CFTC – FinTech and Blockchain Law Watch

CFTC Files Complaint Against Voyager’s Former CEO Stephen Ehrlich Alleging Fraud and Registration Failures

Oct 16 2023

By Cliff Histed, Cheryl Isaac, Eden Rohrer, and Josh Durham

On 12 October, the Commodity Futures Trading Commission (CFTC) filed a complaint against Stephen Ehrlich, the former CEO of the now-defunct cryptocurrency platform, Voyager Digital (Voyager), in the US District Court for the Southern District of New York. In its 55-page complaint, the CFTC asserts both fraud and registration failures by Ehrlich in connection with the Voyager platform and Voyager’s operation of an unregistered commodity pool.

CFTC Chair Asserts Jurisdiction Over Fiat-Based Stablecoins

Mar 13 2023

By Cheryl L. Isaac and Maxwell J. Black

Last week, Commodity Futures Trading Commission (“CFTC”) Chair Rostin Behnam asserted that fiat-based stablecoins (such as USD Coin (USDC), Tether (USDT), and Binance USD (BUSD), all of which are pegged to an underlying fiat currency) should be considered as commodities, subject to the CFTC’s enforcement jurisdiction.

DeFi Regulatory Alert: CFTC Files Its First Ever Oracle Manipulation Case

Jan 11 2023

By Andrew M. Hinkes, Clifford C. Histed, Cheryl L. Isaac, and Maxwell J. Black

The Commodity Futures Trading Commission (“CFTC”) filed a civil enforcement action this week against Avraham Eisenberg, charging him with a scheme to defraud others and engage in price manipulation (as announced by the CFTC here). While there have been other enforcement actions related to decentralized finance (“DeFi”) protocols, this is the first case in which the CFTC has charged a person for fraud in connection with “oracle manipulation” on a decentralized exchange. In addition to this CFTC action, the U.S. Department of Justice previously charged Eisenberg with criminal fraud and commodity price manipulation in connection with this same alleged scheme.

CFTC Ordered to Serve Former Founders in Ooki DAO Case

Dec 20 2022

By Andrew M. Hinkes, Clifford C. Histed, Carly E. Howard, Cheryl L. Isaac, Maxwell J. Black

Following the unprecedented Ooki DAO enforcement action by the Commodity Futures Trading Commission (“CFTC”), the district court, after entertaining argument by several amici, clarified its position on another novel legal issue in the DeFi space: how to serve process on a DAO. On 12 December 2022, the United States District Court for the Northern District of California ordered the CFTC, as part of its efforts to serve the OOKI Dao, to personally serve the former founders of Ooki DAO as individually identifiable token holders.

The Future of Digital Asset Regulation: Key Regulators Give Their Thoughts at the D.C. Blockchain Summit (Part 2)

Mar 12 2019

By Daniel S. Cohen

On March 6^th, the Chamber of Digital Commerce held its Fourth Annual D.C. Blockchain Summit. One of the first panels featured a discussion on the current and future contours of the digital asset regulatory regime with Daniel Gorfine, Director of LabCFTC; Kavita Jain, FINRA’s Director of the Office of Emerging Regulatory Issues; Jessica Renier, Senior Advisor on Domestic Finance for the Treasury Department; and Valerie Szczepanik, the SEC’s Senior Advisor for Digital Assets & Innovation.

Ms. Szczepanik explained that the SEC staff is developing guidance regarding digital assets but declined to provide a timetable for its release. She noted that whether a digital asset is a security will, as it does now, depend on whether it is an investment contract in light of its individual facts and circumstances. Ultimately, the SEC is seeking to promote financial innovation, capital formation, and wealth creation but in balance with investor protections.

Commissioner Brian Quintenz Comments On The Liability Of Smart Contract Developers For Uses In Violation of CFTC Regulations

Oct 22 2018

By Anthony R.G. Nolan and Russell E. Deutsch

Recently, Commissioner Brian Quintenz of the US Commodity Futures Trading Commission (CFTC) commented that smart contracts that have the defining features of a swap, future or option are subject to CFTC regulation. The Commissioner posited the hypothetical that, after appropriate analysis, the CFTC has concluded that a particular smart contract, e.g., a binary option executed on a blockchain, is within its jurisdiction. He queried: If that contract is executed in violation of CFTC regulations, then against whom should the CFTC bring enforcement action?

ASIC enters into bilateral cross border cooperation agreement with US regulator

Oct 08 2018

By Jim Bulling, Felix Charlesworth and Edwin Tan

On 4 October 2018, the Australian Securities and Investments Commission (ASIC) entered into the ‘Cooperation Arrangement on Financial Technology Innovation’ bilateral agreement (Agreement) with the US Commodity Futures Trading Commission (CFTC) to cooperate and exchange information in the fintech and regtech industries in each jurisdiction. Broadly, the Agreement seeks to enhance mutual understanding, identify market developments and trends, facilitate fintech innovation and foster the use of more efficient and effective regtech.

Conference Report – Blockchain and the Law: Towards a Responsible Blockchain Sector

Jun 22 2018

By Anthony R. G. Nolan and Julien E. F. Barbey

On June 14, Cardozo Law School in New York City held a conference entitled “Blockchain and the Law: Towards a Responsible Blockchain Sector.” The conference was led by a panel consisting of current and former commissioners and staff members of the SEC and the CFTC including Rob Cohen, director of the SEC’s enforcement division.

Among topics discussed was SEC Director William Hinman’s recent speech in which he stated that Ethereum is not a security. Panelists suggested this may indicate that the SEC would regard a token as being able to change its character over time, such that a token that was once a security can morph into one that is not a security. This would have important implications for market practices, potentially including the utility of SAFTs.

LabCFTC’s First Primer Covers Bitcoin, other Virtual Currencies, Virtual Tokens and ICOs

Dec 04 2017

By Anthony Nolan and Eric A. Love

The U.S. Commodity Futures Trading Commission’s (CFTC) New York-based LabCFTC has released a twenty-page primer (the “Primer”) about virtual currencies, virtual tokens and initial coin offerings (ICOs). It’s the first in a series of educational primers that LabCFTC will issue in the coming months about innovations in the FinTech industry.

The Primer answers important questions about how CFTC regulations apply to virtual currencies, virtual tokens and ICOs. Notably, the Primer reiterates that Bitcoin and other virtual currencies are appropriately categorized as commodities and also states that virtual tokens can in some instances be commodities or derivatives contracts even if they are also considered to be securities under the U.S. securities laws. The Primer notes that, in applying U.S. commodity futures laws to virtual tokens, the CFTC will look beyond form and examine the “actual substance and purpose” of particular activities.

A New Cyber Regulator on the Beat: The CFPB Issues its First Cybersecurity Order and Fine

Mar 09 2016

By Ted Kornobis

On March 2, 2016, the Consumer Financial Protection Bureau (“CFPB”) instituted its first data security enforcement action, in the form of a consent order against online payment platform Dwolla, Inc.

The CFPB joins several other regulators that have recently issued statements or instituted enforcement actions in this space, including the Securities and Exchange Commission (“SEC”), Commodities Futures Trading Commission (“CFTC”), the Financial Industry Regulatory Authority (“FINRA”), the National Futures Association (“NFA”), the Department of Justice (“DOJ”), state attorneys general, and the Federal Trade Commission (“FTC”), which has been active in this area for several years.

To read more click here.

Tag:CFTC