Multiple Enterprise Blockchain Applications Announced, SEC and CFTC Issue Guidance and Enforcement Actions

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Blockchains on Broadway, Smart Contracts Make Headway, Food Supply Chain and Health Applications Continue

By: Diana J. Stern

The National Science Foundation has awarded SimplyVitalHealth Inc. a grant to further develop its blockchain protocol, Nexus, which seeks to “decrease healthcare costs by enabling data access through blockchain.” According to a press release, Nexus is compatible with the Health Insurance Portability and Accountability Act (HIPAA).

In supply chain news, KT, a South Korean telecommunications company, is working with the Korea Muslim Federation and B-square Lab to develop a blockchain-based platform that authenticates halal food. KT intends to transform a largely paper-based process by issuing blockchain-based certificates and utilizing unique QR codes to track products. In another development that would transform the chocolate supply chain, Dutch NGO FairChain Foundation is working with the United Nations to insert a code inside wrappers for The Other Bar chocolate. Consumers scan the code to donate a blockchain-based token to the farmer who produced the cocoa and to receive discounts on future chocolate bar purchases. Reports state that many cocoa farmers currently do not earn a living wage, despite chocolate production being a €92 billion industry.

An Asian news outlet reported this week that the Mobility Open Blockchain Initiative, a consortium of international automobile manufacturers, will soon begin testing a blockchain-based system that assigns digital IDs to automobiles, enabling the collection of data throughout the lifetime of a vehicle. According to reports, among other features the system would enable automatic payment of parking fees and highway tolls.

This week, the largest theater operator on Broadway announced a pilot with startup True Tickets. Starting next year, the pilot will leverage the True Tickets’ blockchain-based mobile ticketing platform to reduce fraud in the secondary market for theater tickets. In other news, a multinational professional services firm launched a blockchain-enabled solution for governments that tracks and improves processes for financial management of public funds. The City of Toronto has already piloted the platform to test how it can improve reconciliations and interdivisional fund transfers by increasing transparency and efficiency.

Finally, yesterday, Canadian multinational media conglomerate and smart contract startup OpenLaw announced a proof-of-concept to test how the Canadian firm’s flagship document automation product, Contract Express, can integrate with OpenLaw and the Ethereum blockchain. According to reports, Contract Express can be used to input the initial data for the agreements, and then OpenLaw can hash certain data points on the Ethereum blockchain. As a result, users could configure smart contracts to preprogram how certain tokens should be sent among parties.

For more information, please refer to the following links:

CFTC Says Ether Is a Commodity, Crypto Trading and Payments Markets Expand

By: Joanna F. Wasick

The chairman of the Commodity Futures Trading Commission (CFTC) recently stated that ether is a commodity and therefore falls under the CFTC’s jurisdiction. While the CFTC had previously announced its view that bitcoin was a commodity, this was its first official statement on ether, and it comports with the position of the Securities Exchange Commission (SEC) that neither bitcoin nor ether is a security. The CFTC chairman also stated that “forked” assets – cryptocurrencies created by forks from the original cryptocurrency (e.g., bitcoin cash or bitcoin gold) – should be treated by regulators the same way as the original asset.

In capital markets news, earlier this week trading platform eToro launched a new portfolio that trades cryptocurrencies based on AI analyses of Twitter posts (tweets). In the foreign markets, late last week, SE Digital Co. Ltd., a subsidiary of a leading Thai financial services firm, obtained SEC approval to operate in Thailand as an initial coin offering portal. The company plans to launch the country’s first investment token with a target transaction size of between two and three billion Thai Baht. Also last week, a major Australian precious metals company announced the launch of the Perth Mint Gold Token, a digital token backed 1:1 by GoldPass certificates issued by the Perth Mint, the world’s largest refiner of newly mined gold.

Acceptance of cryptocurrency as a form of payment continues to increase. According to a major British online real estate portal and property website, the seller of a property in Durham County priced at 1.2 million British pounds will accept bitcoin as a method for payment. Additionally, a California-based luxury electric car automaker now accepts bitcoin as payment for car sales and services at its flagship store in Newport Beach. And the Bermuda government announced this week that it will accept payments for taxes, fees and other government services in USD Coin (USDC), a stablecoin backed by U.S. dollars that was launched a year ago by a major cryptocurrency exchange and a U.S. fintech and cryptocurrency firm.

For more information, please refer to the following links:

Federal Agencies Warn on AML and Bring Civil Actions; DOJ Brings Down Darknet Site

By: Jonathan D. Blattmachr

Last Friday, FinCEN, the CFTC and the SEC issued a joint statement warning digital asset space players of their AML/CFT obligations under the Bank Secrecy Act (BSA). The statement emphasized that covered entities must establish and implement an effective AML program, and have certain recordkeeping reporting obligations, including filing suspicious activity reports. The agencies reminded those dealing with digital assets that simply labeling an asset or activity something does “not necessarily align with” how the BSA or other federal rules or regulations may classify them: “The nature of the digital asset-related activities a person engages in is a key factor in determining whether and how that person must register with the CFTC, FinCEN, or the SEC.”

Also last Friday, the SEC announced a temporary restraining order against two offshore entities the Commission alleges were conducting an illicit digital token offering in the U.S. and abroad. The SEC alleges that Telegram Group Inc. and subsidiary TON Issuer Inc. began raising capital in January 2018 to fund their operations. The complaint against the companies alleges they failed to register the token offers and sales, 2.9 billion tokens worth $1.7 billion, which the SEC avers are securities.

This week the CFTC filed a civil action against David Saffron and Circle Society Inc. related to a Ponzi scheme Saffron allegedly ran through Circle Society. The complaint alleges that for nearly two years, defendants tricked U.S. individuals into handing over $11 million worth of bitcoin and U.S. dollars to trade off-exchange binary options on foreign currencies and cryptocurrency pairs. The defendants allegedly guaranteed returns up to 300%, but instead misappropriated the funds.

A federal grand jury has indicted a South Korean national for operating the largest child exploitation market by volume of content. Hundreds of users in the U.S. and 37 other countries have been arrested and charged. The darknet site offered 250,000 videos for sale in exchange for bitcoin. The DOJ is seeking forfeiture of the bitcoin and to give the funds to the victims.

For more information, please refer to the following links:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

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Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

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How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
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  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
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How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

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Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
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    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

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  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
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Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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