In a recent press release, the U.S. Department of Justice announced the extradition of a Latvian man in relation to "a six-count indictment charging him with wire fraud, securities fraud, and conspiracies to commit wire fraud and securities fraud in connection with the operation of eight companies that purported to offer, invest in or mine digital assets." According to the press release, the defendant operated a series of entities "that advertised through email campaigns, social media and websites dedicated to cryptocurrencies" and made false representations to solicit investments related to initial coin offerings, cryptocurrency investment platforms and cryptocurrency mining operations, resulting in losses of at least $7 million from victims in the U.S. and elsewhere.
Another recent press release announced that a U.S. representative, the chair of the Subcommittee on Economic and Consumer Policy, has sent letters to the U.S. Department of the Treasury, the U.S. Securities and Exchange Commission (SEC), the U.S. Commodity Futures Trading Commission, and the U.S. Federal Trade Commission, as well as to five major U.S. cryptocurrency exchanges, "requesting information about the steps they are taking to combat cryptocurrency-related fraud and scams and additional actions that are needed to protect Americans." According to the press release, "[T]he federal government has been slow to curb cryptocurrency scams and fraud, and existing federal regulations do not comprehensively or clearly cover digital assets under all circumstances."
According to reports last month, a major U.S. cryptocurrency investment firm recently disclosed in public filings that it has been responding to SEC staff regarding the securities law analysis related to the native cryptocurrencies of the Stellar (XLM), Zcash (ZEC) and Horizen (ZEN) blockchains. Among other things, the disclosures reportedly diverge from prior filings by acknowledging that ZEC, ZEN and XLM each "may currently be a security, based on the facts as they exist today."
For more information, please refer to the following links:
- Latvian Individual Extradited for Securities Fraud and Wire Fraud in Cryptocurrency Scheme
- Chairman Krishnamoorthi Requests Information from Federal Agencies and Crypto Exchanges on Efforts to Combat Fraud and Scams
- Grayscale, Disclosing SEC Queries, Says Cryptos XLM, ZEC, ZEN May be Securities
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