By Odelia Nikfar and Alexandra Levin Kramer
The following is a survey of recent legal developments globally that are significant to the blockchain industry.
N.J. State Attorney General Gurbir S. Grewal and the N.J. Bureau of Securities within the Division of Consumer Affairs announced, on July 19, 2019, that the State has filed a three-count lawsuit against Pocketinns, Inc., a Princeton-based blockchain-driven online rental marketplace, and its president Sarvajnya G. Mada. The lawsuit alleges that Pocketinns and Mada offered and sold more than $400,000 of unregistered securities from New Jersey in the form of a cryptocurrency called “PINNS Tokens” in exchange for Ethereum in January 2018.
According to a July 19, 2019 report, the U.S. Commodity Futures Trading Commission is investigating cryptocurrency exchange BitMEX. The investigation if focused on whether BitMEX allowed Americans to trade on the platform without registering with the CFTC. In an interview in January, BitMEX CEO, Arthur Hayes, said that the exchange bars U.S. residents and nationals. However, traders may have tricked filters to mask their location. BitMEX is registered in the Seychelles, while its main office is in Hong Kong. It also has an office in San Francisco.
On July 12, 2019, the U.K. government announced the Economic Crime Plan, which “draws together actions to overhaul the approach to tackling economic crime, with greater partnering between the government, law enforcement and the private sector.” The plan includes action on cryptoassets to ensure these are not being used for money laundering and other illicit activity. The plan aims to do this by “establishing a new cryptoassets regime with the Financial Conduct Authority, going beyond international standards to create one of the most comprehensive global responses to the use of cryptoassets in illicit activity.”
France is set to approve businesses involved in cryptocurrencies, under new legislation. Under new rules, crypto-related firms will abide by consumer protection, tax, and legal requirements in exchange for approval from the French regulator. Anne Marechal, Executive Director for Legal Affairs at the Financial Markets Authority, said on July 18, 2019 that the Authority is in talks with three or four candidates for initial coin offerings.
The Malta Financial Services Authority (MSFA), the single regulator of financial services in Malta, launched a Consultation Paper on Security Token Offerings on July 19, 2019. This action aims to provide a better regulatory environment for financing private sector innovation, investment and growth. The Authority is seeking to bridge the gap between traditional securities offerings and technology-enabled securities offerings and trading. The consultation is open to comments from the public until August 20, 2019.
 Senate Committee on Banking, Housing, and Urban Affairs, Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations (July 16, 2019), https://www.banking.senate.gov/hearings/watch?hearingid=73A97793-5056-A066-6024-1172C38472B5.
 Committee on Financial Services Hearing: Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System, Financial Services Committee (July 17, 2019), https://www.youtube.com/watch?v=9-ZTkCNW0w8.
 Treasury Secretary Steve Mnuchin, Squawk Box (July 19, 2019), https://twitter.com/SquawkCNBC?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1151814981433905152&ref_url=https%3A%2F%2Fwww.coindesk.com%2Fus-treasury-secretary-mnunchin-says-g7-in-agreement-on-libra-cryptocurrencies.
 Complaint, AG Grewal, NJ Bureau of Securities Announce Cryptocurrency Lawsuit Against Princeton-Based Business for Allegedly Violating Securities Law in Sale of Tokens Dept. of Law & Public Safety Office of the Attorney General (July 19, 2019), https://www.nj.gov/oag/newsreleases19/Pocketinns-Complaint_Filed.pdf.
 Benjamin Robertson and Gregor Stuart Hunter, U.S. Regulator Probing Crypto Exchange BitMEX Over Client Trades, Bloomberg (July 19, 2019), https://www.bloomberg.com/news/articles/2019-07-19/u-s-regulator-probing-crypto-exchange-bitmex-over-client-trades.
 HM Government and UK Finance, Economic Crime Plan, 2019-2022, GOV.UK, (July 2019) https://www.gov.uk/government/publications/economic-crime-plan-2019-to-2022.
 HM Treasury and Home Office, Criminals to Face Fresh Crackdown in Fight against Dirty Money, GOV.UK (July 12, 2019), https://www.gov.uk/government/news/criminals-to-face-fresh-crackdown-in-fight-against-dirty-money.
 Inti Landauro, France to Approve First Crypto-issuers as New Rules Loom, Reuters (July 16, 2019), https://www.reuters.com/article/us-crypto-currencies-regulation-france/france-to-approve-first-crypto-issuers-as-new-rules-loom-idUSKCN1UB18P.
 Malta Financial Services Authority, Security Token Offering, MFSA Capital Markets Strategy Consultation Document (July 19, 2019), https://www.mfsa.com.mt/wp-content/uploads/2019/07/20190719_Security-Token-Offering-Consultation-Document.pdf.
 MFSA issues a Consultation Paper on Security Tokens Offering, MFSA, JULY 19, 2019, https://www.mfsa.com.mt/news-item/mfsa-issues-a-consultation-paper-on-security-tokens-offering/.