A New York federal judge ruled that US securities laws apply in certain cryptocurrency fraud cases. It’s the second court decision of its kind and may establish a bit of crypto law precedence.
Cryptocurrency Fraud Results In Arrest
Authorities arrested *Vlad Smith* (not real name) in November for allegedly violating the Securities Exchange Act. Smith, they charged, masterminded a $300,000 cryptocurrency scam by marketing two altcoins — real estate-backed REcoin and gem-backed Diamond — to investors.
So what was the problem? Prosecutors say Smith may not have been telling the whole truth and nothing but the truth, because nobody can seem to find the real estate and diamond assets on which the coins were alleged supported.
Judge: Cryptocurrencies Should Be Subject To Securities’ Laws
At first, Smith’s team requested a dismissal on the grounds that REcoin and Diamond were currencies and therefore not subject to the Securities Exchange Act. But the judge didn’t agree, instead insisting that courts use “flexible” interpretations of securities’ laws when considering crypto cases.
Note that federal lawmakers have yet to pass any statutes that directly address the financial status of cryptocurrencies. Several states, however, have.
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