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In a recent press release, the U.S. Department of Justice
announced the extradition of a Latvian man in relation to “a
six-count indictment charging him with wire fraud, securities
fraud, and conspiracies to commit wire fraud and securities fraud
in connection with the operation of eight companies that purported
to offer, invest in or mine digital assets.” According to the
press release, the defendant operated a series of entities
“that advertised through email campaigns, social media and
websites dedicated to cryptocurrencies” and made false
representations to solicit investments related to initial coin
offerings, cryptocurrency investment platforms and cryptocurrency
mining operations, resulting in losses of at least $7 million from
victims in the U.S. and elsewhere.
Another recent press release announced that a U.S.
representative, the chair of the Subcommittee on Economic and
Consumer Policy, has sent letters to the U.S. Department of the
Treasury, the U.S. Securities and Exchange Commission (SEC), the
U.S. Commodity Futures Trading Commission, and the U.S. Federal
Trade Commission, as well as to five major U.S. cryptocurrency
exchanges, “requesting information about the steps they are
taking to combat cryptocurrency-related fraud and scams and
additional actions that are needed to protect Americans.”
According to the press release, “[T]he federal government has
been slow to curb cryptocurrency scams and fraud, and existing
federal regulations do not comprehensively or clearly cover digital
assets under all circumstances.”
According to reports last month, a major U.S. cryptocurrency
investment firm recently disclosed in public filings that it has
been responding to SEC staff regarding the securities law analysis
related to the native cryptocurrencies of the Stellar (XLM), Zcash
(ZEC) and Horizen (ZEN) blockchains. Among other things, the
disclosures reportedly diverge from prior filings by acknowledging
that ZEC, ZEN and XLM each “may currently be a security, based
on the facts as they exist today.”
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