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The Legal Stuff
Government Enforcement Exposed - "The GEE"
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19 Jul 2018 Cryptocurrencies — An Overview of the Legal Landscape, The Risks of Investing, and the Future of the Markets – Part 2

In my blog post yesterday, I gave an overview of the legal landscape of cryptocurrencies. Today’s post focuses on the biggest risks for people who want to trade cryptocurrency as well as a peek into what the future of this market looks like.   Trace Schmeltz recently spoke with Business First about crypto currencies and crime, taking a look at the legal side of bitcoins and other cryptos.   What are the biggest risks for people who want to trade cryptocurrency?   The most significant risks, each of which is discussed in turn below, are price manipulation and the lack of transparent pricing, fraud scams like so-called pump and dump schemes, cybersecurity issues and other custody problems, potential counter-party concerns, and liquidity issues.   Price…

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18 Jul 2018 Cryptocurrencies — An Overview of the Legal Landscape, The Risks of Investing, and the Future of the Markets – Part 1

In this two-part blog series, I will be giving an overview of the legal landscape of cryptocurrencies, touch on the biggest risks for those who want to trade cryptocurrency, as well as a look into what the future of this market looks like.   The current legal and regulatory environment for cryptocurrencies   Much has been said about the legal uncertainty around cryptocurrency.  Really, understanding what laws apply is quite simple.  Complying with multiple states’ laws is more difficult, of course.  As set out in the U.S. Commodity Futures Trading Commission’s (CFTC) “Backgrounder on Oversight of and Approach to Virtual Currency Futures Markets”:   US law does not provide for direct, comprehensive Federal oversight of underlying Bitcoin or virtual currency spot markets. As a result,…

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19 Feb 2018 Cybersecurity: CFTC Brings Enforcement Action For Faulty IT System

  This past week, the Commodity Futures Trading Commission (CFTC) settled an enforcement action in which it had alleged that futures commission merchant AMP Global Clearing LLC violated 17 C.F.R. 166.3 (duty of supervision) by failing to diligently supervise implementation of a critical component of its information systems security program (ISSP).  As a result, AMP suffered a cybersecurity breach that led to loss of nearly 100,000 files, including customers’ personal identifying information.  As a result of the settlement, AMP paid a $100,000 fine and, undoubtedly, faces significant other expenses in dealing with the customers for whom it lost private information.  AMP will also have to provide written verification to the CFTC of its efforts to strengthen its network security and ensure compliance with its ISSP….

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08 Jan 2015 No Spoofing. No Kidding?

Both the Securities and Exchange Commission and the Commodity Futures Trading Commission have, for years, banned the use of manipulative trading devices. Indeed, if you asked most average market participants, they would have told you that trading practices like layering and spoofing—putting on buy and sell orders in different order types that allow a trader to move the market price without actually trading, in order to sell high and buy low—were manipulative devices. And, yet, it has taken until now for the two largest commodity exchanges (the CME Group and the ICE Futures U.S. Exchange) to come out and ban such blatantly manipulative trading.   In September 2014, the CME announced that it was specifically banning “disruptive market practices,” including spoofing and quote stuffing. Then,…

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20 May 2014 Quick Tip: CFTC to Make First Dodd-Frank Whistleblower Award

  The Commodity Futures Trading Commission plans to make its first whistle-blower award under the Dodd-Frank Wall Street Reform and Consumer Protection Act, with the recipient getting about $240,000 for exposing information about commodities law violations, Acting Director Mark Wetjen said in a May 20 statement.   The number of “high quality tips, complaints and referrals” received by CFTC continues to increase, Christopher Ehrman, head of agency’s Whistleblower Office, said in statement.   Trace SchmeltzTrace Schmeltz is a partner in the Chicago and Washington, D.C., offices of Barnes & Thornburg LLP, where he is the co-chair of the firm’s Financial and Regulatory Litigation Group and a member of the White Collar and Investigations Practice Group. A seasoned trial attorney with experience in numerous forums including…

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