CFTC and SEC Joint Statement Against Virtual Currency Fraud

Joint Statement Addressing Virtual Currency by CFTC and SEC Enforcement Directors.

Both the CFTC and the Security Exchange Commission (SEC) became increasingly active last year enforcing their jurisdiction in the virtual currency landscape. On December 2017 the SEC Chairman Jay Clayton issued a statement on the state of Cryptocurrency and Initial Coin Offerings (ICOs). Promptly the CFTC Chairman J. Christopher Giancarlo commended his fellow regulator’s remarks on the risk of Cryptocurrency and Bitcoin markets. Shortly after the CFTC launched its own Bitcoin webpage, provided consumer advisory on the risks of Bitcoin trading, and by January 2018 CFTC Chairman Giancarlo released his own statement on Bitcoin and Virtual Currency. The same day the CFTC files two charges against virtual currency fraudsters, the CFTC and the SEC issue a joint statement on virtual currency enforcement actions.

CFTC Enforcement Director James McDonald and SEC Enforcement Co-Directors Stephanie Avakian and Steven Peikin released a joint statement today that both regulatory watchdogs would prosecute Cryptocurrency frauds under the full extent of the laws. Full Transcript below:

January 19, 2018

Washington, DC – Joint statement from CFTC Enforcement Director James McDonald and SEC Enforcement Co-Directors Stephanie Avakian and Steven Peikin regarding virtual currency enforcement actions.

“When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or the like – the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws.

“The Divisions of Enforcement for the SEC and CFTC will continue to address violations and to bring actions to stop and prevent fraud in the offer and sale of digital instruments.”

This statement comes just a couple weeks before the Senate Banking Committee hears from the two regulatory agencies for the February U.S. Senate’s financial services panel. Top financial regulators will convene before congress to discuss the implications of Bitcoin and Cryptocurrency in the U.S. financial markets. Both Chairman Giancarlo of the CFTC and Chairman Clayton of the SEC will give their testimony on the disruption virtual currency can cost the U.S financial economy.

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