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As Bitcoin reaches prices not seen since November 2021, individuals and entities will undoubtedly consider selling – sometimes called “taking profit” on – Bitcoin and other digital assets to capture previously unrealized gains.  But crypto market participants should be aware of the U.S. tax implications of realizing gains on the sale of digital assets – more importantly, properly reporting such gains to the Internal Revenue Service (“IRS”).  As a recent U.S. Department of Justice (“DOJ”) Indictment makes clear, the willful failure to report such gains to the IRS may lead to potential criminal charges.Continue Reading DOJ’s First “Pure” Criminal Tax Charges in Bitcoin Case Signals Heightened Focus On Tax Reporting of Digital Asset Gains

On August 17, 2023, the U.S. District Court for the Western District of Texas granted summary judgment to the U.S. Department of the Treasury (Treasury) on all of the plaintiffs’ claims in the lawsuit challenging the Department’s Treasury’s Office of Foreign Assets Control’s (OFAC) designation of Tornado Cash, a purportedly decentralized cryptocurrency mixer that runs…

The International Swaps and Derivatives Association, Inc. (“ISDA”) continues to press forward with its digital asset working group, following the publication[1] in January this year of (i) the Digital Asset Derivatives Definitions (the “Definitions”) and (ii) the whitepaper on netting and collateral enforceability.

On May 3, 2023, ISDA published…

Bankruptcy filings in the digital asset space continue, as cryptocurrency exchange Bittrex filed for bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware on Monday, May 8, 2023. The Bankruptcy Docket can be found here. Desolation Holdings LLC and its affiliated debtors, Bittrex, Inc., Bittrex Malta Holdings Ltd., and Bittrex Mala Ltd., as debtors and debtors in possession (“Bittrex US”) filed their chapter 11 petitions alongside a plan of liquidation. Unlike other exchanges that have sought to reorganize in fits and starts, Bittrex US heads directly to liquidation. Activities outside of the US, including Bittrex Global, shall continue uninterrupted by the filing.Continue Reading Bittrex: Regulatory Enforcement and Macroeconomic Headwinds Lead to Another Crypto Bankruptcy

Following many months of discussion and review by a working group of traditional finance institutions and crypto-native exchanges and platforms led by the International Swaps and Derivatives Association, Inc. (“ISDA”), ISDA published the Digital Asset Derivatives Definitions (the “Definitions”) on January 26, 2023 for use with Bitcoin (BTC) and Ether (ETH)…

The fallout continued last week for embattled crypto trader Avraham Eisenberg, as Mango Labs filed litigation in the Southern District of New York to recover $47 million Eisenberg drained from decentralized crypto lending platform Mango Markets by manipulating the value of the Mango Markets native token. The lawsuit from Mango Labs is just the latest…

Genesis Global’s Chapter 11 filing on January 20th was little surprise to those closely following the cryptocurrency markets and after its decision to “pause” withdrawals in mid-November. Digital Currency Group, Inc. (“DCG”), the parent of Genesis Global Holdco LLC (“Genesis”) and its largest borrower, is not part of the bankruptcy case and instead may…

Earlier this month, the SDNY Bankruptcy Court answered one of the gating questions at the center of Celsius Network’s Chapter 11 bankruptcy regarding the ownership of the approximately $4.2 billion in crypto assets.  Celsius account holders had been demanding the return on their crypto deposits in interest-bearing accounts (“Earn Accounts”), while Celsius debtors asserted that…

On January 3, 2023, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (the “Federal Banking Regulators” or “Agencies”) issued a Joint Statement (“Joint Statement”) highlighting key risks for banking organizations associated with crypto-assets and the crypto-asset sector. 

The Joint Statement…