Cryptocurrency

March 24, 2023

Michael Alan Stollery, the CEO and founder of purported cryptocurrency investment platform Titanium Blockchain Infrastructure Services Inc. (“TBIS”), has been sentenced to over 4 years in prison.  According to the DOJ, Stollery failed to register TBIS’s ICO with the SEC and falsified information on TBIS’s website and white papers, including information about TBIS’s prospects for profitability, client testimonials, and business relationships.  Additionally, he misappropriated client funds to pay off personal expenses.  DOJ

February 16, 2023

Nexo Capital Inc., which provides crypto-asset-related financial services, has agreed to pay $45 million to multiple state and federal securities regulators to resolve allegations that it offered and sold unregistered securities.  An investigation by a working group of state securities regulators, North American Securities Administrators Association (NASAA), had found that Nexo illegally offered interest-bearing digital asset deposit accounts to over 90,000 clients with total assets valued at $800 million.  NJ AG

February 9, 2023

Payward Ventures, Inc. and Payward Trading Ltd., better known as Kraken, has agreed to pay $30 million in disgorgement, prejudgment interest, and civil penalties for its failure to register the offer and sale of its crypto asset staking-as-a-service program.  Staking involves investors locking their crypto tokens with a blockchain validator; if the tokens then become used to validate data for the blockchain, their owners are rewarded with additional tokens.  According to the SEC, Kraken advertised its staking-as-a-service program as having annual investment returns of as much as 21%, but failed to properly register or disclose risks to investors.  SEC

January 19, 2023

Cryptocurrency company Nexo Capital Inc. has agreed to pay $22.5 million and comply with a cease and desist order in order to settle SEC charges of failing to register the offer and sale of its retail crypto asset lending product.  The company has agreed to pay another $22.5 million and comply with additional terms in order to settle similar charges in California, Indiana, Kentucky, Maryland, New York, Oklahoma, South Carolina, Vermont, Washington, and Wisconsin.  As part of those additional terms, Nexo must notify all remaining U.S. investors to withdraw all remaining assets from Nexo’s platform by April 2023.  SEC, AG NY

September 19, 2022

Sparkster Ltd. and its CEO, Sajjad Daya, have agreed to pay $30 million to settle charges of offering and selling crypto asset securities called SPRK tokens that were not registered with the SEC and were not eligible for a registration exemption.  A crypto influencer, Ian Balina, was separately charged in federal court for promoting SPRK tokens on social media without disclosing that he received a 30% bonus on tokens he purchased in exchange for his posts, and for selling the tokens to an investing pool of around 50 individuals.  SEC