A Russian, Alexander Vinnik, is escorted by police officers as he arrives at a courthouse in Thessaloniki on October 4, 2017. Vinnik headed BTC-e, an exchange that was indicted by a U.S. court in 2017 and now faces a $110 million civil suit.Getty
Last month, acting director of the United States Financial Crime Enforcement Network Jamal El-Hindi filed a $110 million civil case against Russian national Alexander Vinnick and BTCe, a cryptocurrency exchange he ran that allegedly served 700,000 customers around the world without taking necessary steps to prevent money laundering. Just days before, New Jersey attorney general Gurbir Grewal filed paperwork in his state’s superior court alleging that ethereum startup Pocketinns violated the state’s uniform securities laws when it raised $410,000 to build decentralized marketplaces to compete with Uber, Airbnb and Amazon.
In spite of being in wildly different jurisdictions, the cases are among more than 250 that can now be found on the newly launched Blockchain Litigation Database (BLD), created by the Richmond, Virginia-based financial law firm Murphy & McGonigle to bring cryptocurrency cases from different jurisdictions into a single, searchable location. To capitalize on the precedent these early cases could set for its current clients and others, the law firm, which represents banks including Capital One and Morgan Stanley and cryptocurrency exchanges Coinbase and Bittrex, charges $5,000 to access the technology and $2,500 a month on an ongoing basis.
Law firms are increasingly becoming involved in the development of technology, each racing to attract and hold onto highly technical, highly lucrative blockchain and cryptocurrency clients. What results is a new kind of law firm that looks as much like a fintech startup as a legal outlet, according to Daniel Payne, a partner at Murphy & McGonigle and the founder of its 12-person blockchain practice. “It’s been extremely helpful in giving us added credibility when we market to blockchain-related clients,” says Payne. “We’ve probably used the database on at least a dozen pitches.”
The court cases tracked in the database go back to the very first case on record, filed in November 2011, involving the United States versus Theresa Tetley, known as the “bitcoin maven,” who was eventually sentenced to a year in prison for money laundering. In addition to such early, little-known court cases, the search engine includes court documents on higher-profile convictions like that of Ross Ulbricht, the mastermind behind the Silk Road black market, and ongoing cases like one involving the disappearance of $850 million from Bitfinex, a cryptocurrency exchange that allegedly hid its losses using another cryptocurrency it had the power to create.
Data tracked by the BLD includes total cases, annual trends, whether a case is criminal or civil, whether the case involves oversight by the SEC or the CFTC, and the ability to search for terms that might relate to other pending or potential cases. A review of the BLD’s first full year in action that Murphy & McGonigle sent to its clients showed that about 150 cases, representing more than half of all cases related to cryptocurrency and blockchain, were filed in 2018, following the market-wide collapse of the price of cryptocurrency and a clampdown by the SEC on companies that raised capital by selling digital tokens issued on ethereum and other blockchains. Of the cases filed last year, nearly half involved alleged violations of federal securities laws, according to the search engine, with 23 being filed by the U.S. Securities and Exchange Commission.