Defending Crypto Charges in Florida’s Federal Courts

Many Florida entrepreneurs are heavily engaged in cryptocurrency transactions, and these activities can easily lead to federal charges. Although many crypto enthusiasts assume that crypto tokens fall outside of the purview of SEC guidelines, a new case casts doubt upon this time-honored principle. What can you do if you are facing white-collar crimes for cryptocurrency in Florida?

Federal Judge Identifies Crypto Token as an “Investment” Under SEC Guidelines 

In June of 2024, a defendant received approximately four years in prison after pleading guilty to securities fraud and price manipulation. During the defendant’s trial, a federal judge in Florida ultimately concluded that the defendant’s proprietary crypto token constituted an “investment” according to SEC guidelines. As a result of this classification, the defendant became subject to SEC rules regarding price manipulation.

If the federal judge had decided that the token was not an SEC-classified “investment,” the defendant may have walked free. This case is notable, as the general consensus has traditionally been the opposite of the judge’s ruling. Although the United States has gone back and forth on this issue on numerous occasions, the matter seemed to be settled after the House passed a bill in May of 2024. This bill, which could be taken up by the Senate, officially prevents cryptocurrencies (and all transactions on the blockchain) from being viewed as securities.

A representative of the Justice Department noted that the recent case in Florida represents “the first time” a cryptocurrency has been classified as a security in a federal court. The Justice Department also pointed out that this was the first time someone had been convicted of price manipulation of crypto under securities laws.

This specific case involves allegations that the defendant used a “market maker” scheme to inflate the price of HYDRO tokens, effectively leading to a “pump and dump” that left investors with serious losses.

Is Crypto a Security or Not? 

Many Florida investors and entrepreneurs may be unsure about the true classification of crypto tokens in the modern era. Various agencies and politicians all seem to have different ideas about this contentious subject.

The SEC wants to classify all crypto as investments and securities, as this would allow them to prosecute crypto entrepreneurs and investors in the same way as others. Some believe that crypto should be classified as a commodity instead. The specific rules regarding crypto depend heavily on its classification – and the unclear stance of numerous agencies raises more questions than answers.

The most recent case comes with a stark warning from the Justice Department:

“The Criminal Division will not hesitate to use all tools at its disposal — including the federal securities laws — to protect the integrity of cryptocurrency markets.”

Find an Experienced Federal White-Collar Crime Lawyer in Fort Myers 

If you’ve been searching for an experienced criminal defense lawyer in Fort Myers, look no further than The Foley & Wilson Law Firm. We know how confusing SEC guidelines can be, especially in the context of cryptocurrencies. Book a consultation today to discuss your legal options in more detail.

Sources: 

cointelegraph.com/news/hydrogen-technology-ceo-sentenced-price-manipulation

reuters.com/world/us/us-securities-regulator-urges-against-crypto-bill-adoption-2024-05-22/