For example, if a violation occurs in the chain of distribution, transactions involving that security may be set aside as void or voidable. If values collapse, disputes will follow. The cryptocurrency and ICO mania has been wildly profitable for some, but it also has some classic signs of a bubble. Bitcoin Bubble: Related Private Litigation Fund managers with investments in or exposure to these areas should prepare for questions about disclosures and increasing regulatory scrutiny and spillover relating to those investments.Ģ. In addition, the CFTC has declared virtual currencies to be “commodities” subject to its oversight under the Commodity Exchange Act and has brought a number of actions under the anti-fraud provisions of the CEA against industry participants. A number of enforcement attorneys in the SEC’s new Cyber Unit are focused on ICO and cryptocurrency investigations, with more cases in the pipeline.
#REGULATORY SCRUTINY REGISTRATION#
The SEC has asserted jurisdiction over products structured as ICOs and is pursuing violations of the anti-fraud provisions and registration violations involving ICOs and cryptocurrencies. Regulatory Scrutiny Involving Cryptocurrencies and ICOsĬryptocurrencies and other instruments based on blockchain technology – such as Initial Coin Offerings (ICOs) – are in the regulators’ sights. With that backdrop, we are pleased to present our Top 10 Regulatory and Litigation Risks for Private Funds in 2018. Disputes typically follow capital, and the steeper the growth curve, the greater the risk of litigation and regulatory scrutiny. With the public equity markets at an all-time high and private equity fundraising setting new records, it might seem counterintuitive to forecast litigation and regulatory risks. Hackett, Anthony Drenzek, William Dalsen, Alexandra V.
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