Cryptocurrency Enforcement Heating Up

Yesterday the Commodity Futures Trading Commission (CFTC) announced that it had sued and seized the assets of a somewhat obscure cryptocurrency, known as My Big Coin. The CFTC alleges that the creators of My Big Coin misappropriated “over $6 million from customers by, among other things, transferring customer funds into personal bank accounts, and using those funds for personal expenses and the purchase of luxury goods.” Details of the case are at the CFTC website and here.

As Law360 notes, this is the third enforcement action filed just this week against a virtual currency business and its backers, after the CFTC filed its first such suit in September 2017. The SEC and DOJ at this point only have a single case pending in the cryptocurrency arena, but many more are expected in 2018 – the heads of the SEC and CFTC said as much yesterday in a WSJ op-ed. And echoing the point, at a recent ABA White Collar Committee panel, my good friend and former trial partner Brian Klein, and some law enforcement panelists – all of whom work in the cryptocurrency area – all discussed not whether there will be more criminal and civil enforcement actions in this area, but when they are coming and what they will look like.

Short story is, if you’re an investor, buyer be very aware. And if you’re building a cryptocurrency, make sure you dot your “i’s” and cross your “t’s” (or your ones and zeros, for you coders).