Virtual currencies such as bitcoin have grown in popularity. With that popularity it may well have been inevitable that the SEC would bring enforcement actions centered on the new phenomenon, alleging fraud. A new variation of those actions is the predicate for the Commission’s most recent enforcement action in the area – mining for virtual currency. SEC v. Gara, Civil Action No. 3:15-cv-01760 (D. Conn. Filed...

As reported by Bloomberg , the Commodity Futures Trading Commission has now ruled that bitcoin, the peer-to-peer digital currency, is a commodity. This means the CFTC can regulate it and punish evildoers. Several in the bitcoin industry intend to challenge the CFTC’s jurisdiction. They say it’s not a commodity but rather a currency, or just property. Avoiding currency issues and government interference was...

by Zachary Q. Hoard On August 11, 2014, the Consumer Financial Protection Bureau (CFPB) issued a consumer advisory warning consumers about the risks of virtual currencies, also referred to as “digital currencies,” such as Bitcoin. The potential risks include the threat of hacking and scams, volatile exchange rates, unclear costs, and the risk that companies offering virtual currencies may not offer help...

by Joseph H. Langhirt , David Plewa , and Michael Greenberg The Internal Revenue Service has joined several other jurisdictions in publishing guidance regarding the income tax consequences of certain convertible virtual currency transactions.[ 1 ] IRS Notice 2014-21[ 2 ] clarifies that existing general tax principles apply to transactions using convertible virtual currency and that such virtual currencies should be...

The Securities and Exchange Commission has filed civil fraud charges against a Texas man, accusing him of masterminding a Ponzi scheme using the virtual currency known as Bitcoin that promised annual returns exceeding 300%. Trendon T. Shavers, 30, was charged with violations of federal securities laws for operating a digital hedge fund that offered and sold Bitcoin-denominated investments to thousands of investors. Bitcoin...