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Karen Boto

In the following guest post, Karen Boto, Legal Director at Clyde & Co, takes a look at the Legal Statement recently published by the UK Jurisdictions Taskforce addressing a number of legal issues cryptocurrencies and smart contracts. A version of this article previously was published as a Clyde & Co client alert. I would like to thank Karen for allowing me to publish her article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Karen’s article.
Continue Reading Guest Post: Landmark UK Legal Statement Provides Clarity for Smart Contracts and Cryptoassets

Karen Boto

As prior posts on this blog have noted (most recently here), the rise of cryptocurrencies is one of the most important and interesting recent developments in the financial arena. The rise of cryptocurrencies presents a number of challenges. Among the challenges is providing appropriate insurance solutions for cryptocurrency companies. In the following guest post, Karen Boto, a Legal Director at Clyde & Co law firm, takes a look at these cryptocurrency-related insurance issues. A version of this article was previously published as a Clyde & Co client alert. I would like to thank Karen for her willingness to allow me to publish her article as a guest post. I welcome guest post submissions from responsible authors on topics of interest to readers. Please contact me directly if you would like to submit a guest post. Here is Karen’s article.
Continue Reading Guest Post: Cryptocurrencies – To Insure or Not to insure?

Among the many innovations we have had to confront in a world characterized by rapid technological change is the advent of cryptocurrency, as a social and financial phenomenon. As I have previously noted, the current cryptocurrency craze has also become a legal phenomenon as well, as now nearly a dozen securities class action lawsuits involving cryptocurrency, ICOs, and blockchain technology have been filed just in the last six months or so. The latest of these lawsuits  — one involving allegations relating to an Italian cryptocurrency exchange operator nicknamed “The Bomber” and including investor demands for the court to compel a “rescue fork” — may suggest that in addition to technological change, the advent of cryptocurrency could introduce legal changes as well.
Continue Reading Cryptocurrencies: New Digital Assets, New Legal Issues?

One of the changes Congress introduced in the Jumpstart our Business Startups (JOBS) Act of 2012 was the creation of a new securities offering exemption for smaller companies. In March 2015, the SEC introduced rules implementing this provision, known as Regulation A+. The track record for Reg. A+ offerings has been mixed, as discussed further below. Recent events involving Longfin Financial, a blockchain fintech company that just completed a Reg. A+ offering in December 2017 highlights many of the questions and concerns about Reg. A+ offerings. Longfin’s share price plunged over 80% after the company announced on Monday that its offering and a subsequent acquisition are the subject of an SEC investigation. Now the company has been hit with a securities class action lawsuit. As discussed below, these recent developments have a number of implications.
Continue Reading Fintech Company Hit with Securities Suit Completed Reg. A+ Offering in December

I am sure that when most people think about the kind of organization that might engage in an Initial Coin Offering (ICO), they typically are thinking of a start-up venture — an enterprise trying to get off the ground. But there have been some high-profile cases of well-established companies trying to jump on board the cryptocurrency bandwagon. For example, Kodak, the iconic film and photographic equipment company that has fallen on hard times in recent years, announced a plan earlier this year to launch KodakCoin, a photography-focused cryptocurrency that is supposed to help photographers manage their collections by creating permanent, immutable records of ownership. (Kodak’s later postponed the planned launch.)

The online retailer Overstock.com is another established company that late last year announced plans for a cryptocurrency offering. Overstock’s cryptocurrency plans were derailed earlier this month after its planned offering drew SEC scrutiny. Now, the company has been hit with a securities class action lawsuit relating to its miscarried cryptocurrency initiative, as discussed below. Though much of what happened to Overstock is company- specific, the sequence of events and the overall circumstances may have some important lessons as the cryptocurrency phenomenon evolves.   
Continue Reading We Need to Talk About ICOs, Cryptocurrency, and Blockchain

One of the most distinct phenomena at the peak of the Internet bubble in the late 90s was the way that so many otherwise entirely ordinary companies added “dot com” to their names to try to cash in on the frenzy. It now looks as if some companies are attempting moves from the same playbook amidst the current cryptocurrency mania. Companies with no prior connection either to bitcoin or blockchain are adopting names or strategies as a way to try to ride the current wave, even where the companies have little or no experience with the technologies. Regulators noting these developments have started sounding the alarm bell. And in at least one instance, these kinds of developments have led to securities litigation.
Continue Reading Company Capitalizing on Blockchain Mania Draws Securities Suit

John Reed Stark

As many readers undoubtedly are aware, the prices for bitcoin has plunged in recent days, from a peak of nearly $20,000 in December to approximately $8,300 more recently, representing a decline of nearly 60%. The prices for other cryptocurrencies have also fallen along the same order of magnitude. This dramatic decline certainly at least raises the question of whether or not the pricing bubble for cryptocurrencies that fueled the recent wave of initial coin offerings (ICOs) has burst – or at least, is about to burst. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, suggests that the bursting of the ICO bubble may be exactly what the financial marketplace needs for the long haul. I would like to thank John for his willingness to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest for this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s guest post.
Continue Reading Guest Post: The Benefit of an ICO Bubble Burst

 The astonishing bitcoin bubble may have burst over the last several days. From its intraday peak in December 2017 of $19,783, the price for bitcoin had fallen as of Saturday to $8,524, a decline of over 60%. (Price declines continued on Monday.) Bitcoin’s price has fallen before and it has generally proven to be volatile. The price may yet escalate again. But if it has always been hard to specify a reason for the phenomenal price movements of bitcoin and other cryptocurrencies, there certainly have been recent developments aplenty to undermine the price for these digital assets.
Continue Reading A Multitude of Cryptocurrency Developments

Even after the precipitous drop this past Friday in the price of Bitcoin and other digital currencies, the developments during the past several months involving cryptocurrencies have to be one of the year’s top business stories. While news articles about digital currencies focus on the dramatic rise this year in the price of Bitcoin or on the recent wave of initial coin offerings (ICOs), part of this year’s cryptocurrency story has to include the SEC’s increasingly active approach to policing digital currency trading, as well as the rising numbers of lawsuits filed against cryptocurrency sponsors. As I have noted in prior posts, in recent weeks claimants have filed a number of cryptocurrency-related securities lawsuits. Late last week, investors filed two more of these lawsuits, one involving an ICO company and the other involving a publicly traded blockchain consulting company.
Continue Reading Cryptocurrency-Related Securities Lawsuits: A Litigation Filing Trend for the New Year?

John Reed Stark

 As I noted in a recent post (here), the business pages these days are full of headlines about Initial Coin Offerings (ICOs). Among many issues swirling around ICOs one is the question of how the offerings fit within the overall legal and regulatory framework. In the following guest post, John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, takes a detailed look at ICOs with a particular focus on securities regulation. A prior version of this article previously appeared on Securities Docket. I would like to thank John for his willingness to allow me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s guest post.
Continue Reading Guest Post: The SEC and ICOs: Winter is Coming