Telegram: Deconstructing One of the Biggest Blockchain Cases of 2020

The Telegram case is arguably the most important case of 2020 involving the legal classification of blockchain-based digital assets. Because it is often cost-prohibitive for companies to challenge the government in court, the Telegram litigation offered a unique opportunity for the parties to present arguments on several complex legal issues. Given the lack of judicial precedent in this area, as well as the size and profile of the Telegram project, the Telegram case was closely watched by blockchain industry participants and represents a significant development for this emerging market. Here we provide an overview of the case, an analysis of the Court’s ruling, details on the final resolutions, and some key takeaways.

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Traditional and Crypto Firms Across Globe Launch New Initiatives, UN Designs Blockchain Land Registry, Privacy Wallets Spark Debate, Crypto Enforcement Continues

In this issue:

Cryptocurrency Firms and Legacy Financial Instituadingtions Worldwide Make Crypto Moves

Traditional and Crypto Firms Partner to Launch Tokenized Stocks and Other Products

UN Designs Blockchain Land Registry; Solutions Address Supply Chain, Energy Efficiency

Crypto Privacy Wallets Spark Debate, Blockstack Says STX Will Shed Security Status

U.S. and Foreign Actions Target Crypto Tax Evasion, Securities Fraud and Other Crimes

Cryptocurrency Firms and Legacy Financial Institutions Worldwide Make Crypto Moves

By: Veronica Reynolds

Two cryptocurrency firms filed applications this week with the Office of the Comptroller of the Currency to become federally regulated banks in the U.S. The first, BitPay, a bitcoin payments company, submitted an application for the BitPay National Trust Bank, to be headquartered in Georgia. The second application was submitted by Paxos, a stablecoin issuer and cryptocurrency services firm, for the Paxos National Trust. As a next step in the process, each application will undergo a 30-day comment period.

In the U.K., two major financial services providers have announced plans to launch an institutional-grade custody solution for cryptocurrencies, called Zodia Custody. According to a press release, Zodia would allow institutions to invest in cryptocurrency assets, including transaction and settlement activities.

In Sweden, the Bank for International Settlements’ Innovation Hub (BISIH) Swiss Centre, the Swiss National Bank (SNB) and financial infrastructure operator SIX recently announced the successful completion of a joint proof of concept for central bank digital currencies (CBDCs). The proof of concept reportedly shows the feasibility of linking a digital asset platform to an existing payment system and issuing a tokenized CBDC.

In Singapore, DBS Group Holdings Ltd. (DBS) recently announced a partnership with Singapore Exchange Ltd. to offer new services that include cryptocurrency custody services, secondary trading of digital assets and asset tokenization. The initiative has reportedly received approval from the Monetary Authority of Singapore, allowing DBS to be among just a few banks in the region to engage meaningfully in the cryptocurrency industry.

One of the world’s oldest banks, located in Germany, plans to issue a Euro stablecoin on Stellar, according to recent reports. The bank is working with Bitbond, a tokenization and digital asset custody technology provider, to launch the initiative. Bitbond has reportedly already received approval from a German regulator to issue tokenized bonds, also through Stellar.

For more information, please refer to the following links:

Traditional and Crypto Firms Partner to Launch Tokenized Stocks and Other Products

By: Robert A. Musiala Jr.

According to a press release, the Bitwise 10 Crypto Index Fund, the first publicly traded crypto index fund in the U.S., has qualified to trade on the OTCQX® Best Market, an over-the-counter market of U.S. and global securities that connects a network of broker-dealers. In another development from the U.S. market, a major U.S. financial services firm, in partnership with blockchain startup BlockFi, has reportedly launched an offering for its institutional customers that will allow the customers to pledge bitcoin as collateral for cash loans.

According to another press release, Bittrex Global (Bermuda) Ltd. has announced that it will soon list “tokenized stocks” on its digital asset exchange in cooperation with Swiss investment firm DigitalAssets AG. According to the press release, “the tokenized stocks available through Bittrex Global will allow customers to purchase a fraction of a stock without needing to purchase entire shares, where the underlying risk of the tokens is derived from the tokenized company.” The press release includes a list of publicly traded stocks that will be offered as tokenized assets.

In Switzerland, a new bitcoin exchange-traded product, Bitcoin Zero, has begun trading on the Stockholm-based Nordic Growth Market stock exchange. In more news from Switzerland, the SIX Digital Exchange has announced a joint venture with the subsidiary of a Japanese financial services firm to launch a Singapore-based “digital asset securities and cryptocurrency assets” exchange for institutional clients. The exchange will seek to obtain approval from the Monetary Authority of Singapore. And in the Philippines, a recent press release has announced that a major global financial institution and a Philippines-based bank have completed “a proof of concept for the issuance of a retail bond on a digital platform leveraging blockchain technology for bond tokenization.”

For more information, please refer to the following links:

UN Designs Blockchain Land Registry; Solutions Address Supply Chain, Energy Efficiency

By: Jordan R. Silversmith

Three organizations associated with the United Nations recently announced the release of the first open-source urban land registry solution designed for the government of Afghanistan. The goLandRegistry solution is expected to record land parcels on a blockchain platform designed by the LTO Network. The Solution will reportedly allow landowners to demonstrate the authenticity of property titles through an “Open Source blockchain verification tool.” The tool will be handed off by the UN this month to the Ministry of Urban Development and Land in Afghanistan.

Steve Wozniak is aiming to reform the energy-efficiency market with his second company, Efforce, which will use a novel web-based platform that leverages blockchain and related tokens to help spur global energy efficiency. And in other enterprise news, a Japanese independent coffee company, the fifth-largest coffee roaster globally, has partnered with a major software company to launch a blockchain solution aimed to enable traceability of its coffee to its originating farm.

Two recent reports indicate that the role of blockchain usage across the supply chain is expected to continue growing over the next few years. Blockchain technology helps solve three key issues in supply chain management, according to the reports: counterfeiting, visibility/traceability and “efficiency play.” Globally, the reports expect blockchain in the supply chain market to grow from $81.4 million in 2017 to $3485.25 million in 2023.

For more information, please refer to the following links:

Crypto Privacy Wallets Spark Debate, Blockstack Says STX Will Shed Security Status

By: Marc D. Powers

According to recent reports, Treasury Secretary Steven Mnuchin is considering new regulations concerning “self-hosted wallets” of cryptocurrency owners. The Financial Action Task Force, a global multigovernmental body that sets anti-money laundering recommendations, has reportedly also suggested that self-hosted wallets be banned. These reports have sparked quick reaction from the cryptocurrency industry, including several U.S. lawmakers who have expressed concern that such overregulation or prohibition would “crush a nascent industry and leave the United States behind the rest of the world when it comes to harnessing the power of blockchain and cryptocurrency.” One commentator has said that self-hosted wallets are no different than the traditional, leather wallets each individual keeps in his or her own pocket or pocketbook.

A recent report by blockchain analytics firm Elliptic has added to the debate by publishing an analysis finding that so-called privacy wallets, such as Wasabi Wallet, appear to be growing in use by threat actors. According to the report, in 2020 at least 13 percent of all bitcoin criminal proceeds were sent through privacy wallets, up from 2 percent in 2019. The debate on cryptocurrency and privacy is also happening in France, where the French Ministry of Finance has reportedly unveiled broad and immediate know-your-customer requirements on all cryptocurrency companies operating in and servicing the country. Among other things, the new requirements reportedly address verifying beneficial owners of and prohibiting anonymous crypto accounts.

In other regulatory developments, this week Blockstack PBC announced that it plans to make its Stacks cryptocurrency (STX) available in the U.S. In a press release, Blockstack published a legal memorandum outlining why STX would “no longer be considered a security under U.S. law after the launch of the Stacks 2.0 blockchain.” A Reuters interview with Blockstack’s co-founder and chief executive, Muneeb Ali, stated: “With the launch of Blockstack’s Stacks Blockchain 2.0 on Jan. 14, 2021, the company’s network will no longer be controlled by any single entity and its Stacks token can no longer be considered a security under SEC regulations.” Blockstack had previously issued STX under an SEC-approved Reg A plus securities offering in 2019.

For more information, please refer to the following links:

U.S. and Foreign Actions Target Crypto Tax Evasion, Securities Fraud and Other Crimes

By: Teresa Goody Guillén

The Department of Justice (DOJ) and the U.S. Securities and Exchange Commission (SEC), with the assistance of the Federal Bureau of Investigation (FBI) and the Internal Revenue Service, Criminal Investigation Division (IRS), have brought parallel criminal and civil actions against the founder of the blockchain protocol Oyster Pearl. The DOJ alleged that the defendant made millions of dollars from the sale of “Pearl tokens” but evaded reporting that income to the IRS, including by filing a false tax return in 2017, failing to file a tax return in 2018, operating the business and owning assets through pseudonyms and shell companies, obtaining income through nominees, and dealing in gold and cash. The DOJ charged the defendant with two counts of tax evasion, each of which carries a maximum sentence of five years in prison. The SEC’s complaint charges the same individual with offering and selling unregistered securities and violating the anti-fraud provisions of the federal securities laws. The SEC complaint alleged that the individual unlawfully raised approximately $1.3 million through the unregistered sale of Pearl tokens, minted approximately 4 million unauthorized Pearl tokens for himself for free and immediately began selling the tokens in the secondary market.

According to a DOJ press release, the creator of Argyle Coin, LLC, who operated a fraudulent diamond investment scheme, was sentenced to serve 84 months in federal prison and pay over $23 million in victim restitution. The defendant and his partners allegedly solicited U.S. and Canadian investors in a fraud scheme involving “diamond contracts.” To further the scheme, the defendant created Argyle Coin, LLC, which was purportedly in the business of developing a cryptocurrency token backed by diamonds.

A court in France has sentenced Russian national Alexander Vinnik to a five-year prison term for money laundering as an alleged operator of the now-defunct cryptocurrency exchange BTC-e. After the defendant’s arrest, the U.S., Russia and France fought for his extradition, with France prevailing. The U.S. is still seeking to extradite Vinnik.

According to a recent report, a Hong Kong-based crypto exchange founder has been taken into custody by Chinese authorities. Because the founder holds the private keys to most of the platform’s cold wallets, the exchange stated that it cannot process and is therefore suspending all withdrawals. The platform will also reportedly close all of its over-the-counter trading services because of the risks related to uncertainties surrounding China’s regulatory policies.

For more information, please refer to the following links:

US Credit Card Company to Integrate USDC, SEC No-Action Letter Addresses ERC20 Token, Tax Bodies Address Crypto, US and State Enforcement Continues

In this issue:

Credit Card Company to Integrate USDC Payments, 401(k) Advisor Integrates Bitcoin

SEC Issues No-Action Letter on Digital Assets, Second Addresses ERC20 Token

FinHub Role Expands, Foreign IPO and Lending Service Integrates Crypto

Tax Bodies Address Cryptocurrencies, Exchanges React to Evolving Landscape

US and State Enforcement Agencies Take Action Against Crypto Fraud Schemes

Foreign Regulators Scrutinize Privacy Coins, Seize/Sell Criminal Crypto

Credit Card Company To Integrate USDC Payments, 401(k) Advisor Integrates Bitcoin

By: Jordan R. Silversmith

A major U.S. credit card company has announced plans to link its global payments network of over 60 million merchants to a cryptocurrency startup’s Ethereum-based U.S. Dollar Coin (USDC). Although the credit card company itself will not custody the digital asset, the two companies will begin working to help credit card issuers begin integrating software for USDC into their platforms to enable USDC payments. Those businesses will in turn be able to send international USDC payments to any business supported by the credit card company, convert USDC into the local national currency and spend the funds anywhere that accepts the company’s credit card. The companies also plan to release a new credit card in the future that lets businesses send and receive USDC payments directly from any business using the card.

Digital Asset Investment Management (DAiM), a California-based registered investment advisor, recently announced that it has launched the first ERISA-compliant employer-sponsored 401(k) plans that integrate bitcoin into plans’ asset allocation. DAiM will serve as advisor and fiduciary to companies looking to create model portfolios of varying risk profiles comprising traditional assets and allocations of up to 10 percent of bitcoin.

A Japanese banking giant has announced plans to launch a blockchain payment network in 2021. The company expects the network to be fully functional throughout Japan by summer 2022.

For more information, please refer to the following links:

SEC Issues No-Action Letter on Digital Assets, Second Addresses ERC20 Token

By: Teresa Goody Guillén

The Division of Corporation Finance (CorpFin) of the U.S. Securities and Exchange Commission (SEC) issued its third no-action letter addressing digital assets, which is its second no-action letter addressing an ERC20 token. The no-action letter request involves “an online software application that people use to interact in virtual venues, play games … and offer and obtain virtual goods and services.” The “heart” of the platform is a virtual economy using digital credits, which cannot be transferred or used off the platform. The platform requested no-action relief to use an ERC20 token instead of the credits. The ERC20 token would have real value and can be transacted on and off the platform. CorpFin noted significant factors in granting the no-action relief, which include:

  • The company will not use proceeds from the sale of the digital asset to finance the upgrade from credits to the digital asset, which will be fully functional and operational immediately upon its launch and before any digital asset is sold.
  • The digital asset will be immediately usable for its intended purpose at the time it is sold.
  • Digital asset holders will be subject to know your customer/anti-money laundering checks when they establish open wallets and on an ongoing basis.
  • The digital asset will be made continuously available in unlimited quantities and at a fixed price.
  • The company will not promote or support listing or trading of the digital asset on any third-party trading platform.
  • Users who purchase the digital asset from the company will be required to affirm that they are acquiring the digital asset for consumptive use and not for speculative purposes.

For more information, please refer to the following links:

FinHub Role Expands, Foreign IPO and Lending Service Integrates Crypto

By: Teresa Goody Guillén

This week, the U.S. Securities and Exchange Commission (SEC) announced that its Strategic Hub for Innovation and Financial Technology (FinHub) will become a stand-alone office. Valerie Szczepanik will continue to lead FinHub as its first director and will report directly to the SEC chairman. FinHub was created in 2018 and housed within the Division of Corporation Finance. FinHub has been the SEC’s contact for market and technology innovators and domestic and international regulators to engage the SEC on emerging financial innovations and technologies in compliance with the federal securities laws.

An Australia-based company recently completed the nation’s first initial public offering (IPO) to use cryptocurrency for its capital raise, raising more than AU$5 million (US$3.65 million). It is reported that just over 89 percent, or approximately AU$4.4 million (US$3.2 million), of the total raise was made using the Stablecoin tether (USDT). The remaining funds were raised in Australian dollars. The company used a capital-raising platform that is reportedly Australia’s first such platform to accept both cryptocurrency and Australian dollars.

A subsidiary of a major Japanese financial services firm has launched a crypto lending service that will allow users to deposit bitcoin (BTC) and earn interest. The reported minimum and maximum amounts of BTC users can deposit is 0.1 BTC and 5.0 BTC, respectively. The firm said it plans on expanding the service to other cryptocurrencies, including XRP and Ethereum.

For more information, please refer to the following links:

Tax Bodies Address Cryptocurrencies, Exchanges React to Evolving Landscape

By: Robert A. Musiala Jr.

New tax reporting rules for cryptocurrencies may be on the horizon, according to reports covering the recent 2020 Global Blockchain Policy Forum hosted by the Organization for Economic Cooperation and Development (OECD). An OECD official reportedly said the OECD expects to release standards for the tax treatment of “cryptoassets” sometime in 2021. A U.S. tax official reportedly commented that the U.S. is concurrently developing domestic reporting rules for the tax treatment of cryptocurrencies. And in other regulatory news, the Bank for International Settlements, an international financial institution owned by central banks, recently published a working paper addressing risks and regulation of Stablecoins.

Cryptocurrency exchanges have recently announced actions that appear to be in response to the evolving regulatory landscape. A major U.S. exchange recently announced that for the 2020 U.S. tax season it will depart from its prior practice of issuing IRS Form 1099-K to certain users and will instead issue Form 1099-MISC. The same exchange also recently announced that it has disabled margin trading based on new guidance from the Commodity Futures Trading Commission.

Meanwhile, a major foreign-based exchange has reportedly escalated its efforts to remove U.S. persons from access to its platform.

For more information, please refer to the following links:

US and State Enforcement Agencies Take Action Against Crypto Fraud Schemes

By: Robert A. Musiala Jr.

Early this week, the U.S. Department of Justice announced that a Brazilian citizen has been extradited from Panama in connection with an indictment involving an international fraud and money laundering ring allegedly perpetrated “through investments in AirBit Club, a purported cryptocurrency mining and trading company.” According to a press release, the defendants “falsely promised victims that AirBit Club earned returns on cryptocurrency mining and trading and that victims would earn passive, guaranteed daily returns on any membership purchased.” Instead, according to the press release, no bitcoin mining or investment took place and the defendants enriched themselves.

In a series of recent actions by the Texas State Securities Board (TSSB), the TSSB issued cease-and-desist orders to 15 firms related to alleged fraudulent schemes involving cryptocurrencies. The schemes all appear to have used social media platforms to perpetrate fraud involving various illegal activities, including illegal referral programs, false claims of licensure, registration violations, material misstatements and omissions, false claims, and other deceptive activities.

For more information, please refer to the following links:

Foreign Regulators Scrutinize Privacy Coins, Seize/Sell Criminal Crypto

By: Joanna F. Wasick

The South Korean government, in an effort to reduce money laundering, recently enacted a law banning privacy coins (cryptocurrencies with additional anonymity features) on South Korean exchanges. The law will also require exchanges to implement a variety of “know your customer” measures.

Earlier this week, the Financial Transactions and Reports Analysis Centre of Canada issued guidance to financial institutions for detecting and reporting suspicious cryptocurrency transactions that may reflect money laundering and terrorist financing. Twenty-six types of suspicious activity are listed, including a number related to privacy coins, e.g., portfolios consisting primarily of privacy coins, transactions in which large quantities of bitcoin are exchanged for privacy coins, or clients unwilling or unable to identify the source of their privacy coins. Other listed activities focus on abnormalities in cryptocurrency addresses, how and when transactions take place, and other details that suggest criminal activity.

Last week, a report was released detailing the seizure of $4.2 billion in cryptocurrency by the Chinese government in a raid that occurred earlier in November. The raid was part of a case against PlusToken, a massive Ponzi scheme that pretended to offer high-yield returns after people deposited funds into the system.

In Lithuania, a local news source reported last week that the country’s tax department sold off confiscated cryptocurrencies for the first time, bringing in $7.5 million. The department reportedly gained possession of the cryptocurrency in February but no details were provided as to why the cryptocurrency was initially seized.

Pickle Finance, a popular decentralized finance (DeFi) protocol, recently announced that it was hacked last week, draining $19.7 million in DAI, a decentralized Stablecoin pegged to the U.S. dollar, from a Pickle wallet. The vulnerability that may have led to the attack has reportedly been fixed. The company stated that the hack, which did not appear to affect any other funds, was “very complicated”; however, the company said it would not disclose any specific details at this time.

For more information, please refer to the following links:

New Crypto Payment Services Launch; Blockchain Pilots Announced for Agriculture, Textile, Seafood Supply Chains; DeFi Project Hacked for $7 Million

A side view on a digital panel merging binary numbers with an integrated circuitIn this issue:

New Crypto Payment Services Launch, Bitcoin ATM Firm Asserts Patent Rights

Blockchain Pilots Announced in the Agricultural, Textile and Seafood Industries

Spanish Police Target Crypto Front Company, DeFi Project Hacked for $7 Million

New Crypto Payment Services Launch, Bitcoin ATM Firm Asserts Patent Rights

By: Joanna F. Wasick

Late last week, BitPay, a major cryptocurrency payment provider, announced the introduction of BitPay Send, a new mass payout service that enables organizations to pay employees, affiliates, customers, vendors, contractors and others with cryptocurrency. According to a press release, for a 1 percent fee, payments can be made 24/7, anywhere around the world. Recipients can participate without a bank account, and only need a BitPay ID and cryptocurrency wallet. The press release notes that companies do not need to own or manage cryptocurrency, and that no foreign exchange fees apply.

Also last week, Peninsula Visa, a U.S. passport and visa expeditor, announced it will accept bitcoin payments, using the payment services arm of a U.S. major cryptocurrency exchange as its processor. Bitcoin payments will only be accepted for select passport services, including renewals and name change. However, additional passport and visa services for which Peninsula will accept bitcoin payment will be rolled out over the next 12 months.

Belarusbank, the largest financial institution in Belarus, recently announced plans to launch a service allowing users to exchange cryptocurrency using a major credit card company’s payment card. The service is available to citizens of Belarus and Russia, and also enables trading cryptocurrency with fiat currencies, including the Belarusian ruble, the U.S. dollar and the euro.

Earlier this month, Bots Inc., a software company that develops artificial intelligence-based chatbots, announced that it was taking steps to enforce its Bitcoin ATM patent, which it acquired late last month. The patent relates to protocols underpinning the operation of “Bitcoin ATMs,” which enable purchase and sale of cryptocurrencies through web-linked kiosks that accept cash or debit or credit cards. In a statement, Bots said it was meeting with a major law firm to discuss enforcement of the patent to make Bitcoin ATM operators pay royalties to Bots. Bots also said it was contacting individual ATM operators to reach an amicable arrangement without litigation, while inviting those operators to join a consortium of Bitcoin ATMs.

For more information, please refer to the following links:

Blockchain Pilots Announced in the Agricultural, Textile and Seafood Industries

By: Robert A. Musiala Jr.

Two recent partnerships have been announced for blockchain solutions in the agricultural sector. Late last month, a major U.S. financial services firm announced a collaboration with GrainChain to develop and implement a blockchain platform “to forensically track commodities, from the initial inputs and raw materials to harvesting and processing to logistics and delivery to the consumer’s hands.” And this week, a major German pharmaceutical firm and BlockApps, an enterprise blockchain platform provider, announced the launch of TraceHarvest, an Ethereum-based network designed to “enhance food quality, safety and sustainability by bringing supply chain efficiencies, transparency, compliance and stewardship to agricultural products.”

Also this week, a major U.S. technology firm announced a collaboration with KAYA&KATO, “a textile company that manufactures uniforms and work wear,” to develop “a blockchain network for the fashion industry … designed to create transparency about the origin of garments, from the fiber used to the completion of the final product, and to provide consumers with the knowledge that their clothes are sustainably produced.” In another recent development, Australian tech firm Two Hands announced that it had successfully completed a pilot of its GoTrace blockchain platform to track a shipment of southern rock lobsters from Melbourne, Australia, to Shanghai, China, where the lobsters were served at a hotel wedding banquet.

A recent paper published by academics at MIT addresses “voting over the Internet” or “voting on the blockchain” and finds that “Internet and blockchain-based voting would greatly increase the risk of undetectable, nation-scale election failures.” The paper “analyzes … the security risks of online and electronic voting, and show[s] that not only do these risks persist in blockchain-based voting systems, but blockchains may introduce additional problems for voting systems.”

For more information, please refer to the following links:

Spanish Police Target Crypto Front Company, DeFi Project Hacked for $7 Million

By: Jordan R. Silversmith

Last week, Spanish police arrested a man alleged to be a former member of the Colombian Cali Cartel in relation to a cryptocurrency money laundering operation. The police claim that after the arrests of the Cali Cartel’s heads in 1995 and the subsequent decline of the gang’s drug empire, the man founded a cryptocurrency company that was a front for his money laundering activities. The Spanish police believe that the man has laundered over $7.1 million in drug and crime proceeds through cryptocurrencies.

A Chinese crypto blogger reported on Monday that cryptocurrency miners in China have been struggling to pay for electricity as a result of a recent crackdown by Chinese authorities on the country’s over-the-counter (OTC) brokers, which the cryptocurrency miners use to convert newly mined bitcoin to yuan. Chinese regulators have been increasing efforts to block bank accounts potentially related to money laundering via cryptocurrency and have recently investigated the two largest cryptocurrency OTC brokers in China.

Stablecoin project Origin Dollar (OUSD) recently experienced a DeFi attack that resulted in a loss of $7 million, including over $1 million deposited by Origin and its founders and employees. The attack used a flash loan and flaws in OUSD smart contracts to initiate a “rebase” that artificially inflated the supply of OUSD tokens in the protocol before swapping out the newly printed tokens for USDT. The team subsequently disabled deposits as the project’s native token has dropped 85% since the attack. The attack comes as the U.S. dollar value of cryptocurrency liquidity stored in DeFi projects reportedly hit $13.6 billion.

For more information, please refer to the following links:

Podcast: BakerHostetler Blockchain University: What You Need to Know About the Most Common Blockchain Networks

The third episode in the series focuses on the differences and similarities between the Ethereum Network, HyperLedger, and other key blockchain networks. Topics discussed include smart contracts, public versus private blockchains, distributed autonomous organizations (DAOs), blockchain “forks” and more.

Questions & Comments: rmusiala@bakerlaw.com, jsilversmith@bakerlaw.com

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Ethereum Upgrade and Blockchain Identity Solutions Progress, SEC Addresses Digital Asset Custody, Data Published on ICO Penalties and Crypto Crimes

Modern research and information technologies in cyberspaceIn this issue:

Ethereum 2.0 Moves Closer to Launch, Blockchain Identity Solutions Announced

SEC Addresses Digital Asset Custody, Crypto Firms Achieve Licenses/Certs

Crypto Fraudster Sentenced, Data on ICO Penalties and Crypto Crimes Published

Ethereum 2.0 Moves Closer to Launch, Blockchain Identity Solutions Announced

By Jordan R. Silversmith

After having launched last week, the deposit contract for the newest upgrade to the Ethereum blockchain, Ethereum 2.0, now tops out at over 50,000 ETH, equivalent to over $22.5 million, which is one-tenth the way toward the threshold needed to activate the update. The deposit contract, a cornerstone of the Ethereum 2.0 update, is a bridge for major change in the Ethereum network. Rather than maintaining the traditional proof-of-work (PoW) consensus algorithm as its foundation, Ethereum 2.0 is intended to help the Ethereum network migrate away from PoW and toward a new technical infrastructure based on proof of stake (PoS). Once Ethereum 2.0 is triggered and goes live, early investors of Ethereum on the new network, or “stakers,” will reportedly begin earning block rewards at an estimated rate of 8 percent to 15 percent annually.

A collection of Spanish firms, including banking giants and energy firms, recently announced the development of a new “self-managed” digital identity system founded on blockchain technology. The group, named “Dalion,” said in an announcement that the mobile device-enabled ID platform will allow users to have more control over the ways their personal data is used. The group mentioned likely use cases including car rentals, insurance and loan applications, and sign-ups with utility providers. A proof-of-concept trial found the solution works “satisfactorily,” and while a second phase launches this month, there has been no word on when the platform will be released to the public.

A Japanese e-commerce giant recently announced that a blockchain platform is being integrated into the company’s online travel booking subsidiary. The integration of the platform means that customers can opt in to use the platform’s self-sovereign identity app and access bookings at more than 600,000 hotels and 200,000 rentals, according to an announcement. The blockchain-powered platform will reportedly allow customers to store and exclusively access travel documents in one location and eventually use cryptocurrencies to pay for bookings. The integration is scheduled to go live within the next two weeks.

For more information, please refer to the following links:

SEC Addresses Digital Asset Custody, Crypto Firms Achieve Licenses/Certs

By Robert A. Musiala

This week, the U.S. Securities and Exchange Commission (SEC) Staff of the Division of Investment Management, in consultation with the Staff of the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub), published a statement addressing the recent letter by the Wyoming Division of Banking that gave a trust company authority to provide custodial services for digital assets, “including virtual currency and digital (tokenized) securities” under Wyoming law. The SEC statement encourages interested parties “to engage with the Staff directly on the application of the Custody Rule to digital assets, including with respect to the definition of ‘qualified custodian’ under the rule.” The SEC statement also calls on interested parties to submit comments to the SEC on the topic of the “Custody Rule and Digital Assets” and provides a list of topics that the SEC is interested in discussing with industry participants.

According to reports this week, cryptocurrency custodian Anchorage recently received a SOC 1 Type 1 certification from a Big Four professional services firm. The SOC 1 Type 1 certification is an independent attestation of Anchorage’s internal systems and controls. Another report this week noted that Texture Capital has received its broker-dealer and alternative trading system licenses from the Financial Industry Regulatory Authority (FINRA). The licenses are a key step forward in the firm’s plans to launch a marketplace for trading private securities issued on blockchain networks

For more information, please refer to the following links:

Crypto Fraudster Sentenced, Data on ICO Penalties and Crypto Crimes Published

By Veronica Reynolds

Last week, a software engineer formerly employed at a major tech firm was sentenced to almost a decade in prison for 18 federal felonies related to an attempt to defraud his former employer of more than $10 million. The scheme involved the engineer using his role at the company to steal “currency stored value” (CSV), including digital gift cards, and reselling the CSV online. The sentencing may have been influenced and more severe due to the fact that the man fraudulently used email addresses associated with his colleagues in an attempt to cover his tracks, as well as a bitcoin “mixing” service in an effort to hide the source of the funds that were directed to his bank account.

The SEC recently reported that in 2020 it collected around $1.26 billion in penalties from enforcement actions against unregistered initial coin offerings (ICOs), the majority of which was collected from Telegram. And abroad, the Canadian Revenue Agency is seeking judicial intervention to force cryptocurrency exchange Coinsquare to relinquish more than seven years of client data in an effort to trace tax gains received by Canadians who failed to report such gains to the agency.

A recent report by Crystal highlights that fraud and cybersecurity issues continue to proliferate in the cryptocurrency industry. The report details “security breaches, fraudulent activity, cyber-terrorism, and scams” related to cryptocurrencies between 2011 and 2020, noting 113 security attacks and 23 fraudulent schemes, which have resulted in approximately $7.6 billion worth of stolen crypto assets. Of that amount, $2.8 billion is attributed to theft resulting from security breaches and $4.8 billion is from scams.

For more information, please refer to the following links:

US Crypto Debit Card Launches, Cayman Islands Announces VASP Regulations, Enterprise Developments in Telecom and Transport, DOJ Seizes $1 Billion in Bitcoin

In this issue:

US Crypto Debit Card Launches, Cayman VASP Regs Announced, INX to List in Canada

Blockchain Developments in Telecommunications, Transportation and Digital Identity

DOJ Seizes $1 Billion in Bitcoin from Silk Road, DOJ and CFTC Prosecute Crypto Fraud

US Crypto Debit Card Launches, Cayman VASP Regs Announced, INX to List in Canada

By: Joanna F. Wasick

Paxful, a peer-to-peer marketplace, and BlockCard, a cryptocurrency fintech platform, recently announced the launch of a crypto debit card they say will enable users to convert cryptocurrencies to U.S. dollars at the time of purchase and will allow payments and the withdrawal of funds at over 45 million merchants and ATM locations worldwide. At launch, the card will be available only to U.S. users, but there are plans to expand into other regions. The card is touted as filling the void left by traditional banking to service unbanked populations.

The Cayman Islands recently announced its development of a regulatory framework for Virtual Asset Service Providers (VASPs) within its jurisdiction, as part of compliance with Financial Action Task Force (FATF) guidelines that were rolled out last year. According to the October press release, the regulations for VASPs will commence in two phases. The first begins immediately and focuses on the compliance, supervision and enforcement of anti-money laundering and counterterrorist financing rules that comport with the FATF and Cayman local guidelines. For example, prospective and existing VASPs will have to register with the Cayman Islands Monetary Authority. The second phase is slated for June 2021 and focuses on licensing requirements and supervision.

And late last week, the INX cryptocurrency and security token exchange announced that it plans to trade its INX token on the Canadian Securities Exchange after finishing its initial public offering (IPO). The IPO was the first security token offering registered with the U.S. Securities and Exchange Commission and is seeking to raise $117 million from U.S. investors.

For more information, please refer to the following links:

Blockchain Developments in Telecommunications, Transportation and Digital Identity

By: Robert A. Musiala Jr.

According to reports this week, a major U.S. telecommunications company intends to begin recording all of its public statements and press releases on a blockchain ledger in order to “combat misinformation online.” The initiative is called the Full Transparency project and it leverages a blockchain platform that was reportedly developed by the telecom firm in collaboration with a New York-based digital ad agency, the AdLedger blockchain consortium and blockchain adtech firm MadNetwork.

In the transportation industry, a major provider of dump truck logistics technology recently announced that it has joined the Blockchain in Transport Alliance (BiTA). BiTA is a blockchain consortium focused on developing blockchain standards for use in the transportation industry.

And in the digital identity space, a market research firm recently published a major report covering digital identity from technical, regulatory and market perspectives. The report focuses on how consumers are expected to use digital identity, how successful blockchain will be in the digital identity market, the effect of regulations, the emergence of new identity networks and leading digital identity companies.

For more information, please refer to the following links:

DOJ Seizes $1 Billion in Bitcoin from Silk Road, DOJ and CFTC Prosecute Crypto Fraud

By: Jordan R. Silversmith

Early Wednesday morning, a blockchain intelligence firm reported that a wallet possibly belonging to the early dark web market Silk Road moved more than $1 billion in bitcoin. This was the first reported transaction from the address since 2015, when it transferred 101 bitcoin to BTC-e, a now-closed crypto exchange allegedly favored by money launderers. Later, on Thursday, the U.S. Department of Justice (DOJ) announced that it had seized the more than $1 billion in funds. According to a press release, the DOJ used a blockchain analytics firm to identify the seized bitcoin as having been stolen from Silk Road by an unnamed individual referred to as “Individual X.” The seizure represents the largest cryptocurrency seizure to date by the DOJ. The Bitcoin has been transferred to a government-controlled wallet and the DOJ has filed a civil complaint for forfeiture of the funds. If forfeited, the bitcoin will be moved to the Treasury Forfeiture Fund.

Also this week, the DOJ announced that it had seized cryptocurrencies worth an estimated $24 million on behalf of the Brazilian government in connection with a large cryptocurrency fraud scheme. Brazilian authorities estimate that the scheme, dubbed “Operation Egypto,” has defrauded tens of thousands of Brazilians of more than $200 million. The individuals behind the scheme duped investors with the possibility of lucrative investments in cryptocurrencies, allegedly making false and inconsistent promises about the way funds were invested and exaggerating the rates of return.

The Commodity Futures Trading Commission (CFTC) this week announced that a federal court has ordered a Colorado company and its principal to pay over $900,000 for their role in a digital assets and forex Ponzi scheme. The court ruled that the defendants fraudulently solicited more than 72 clients to invest in commodity pools that purportedly traded in foreign exchange funds and digital assets, including bitcoin, and then misappropriated the money. In addition to civil monetary penalties and a ban by the CFTC, the order requires the principal and the company to repay defrauded investors.

A hacker has reportedly stolen over $24 million from Harvest Finance, a decentralized finance service that allows users to invest cryptocurrencies and then farm out the price variations for small profit yields. The hacker ended up stealing $13 million worth of USD Coin and $11 million worth of Tether, although the hacker returned $2.5 million to the platform two minutes after the hack. Harvest Finance authors are offering $100,000 to anyone who can return the remaining funds.

For more information, please refer to the following links:

US Bank Crypto Services Proceed, Crypto Debit Cards Launch in US and Mexico, Blockchain Enterprise Developments, and Crypto Enforcement Continues

In this issue:

US Bank and Trust Companies Move Forward with Cryptocurrency Services

Cryptocurrency Debit Cards Launch in the United States and Mexico

Blockchain Developments in Protocols, Healthcare, Copyrights, E-Signatures, IoT

Enforcement Actions Target Crypto SIM Swapping and Ponzi Schemes

US Bank and Trust Companies Move Forward with Cryptocurrency Services

By: Robert A. Musiala Jr.

This week Avanti Bank & Trust was granted a bank charter from the Wyoming State Banking Board. According to a press release, the charter gives Avanti the same powers as national banks in its approved business lines. The press release notes that Avanti’s approved business plan includes “a tokenized U.S. dollar called Avit™*; custody services for digital assets as a ‘qualified custodian’ under the Investment Advisers Act; API-based online banking services, where customer deposits must be 100% backed by reserves; and prime services for digital assets.”

In related news, late last week a Wyoming-based trust company that provides wealth management services to high net worth individuals and family offices received a “No-Action Letter on Custody of Digital Assets and Qualified Custodian Status” from the Wyoming Division of Banking. The no-action letter gives the trust company authority to provide custodial services for digital assets, “including virtual currency and digital (tokenized) securities” under Wyoming law.

According to recent reports, the largest bank in the U.S. has said that its digital currency, JPM Coin, “is being used commercially for the first time this week by a large technology client to send payments around the world.” Late last week, the same bank reportedly issued a report noting that while bitcoin is more appropriately characterized as a “risk” asset than a “safe” asset, the “potential long-term upside for bitcoin is considerable.”

For more information, please refer to the following links:

Cryptocurrency Debit Cards Launch in the United States and Mexico

By: Robert A. Musiala Jr.

This week a major U.S. cryptocurrency exchange, in partnership with a major U.S. financial services firm, launched the first cryptocurrency debit card to be made available in the U.S. The crypto debit card will enable users to spend their cryptocurrency by using the debit card to make in-store and online purchases, as well as withdraw funds in U.S. dollars from ATMs. According to a press release, the crypto debit card is now available to customers in “nearly 30 countries, including the UK and across Europe,” with the first U.S. customers to be approved this winter.

In similar news from abroad, Paxful, a peer-to-peer cryptocurrency marketplace, has reportedly partnered with a Spanish bank to launch the first-ever crypto debit card to be made available to customers in Mexico. According to another recent report, “almost half of all bitcoin traded on the P2P exchange Paxful is exchanged for gift cards.” The report noted that up to $20 million worth of bitcoin is exchanged for gift cards on Paxful every week.

Earlier this month a major U.S. blockchain payments firm published its annual Blockchain in Payments Report. The report finds that blockchain payment solutions are scaling; digital assets are increasingly being considered for facilitating payments, especially when paired with blockchain technology; and industry innovators are realizing significant growth, even amid COVID-19.

For more information, please refer to the following links:

Blockchain Developments in Protocols, Healthcare, Copyrights, E-Signatures, IoT

By: Jordan R. Silversmith

Last week, a major U.S. technology company announced a new partnership with a New York-based blockchain company. By way of this collaboration, the technology company, which has mostly focused its blockchain offerings on HyperLedger Fabric, will now be able to offer blockchain solutions that leverage the R3 Corda blockchain. While the two companies have been competitors in the area of permissioned enterprise blockchain, the collaboration will now allow each to offer more solutions that leverage blockchain protocols initially developed by the other company.

A recent report on the role of blockchain in the global healthcare market predicts significant growth in the use of blockchain through 2027. The market is expected to reach a valuation of USD 5,798.0 million by 2027, the report says, even taking into account the effects of the pandemic.

A new plug-in from a leading web publishing platform will now allow users to timestamp content on the Ethereum blockchain. Timestamping, which creates a unique hash for the latest version of the content added to a blockchain, provides proof that the owner of the content created it and that the content has not been tampered with. To that end, the company hopes the new plug-in will help with copyright issues.

A prominent electronic signature business recently announced its vision for how blockchain-based “smart agreements” will work. The business plans to work with a company focused on smart contracts to create a new way for e-signatures to be integrated into the blockchain framework. The goal of the functionality is to enable e-signatures to become active pieces of IT infrastructure that can communicate with external resources.

The Sovrin Community released a new white paper last week on the interaction between the “Internet of Things” (IoT) and the concept of self-sovereign identity (SSI). The white paper addresses the current lack of a universal means to distinguish one “thing” from others or to determine what that thing is permitted to do. According to the white paper, this lack of identity and authority in IoT objects hampers the development of multiparty IoT services and ecosystems and makes it more difficult to provide effective solutions to the growing threat of cyberattacks. The white paper runs through several use cases and shows how SSI-enabled devices can use cryptographic methods to validate the identity of IoT objects.

For more information, please refer to the following links:

Enforcement Actions Target Crypto SIM Swapping and Ponzi Schemes

By: Joanna F. Wasick

This week, the U.S. Attorney’s Office announced indictments related to a plot to steal cryptocurrency and various electronic accounts, including social media accounts. The scheme allegedly involved registering fraudulent internet domains that appeared to be from legitimate wireless providers, sending “phishing” emails and taking over wireless phone numbers. The defendants are also alleged to have used electronic account credentials stolen from employees and affiliates of wireless providers to access those companies’ computer networks without authorization. The indictment states that after getting access, the defendants took over victims’ wireless accounts through “SIM swapping,” whereby customers’ mobile numbers, which are linked to unique subscriber identity modules (SIMs), were instead linked to SIMs installed in a device controlled by the defendants or their co-conspirators. Defendants then were able to access the victims’ other accounts, including email, social media and cryptocurrency accounts.

Last week, Spanish National Police arrested Santiago Fuentes, the operator of cryptocurrency arbitrage firm Arbistar 2.0 and charged him with financial fraud and money laundering. Arbistar reportedly served about 120,000 users who together invested about $520 million dollars in bitcoin into Arbistar’s trading bot. Last month, investors began accusing the platform of being fraudulent after Fuentes claimed a “computer error” disabled trading bot withdrawals and erased more than a quarter of the funds. An investigation firm tracking the case has reportedly found that Fuentes was actually running the platform as a Ponzi scheme.

For more information, please refer to the following links:

Major U.S. Firm Offers Cryptocurrency Services, Blockchain Solutions Launch Across Industries, CFTC Issues Crypto Guidance, FinCEN Fines Tumbler Service

In this issue:

Major U.S. Payments Firm Launches Cryptocurrency Service as Adoption Grows

Blockchain Supply Chain, Copyright and Satellite Comms Solutions Launch

CFTC Guidance Addresses Crypto Deposits, Travel Rule White Paper Published

Arrests Target Criminal Network Using Crypto, FinCEN Fines Tumbler Operator

Major U.S. Payments Firm Launches Cryptocurrency Service as Adoption Grows

By: Robert A. Musiala Jr.

This week a major U.S. Internet payments firm announced the launch of “a new service enabling its customers to buy, hold and sell cryptocurrency directly from their … account.” According to a press release, the company plans to make cryptocurrencies “available as a funding source” through its online payment’s platform “for purchases at its 26 million merchants worldwide” and will initially support bitcoin, ether, bitcoin cash and litecoin directly within customers’ digital wallets. The new service will reportedly become available to U.S. customers in the coming weeks. As part of the new offering, the company has become the first approved entity to receive a “conditional BitLicense” from the New York State Department of Financial Services. According to various press releases, the company will partner with a New York chartered trust company that will provide cryptocurrency trading and custodial services for customers using the new service.

In foreign markets, this week the Bahamas officially launched its central bank digital currency (CBDC), the sand dollar. The sand dollar is a digital version of the Bahamian dollar that is issued by the Central Bank of the Bahamas. In Japan, the firm that operates the country’s most popular messaging app is reportedly planning to launch a blockchain-based platform targeted at assisting central banks in launching CBDCs. And in the U.K., a publicly traded fintech firm has reportedly become “the first U.K. publicly traded company to announce a significant purchase of Bitcoin as part of its treasury investment strategy.” According to a press release, the company “has allocated up to ten percent (10%) of its cash reserves to purchase Bitcoin and adopt it as a treasury reserve asset.”

For more information, please refer to the following links:

Blockchain Supply Chain, Copyright and Satellite Comms Solutions Launch

By: Teresa Goody Guillén

Two global container carriers recently announced that they are now fully integrated onto the TradeLens blockchain-enabled shipping platform. According to the announcement, the global container carriers will help expand the ecosystem and will run validator nodes on the blockchain network.

A global retailer and a developer of enterprise-level blockchain platforms have published a case study that provides details on the creation and adoption of DL Freight, a blockchain solution for freight invoice management that tracks deliveries, verifies transactions and automates invoices in real time through the application of smart contracts. According to a press release, the solution has become “the national standard for freight invoice management” for the Canadian division of the global retailer.

This week a technology firm based in Mumbai, India, announced an initiative to leverage the R3 Corda blockchain to develop “a suite of next generation payments, working capital, and Foreign Exchange services that can be seamlessly deployed on Corda.” The solution will target midsize and small businesses.

A major Chinese blockchain business has announced the deployment of a new digital copyright services platform that combines blockchain technology with artificial intelligence to enable creators to securely authenticate and verify various forms of original content, including video as well as image-based and written material. The platform reportedly generates a unique, tamperproof digital copyright certification and notary stamp for each work that is uploaded into its database.

In a final notable development, a U.S. university’s engineering school and a nonprofit organization have secured a flight for the university’s blockchain solution on an aerospace rocket scheduled to launch on Nov. 20. The rocket is expected to carry a satellite that will include the university’s private blockchain mounted on a Raspberry Pi, which is a credit card-sized single-board computer. The pilot project seeks to reduce the cost of maintaining ground stations by allowing satellites to “talk” to each other in space.

For more information, please refer to the following links:

CFTC Guidance Addresses Crypto Deposits, Travel Rule White Paper Published

By: Robert A. Musiala Jr.

The U.S. Commodity Futures Trading Commission (CFTC) has issued an advisory to futures commission merchants (FCMs) to provide guidance on “how to hold and report certain deposited virtual currency from customers in connection with physically-delivered futures contracts or swaps” and on “designing and maintaining risk management programs concerning the acceptance of virtual currencies as customer funds.” The advisory sets out 12 requirements that FCMs must adhere to when holding virtual currency as customer funds. Among other things, the 12 requirements address approved depository institutions for virtual currencies, identification and documentation of deposits, withdrawal availability and timing, fair market value reporting, computation of daily and month-end segregation requirements, account segregation procedures, investment and margin value restrictions, procedures for return of customer funds, and required notices. The advisory notes that the CFTC “may determine to examine any FCM that accepts and holds customer virtual currency assets to determine how it is choosing to meet its obligations.”

The U.S. Travel Rule Working Group (USTRWG), whose members include 25 leading U.S. virtual asset service providers (VASPs), have published a new white paper addressing the application to VASPs of the Travel Rule, which imposes certain customer identification and data transmission requirements on cryptocurrency transactions based on the U.S. Bank Secrecy Act, regulations issued by the U.S. Financial Crimes Enforcement Network, and guidance from the Financial Action Task Force. The white paper focuses on Phase 1 of a solution that is intended to serve as a proof of concept for facilitating Travel Rule compliance among VASPs.

This week a major U.S. cryptocurrency exchange published a report providing details on requests that the exchange received from law enforcement during the period of Jan. 1 to June 30, 2020. Among other things, the report noted that 58 percent of all requests came from U.S. agencies, 16 percent came from state or local authorities, and 90 percent of all requests came from just three jurisdictions: the U.S., the U.K. and Germany.

For more information, please refer to the following links:

Arrests Target Criminal Network Using Crypto, FinCEN Fines Tumbler Operator

By: Joanna F. Wasick

Twenty suspected members of the QQAAZZ criminal network were recently arrested for attempting to launder tens of millions of euros on behalf of the world’s most notorious cybercriminals. According to press releases, the QQAAZZ money laundering network used bank accounts and sometimes converted funds to cryptocurrency using “tumbling” services to obscure the source of the funds. After taking a fee of up to 50 percent, QQAAZZ members would return the balance of the stolen funds to their cybercriminal clients. The arrests were the result of an unprecedented international law enforcement effort involving enforcement from 16 countries, including the U.S. Department of Justice, which last week announced related indictments out of its office.

Earlier this week, the Financial Crimes Enforcement Network (FinCEN) announced its assessment of a $60 million civil money penalty against Larry Dean Harmon, the founder and operator of Helix and Coin Ninja, cryptocurrency “mixers” or “tumblers” that are designed to obscure the source of cryptocurrency. According to FinCEN, Harmon operated his companies as an unregistered money services business (MSB) and violated the Bank Secrecy Act and related regulations by failing to register as an MSB, failing to implement and maintain a proper anti-money laundering (AML) program, and failing to report certain suspicious financial activity. FinCEN identified over 1.2 million unlawful transactions, including 356,000 bitcoin transactions, through Harmon’s enterprise, including transactions involving narcotics traffickers, counterfeiters and other criminals.

The trial against Alexander Vinnik, who allegedly laundered billions of dollars through his alleged operation of the now defunct cryptocurrency exchange BTC-e, is set to begin this Monday in Paris. Vinnik, who is also wanted in the United States and Russia, was arrested in 2017 while on vacation in northern Greece. After two years of litigation, Greek authorities ruled Vinnik would be extradited first to France, then to the United States and then to Russia.

This week the U.S. Securities and Exchange Commission (SEC) announced a final judgment on consent against Kik Interactive Inc., to resolve the SEC’s charges that Kik’s unregistered offering of digital “Kin” tokens in 2017 violated federal securities laws. Under the judgment, Kik must pay a $5 million penalty and must, for the next three years, provide the SEC notice before engaging in enumerated future issuances, offers, sales and transfers of digital assets.

For more information, please refer to the following links:

DOJ and IRS May Soon Begin Enforcement Actions Against Virtual Currency Tax Fraudsters

In the past several years, the use and prevalence of virtual currency have increased exponentially. The proliferation of digital assets has changed the way goods and services are exchanged and has allowed for faster and cheaper transactions. But with this new technology comes the increased risk of fraudulent activity – especially tax fraud. Recently, the Internal Revenue Service (“IRS”) has made it abundantly clear through guidance, amendments to tax forms, and even warning letters to Americans suspected of tax fraud, that it is getting very serious about virtual currency tax compliance.

The IRS and the Department of Justice (the “DOJ”) appear to be poised to commence a flurry of enforcement actions against virtual currency tax fraud offenders. Likely to be entangled in these enforcement actions are virtual currency institutions and companies that regulators suspect facilitated their customers’ tax evasion. It is thus imperative for all entities in the virtual currency industry to ensure their compliance programs are equipped to detect and prevent the facilitation of virtual currency tax fraud. Continue Reading

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