How did a Dallas-based partner in a global law firm come to be selected by the U.S. Securities and Exchange Commission (SEC) as the first ever receiver in an enforcement action against the promoters of an Initial Coin Offering (ICO)?
As reported by Jill Cowan from the Dallas Morning News, this trail-blazing story starts a couple years ago when Jones Day partner Mark Rasmussen and colleagues at the firm began exploring how technology trends could impact clients. While some of his colleagues focused on artificial intelligence and others on robotics, Mr. Rasmussen was intrigued by bitcoin and blockchain technology and took a lead in this area.
Fast forward to January 25, 2018, when the SEC filed a lawsuit against AriseBank, and its promoters. AriseBank claimed to be a decentralized bank, for which the promoters had been raising funds via an ICO. When the SEC obtained a court order to freeze all assets of the defendants, the court also approved the agency’s selection of Mr. Rasmussen as the receiver and Kroll as the cyber security firm to assist Jones Day, who is serving as counsel to the receiver.
Mr. Rasmussen and another Jones Day colleague, James Cox, moved quickly with Kroll’s help to secure the defendants’ assets. As he tells it, “The first day was such a wild blitz, and there was a need for people around the globe, really.” Much of the activity focused on accessing various wallets (digital accounts) that held cryptocurrency and transferring the contents into new wallets created by Kroll’s experts on pristine new laptops.
While the process of recovering digital assets started smoothly enough, troubles on the second day highlighted the need for expertise and speed when working in the digital realm. Access to a wallet full of a digital currency called Pivx, worth several hundred thousand dollars at that time, had simply vanished.
To find out where the Pivx went, how “complexities on steroids” make maximizing the value of cryptocurrency extra difficult for receivers, and why the enforcement chief of the Texas State Securities Board said the way Jones Day and Mr. Rasmussen “figur[e] out how to handle the estate” will be a “monumental step,” read the entire article here.