Coinfirm’s Regulatory Affairs department summaries the key US crypto law enforcement and regulatory moves from July, including the:
- Comprehensive Cyber Review by the DoJ
- SEC Charges Former Coinbase Manager in Crypto Asset Insider Trading Action
- CEO of Titanium Blockchain Pleads Guilty in $21 Million Cryptocurrency Fraud Scheme
US Department of Justice – Comprehensive Cyber Review
The Comprehensive Cyber Report outlines challenges posed by cyber threats and how the US Department of Justice addresses them.
With regards to virtual assets, the DoJ has established the International Virtual Currency Initiative focused on strengthening international law enforcement efforts to combat the illicit use of digital asset. The Initiative will seek to build capacity in the US foreign law enforcement partners and strengthen relationships with those partners to better collaborate on investigations and prosecutions.
As part of the Initiative:
- The Criminal Division will work to strengthen international cooperation and capacity with respect to the illicit use of cryptocurrency
- Resident Legal Advisors (RLAs) will increase their focus on the use of virtual currencies to fund terrorist organisations
- The Department will work closely with the Department of the Treasury, the Department of State, and international partners to pursue the implementation of global anti-money laundering and counter financing-of-terrorism (AML/CFT) standards for virtual assets and virtual asset service providers (VASPs)
SEC Charges Former Coinbase Manager in Crypto Asset Insider Trading Action
The Securities and Exchange Commission announced insider trading charges against a former Coinbase product manager, his brother, and his friend for trading ahead of announcements regarding certain crypto assets which would be made available on the popular crypto asset exchange, Coinbase.
“Nikhil Wahi and Ramani allegedly purchased at least 25 crypto assets, at least nine of which were securities, and then typically sold them shortly after the announcements for a profit. The long-running insider trading scheme generated illicit profits totaling more than $1.1 million.”
The SEC’s complaint points out that Coinbase had in place policies addressing insider trading and requiring employees not to trade on the basis of confidential information nor to pass it on elsewhere.
CEO of Titanium Blockchain Pleads Guilty in $21 Million Cryptocurrency Fraud Scheme
The CEO and founder of Titanium Blockchain Infrastructure Services Inc. (TBIS) – Michael Alan Stollery – pleaded guilty for his role in a cryptocurrency fraud scheme involving TBIS’s initial coin offering (ICO) that raised approximately $21 million from investors in the United States and overseas.
According to the SEC’s press release, Stollery:
- Lured investors to purchase “BARs,” the cryptocurrency token or coin offered by TBIS’s ICO, through a series of false and misleading statements
- Did not register the ICO regarding TBIS’s cryptocurrency investment offering with the U.S. Securities and Exchange Commission (SEC)
- Falsified aspects of TBIS’s white papers
- Planted fake client testimonials on TBIS’s website
- Admitted that he did not use the invested money as promised but instead commingled the ICO investors’ funds with his personal funds
Stollery pleaded guilty to one count of securities fraud. He is scheduled to be sentenced on November 18 and faces up to 20 years in prison.