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QE on the Block - Digital Assets and Blockchain Newsletter - September 2021

Business Litigation Reports

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Just Minted: News Sweep July-September 2021

  • In recent months, federal regulators have devoted more attention to pursuing alleged violations of federal securities laws by businesses in the cryptocurrency sector. Several state regulators have also increased the pace of their enforcement actions.
  • Poloniex agreed to pay $10 million to settle claims brought against it by the SEC. Regulators alleged that Poloniex permitted users to trade certain cryptocurrencies - which the SEC considered securities - without registering as an exchange. In settling the matter, Poloniex neither admitted nor denied the claims.
  • Coinbase, another crypto exchange, is facing a class action lawsuit led by an investor alleging violations of the federal securities laws. The complaint alleges that Coinbase misled investors about its finances and the stability of its software.
  • El Salvador’s Bitcoin roll-out—the world’s first— ran into problems. Hours after the launch of its official digital wallet, Chivo, the government had to remove it from app stores in order to resolve network capacity issues. The wallet is now available again.
  • The head of the UK’s Financial Conduct Authority called for a more aggressive response to the threat posed by speculative or fraudulent cryptocurrencies. Chair Charles Randell cited the significant risk to unsophisticated consumers and stated that, in particular, the role of social media influencers in promoting cryptocurrency investments merits greater scrutiny.
  • On August 3, 2021, Chair of the SEC Gary Gensler gave a speech in which he called for additional regulation in this area, expressing concern that, without additional authority, certain “transactions, products, and platforms [might] fall[] between regulatory cracks.” Gensler further noted that “the legislative priority should center on crypto trading, lending, and DeFi platforms. Regulators would benefit from additional plenary authority to write rules for and attach guardrails to crypto trading and lending.”
  • The SEC has charged Gregory Keough, Derek Acree, and their company Blockchain Credit Partners for raising $30 million through fraudulent offerings. The lender sold tokens to the public and promised to invest the money...

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