Jason Gottlieb Comments in Law360 on States Taking up Enforcement of the Cryptocurrency Market
June 28, 2019 – Morrison Cohen Partner Jason P. Gottlieb commented on states taking on enforcement action of the cryptocurrency market alongside the U.S. Securities and Exchange Commission in the article “States 'Stepped Into The Breach' As Crypto Market Exploded” that appeared in the June 26, 2019 Law360. States across the U.S. have stepped up their focus on unregistered ICOs as the crypto market has exploded over the past 18 months.
AG Letitia James’ efforts to halt the alleged "dissipation" of U.S. dollars were the culmination of strides state agencies have made alongside federal regulators since the price of bitcoin hit its all-time high at the end of 2017. As the SEC “was and continues to be overwhelmed” by the breadth of its unsettled enforcement responsibilities, states have readily “stepped into the breach,” according to Morrison Cohen LLP partner Jason Gottlieb.
According to Gottlieb, who tracks cryptocurrency- and blockchain-related litigation in databases available on Morrison Cohen’s website, the SEC has largely divided the ICO world into three categories of enforcement: outright frauds, legitimate businesses that host offerings by fraudulent means and legitimate businesses that aren’t registered to sell the tokens they’re offering.
With the federal agency spending so much time with the first two categories, Gottlieb said, it was the states that stepped up to tackle the third. Their focus on quelling unregistered ICOs, often before they occurred, bore out in the spring of 2018, with Massachusetts’ securities regulator announcing it had ordered five area firms that use blockchain technology to immediately halt their planned ICOs and the Texas securities board filing a seventh action in its cryptocurrency crackdown.