On Wednesday, the U.S. Office of Foreign Assets Control (OFAC) identified three Chinese nationals and a related entity for allegedly manufacturing fentanyl and other drugs and distributing them to numerous countries, including the United States. As part of the action, the government identified and blocked bitcoin public key addresses associated with the purported drug ring. This marks the second time OFAC has blacklisted cryptocurrency accounts, leading some to remark that the practice will likely become commonplace. Earlier in the week, an individual in California was sentenced to 70 months in prison by a federal judge for crimes related to his purchase and sale of fentanyl and other drugs. As part of his guilty plea, the defendant forfeited millions of dollars in cryptocurrencies, and admitted that these funds were proceeds from drug trafficking and were used in money laundering over the Dark Web.

The Securities and Exchange Commission (SEC) announced this week that ICO Rating, a Russia-based analytics firm, agreed to pay $268,998 to settle charges that the company failed to disclose payments received from issuers for publicizing their digital asset securities offerings. An SEC associate director remarked, "The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments .... This requirement applies regardless of whether the securities ... are issued using traditional certificates or on the blockchain." Last week, the Maryland attorney general announced the Maryland Securities Division's participation in "Operation Cryptosweep," an initiative of the North American Securities Administrators Association, which, since the beginning of this year, has been involved in 35 enforcement actions against initial coin offerings and related cryptocurrency investment products. In conjunction with that initiative, the Maryland Securities Division began its own enforcement action against a bitcoin trading platform, and a Maryland resident operating on it, for falsely informing investors that they could earn as much as 150% in passive cryptocurrency investments.

According to reports, the Internal Revenue Service (IRS) recently issued a second round of tax warnings to cryptocurrency investors. The letters reportedly informed recipients that their federal tax returns did not match the information received from cryptocurrency exchanges (although the IRS acknowledged that the exchanges may have made errors in reporting). In July, the IRS sent similar letters to more than 10,000 investors, warning that they may owe taxes on cryptocurrency transactions.

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