1Broker, a Marshall Islands-based securities dealer and bitcoin trading platform, was recently taken down by the US authorities.
The FBI seized the domain of 1Broker, shutting down the platform for allegedly violating money laundering regulations and distributing securities as an unregistered dealer.
“The SEC alleges that a Special Agent with the Federal Bureau of Investigation, acting in an undercover capacity, successfully purchased several security-based swaps on 1Broker’s platform from the U.S. despite not meeting the discretionary investment thresholds required by the federal securities laws.”
On Oct. 2, the 1Broker team released a statement on social media, stating that the company is working with a U.S. counsel and its legal team to represent 1Broker in the SEC/CFTC case to potentially recover the platform.
“We are currently engaging U.S. counsel who can represent us in the SEC/CFTC case. We expect that this takes a few days. We received the green light from our lawyers to set up a read-only version 1Broker to view balances and transaction history. ETA: 48 hours,” the team said.
Prior to that, on Sept. 27, 1Broker emphasized that it will cooperate with the authorities and with the SEC to partially re-enable the platform to allow withdrawals for its users.
“Statement regarding the SEC allegation: All funds are currently secure and we will fully cooperate with the authorities. If approved by the SEC, we will enable withdrawals for US customers as soon as possible. A more detailed statement will follow.”
Currently, as of Oct. 2, the official domain of 1Broker still displays a statement from the FBI, which seized 1Broker.com after obtaining a warrant from the United States District Court for the District of Columbia.
Jake Chervinsky, a government enforcement defense and securities litigation attorney at Kobre & Kim LLP, explained that an undercover FBI agent initiated a unregistered security-based swap on March 30, 2016.
It took more than two years for the SEC and the FBI to take action and shut down the exchange of 1Broker. Given that most tokens, which are considered as securities under existing laws in the US, were released in the second half of last year, Chervinsky implied that in the months to come, many exchanges and token issuers are likely to be targeted by US authorities.
“The undercover FBI agent who investigated 1broker bought his first unregistered security-based swap on March 30, 2016. The government didn’t take action until two and a half years later. The majority of ICOs (unregistered securities?) were issued in 2H 2017. Buckle up, folks,” he said.
Several investors in the cryptocurrency space including Aurelius, a widely recognized crypto trader, stated that exchanges like BitMEX could potentially be targeted by the SEC for offering margin trading around Bitcoin and Ethereum.
As Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office said:
“The SEC protects U.S. investors across a variety of platforms, regardless of the type of currency used in their transactions. International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”
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Last modified (UTC): October 2, 2018 21:17