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This site is a resource for those interested in legal and regulatory developments in the application of blockchain technology, provided by Murphy & McGonigle. We regularly work with financial services companies that have a stake in legal and regulatory developments impacting blockchain technology. We created this site to provide periodic updates on important developments in the law surrounding blockchain technology.
Produced by the Attorney General’s Cyber-Digital Task Force, the Framework is divided into three parts with a conclusion. It provides an overview of threats and enforcement challenges associated with the increasing use of cryptocurrency; enumerates the criminal and civil statutes and regulatory framework used to investigate and regulate illegal crypto-related activities; and outlines ongoing challenges for businesses involved with cryptocurrency, and future strategies for investigating and prosecuting crypto involved crimes.
The author examines the decisions in SEC v. Telegram and how they may impact digital token issuers’ use of the Simple Agreement for Future Tokens model for distributing tokens.
The Southern District of New York has issued two main rulings in SEC v. Telegram—that the offer and sale of Telegram’s cryptocurrency (Grams) involved a "scheme" to distribute securities subject to 1933 Act registration requirements, and that the Court’s preliminary injunction regarding sales or resales of Grams applies to both U.S. and non-U.S. purchasers. Murphy & McGonigle’s Larry Bergmann examines both rulings and weighs the impact they might have on future issuances of digital tokens. Among other things, Bergmann believes that the decisions will make it more difficult for digital token issuers to argue that securities sold to raise capital can be transformed at a later date into "utility" digital assets that are not securities. He also raises the question of whether improvements can be made to an operational cryptocurrency platform to enhance the value of that platform’s tokens.
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The agency is seeking public comment on two proposals that will promote the responsible and efficient diversification of cryptocurrencies traded on New York licensed exchanges.
In response to market participants’ request for guidance on how the customer protection provisions of the Commodity Exchange Act (“Act”) and the Regulations (“Regulations”) of the Commodity Futures Trading Commission (“CFTC”) apply to virtual currencies deposited by futures customers or cleared swaps customers with futures commission merchants (“FCMs”), the CFTC’s Division of Swap Dealer and Intermediary Oversight (“DSIO”) issued an advisory on October 21, 2020 (“Advisory”) regarding the holding of virtual currency in segregated accounts. The Advisory provides FCMs with its views on accepting and holding customer virtual currency assets. The Advisory also sets forth guidance on practices to consider in developing and maintaining risk management programs in accordance with Regulation 1.11 when holding virtual currency as customer funds. With the issuance of this Advisory, FCMs holding virtual currencies as customer funds should consider themselves on notice of these requirements and should immediately incorporate these requirements into their risk management programs.
On September 30, 2020, a New York federal judge agreed with the SEC that Kik Interactive Inc.'s sale of its cryptocurrency, Kin, violated securities laws. The case had been one of the most hotly contested concerning the application of securities laws to the sale of cryptocurrency.
The fifth entry in a series of blog posts focused on trends and analytics derived from Murphy & McGonigle's Blockchain Litigation Database.
Blockchain Litigation Database
The Blockchain Litigation Database tracks blockchain and cryptocurrency-related litigation using a data-based, analytical approach to enable subscribers to follow the development of the case law, analyze legal risks, perform due diligence on counterparties, and more.