Perkins Coie

Weekly Focus

  • U.S. Senate Confirms SEC Commissioner Hester Peirce for Second Term
  • U.S. Attorney Files Complaint to Forfeit $6.5M in Cryptocurrency Stolen in Ponzi Scheme
  • Russian Cryptocurrency Law Signed
  • Tel Aviv Stock Exchange Announces Blockchain Securities Platform
  • Swiss Bank to Launch Crypto Services

US Developments

US Senate Confirms SEC Commissioner Hester Peirce for Second Term

The U.S. Senate confirmed Securities and Exchange Commissioner Hester Peirce for a second term on Thursday alongside Caroline Crenshaw who replaces former commissioner Robert Jackson. As previously reported, Commissioner Peirce proposed a safe harbor for token offerings earlier this year and, during the July 21st nomination hearing, she reiterated that she will continue to “work on the commission’s attitude toward innovation, which has been highlighted when we consider crypto.”

Click here to view the July 21st nomination hearing and here to watch Peirce and Crenshaw’s confirmation.

US Attorney Files Complaint to Forfeit $6.5M in Cryptocurrency Stolen in Ponzi Scheme

The United States filed a complaint on July 29th seeking the forfeiture of $6.5M in cryptocurrency held by Banana.Fund (the Fund), which the government alleges was a Ponzi scheme operating outside the United States.

The Fund claimed to be an “equity crowdfunding platform, using Bitcoin to finance user projects.”  However, a review of financial records indicated that the manager of the Fund did not invest or otherwise use the funds to support any such business endeavors. Instead, the government alleges that funds were used to trade different virtual currencies for personal gain.

In 2018, the Fund announced a limited refund, claiming that only $1.73M was available for distribution. The government claims, however, that the Fund controlled approximately $11M and that the majority of investors were not made whole. Law enforcement seized all available bitcoins from the subject account that were traceable to the scheme as well as approximately $1.73M, for which the government now seeks forfeiture as property derived from proceeds traceable to violations of the wire fraud statute.

Click here for the announcement from the U.S. Department of Justice.

International Developments

Russian Cryptocurrency Law Signed

A much-anticipated Russian law defining and regulating cryptocurrencies was signed by Russian President Vladimir Putin on July 31st. The law, which comes into effect on January 1, 2021, defines “digital financial assets” as “digital rights comprising money claims, ability to exercise rights under negotiable securities, rights to participate in equity of a non-public stock company and right to claim transfer of negotiable securities set in a resolution on the DFA issue.”

The new law acknowledges crypto-assets as a form of property but, importantly, the law provides that, while such digital assets may be sold, purchased, exchanged, and pledged, cryptocurrency cannot be used as a means of payment. The Bank of Russia, the country’s central bank, will supervise the issuance of new digital currencies and reports indicate that the government may be preparing to launch a centralized, state-backed cryptocurrency.

Please click here for a Reuters article and here for a Coindesk article regarding the new law.

Please click here for the full text of the law (in Russian).

Tel Aviv Stock Exchange Announces Blockchain Securities Platform

On July 28th, the Tel Aviv Stock Exchange (TASE) announced that it is launching a blockchain securities lending platform in order to enable direct lending among major financial instruments. TASE plans to launch the platform in November, which has been in testing since March 2020.

More reporting on TASE’s blockchain securities lending platform can be found here.

Swiss Bank to Launch Crypto Services

Basler Kantonalbank, a Switzerland government-backed lender, plans to launch digital asset trading and custody offerings as early as next year through its subsidiary Bank Cler. The launch would make the bank the first state-backed bank in Switzerland to offer cryptocurrency services.

For more information regarding the services launch, click here and here.

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