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Financial Law Firm Creates Unified Bitcoin And Crypto Crime Database

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bitcoin and crypto criminal cases

A new database called the Blockchain Litigation Database is making easier for law firms to provide legal services to crypto-sector clients concerned about compliance issues with the SEC and CFTC.


Financial Regulators Crack the Whip

In July Jamal El-Hindi, the acting director of the United States Financial Crime Enforcement Network, filed a $110 million civil case against former BTCe head Alexander Vinnick. The case alleged that BTCe provided services to 700,000 customers without requiring users to go through any anti-money-laundering (AML) or know-your-customer (KYC) processes.

A few days prior to El-Hindi’s filing, the New Jersey attorney general Gurbir Grewal also launched a case against Ethereum startup Pocketinns for violating the state’s securities laws.

According to Grewal, Pocketinns raised $410,000 and intended to use the funds to construct a decentralized marketplace that would compete with Airbnb, Amazon, and Uber. 

In 2018 U.S. federal and state-level financial regulators clearly stated that they would aggressively pursue legal action against any company offering and hosting unregistered securities sales. 

To date, there are more than 250 cases against various offenders and each case can now be found on the Blockchain Litigation Database (BLG). Virginia-based financial law firm Murphy&McGonigle developed the platform and it is designed to collate all cryptocurrency cases from various jurisdictions into a single, searchable database. 

Fintech Law Firms are Growing in Number

Currently, the law firm represents Capital One, Morgan Stanley, Bittrex, and Coinbase. The firm charges $5,000 to access the platform and $2,500 per month for ‘membership’ style access. According to Murphy & McGonigle partner Daniel Payne, many law firms are delving into the space and looking to develop technology which will allow them to attract well-heeled blockchain and cryptocurrency clients.

Payne said law firms that look like pseudo fintech startup legal outlets are growing increasingly attractive to clients from the fintech sector. Payne explained that “it’s been extremely helpful in giving us added credibility when we market to blockchain-related clients. We’ve probably used the database on at least a dozen pitches.” 

The database contains cases that go back as far as November 2011, when the United States versus Theresa Tetley (Bitcoin Maven) led to her receiving a one-year prison sentence for money laundering.

The platform also contains information and court documents related to Silk Road mastermind Ross Ulbricht. Documents related to more recent cases, like the $850 million Bitfinex / Tether scandal are also included in the database. 

The BLD platform categorizes cases by criminal or civil and it also lists which case is overseen by which regulatory authority. Of the 250 cases in the database, 150 were filed in 2018 and roughly 50% relate to violations of federal securities laws.

Crypto Companies Aspire for Compliance

Generally, the database shows that the U.S. Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) have made good on their promise to crack down on unregistered securities sales.

Many in the crypto-sector are critical of financial regulators heavy hand with the sector and a number of companies have expressed their belief that the lack of regulatory clarity is stifling sector growth.

While this may be true, the fact that a growing number of law firms are offering fintech and crypto companies legal and financial advice shows that many crypto and blockchain companies are taking precautions in order to remain compliant. This could be a net positive for the crypto-sector. 

Do you think fewer crypto companies will run afoul of the SEC and CFTC in 2019? Share your thoughts in the comments below! 


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