On Oct. 18, the Securities and Exchange Commission (SEC) announced the creation of the Strategic Hub for Innovation and Financial Technology (FinHub). According to an SEC press release, the FinHub will serve as a centralized resource on the SEC's fintech initiatives, including those relating to blockchain, digital marketplace financing, automated investment advice and AI. SEC Chairman Jay Clayton said, "The FinHub provides a central point of focus for our efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute our mission." Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director in the SEC's Division of Corporation Finance, will lead the FinHub, which will be staffed by members of various SEC divisions and offices with fintech expertise.
Earlier this week, the SEC announced the suspension of trading in the securities of a U.S.-based retail company. The SEC alleged the company made false claims that it had partnered with an SEC-qualified custodian for cryptocurrency transactions and was conducting a token offering registered under SEC regulations. In related news, the Commodity Futures Trading Commission (CFTC) announced that a federal district court has ordered a New York-based corporation and its CEO to pay more than $2.5 million in civil penalties and restitution in what the CFTC called its first-ever anti-fraud enforcement action involving bitcoin. The CFTC brought the action in response to a Ponzi scheme in which the defendants generated false statements showing gains from bitcoin trading to solicit more than $600,000 from at least 80 investors between 2014 and 2016. According to a recent report, the Australia Securities Investments Commission (ASIC) has shut down a Brisbane-based initial coin offering (ICO) project that intended to raise up to $50 million USD to create a cryptocurrency trading platform.
A study published last week claims that Lazarus, a hacker group thought to be sponsored by North Korea, has stolen $571 million in cryptocurrency during 2017 and 2018, out of an estimated total of $882 million stolen from online exchanges in that time. The Financial Action Task Force on Money Laundering (FATF), an intergovernmental organization initially founded by the G-7, recently announced an update to 2015 guidance that set out requirements for combating money laundering and terrorist financing in the virtual currency space. According to the FATF, the updates are designed to make clear that virtual assets and their service providers "are subject to AML/CFT regulations, for example conducting customer due diligence including ongoing monitoring, record-keeping, and reporting of suspicious transactions." The FATF said it would consider further updates over the next 12 months, as it tries to strengthen the global AML/CFT regime while also creating room for innovation.
To read more about the topics covered in this week's post, see the following:
- SEC Launches New Strategic Hub for Innovation and Financial Technology
- SEC: Request Form for FinTech-Related Meetings and Other Assistance
- SEC: FinHub
- SEC Suspends Trading in Company for Making False Cryptocurrency-Related Claims about SEC Regulation and Registration
- Federal Court Orders Trading Firm and CEO to Pay More than $2.5 Million for Fraudulent Bitcoin Ponzi Scheme
- Australian Securities Watchdog Halts ICO Seeking to Raise $50 Million
- Report: North Korea-Sponsored Hacks Comprise 65 Percent of Total Crypto Stolen
- FATF: Regulation of Virtual Assets
- Financial Action Task Force Adopts Changes to Standards Covering Virtual Currencies
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