INX got SEC approval for a groundbreaking token sale. But companies need to weigh the risks of engaging with regulators, General Counsel Cathy Yoon argues.
The digital marketplace for NFTs grew to an estimated $22bn last year but companies face challenges monitoring stolen art
Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Blockchain, Crypto, Digital Assets Regulations
Freedom Convoy Continues, Fundraiser Raises $542K in Bitcoin
Bitcoin.com | Jamie Redman | Feb 8, 2022
PM Justin Trudeau Insists Trucker’s Protest ‘Has to Stop,’ Florida Governor to Investigate Gofundme’s Actions
The Freedom Convoy 2022 is still ongoing as thousands of people have surrounded the parliament buildings in downtown Ottawa, Ontario. The protest started on January 29, as Canadian truckers objected to the new coronavirus vaccine and testing rules.
On Monday, after falling ill with Covid-19, while being fully vaccinated and boosted, Canadian Prime Minister Justin Trudeau addressed parliament for the first time since he caught the coronavirus last week. ”Individuals are trying to blockade our economy, our democracy, and our fellow citizens’ daily lives. It has to stop,” Trudeau insisted.
See: Giving block reports, Crypto philanthropy jumped nearly 16x in 2021
Trudeau’s statements follow the American crowdfunding platform, Gofundme, shutting down the Freedom Convoy’s fundraiser and telling the public it would be returning donations. The fundraiser raised $9 million for the truckers before Gofundme shut it down and the decision was met with criticism. After Gofundme reversed the Freedom Convoy’s fundraiser, Florida governor Ron DeSantis promised to investigate Gofundme’s decision. “I will work with [Florida Attorney General Ashley Moody] to investigate these deceptive practices,” DeSantis said.
Hundreds of Thousands in Censorship-Resistant Crypto Raised Since Gofundme Reversed Truckers’ Fundraiser
Three days ago, Bitcoin.com News reported on cryptocurrency advocates reacting to Gofundme’s decision and two crypto-infused fundraisers. A Bitcoin cash (BCH) supporter started a Flipstarter fundraiser in order to raise 100 BCH for the truckers and so far, the Flipstarter has raised 24.10 BCH or close to $8K using today’s exchange rates. Another fundraiser our newsdesk reported on was crafted by a Twitter account dubbed: “Honkhonk Hodl.”
See: Bank of Canada Staff Paper: Bitcoin Adoption and Beliefs in Canada
Honkhonk Hodl’s fundraiser — hosted on the Tally platform — has raised $541K or 12.41 bitcoin (BTC) so far and people can donate onchain or leverage the Lightning Network to send support. 53% of the BTC donors donated to the Freedom Convoy’s fundraiser onchain, while the rest utilized the Lightning Network. According to an interview with one of the fundraiser’s founders and the Toronto Star reporters Alex McKeen and Grant LaFleche, the fund’s keys are being held by five different individuals.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Arca on-demand recordings: Finance on the Blockchain conference
Arca | Feb 8, 2022
Curated and developed by Arca Labs, “Finance on the Blockchain” brings together tokenization and digital asset securities leaders with incumbent financial firms for an educational and networking event.The conference focused on the path for institutions to tokenize financial products, the steps needed to transition into the digital age, regulatory hurdles, and addressed the current roadblocks needed for firms to successfully deploy blockchain-powered financial products.
See: GBBC Blockchain Central Davos Virtual Event Jan 18-19: On Demand Recordings
Sessions
- Pioneering the BTF
- Blockchain-Enabled Insurance
- Digital Asset Securities Adoption and Roadblocks
- Keynote - Hester Peirce & Gabriel Benincasa
- International Approach to Digital Asset Securities
- ATS Leaders - The Future of Digital Exchange
- Why Transfer Agents are Important in Security Issuance
Watch these on-demand videos --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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SEC Considering 50 Rule Changes: “One of the largest regulatory agendas in years”
CNBC | Bob Pisani | Feb 4, 2022
The Securities and Exchange Commission has roughly 50 proposed rule changes it is considering, and a handful that are in a final regulatory stage and could be adopted soon.
Amy Lynch, president of Frontline Compliance and a former SEC compliance official, told me:
“This is one of the largest regulatory agendas we have seen from the SEC in many years.”
While the list of proposed rules changes is large, they can be loosely grouped into several “buckets”: proposals of an environmental, social and government (ESG) type; buybacks; insider trading and executive compensation; trading activities; and investor protection.
Focus on Crypto
While there are no explicit proposals on cryptocurrency, Gensler and his staff will be very active deciding what comes under their jurisdiction. The SEC chairman has refused to approve a pure-play bitcoin ETF on the grounds bitcoin is subject to fraud and manipulation, and has also made it clear he believes Congress should clarify the regulatory regime around the crypto space. But Congress is unlikely to pass any legislation.
See: Top Crypto Lawyer says Don’t wait for the SEC
Thomas Gorman, an attorney with Dorsey Whitney who held key positions at the SEC for many years, told me:
“In the absence of new regulation, Gensler can continue to define what is a registered security, which will determine whether the SEC has jurisdiction over coins, crypto exchanges or other parts of the crypto universe.”
He noted the SEC will likely claim that certain crypto investments and platforms meet the definition of a security under existing law and will seek to force them to register with the SEC.
Disclosure is a main theme
At the heart of many of Gensler’s proposed rules is disclosure, lots of it.
Few argue against disclosure, but the issue revolves around how much is necessary and how it is used.
See: Canadian securities regulators publish guidance on ESG-related investment fund disclosure
One SEC watcher, who asked to remain anonymous, told me:
“The point of disclosure is, do people have enough information to make an informed decision?”
Referring to the PFOF controversy, this source told me, “The point is not to regulate the pricing of the products. If there are hidden fees, they should be disclosed, but the point should not be, ’You guys are making too much money, and we should do disclosure so you can make less money.”
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Top Crypto Lawyer says Don’t wait for the SEC
Protocol.com | Benjamin Pimentel | Feb 4, 2022
INX got SEC approval for a groundbreaking token sale. But companies need to weigh the risks of engaging with regulators, General Counsel Cathy Yoon argues.
INX made history last year with the first-ever public offering of a digital security registered with the SEC.
That move by the blockchain-based service for trading cryptocurrencies and digital assets was a big deal at the time: The SEC has had a reputation for being particularly tough on crypto, and companies have long complained that the agency hasn’t put out clear rules for how they should operate. This was highlighted by legal disputes between the SEC and players like Coinbase and Ripple.
General Counsel Cathy Yoon said INX’s IPO was a triumph for a company whose CEO, Shy Datika, wanted to “issue something digital without having the SEC come after me,” she told Protocol. INX did it by working closely with the SEC and doing everything by the book, a process Yoon described as “a 950-day journey” with the regulator.
See: SEC Regulation: Constructing a Crypto Regulatory Framework – New Tech, Old Rules
But Yoon offers this advice to crypto companies: Waiting for the SEC’s blessing isn’t always the smart move.
“My biggest concern is that companies will go to the SEC or other regulators with the idea that if you can get permission before you do it, that you're going to be OK,” Yoon said.
Yoon elaborated on how she thinks crypto companies should deal with the SEC in an interview with Protocol. She also talked about what to expect in the coming regulatory battles over crypto, why she’s unimpressed both with SEC Chairman Gary Gensler and Coinbase’s proposal for a separate crypto regulator, and her misgivings about a plan for a digital dollar.
What is your biggest worry on the regulatory front this year?
My biggest concern is that companies, projects and founders will go to the SEC or other regulators with the invitation, “Come speak with us,” with the idea that if you can get permission before you do it, that you're going to be OK.
But in order to get to the place where you go to the SEC with your proposal, you've already [spent] a lot of money. You have to build the team. You have to build the tech. You've incurred legal fees, auditing fees. [Maybe] the SEC is going to make a good-faith effort and try to help you find a solution. But that might take 18 months. If you're pre-revenue, how are you going to survive for 18 months while waiting for the SEC?
See: Gensler Speech Addresses Dynamic Regulation And Market Modernization
What allegedly happened with Coinbase when they went to speak with them — I only know Coinbase’s side — but they were served with a Wells notice. There would be potential enforcement action based on that meeting. Why would anyone go speak with the SEC if that's a potential outcome?
My approach is: I have a pretty good understanding of the existing rules and regulations. I’m a pretty smart lawyer. I’ve been doing this for a while. I think I can make a good-faith effort or attempt to look a regulator in the eye and say, “You know what, I'm not going to ask for permission. These are the current rules and regulations, and this is how I'm going to steer my company to do things.”
I'm not going to wait. I'm going to make sure that we try to bring revenue in the door and survive. And I'm hoping that approach will work. Instead of being shut down, [the regulator would say,] “We understand why you did it. We don't like why you did it this way. So maybe you can do it this way.”
See: Deloitte: Financial Markets Regulatory Outlook 2022
I think that would be the better approach. My fear right now is that it doesn't seem to me that the SEC, even if you went to them, would even be able to work with you to come out with a workable solution. So why are you going to wait when you can do things in a compliant manner, put something down and give the SEC something to work with?
As an operating company, I juggle every day: How much do I go and try to help move my company forward without asking for permission? What is that risk profile? Or do I stop everything and ask for permission? My biggest concern is that people will stop everything.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Is Open Sea doing enough to combat NFT fraud?
The Guardian | Lois Beckett | Jan 29, 2022
The digital marketplace for NFTs grew to an estimated $22bn last year but companies face challenges monitoring stolen art
Van Baarle is a popular digital artist, with millions of followers on social media. She’s one of a growing number of artists who have had online images of their art stolen, minted as unique digital assets on a blockchain, and offered up to trade in cryptocurrency on the NFT platform OpenSea.
The rise in such thefts comes as the market for non-fungible tokens, or NFTs, exploded last year, growing to an estimated $22bn, attracting Sotheby’s and Christie’s, and driving multimillion-dollar auctions for these new certificates of ownership of digital assets.
See: NFT Boom Will Surely Lead to Questions Over Copyright, Control and Plagiarism
OpenSea has grown at a dizzying pace, and is now valued at $13bn. But amid its spectacular rise, the company is doing far too little to prevent the trade in fraudulent NFTs, some artists charge, and is placing much of the burden of policing art fraud on the artists themselves.
OpenSea said in a statement: “It is against our policy to sell NFTs using plagiarized content,” adding that it regularly delisted and banned accounts that did so. The company said it was working to build new image recognition and other tools that would quickly recognize stolen content and protect creators, and that it planned to launch some of them in the first half of this year.
A boon and nightmare for artists
“We’re in an incredible mushrooming of opportunity for digital artists,” said Schachter. “It’s 1,000% better than a year ago, two years ago, when there was no marketplace for any of this art.”
But other artists say that the past year’s crypto boom has been a nightmare. Among the problems is that anyone can “mint” a digital file as an NFT, whether or not they have rights to it in the first place, and the process is anonymous by default.
See: Are NFTs More Than Just Art?
“It is much easier to make forgeries in the blockchain space than in the traditional art world. It’s as simple as right-click, save,” said Tina Rivers Ryan, a curator and expert in digital art at the Albright-Knox gallery in Buffalo, New York. “It’s also harder to fight forgers. How do you sue the anonymous holder of a crypto wallet? In which jurisdiction?”
‘How much of their valuation is from stolen art?’
Aja Trier, a Texas-based artist who has found viral fame for painting riffs on Van Gogh’s Starry Night featuring various breeds of dog, said she discovered 87,000 NFTs based on images of her work for sale on OpenSea, many of them priced at $9.88 each.
See: Walmart Files Several Crypto, NFT and VR Gaming Patents
Trier said 500 listings of her stolen work were added in a single night, suggesting the theft was being automated and carried out by bots.
More than half of the company’s current staff works either full-time or extensively on issues of plagiarism and content moderation, OpenSea said:
[We are] developing “smart moderation” tools to speed up the company’s response to reports of plagiarism.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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In the face of wreckage, DeFi’s self-policing shines
Arca | Jeff Dorman | Jan 31, 2022
The Chief Financial Officer of popular decentralized finance (DeFi) protocol Wonderland was revealed as a convicted scammer and former executive of Quadriga. Michael Patryn, who went by the pseudonymous handle “Sifu” and worked directly with prominent DeFi founder Dani Sestagalli, had oversight over a treasury of nearly $1 billion. Though this story is about one individual and one DAO, the ripple effects were felt across DeFi because of the interconnectedness of DeFi applications and the immense influence of a handful of really successful DeFi developers and founders (like Sesta).In a very abridged summary, MIM, the asset-backed stablecoin of the Abracadabra protocol, has a massive MIM-UST pool on Curve—the decentralized exchange that focuses on stablecoin trading. These incentivized Curve pools accounted for most of the minting of UST (the stablecoin of the Terra Luna/Anchor protocol ecosystem), whose rapid growth ($11 bn outstanding) helped drive the price of LUNA higher over the last several months. As LPs pulled assets out, TVL across Terra Luna dropped, as did the price of LUNA, and Curve’s TVL dropped as well, while all of the tokens in the Abacadabra/Sesta ecosystem (SPELL, TIME, ICE) fell 30-70%. Meanwhile, prediction markets popped up, betting that UST will lose its peg.
See: Gerry Cotten’s widow speaks out over his death and millions of missing crypto
Dealers were inundated with UST put buyers, and FTX even spun up a UST perpetual future market so traders could short UST. SUSHI, a completely unrelated DEX that was in the process of integrating Sesta and his team (but had not yet begun), also became part of the collateral damage. A historical chain of events that led to billions in losses started with the doxing of an individual. He indeed committed terrible crimes, but as of this writing, he has not been accused of any wrongdoing concerning all of the assets/projects mentioned above.
But here’s where it gets positive. Bad things occasionally happen in digital assets, just like corporate fraud in traditional markets (Madoff, Enron, Worldcom, Theranos, etc.) The difference is that corporate scams are usually elaborate and go on for years before being uncovered. By contrast, in digital assets, most of these events rise and fall within weeks, and any wrongdoings are discovered immediately by amazing DeFi onchain detectives (like those that identified SiFu’s misdeeds). That cannot be understated: the onchain detectives of DeFi are doing exceedingly more positive and real-time self-policing of this industry than any regulator will be able to do.
See: NASAA: Crypto scams are the leading threat to investors in 2022
As a result, most of the issues within DeFi are either very easy to avoid with even a shred of due diligence or discovered immediately due to the public records of blockchain. Thus, simple rules of thumb can be:
- Don't buy things you don't understand
- Understand who the founding teams are and their motivations
- Be careful engaging with super early-stage products without a long track record
- Listen when someone uncovers some important data
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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IRS Special Agent “Seeing ‘Mountains Of Fraud in Cryptocurrencies, NFTs”
ComplianceX | Jack Kelly | Jan 31, 2022
Speaking at a virtual event held on Tuesday by the USC Gould School of Law, Ryan Korner from the IRS Criminal Investigation’s Los Angeles field, said that both NFTs and cryptocurrencies are becoming a growing area of concern for regulators and tax collectors as they’ve steadily become more mainstream.
Korner said, according to Bloomberg:
“We’re just seeing mountains and mountains of fraud in this area”
Due to their rising popularity, regulators are struggling to police how the tokens are used and prevent them from being utilized for criminal activity such as fraud, money laundering, market manipulation, and tax evasion.
In December, former First Lady Melania Trump released her first NFT and launched a new platform that will release NFTs regularly, called “Melania’s Vision.”
See: NFT Marketplace exploit leads to catastrophic losses for some collectors
Including award-winning director Quentin Tarantino and electronic music artist Deadmau5.
The IRS Criminal Investigation Unit seized $3.5 billion in cryptocurrency during fiscal year 2021, which accounted for 93 percent of its criminal investigation seizures, according to the agency’s annual criminal investigation report published in November (pdf).
Korner said the unit ended the year with active 80 cases in its inventory where the primary violation was tied to cryptocurrencies, and that the unit is working to train all of its staff on the issues surrounding cryptocurrencies and NFTs, acknowledging that “this space is the future.”
Continue to the full article --> here
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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