This summer was a busy one for cryptocurrency regulators, with aggressive actions potentially signaling an increase in consumer protection compliance activity. In August alone, the New York Department of Financial Services (“DFS”) brought its first enforcement action against a DFS-licensed “virtual currency business” – resulting in a $30 million settlement with cryptocurrency investing platform Robinhood Crypto, LLC – and the U.S. Securities and Exchange Commission charged 11 people in an alleged crypto pyramid and Ponzi scheme called Forsage. The U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned and banned currency mixer Tornado Cash, alleging that the platform laundered more than $7 billion in virtual currency since launching in 2019. In addition to these actions, Gary Gensler, chairperson of SEC, has repeatedly commented he believes most cryptocurrencies are securities as defined under the “Howey Test,” signaling the SEC intends to move forward with increased regulation the industry has long suspected would be forthcoming.
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