The U.S. Commodity Futures Trading Commission (CFTC) has reportedly been investigating whether BitMEX (a cryptocurrency exchange based in Hong Kong, registered in the Seychelles but unregistered in the U.S.) violated securities rules that prohibit transactions by Americans. While BitMEX bars trading by U.S. residents and nationals, some have allegedly skirted the ban by masking their location and assigning their computers an internet protocol address from a country where use of BitMEX is permitted. In related news, Treasury Secretary Steven Mnuchin recently announced that U.S. regulators will likely issue new rules on cryptocurrencies to prevent their negative impact on the overall financial system. Mnuchin emphasized concerns that cryptocurrencies were being used for criminal activity.

In New York last week, the U.S. attorney announced the arrest of Hugh Brian Haney for laundering, through cryptocurrencies, more than $19 million of proceeds made from illegal drug sales conducted on the "Silk Road," the infamous Dark Web site that was shut down in 2013. The U.S. attorney's office stated, "Today's arrest should be a warning to dealers peddling their drugs on the dark web that they cannot remain anonymous forever."

Last week, the New Jersey attorney general filed a lawsuit against Pocketinns Inc., a New Jersey-based blockchain online rental marketplace, and its president, Sarvajnya G. Mada. The complaint alleges that the defendants sold more than $400,000 in unregistered securities called PINNS Tokens. While defendants represented that the tokens were sold pursuant to a registration exemption for sales to accredited investors, the government charges that the defendants failed to take reasonable steps to ensure that investors met this criteria. Also, in New Jersey, William Green was charged earlier this week with operating an unlicensed money-transmitting business by operating a website, Destination Bitcoin, through which Green would receive customers' funds and convert them into bitcoin for a fee. Officials charge that Green never obtained the proper licenses for his money-transmitting business. He faces a maximum penalty of five years' imprisonment and a $250,000 fine.

Israeli enforcement agencies indicted Eliyahu Gigi last week for allegedly stealing NIS 6.1 million ($1.75 million) in cryptocurrencies from various foreign citizens. Gigi allegedly created and managed a criminal enterprise involving numerous websites through which he distributed software enabling him to access victims' computers and steal their cryptocurrency. Gigi also was charged with various tax-related crimes. In South Korea, the government recently issued a report finding that nearly 2.7 trillion won ($2.3 billion) has been lost to cryptocurrency-related crimes, including Ponzi schemes, embezzlement, illegal exchange transactions and other scams. The total did not include losses caused by exchange hacks.

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