On August 28, 2023, the SEC settled enforcement charges against a Los Angeles-based media and entertainment company for conducting an unregistered offering of non-fungible tokens (NFTs). The case represents the SEC’s first foray into the NFT space.
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Court’s Ruling Splits Partly in Favor of SEC and Partly for Ripple
On July 13, 2023, the Federal District Court for the Southern District of New York issued the hotly anticipated ruling in the SEC’s case against Ripple Labs, Inc. On cross-motions for summary judgment, the court found that only Ripple’s sale of its XRP tokens to institutional buyers pursuant to sales contracts constituted unregistered sales of securities in violation of Section 5 of the Securities Act of 1933.
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SEC Issues SAB 121 Providing Accounting Guidance for Companies that Safeguard Digital Assets
On March 31, 2022, the staff of the Division of Corporation Finance and the Office of the Chief Accountant of the SEC issued Staff Accounting Bulletin No. 121 (SAB 121), which “adds interpretive guidance for entities to consider when they have obligations to safeguard crypto-assets held for their platform users.” SAB 121 highlights the enhanced technological, legal and regulatory risks associated with safeguarding digital assets, as compared with more traditional asset classes.
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SEC Determines Digital Asset, VCOIN, Not a Security
On November 19, 2020, IMVU, Inc. received no-action relief from the Securities and Exchange Commission confirming that the Division of Corporate Finance will not recommend enforcement action against IMVU for selling its digital asset, VCOIN.
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SEC and CFTC Charge a Bitcoin-Funded International Securities Dealer
On September 27, 2018, the Securities Exchange Commission (“SEC”) and Commodity Futures Trading Commission (“CFTC”) charged an international securities dealer with illegally offering and selling to U.S. investors security-based swaps funded with bitcoins and related violations of the Commodities Exchange Act. The broker, 1pool Ltd., a.k.a. 1Broker, and its CEO, Patrick Brunner, were both named in the complaint filed by the SEC with the U.S. District Court for the District of Columbia.
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SEC Acts Over Weekend to Suspend Trading in Certain Crypto Stocks
On September 9, 2018, the SEC announced the temporary trading suspension of two securities, known as Bitcoin Tracker One and Ether Tracker One, in light of apparent confusion among market participants regarding the characteristics of these instruments.
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NASAA Updates Status of “Operation Cryptosweep”
On August 28, 2018, the North American Securities Administrators Association published a press release with an update on the progress of the coordinated enforcement sweep of the ICO market dubbed “Operation Cryptosweep.”
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SEC Brings Enforcement Case Involving “Airdrop” of Securities
A recent settled SEC enforcement action against an ICO issuer and its promoter calls into question the viability of the “airdrop” model of distributing digital tokens to investors. Whether such a distribution model runs afoul of the federal securities laws has been the subject of much debate in recent months, and the SEC’s case provides additional insight into their analysis of the issue.
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World Bank Offers Blockchain Bond
On August 9, 2018, the World Bank issued a press release highlighting what it described as the “World’s First Blockchain Bond.”
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FTC to Commence Hearings on Competition and Consumer Protection in the 21st Century
On August 6, 2018, the FTC published a notice seeking public comment as to whether broad-based changes in the economy, evolving business practices, new technologies or international developments might require adjustments to competition and consumer protection law, enforcement priorities and policy. The topics that the FTC seeks comments on could easily accommodate market developments due to the emergence of blockchain technology and related applications.
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