Last week, the SEC announced its settlement with Gladius, a Washington, D.C.-based company that raised approximately $12.7 million in an initial coin offering (ICO) conducted in late 2017. The company did not register its ICO, despite the SEC's statement in July 2017 cautioning that offers and sales of so-called ICO tokens are subject to federal securities laws. However, in the summer of 2018, Gladius self-reported its unregistered ICO to the SEC. Gladius then cooperated in the ensuing investigation, and ultimately agreed to compensate investors and register its coins as a class of securities. Importantly, the SEC did not impose fines, as it did in earlier actions against CarrierEQ Inc. (Airfox) and Paragon Coin Inc. – two companies that also issued unregistered ICOs after the SEC's warning but did not self-report. The SEC's stance that ICOs are subject to federal securities laws was also strengthened by a recent California federal court decision. The SEC sued Blockvest LLC in late 2018, and asked the court to prevent Blockvest's planned unregistered ICO. The court initially declined the SEC's request – a move that some commentators interpreted as the court's reluctance to consider ICO tokens as securities. Amid the controversy, the SEC moved the court to reconsider its decision, and in mid-February the court did so, finding that Blockvest's contemplated ICO was indeed an offer to sell securities.

Earlier this week, the U.S. Department of Justice announced that Randall Crater, the founder and principal operator of My Big Coin Pay Inc. in Las Vegas, had been charged for wire fraud and illegal monetary transactions in connection with his alleged participation in a scheme to defraud investors by marketing and selling fraudulent virtual currency. Additionally, the FBI has begun asking that investors in BitConnect tokens (BCC) identify themselves as victims and provide information to assist in an ongoing investigation, following the crash of the BCC market last January that occurred after regulators' warnings of BitConnect's Ponzi-type nature. And Bitfinex confirmed in recent blog post that, as a result of law enforcement efforts, the U.S. government collected and returned roughly 28 bitcoins stolen off the exchange during a major 2016 hack.

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