Tag archives: cryptocurrency

Another nail in PlexCoin’s crypto-coffer: TMF decision affirmed on appeal

As discussed in our previous post, the Financial Markets Administrative Tribunal (TMF) had provided clarity in the application of the “investment contract” criteria, first enunciated in Pacific Coast Coin Exchange v. Ontario Securities Commission and codified under article 1 of the Quebec Securities Act, CQLR c V-1.1 (QSA), by finding that PlexCorps’ project was an investment contract.

On appeal, the Court of Quebec affirmed in Lacroix c. Autorité des marchés financiers, 2020 QCCQ 1467, the TMF’s decision that PlexCorps’ project was an investment contract.

Facts

PlexCorps offered a cryptocurrency called PlexCoin along with … Continue Reading

Not ready yet: OSC rejects bitcoin fund prospectus

On February 15, 2019, the Ontario Securities Commission issued a decision in which it refused to issue a receipt for a prospectus filing made by 3iQ Corp. (3iQ) in respect of The Bitcoin Fund (the Fund).  The decision highlights the challenges faced by issuers seeking to do business in cryptocurrency markets, which regulators continue to view as highly problematic.

Background

3iQ designed the Fund as a non-redeemable investment fund (NRIF) that would expose investors to bitcoin and daily price movements of bitcoin relative to the US dollar.  3iQ filed a non-offering prospectus on behalf of … Continue Reading

From boom to busted: TMF deems PlexCoins as investment contracts

The legal noose is tightening around the necks of rogue cryptocurrency issuers in Quebec. PlexCorps’s legal troubles, as covered in our previous post, have deepened.

In Autorité des marchés financiers c. PlexCorps, 2018 QCTMF 91, the Tribunal des Marchés Financier (TMF) qualified PlexCoin as an investment contract within the meaning of Quebec’s Securities Act. This should come as no surprise as all TMF decisions to date have qualified cryptocurrency products as investment contracts.[1]

Background: a Burgeoning Crypto-Fraud Business

PlexCorps offered a cryptocurrency called PlexCoin along with financial services such as the PlexCard, PlexWallet and PlexBank. It … Continue Reading

Federal court holds that CFTC can regulate virtual currencies as commodities

On March 6, 2018, in a fraud proceeding involving a virtual currency product, a New York federal court held that virtual currencies can be regulated by the Commodity Futures Trading Commission (CFTC) as commodities. Commodity Futures Trading Commission v. McDonnell (E.D.N.Y. Mar. 6, 2018).[1] This ruling marks the first federal judicial endorsement of the CFTC’s position that it had such jurisdiction over virtual currencies, which the CFTC took in its 2015 order in the Coinflip proceeding.[2] As such, this ruling represents a major step in defining the regulatory landscape in the United States for virtual currencies (also known … Continue Reading

Canadian Securities Administrators to regulate Cryptocurrency Offerings and Crypto-Investment Funds

2017 has been an extraordinary year for cryptocurrencies.[1] The recent increase in the number of cryptocurrency offerings reflects a dramatic shift in investor-attitudes towards the crypto-economy. However, the increased popularity of initial coin offerings (ICO), initial token offerings (ITO) and cryptocurrency investment funds has triggered a wave of regulatory responses, from the USA to Singapore and to, most recently, Canada.[2]

On August 24, 2017, the Canadian Securities Administrators (CSA) announced that securities law requirements may now apply to cryptocurrency offerings (ICOs and ITOs) involving persons or companies conducting business from within Canada … Continue Reading

SEC ruling on The DAO signals increased acceptance of blockchain-based securities

On July 25, 2017, the Securities and Exchange Commission (SEC) issued a statement on the regulatory significance of offers and sales of digital assets carried out using distributed ledger or blockchain technology.  That statement followed the SEC’s Report of Investigation into The DAO, an unincorporated organization designed to issue tokens administered on a distributed ledger that would allow the holder to share in the anticipated earnings of the organization. The DAO and its structure drew a great deal of attention after a hacker stole approximately 1/3 of its assets.

The SEC’s investigation, as summarized in the Report of … Continue Reading

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