A cryptocurrency sweep announced by NASAA comes on the heels of an in-depth report from the Wall Street Journal on red flags in the ICO market.
Recent cases have distilled some of the crypto-specific legal issues that companies are facing in litigation.
The Commodity Futures Trading Commission (“Commission”) recently entered an order finding that Coinflip, Inc. d/b/a Derivabit (“Coinflip”), an unregistered Bitcoin options trading platform, and its founder and CEO, Francisco Riordan (“Riordan”) violated Sections 4c(b) and 5h(a)(1) of the Commodity Exchange Act (“CEA”), and Commission Regulations 32.2 and 37.3(a)(1). The action is based on the Commission’s finding, for the first time, that “Bitcoin and other virtual currencies are encompassed in the definition [of ‘commodity’] and are properly defined as commodities.” The Commission made this finding without discussion other than to note that Section 1a(9) of the CEA defines “commodity” to include “all services, rights, and interests in which contracts for future delivery are presently or in the future dealt in.” The Commission did not impose penalties against either respondent.
To view Murphy & McGonigle’s Commodities, Futures & Derivatives practice, please click here.