Significant Judicial And Enforcement Developments In The Cryptocurrency Space

This past week saw important developments in the cryptocurrency space with two new regulatory actions, and a significant and much-anticipated decision in a criminal securities fraud action relating to an initial coin offering.

Specifically, in In the Matter of TokenLot, LLC, et al., Admin. Proc. No. 3-18739 (Sept. 11, 2018) and In the Matter of Crypto Asset Management, LP and Timothy Enneking, Admin. Proc. No. 3-18740 (Sept. 11, 2018), the SEC announced settlements with two digital securities companies it alleges were operating as unregistered broker-dealers. In United States v. Zaslavskiy, No. 17-CR-0647, ECF No. 37 (E.D.N.Y. Sept. 11, 2018), Judge Raymond J. Dearie denied defendant’s motion to dismiss the Indictment, and agreed with the DOJ that the initial coin offerings (“ICO”) conducted by defendant’s companies could constitute investment contracts within the purview of federal securities law.

U.S. v. Zaslavskiy

In U.S. v. Zaslavskiy, the Government charged Maksim…