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Indian Lawyer Files Petition Demanding Cryptocurrency Regulations

An Indian lawyer has filed a public interest litigation (PIL) seeking to force action on the regulation of cryptocurrencies in the country.

Bivas Chatterjee, a Kolkata-based advocate who also serves as the state government’s nodal officer for cyber crime cases, filed the PIL at the city’s high court Friday, demanding a legal framework for cryptocurrencies in India. In his petition, the lawyer said that rules are required since cryptocurrencies have been linked to money laundering, drug trafficking and other illegal activities on the dark web.

According to the Times of India, the filing comes in the wake of the arrest of two youths in Kolkata last month by country’s Narcotics Control Bureau for procuring and selling drugs through the dark web using bitcoin.

Chatterjee pointed out that the economic impact of “decentralised, unregulated and unaccounted parallel economic system” is vast, alleging that cryptocurrencies are used to fund money laundering, terrorism activities and tax evasion.

The petition states:

“There is an urgent need to frame a joint panel or a group of committees with experts from various fields to ensure the legality and accountability of cryptocurrency.”

He added that the “absence of controlling authorities” has also led to the recent “upheaval” in the prices of cryptocurrencies.

Chatterjee argued that the government should either ban bitcoin or form a regulatory body to control the market, the Indian Express reports.

The high court is reportedly expected to hear the case on Feb. 2.

In April 2017, a committee of government and central bank officials in the country came up with a plan to consider new regulations related to digital currencies. The committee prepared a report that put forward policies related to money laundering and consumer protection.

Later, in November, the country’s supreme court asked the government to respond to calls to regulate bitcoin.

Recently, India’s finance minister, Arun Jaitley, clarified that the government does not recognize bitcoin as legal tender. However, he noted that “recommendations are being worked at” to regulate the cryptocurrency.

Blind justice statue image via Shutterstock

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ATB Coin the Latest to Face Class-Action Suit After ICO

Following similar suits against Tezos and Centra, another initial coin offering that opted not to register with the Securities and Exchange Commission (SEC) faces a class-action lawsuit alleging its cryptocurrency should be considered a security.

On December 21, Raymond Balestra filed a class action suit in the Southern District of New York against ATBCoin LLC, Edward Ng (CEO) and Herbert W. Hoover (co-founder). Seeking a jury trial from the court, the plaintiffs alleged that ATBCoin had violated the Securities Act by issuing unregistered securities with the expectation of profit in the form of the ATB coin and the placement of all remaining funds invested into a trust, in the interest of investors.

The complaint alleges:

“The ATB ICO was a clear offer and sale of securities because, inter alia [among other things], Defendants touted, and Plaintiff and other ATB ICO investors reasonably expected, that the ATB Coins received in exchange for their investments would be worth more than the ETH, BTC, LTC or other currencies invested.”

Offered as a fast and inexpensive blockchain-based payment system, ATB’s initial coin offering launched on June 12, to run through July 12, according to a blog post. The plaintiffs alleged that the offering effectively continued into September, with a second phase in August and a press release on September 11 announcing it was still open to investment. On the ATB blog, the company announced that sales were closed on September 8 and that distribution would take place on September 14.

The plaintiff invested 2.1 ETH on August 12 (approximately $621.62 at the time, according to CoinDesk’s Ethereum Price Tracker). It is not known how many people invested or how much was raised, but the complaint estimated the total to be somewhere “between $20,400,000 and $24,210,000” in bitcoin, ether and litecoin.

The case made similar allegations to those of other investors against other ICO projects such as Tezos and Centra Tech, in which similar arguments from plaintiffs were made that tokens offered by these ICOs should be seen as securities.

In addition, legal experts also weighed in arguing that private complaints against initial coin offerings may force the courts to define which cryptocurrencies are considered as securities before the Securities and Exchange Commission (SEC).

Drinker Biddle’s Jim Lundy, a veteran of the SEC who represents clients in securities cases, told CoinDesk, that the complaint is “following a typical securities class action format for a public offering.” He said, “This theory is that item itself, the ATB Coin, is a security. I don’t doubt that the defendants will move to dismiss that, and the judge will have to rule.”

Participants in the crypto-economy have been waiting for greater clarity from the courts or the SEC on which kinds of coins are securities under U.S. law. Even getting to that ruling is likely to take months, however. 

Another SEC veteran, Timothy Peterson, now of Murphy & McGonigle, agreed that a motion to dismiss should come shortly, adding that “it’s likely the court will look at the SEC’s 21(a) report on DAO for guidance, but it’s important to note that the 21(a) report is not controlling. That is, the court can come to its own conclusions about what is and what is not a security for purposes of federal securities law.”

Peterson concluded:

“I think we can expect to see more of these complaints in the future, especially once courts begin to carve out tests to define how cryptocurrencies should be regulated or examined. More facts will need to come out before it’s fair to comment on the merits of these particular allegations.”

The full filing may be read here:

ATB Coin Complaint by CoinDesk on Scribd

Justice lady image via CoinDesk archive.

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Legitimate? IRS Defends Coinbase Customer Investigation in Court Filing

The U.S. Internal Revenue Service (IRS) has filed new court documents in its long-running lawsuit against cryptocurrency exchange startup Coinbase, public records show.

As previously reported by CoinDesk, the IRS is seeking to identify potential tax avoiders, years after it first moved to begin taxing bitcoin as a kind of intangible property.

The tax agency had been given a September 1 deadline to issue its arguments in support of a narrowed summons for customer information between the years 2013 and 2015, and has submitted multiple filings, according to PACER. These include responses to outside advocacy groups that have moved to block the court effort with arguments of their own.

In response to Coinbase’s petition to block the summons, the agency attacked the notion that it was looking to enforce it “for research or public relations reasons,” calling the summons part of a “legitimate” investigation.

Lawyers for the agency wrote:

“The IRS sought and issued the summons to Coinbase because it suspects there is a tax compliance problem with U.S. taxpayers using virtual currency and it is duty-bound to investigate issues of tax non-compliance − not for research or any public relations purpose. Nevertheless, the summons is not made unenforceable because the IRS will benefit from the additional educational aspect of the summons and any research it may yield.”

Elsewhere in the document, the IRS reiterates a key argument made earlier this year, stating that it believes Coinbase could have information regarding potential tax avoiders.

“The United States has offered evidence that, based upon the information available to the IRS there appears to be a reporting gap between the number of virtual currency users Coinbase claims to have had during the summons period (500,000) and U.S. bitcoin users reporting gains or losses to the IRS during the summoned years (807, 893, and 802),” the filing states.

Justice statue image via Shutterstock

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has ownership stake in Coinbase. 

The full opposition filing to Coinbase’s petition can be found below:


The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].