Aug 8, 2018).
8/13/2018 John Hastings
v. Unikrn, Inc., Docket No.
18-2-20306
Superior Court of Washington
King County
Stritmatter Kessler Whelan Koehler Moore Plaintiff John Hastings sued Unikrn, Inc., Unikrn Bermuda Ltd., Rahul Sood, Karl Flores, and Does 1-10 on behalf of all investors who purchased UnikoinGold Tokens during the UnikoinGold ICO in September-October 2017, for the offer and sale of unregistered securities in violation of Sections 5 and 12(a)(1) of the Securities  Act by all defendants, and in violation of Section 15 of the Securities Act by Unikrn, Inc., Rahul Sood, and Karl Flores. Unikrn had declared the UnikoinGold Tokens to be utility tokens and conducted a private presale to celebrity investors including Mark Cuban. Unikrn sold approximately 127 million tokens for over 112,000 Ethereum worth approximately $298 million at the time in the ICO, then continued to sell tokens to the public.

For more, see our full resource for Initial Coin Offering Class Actions.