Cryptocurrency

July 12, 2023

Florida man Adam Todd and his companies, Digitex LLC, Digitex Limited, Digitex Software Limited, and Blockster Holdings Limited Corporation, have been banned from registering with the CFTC and trading in CFTC-regulated markets, and ordered to pay almost $4 million in disgorgement and $12 million in civil monetary penalty.  According to the agency, the defendants failed to register with the CFTC, failed to comply with certain regulations, attempted to manipulate the price of a digital asset token, and violated anti-money laundering procedures.  CFTC

June 6, 2023

Coinbase, Inc. has been ordered to pay $5 million for offering unregistered securities through staking offerings, in violation of New Jersey’s securities laws.  Not registering offerings with the CFTC subjected Coinbase’s 3.5 million staking investors to increased risk. NJ AG

May 30, 2023

Former Coinbase manager, Ishan Wahi, and his brother, Nikhil Wahi, have been sentenced to 2 years and 10 months in prison respectively and ordered to forfeit cryptocurrency and cash in order to resolve civil and criminal charges of insider trading.  As part of his position at Coinbase, Ishan helped coordinate public listing announcements for crypto assets, at least nine of which were crypto securities.  In violation of Coinbase’s rules as well as federal law, Ishan tipped his brother Nikhil and friend Sameer Ramani off to the assets’ release, allowing them to purchase them and sell them for a profit.  SEC

April 27, 2023

Gary James Harmon will spend 51 months in prison for stealing 712 bitcoin subject to forfeiture. Gary’s brother, Larry Dean Harmon, operated a cryptocurrency money laundering service on the darknet, with large amounts of said money coming from darknet markets. Knowing the government was attempting to seize Larry’s crypto, Gary transferred the $4.8 million in bitcoin to his own accounts, using Larry’s credentials to effectuate the transfer. DOJ, USAO DC

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