What Are Blockchain, Crypto and NFTs? A Deeper Look – Faegre Drinker on Law and Technology Podcast

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As of March 2022, there are more than 18,000 different crypto currencies in service for a total market capitalization of $2 trillion. In this episode of the Faegre Drinker on Law and Technology Podcast, host Jason G. Weiss chats with Faegre Drinker partner Jeff Blumberg and associate Jane Blaney, to revisit the world of crypto and not only discuss the foundations of crypto currencies, but also explore the world of blockchain and non-fungible tokens, or NFTs.

The conversation tackles a number of questions, including:

  • What is blockchain and what makes it different from traditional recordkeeping processes?
  • What exactly is crypto currency? What is important to understand about it?
  • What exactly is an NFT? How do they work in easy-to-understand concepts?
  • What uses are there for blockchain, both using crypto currencies and in uses other than crypto currency?
  • Are crypto currencies considered “legal tender”? Can people use them like normal money?
  • How can and will NFTs be used in other ways in our society as these concepts grow?

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FBI Announces Increased Focus on Illegal Financial Transactions Involving Cryptocurrency

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Cryptocurrency has increasingly become an accepted form of financial exchange. However, it has also become a favored form of payment for cyber criminals.

In an effort to deter the use of cryptocurrencies in furtherance of criminal activity, the Federal Bureau of Investigation recently announced the formation of a Virtual Asset Exploitation Unit (VAXU). The VAXU will combine various investigatory, technical, and analytical resources, and the unit is charged with tracking the illicit use of cryptocurrencies and assisting in their seizure. This announcement follows close on the heels of the recent U.S. Department of Justice appointment of veteran federal prosecutor Eun Young Choi as the first director of the newly-created National Cryptocurrency Enforcement Team (NCET).

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OFAC Issues Sanctions Compliance Guidance for Virtual Currencies

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In October, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) published new guidance for the virtual currency industry focusing on compliance with the financial industry’s obligations related to U.S. economic sanctions.

OFAC administers and enforces economic sanctions against targeted and/or sanctioned foreign countries, geographic regions, entities, and individuals to further U.S. foreign policy and national security goals.

As noted in the new guidance, virtual currencies now playing an increasingly prominent role in the global economy. The growing relevance of virtual currency, both as an investment and as a payment method, brings greater exposure to sanctions risks. Specifically, there is an increased risk that a sanctioned entity or an entity in a jurisdiction subject to sanctions might use virtual currency as an alternative to fiat currency in an effort to avoid U.S. sanctions. As such, the OFAC guidance specifically targets technology companies, virtual currency exchanges, virtual currency administrators, virtual miners, digital currency wallet providers, and users.

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Faegre Drinker on Law and Technology Podcast: A Primer on Cryptocurrency

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When it comes to cryptocurrency, questions abound: What can you purchase with crypto? How can you buy it? Is crypto a passing fad or an innovation that will stand the test of time? In this episode of the Faegre Drinker on Law and Technology Podcast, host Jason G. Weiss sits down with Faegre Drinker’s Jeffrey Blumberg and former Orange County District Attorney Rahul Gupta, a cybercrime prosecutor with experience in cryptocurrency criminal litigation, to talk all things cryptocurrency.

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NFA Proposes Enhanced Disclosure Requirements for Members Engaging in Virtual Currency Activities

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The virtual currency market continues to grow, and this growth has fueled increased attention from retail investors and financial regulators. Financial institutions active in the virtual currency market have seen a trend towards increased regulatory oversight and the latest development imposes new client disclosure requirements upon certain companies.

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SEC Freezes $27 Million Related to a Blockchain/Cryptocurrency Acquisition

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The Securities and Exchange Commission (SEC) obtained a court order freezing more than $27 million in proceeds from alleged illegal distributions and sales of restricted shares of a public company , and charged the company, its CEO, and three other affiliated individuals on April 6, 2018. That same day, the Nasdaq Stock Market  halted trading in the company’s stock.

The SEC’s complaint alleges that shortly after the company began trading on the Nasdaq Stock Market and announced the acquisition of a purported blockchain-empowered cryptocurrency business,  its stock price rose dramatically until its market capitalization exceeded $3 billion. The SEC further alleges that the CEO and the three other individual defendants then illegally sold large blocks of their restricted shares to the public while the stock price was excessively elevated and that they collectively reaped more than $27 million in profits.

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