Blog Posts Tagged With Cyber and Cryptocurrency

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In re Block.one (A.P. Sept. 30, 2019, Settled)

Action against Respondent, a blockchain company, for an alleged unregistered offering.  The SEC alleges that Respondent sold electronic tokens through an initial coin offering without registering or securing an exemption from registration.  Respondent has agreed to pay a civil penalty of $24,000,000.

SEC Order
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CFTC v. Jon Barry Thompson (S.D.N.Y. Sept. 30, 2019, Contested)

Action against Defendant, the principal of a Bitcoin escrow company, for alleged fraud. According to the CFTC, Defendant induced customers to send him funds for the purchase of Bitcoin based on false representations that he already had the Bitcoin in hand.  The CFTC further alleges that Defendant misappropriated the customers’ funds and failed to deliver the promised Bitcoin.

CFTC Press Release

CFTC Complaint
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SEC v. ICOBox and Nikolay Evdokimov (C.D. Cal. Sept. 18, 2019, Contested)

Action against Defendants, a digital currency platform and its founder, for alleged fraud and registration failure.  According to the SEC, Defendants publicly offered digital tokens and made false claims that the tokens would appreciate and could be swapped for other tokens.  The SEC further alleges that Defendant company facilitated initial coin offerings without registering as a broker.

SEC Complaint

SEC Litigation Release

SEC Press Release
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In re Phillip Capital Inc. (A.P. Sept. 12, 2019, Settled)

Action against Respondent, a registered futures commission merchant and broker dealer, for alleged cybersecurity violations. According to the CFTC, Respondent experienced a cybersecurity breach, failed to maintain adequate cybersecurity policies and procedures, and failed to timely notify customers of the breach. Respondent has agreed to pay a civil penalty of $500,000 and received credit for payment of $1 million in reimbursement to customer accounts.

CFTC Order

CFTC Press Release
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CFTC v. John Doe 1 a/k/a Morgan Hunt d/b/a Diamonds Trading Investment House, and John Doe 2 a/k/a Kim Hecroft d/b/a First Options Trading (N.D. Tex. June 28, 2019, Contested)

Action against Defendants, traders and portfolio managers, for an alleged fraudulent investment scheme.  According to the CFTC, Defendants solicited Bitcoin from investors and falsely claimed they would use the funds for their investors’ benefit.  The CFTC also alleges that Defendants misrepresented their experience and track records and misappropriated investor funds.  The court ordered that Defendant Hunt pay restitution of $3,941.35 plus post-judgment interest and a civil monetary penalty of $180,000.  The court also ordered that
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CFTC v. Control-Finance Limited and Benjamin Reynolds (S.D.N.Y. June 17, 2019, Contested)

Action against Defendants, a U.K-based Bitcoin trading and investment company and its principal, for an alleged $147 million Ponzi and pyramid scheme.  According to the CFTC, Defendants made false guarantees of daily trading profits and other misrepresentations to induce investors to purchase Bitcoin and transfer the Bitcoin to Defendants.  The CFTC alleges that Defendants made no trades on investors’ behalf and instead misappropriated investor funds to, for example, make Ponzi-like payments to earlier investors.  The
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