Managing Partner Alon Harnoy Gives Presentation at Event Hosted by China General Chamber of Commerce

Managing Partner Alon Harnoy recently spoke at an event hosted by China General Chamber of Commerce (CGCC) on May 30, 2018 in connection with global partnership and innovation within China and Israel. The event featured additional presentations from Eran Nitzan, Minister of Economic Affairs for the Israel Ministry of Finance at the Embassy of Israel in Washington, D.C., Uri Levin, President and CEO of IDB New York, Adiv Baruch, Chairman of the Israeli Export and International Cooperation Institute, and Shanqing Zhou, Economic and Commercial Counsellor of Consulate General of China in New York. Please see the below link for more information on the event (be sure to scroll down on the homepage for full article) as well as an article feature in China Today (found on page 2 below).

CGCC Hosted “Global Partnership & Global Innovation: China and Israel”


A Guide to Serving Process by Mail on Defendants Located Outside of the U.S. Pursuant to the Hague Service Convention

By Hon. Martin E Ritholtz, Daniel S. Goldstein, Esq. and Joshua Levin-Epstein, Esq.

In a rapidly changing and interconnected world, legal problems without passports proliferate and increasingly challenge New York attorneys, who find themselves embroiled in cases requiring the resolution of conflicts that extend beyond borders.  Having to serve process of a New York lawsuit on Defendants located outside of the country, for example, can be fraught with difficulties.  This article provides guidance on serving process of a New York lawsuit through postal channels in accordance with Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (the “Convention”).[1]

The United States and many other leading international economies are signatories to the Convention, a multinational treaty “intended to provide a simpler way to serve process abroad, to assure that defendants sued in foreign jurisdictions would receive actual and timely notice of suit, and to facilitate proof of service abroad.”[2]  Where service of process is made in a foreign country that is a signatory of the Convention, compliance with the procedures of the Convention is mandatory.[3]

The treaty requires each signatory state to establish a Central Authority that receives international service requests and thereafter serves documents by a method prescribed by the internal law of the receiving state.  The use of the Central Authority, however, is not the only method of service under the Convention.[4]  For example, Article 8 permits service through diplomatic and consular agents.  Likewise, pursuant to Article 10 of the Convention:

Provided the State of destination does not object, the present Convention shall not interfere with –

  1. a) the freedom to send judicial documents, by postal channels, directly to persons abroad,
  1. b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,
  1. c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination

For years, American courts were divided over whether the phrase “the freedom to send judicial documents” in Article 10(a) includes within its meaning the freedom to effect service of judicial documents, as specified by Articles (b) and (c).[5]  This division led to conflicting case law in which the permissibility of international service of process by mail has varied by court, by state, and by appellate department within the state.

Until June 2016, this split existed within the New York Appellate Division.  The First Department (and Third Department until 2012) interpreted the word “send” in Article 10(a) to authorize something other than effecting service, such as the transmittal of notices and legal documents, but not the service of process that initiates a lawsuit and secures jurisdiction over an adversary party.[6]  In contrast, the Second, Third and Fourth Departments interpreted the word “send” in Article 10(a) as including service of process and permitting service of process by regular mail when the State of destination does not object.[7]

Although New York’s Court of Appeals never addressed the issue, in Mutual Benefits Offshore. v. Zeltser, 140 A.D.3d 444 (1st Dep’t 2016), the First Department joined the Second, Third and Fourth Departments to hold that service of process by mail is not prohibited under the Convention.  See Mutual Benefits Offshore. v. Zeltser, 140 A.D.3d 444 (1st Dep’t 2016) (noting the different interpretations of Article 10(a) that had been adopted by New York State’s appellate departments and, for the first time, aligning the appellate departments).

While New York’s appellate departments were in line as of June 2016, the disagreement as to the interpretation of Article 10(a) of the Convention remained in other states and in federal circuit courts as well.[8]


On May 22, 2017, the United States Supreme Court resolved the disagreement as to the interpretation of Article 10(a) of the Hague Service Convention.

In Water Splash Inc. v. Menon, 137 S.Ct. 1504 (2017), plaintiff-petitioner Water Splash, a Texas corporation, sued defendant-respondent Menon, a former employee residing in Canada, in state court in Texas.  Water Splash commenced the action by serving Menon with process via postal channels.  After obtaining a default judgment against Menon, Menon appealed, arguing that service of process by mail does not comport with the requirements of the Hague Service Convention.  The Supreme Court acknowledged the broader conflict among courts as to whether the Convention permits service through postal channels, and granted certiorari.

After analyzing the treaty’s drafting history, taking account of foreign courts’ interpretation of the treaty, and applying “traditional tools of treaty interpretation,” the Supreme Court held that Article 10(a) of the Convention indeed encompasses service of process by mail.  Water Splash thus resolves the longstanding disagreement in the lower U.S. courts and clears the way for international service of process by mail under the Convention.


To be clear, the Court’s holding in Water Splash does not mean that the Convention “authorizes” service by mail in all cases.  “Article 10(a) simply provides that, as long as the receiving state does not object, the Convention does not ‘interfere with . . . the freedom’ to serve documents through postal channels. In other words . . . service by mail is permissible if two conditions are met: first, the receiving state has not objected to service by mail; and second, service by mail is authorized under otherwise-applicable law.”[9]

 Thus, to determine whether service of process by mail is authorized on a case by case basis, it is first necessary to confirm that the receiving state has not objected to Article 10(a).  The objections and declarations of the Convention’s participating countries are available using the Convention’s website.  Objectors to Article 10(a) include China,[10] Germany,[11] Switzerland[12] and Mexico,[13] among others, meaning that service by mail in those countries is not authorized by Water Splash.   Comparably, the State of Israel asserted objections to Articles 10(b) and (c) and specifically declared thereunder that it will “effect the service of judicial documents only through the Directorate of Courts.”  Yet, because Israel has not objected to Article 10(a), the Water Splash decision would now appear to open defendants located in Israel to service of process in U.S. courts by mail.

In addition to being authorized by the receiving State, service by mail must also be authorized “under otherwise-applicable law,” meaning by the jurisdiction hearing the suit.  If the case is commenced in federal court, this means service of process by mail must comport with the Federal Rules of Civil Procedure or other controlling statute on the service of process in that case.[14]  In New York, service of process by mail, with certain exceptions, is not generally authorized by the CPLR (for example, it could be directed by an order of the Court under Article 3).  Thus, absent a court order under Article 3 of the CPLR, service of process in New York in most cases will need to comport with New York Business Corporation Law § 307, New York Vehicle and Traffic Law § 253, or other authorizing New York statutes.


[1] Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965, 20 U.S.T. 361, T.I.A.S. No. 6638.

[2]  New York State Thruway Auth. v. Fenech, 94 A.D.3d 17 (3d Dep’t 2012)

[3] Morgenthau v. Avion Res. Ltd., 11 N.Y.3d 383, 390 (2008)

[4] Sbarro Inc. v. Tukdan Holdings, Inc., 32 Misc. 3d 217, 218 (Sup. Ct. Suffolk County 2011)

[5] Brockmeyer v. May, 383 F.3d 798 (9th Cir. 2004)

[6] New York State Thruway Auth. v. Fenech, 94 A.D.3d 17, 19 (3d Dep’t 2012)

[7] Id.; Sbarro Inc. v. Tukdan Holdings, Inc., 32 Misc. 3d 217, 219 (Sup. Ct. Suffolk County 2011).

[8] New York State Thruway Auth. v. Fenech, 94 A.D.3d 17, 19-20 (3d Dep’t 2012)

[9] Water Splash Inc. v. Menon, 137 S.Ct. 1504, 1513 (2017)

[10] Sulzer Mixpac AG v. Medenstar Indus. Co., 312 F.R.D. 329 (S.D.N.Y. 2015)

[11] PATS Aircraft, LLC v. Vedder Munich GmbH, 197 F. Supp. 3d 663 (D. Del. 2016)

[12] In re Bernard L. Madoff Inv. Sec. LLC, 418 B.R. 75 (Bankr. S.D.N.Y. 2009)

[13] Forth v. Carnival Corp., 12-cv-23770, 2013 WL 1840373 (S.D. Fla. May 1, 2013)

[14] Brockmeyer v. May, 383 F.3d 798, 804 (9th Cir. 2004)

Special Lunch Event with Danny Ayalon Hosted by Shiboleth LLP, BondStreet Capital Advisory, and Silver Road Capital

Shiboleth LLP hosted a very special lunch event with Danny Ayalon in collaboration with BondStreet Capital Advisory and Silver Road Capital. The event featured Former Israeli Ambassador to the United States, Danny Ayalon, who lead an intimate discussion on Capital Raising in Israel for US Real Estate Projects and Israel-US relations under the Trump administration.



What are ICOs and How Do They Work?

By: Alon Harnoy, Esq.,  and Ethan Rubin, Law Clerk


As of April 2018, Initial Coin Offerings (“ICOs”) – an industry analysts believe can eventually become a multi-trillion dollar space – raised a staggering USD $5,014,952,132. With a total market capitalization of over $100 billion, the cryptocurrency market has attracted the attention of many, including traders looking for quick cash with few regulations.

What are Initial Coin Offerings?

ICOs are another form of cryptocurrency that businesses use in order to raise capital. Through ICO trading platforms, investors receive unique cryptocurrency “tokens” in exchange for their monetary investment in the business. It is a means of crowdfunding through the creation and sale of a digital token to fund project development.

This unique token functions like a unit of currency that gives investors access to certain features of a project run by the issuing company. These tokens are unique because they help fund open-source software projects that would otherwise be tough to finance with traditional structures.

What are White Papers? And What Purpose Do They Serve?

            When a cryptocurrency startup firm wants to raise money through an ICO, it usually puts its plans on a “white paper” to provide investors with important information. This information will include, but is not limited to: what the project is about; what objectives the project will aim to fulfill upon completion; how much money is necessary to undertake the venture; how many virtual tokens the issuers will keep for themselves; what type of currency is accepted; how long the ICO campaign will run for; and who the team is behind the white paper. The company issuing the ICO prepares the white paper prior to launching the currency. It is a pivotal component of ICOs, as many investors ask for a whitepaper draft before deciding whether to invest.

Cryptocurrency ICO vs. Stock IPO

The biggest difference between a cryptocurrency ICO and a stock initial public offering (“IPO”) is the regulatory oversight. First, as part of the mandatory requirement to register with the regulatory authority, any company looking to issue an IPO must create a legal document called a “prospectus.” The prospectus represents a legal declaration of its intention to issue its shares to the public, and it must meet certain standards of transparency. Among other things, it must include key information about the company and its upcoming IPO to assist potential investors in making an informed decision.

On the contrary, as stated in recent US regulatory action, ICOs only have regulation requirements if they are issued as security tokens rather than utility tokens, which are described in more detail below. However, because such regulatory activity has only recently been developed, investor assessments and due diligence are more difficult to accomplish, especially in comparison to evaluating stock IPOs, which are regulated through strict processes and overseen by accounting firms and investment banks, thereby providing investors with more information and security.

How do ICO’s Work?

Through the ICO fundraising model, startups can raise capital by issuing tokens on a blockchain (a list of records secured using cryptography) and then distributing tokens in exchange for a financial contribution. These tokens, which can be transferred across the network and traded on cryptocurrency exchanges, can serve an array of different functions, from granting the holder access to a particular service, to entitling them to company dividends. Depending on its function, tokens may be classified as either utility tokens or security tokens.

Utility Tokens

Utility tokens, called “user tokens” or “app coins,” represent future access to the business’s product or service. Through utility tokens, ICO startups can raise capital to fund the development of their blockchain projects in exchange for users’ future access to the service. Utility tokens are not designed to be a standard investment for a share of the company, and, if properly structured, this feature exempts utility tokens from federal laws governing securities.

By creating utility tokens, a startup can sell “digital coupons” for the service in development, similar to how electronic retailers accept pre-orders for video games that might not be released for several months. One example of a utility token is “Filecoin,” which raised $257 million by selling tokens that provide users with access to its decentralized cloud storage program. Businesses that offer these utility tokens are trending to avoid using the term “ICO,” and favor terms such as “token generation events” and “token distribution events,” to ensure they are not appearing to engage in a securities offering.

Security Tokens

Contrary to utility tokens, if a token derives its value from an external, tradable asset or it can increase in value based upon the efforts of others, it may be classified as a security token and become subject to federal securities regulations. Failure to abide by these regulations could result in costly penalties and may threaten to derail a project. Therefore, a business must meet all of its regulatory obligations. Once the token is properly classified, a wide variety of applications are permitted, the most promising being the ability to issue tokens that represent shares of company stock.    Online retailer (“Overstock”) is currently involved in this practice. Overstock announced that tZERO, one of its portfolio companies, would hold an ICO to fund the development of a licensed security token trading platform. The tZERO tokens are issued in accordance with SEC regulations, and Overstock’s CEO, Patrick Byrne, stated that token holders would be entitled to quarterly dividends derived from the profits of the tZERO platform.

Many industry observers, including Mr. Byrne, believe that mainstream companies will one day issue shares through ICOs, either in place of, or in addition to, traditional public offerings.


Joichi Ito, Director of the MIT Media Lab and professor of the practice of media arts and sciences, has raised some concerns with the “gold-rush” mentality that is fueling the success of ICOs. He believes that cryptocurrencies are being deployed in irresponsible ways that are causing harm to individuals and damaging the ecosystem of developers and organizations.

Mr. Ito is concerned that regulators of IPOs have not yet caught up with ICOs, thereby allowing issuers to get rich by taking advantage of unwitting investors who are buying tokens of questionable value. Ultimately, Mr. Ito believes the regulatory intervention will need to be much more sophisticated and technically informed. In the meantime, a long list of people will read about skyrocketing prices of Bitcoin and decide to buy into one of the myriad ICOs being introduced to the public, perhaps without fully understanding the risks associated with such an investment.


An ICO is similar to a mix between an IPO and online crowdfunding, but for cryptocurrency. One can contribute “X” amount of an existing token and receive in return “Y” amount of a new token (at a set conversion rate) at a date set by the issuer of the token.

This token can be used in two ways, either with a utility function or a security function. A utility token is generally unregulated and used by startups to gain capital to fund their projects in exchange for future access to the service in development. On the other hand, a security token is generally treated like a stock, a tradable asset with ownership qualities, and is regulated by the SEC. ICOs are a new concept and some raise concerns with the actual value of the tokens and how easy it is for the issuer to get rich. Ultimately, time will tell whether this becomes the future of funding businesses or merely a “get rich” scheme by issuers.

This article has been featured on Ynet (in Hebrew) – see link below:,7340,L-5253931,00.html


International Law Update – March 2018



The United States, Israel, and many other leading international economies are signatories to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters (the “Hague Service Convention”), a multinational treaty “intended to provide a simpler way to serve process abroad, to assure that defendants sued in foreign jurisdictions would receive actual and timely notice of suit, and to facilitate proof of service abroad.” The treaty requires each signatory state to establish a central authority that receives international service requests and thereafter serves documents by a method prescribed by the internal law of the receiving state. Nothing in the Hague Convention, however, requires litigants to rely exclusively upon the central authority, and a signatory state may consent to additional methods of service.

For years, American state and federal courts have been divided over whether Article 10(a) of the Hague Service Convention should be interpreted as allowing service of process by mail on defendants located outside of the U.S., provided the signatory state does not object. This had led to conflicting case law in which the permissibility of service of process by mail has varied by court, by state, and even by appellate division within the state. See, e.g., Mutual Benefits Offshore. v. Zeltser, 140 A.D.3d 444 (1st Dep’t 2016) (noting the different interpretations of Article 10(a) that had been adopted by New York State’s appellate departments and, for the first time, aligning the appellate departments).


On May 22, 2017, the United States Supreme Court in Water Splash Inc. v. Menon, 137 S.Ct. 1504 (2017) clarified the interpretation of Article 10(a) of the Hague Service Convention for all U.S. state and federal courts.

The Supreme Court held that Article 10(a) indeed authorizes service of process by mail on defendants located outside of the U.S., so long as the receiving state has not objected, and service by mail is recognized by the jurisdiction hearing the suit.  While some countries have objected to Article 10(a), the State of Israel has not.

This decision thus resolves the disagreement in the lower U.S. courts on the permissibility of service by mail under the Hague Service Convention.  Previous state and federal case law that interpreted Article 10(a) to not allow service of process by mail is no longer controlling precedent.


Because Israel has not objected to Article 10(a), this opens defendants located in Israel to service of process in U.S. courts by mail.  Note, however, that this does not end the analysis in U.S. courts.  Service by mail must also be recognized by the jurisdiction hearing the suit.  In the United States, this will depend upon whether the case is brought in state or federal court, and in which state.  While various restrictions apply on a state-by-state basis, in general service of process by mail is recognized by the U.S. state and federal jurisdictions, provided that statutory conditions on such service are complied with.

For more information on this topic, contact:

Sasha Bau (Native Hebrew) at or Daniel S. Goldstein at

Will the New Tax Laws Deter the Middle-Class from Charitable Donations?

By: Alon Harnoy, Esq., Richard H. Wender, Of Counsel, and Ethan Rubin, Law Clerk

Arguably the biggest impact the new tax laws will have on Americans, no matter what socio-economic class they may belong to, is the major changes to the personal or non-business deductions, which deductions a taxpayer can elect to either itemize or take a standard or fixed amount, whichever generates the larger deduction. Before President Trump’s tax law, which was signed on December 22, 2017, personal deductions included, in part, the taxpayer’s real estate and local property taxes, state and local income taxes paid, interest paid on mortgages on a primary and second residence (capped at $1 million in acquisition and improvement indebtedness), interest on a home equity line of credit (capped at $100,000 of indebtedness), medical expenses (exceeding a threshold level), and charitable contributions. Up to approximately one-third of Americans choose to itemize their deductions over using the standard deduction because the total of their actual authorized personal deductions yielded a larger sum than what the government standard deduction offered. However, the new tax law has changed this.

First, the standard deduction has been significantly boosted (i.e., from $12,000 to $24,000 for a married couple filing jointly).  Second, those personal expenses which can now be deducted for tax purposes have been dramatically narrowed.  For example, the deduction for state and local income taxes and local real estate and property taxes are limited to an aggregate of $10,000, interest on equity lines of credit are no longer deductible, and interest deductible on a mortgage on a primary or secondary home is capped at $750,000 in indebtedness.  Because of this, many more Americans will opt to use the standard deduction rather than itemize their deductions because their permitted itemized deductions will not hit the $24,000 threshold. Therefore, it is more appealing to opt for the standard deduction.  Accordingly, it is estimated that roughly 94% of taxpayers will claim the standard deduction in 2018.  At first glance this may seem like a “win” in that it will simplify the preparation of tax returns; however, a substantial pit-fall of the new tax law is that it disincentives taxpayers who are taking the standard deduction from making charitable donations because they will no longer be gaining any tax advantage by doing so.

Charity executives and experts are predicting that starting next year, millions of relatively small donations from moderate-income Americans to mainstream charities will sharply reduce. This means that charitable giving could become less of a middle-class commonality and more of an exclusive act by the wealthy, which already tend to give to arts and cultural institutions, research facilities, and universities rather than mainstream donations such as religious institutions and local causes. Mr. Steve Taylor, Senior Vice President and Counsel for Public Policy at the United Way Charity, stated that, “Some 7.2 million people donate less than $1,000 yearly–on average $154–to the United Way… We’re very concerned. A lot of charities are in shock. Charities feel totally blindsided and like we have been thrown under the bus.”

Charities may have to rework how they pitch their appeals to donors.  According to Lucas Swanepoel, Vice President for Social Policy at Catholic Charities, “we [now] have to redouble our efforts… We really need to make sure we’re telling the stories of the differences it makes in people’s lives.”

These same concerns and sentiments are being seen in the Jewish community, as many Jewish Charities and Synagogues are getting ready for what they fear may become a reality–less donations and contributions. Virtually all-Jewish groups are convinced the new tax bill will result in fewer charitable donations to Jewish federations, synagogues, day schools, and social safety net programs. Andres Spokoiny, CEO of the Jewish Funders Network, which works with Jewish donors to maximize their impact, shared his concerns, “the consensus among experts is that when all is said and done, it [the tax bill] will be detrimental for charities and philanthropy… Of particular concern to charities is the plan to double the standard deduction… making it much more attractive not to itemize and simplifying the tax filing process.” In a statement, the UJA-Federation of New York said, it is “very concerned that several provisions in the proposed tax legislation bill will lead to an overall decline in charitable giving…” and Naama Haviv, Director of Development at MAZON, a Jewish response to hunger, said she fears “major gifts will disappear.”

In conclusion, the new tax law is certainly causing a lot of concern and consternation amongst non-profit organizations. As February 2018 approaches, these organizations have no choice but to revamp all efforts, while they wait-and-see how many donations they may lose. While the new tax law without a doubt makes the deduction process easier for most Americans to understand and do themselves, it will also deter millions of Americans from making charitable donations because itemization is no longer an attractive option. The hope is that most charitable causes are important enough to Americans to continue to donate, but only time will tell if that is true.

This article has been featured on Ynet (in Hebrew) – see link below:,7340,L-5116185,00.html

How Does the New Tax Law Affect You?

By Alon Harnoy, Esq., Richard H. Wender, Of Counsel, and Ethan Rubin, Law Clerk

On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act, which made permanent corporate cuts and various individual changes that will expire at the end of 2025. The bill represents the most significant tax changes in the United States in more than 30 years with new tax brackets, modified deductions and credits, and eliminations of personal exemptions. Here is a summary of the most significant changes that will affect you as a taxpayer and what to look for when filing your upcoming tax returns.

New Brackets for Income Taxes /Increase of Standard Deductions

The new Act keeps the seven previous tax brackets, but lowers tax rates for those brackets which means individuals will benefit from lower tax levels at each of the brackets. For example, individuals that earn $500,000+ will now be taxed 37% rather than 39.6% for taxable income in excess of $500,000 and will also pay lower levels of tax for income up to that $500,000 bracket level. The income levels will rise each year with inflation, but they will rise slower than in the past because the Act uses the chained consumer price index as reference.  Further, the standard deduction is being doubled from $6,350 for single taxpayers/ $12,700 for married filing jointly to $12,400/$24,800.

Married Penalty is gone for Most Americans

One interesting component of the new tax brackets is that the so-called marriage penalty, which many Republican leaders wanted to eliminate, is, for the most part, gone. Since married couples have their incomes combined rather treated as individual incomes, it used to be that they were bumped up in their tax brackets and taxed at higher rates than their actual individual incomes would have transcribed. Under the new tax brackets, many couples would avoid this outcome and remain in their original tax brackets. This change has been applied to every tax bracket, except the two highest tax brackets. Meaning, the marriage penalty has effectively been eliminated for everyone except for married couples earning more than $400,000.

State and Local Taxes Mostly Eliminated

Perhaps one of the most controversial aspects of tax reform was the drastic change to the “SALT” (state and local taxes) deduction. The final version of the bills caps the total deductible amount to $10,000, including income, sales, and property taxes. This is detrimental to many New York and California residents that will have to choose between property taxes and income or sales tax while only being able to deduct up to $10,000. It used to be that residents in these high-tax states were able to deduct all of SALT – that will no longer be the case.

Mortgage Interest Reduction

One of the more noteworthy new deductions is that the new tax law reduces the limit on mortgage interest to the first $750,000 of the loan from the previous $1million threshold. In addition, interest on home equity lines of credit can no longer be deducted at all; previously up to $100,000 of home equity debt could be considered. As a result of this, fewer people will be able to take advantage of the mortgage interest deduction, which could result in lower housing prices. Despite this new deduction, it only applies to mortgages received after December 15, 2017; preexisting mortgages are grandfathered in.

Child Tax Credit Increased & Elder Care Modified  

The new law increases the Child Tax Credit from $1,000 to $2,000 and even permits parents who do not earn enough to pay taxes to claim the credit up to $1,400. Furthermore, it allows parents to use 529 saving plans for tuition at private and religious K-12 schools. The new law also covers funds for expenses of home-schooled students. With regards to elder care, individuals now have a $500 credit for each non-child dependent. The credit is geared to help families caring for elderly parents.


Given the increase of the standard deduction and that many itemized deductions are being eliminated, it is estimated that roughly 94% of taxpayers will claim the standard deduction in 2018.  This elimination of itemized deductions means a simplification of tax returns for many lower income taxpayers and many may try to prepare their own taxes.

According to the Tax Foundation, the new tax Act will help higher-income families the most. Those in the 95-99% income range will receive a 2.2 increase in after-tax income compared to people in the 20-80% income range projected to receive a 1.7 increase. Although under the new law tax rates are lowered for everyone, they are lowered more for the highest-income taxpayers, which detracts from the previous tax law that held the wealthier more accountable. Despite this disparity, The U.S. Treasury reported that the bill would bring in $1.8 trillion in new revenue over 10 years, as a bigger economy leads to bigger tax bills, and projected economic growth of 2.9% a year on average.  Many experts however have questioned the validity of the underlying assumptions on which this projection is based and have predicted that the bill will increase the US deficit.

This article has been featured on Ynet (in Hebrew) – see link below:,7340,L-5076599,00.html

Part 2 – Bitcoins and Cryptocurrencies

By Alon Harnoy, Esq. and Dov Kalton, Of Counsel

How do I buy and sell Bitcoins?

Bitcoin hit an all-time high price of $17,801.94 on December 15, 2017 with many analysts predicting even higher prices.  Where does one acquire Bitcoin?

Bitcoins transactions can be done in many familiar ways.  There are brick and mortar ATM’s in several countries ( where one can deposit currency and purchase Bitcoin. Some also allow selling of Bitcoin, but many do not.  There are several Bitcoin ATMs in New York City, and Tel Aviv also has a few.  The Bitcoin ATM (aka The Bitcoin Embassy) located across the street from the Tel Aviv Stock Exchange is so busy with Bitcoin purchasers that the ATM is closed every 90 minutes to remove the cash used to purchase Bitcoin because the ATM fills up to capacity.

There are online Bitcoin exchanges, similar to stock exchanges, where one opens an account as one would any brokerage account, and can trade Bitcoin, just as with stocks, bonds, commodities or Forex – Blockchain, Nadex, HitBtc etc.  Speculation in these exchanges have contributed to recent price surge of the cryptocurrency.

After you purchase Bitcoin you need a place to store your new bitcoins – a virtual “wallet”. This is crucial since your only ability to transact with Bitcoin is to be in secure possession of this “key” that records your purchase.  Some purchasers will keep their “key” on their computer or back it up to a USB drive or keep a hard copy printout of the code of their bitcoins. The safer route is to “store” your bitcoins with a secure exchange which has invested in secure infrastructure so hackers cannot steal the code. Buyers beware! A British man who had mined 7,500 Bitcoins in 2009 and stored them on his computer mistakenly discarded it with his Bitcoins stored only on his hard drive. The present value of the Bitcoin he erroneously discarded is presently worth upwards of $100 Million US Dollars!!!  Even Elon Musk tweeted last month that he has misplaced a part of a bitcoin key.

Other horror stories include websites and even major Bitcoin exchanges being hacked and Bitcoin disappearing, most famously with Mt. Gox, the Japanese trading site which subsequently went bankrupt (At the time, this caused a major drop in the price of Bitcoin but the price has more than rebounded.) There are regulated exchanges, especially in the U.S. and U.K., which provide a greater, although not total, sense of security, which require more personal information from the account holder.

What do Professionals Say About the Price of Bitcoin?

In addition to the physical concern about the integrity of your Bitcoin is the underlying value concern related to the cryptocurrency. The current value of Bitcoin is highly speculative and the price may fluctuate even more now that futures have begun trading on the CBOE and CME. On the day the CBOE began trading Bitcoin futures, the CBOE website temporarily crashed and trading had to be halted twice in the first week of trading because of price swings. In a recent press conference, outgoing Federal Reserve Chair Janet Yellen echoed the opinion of many other noted financial analysts and economists in stating that Bitcoin is not a “stable source of value” and a “highly speculative asset”.

Jamie Dimon, CEO of JPMorgan Chase said of Bitcoin in September 2017, “that it is a fraud… it’s just not a real thing and eventually will be emperor’s new clothes.”  He said Bitoicn is like the tulip craze of the 1600s where Dutch tulips skyrocketed in price before having a castastrophic fall. “It’s worse than tulip bulbs. It won’t end well. Someone is going to get killed”.

Similarly, we find Bitcoin to be extremely speculative and without inherent value, and note speculation in Bitcoin is similar to gambling in a casino – one might make money in the short run but as a long term strategy it is flawed.

Other Cryptocurrencies

Bitcoin is not the only cryptocurrency presently on the market. Termed “altcoin” by some as an alternative to Bitcoin, the alternative currencies feature different technologies and networks and currently are more affordable than Bitcoin. Presently, the most popular altcoins are Litecoin and Ethereum which are trading at a fraction of the price of Bitcoin.  Since so many other cryptocurrencies are being developed recently, one must question the fundamental value proposition of Bitcoin.

What Are Initial Coin Offerings?

Another cryptocurrency fad that is worth mentioning and is a cause for concern are ICO’s – Initial Coin Offerings.   Initial Coin Offerings have been utilized recently by companies looking to raise capital to fund their businesses. In exchange for a monetary investment, investors receive unique cryptocurrency “tokens” which essentially is a unit of currency giving investors access to features of a project run by the issuing company but technically is not a share of ownership.

In many cases, the tokens could theoretically go up in value in concert with the value of the company and are liquid and can be traded similar to the way a stock would be traded on an exchange. The tokens are issued and distributed on a blockchain or cryptographically secured ledger. During an ICO, companies usually exchange their cryptocurrency for Bitcoins, however, some ICOs involve the exchange of money as well.

The purported advantage of an ICO token would allegedly be the ability to sell the token without the need for a stock exchange and its concomitant regulations and costs.

What do Regulators Say about Initial Coin Offerings?

The first ICO is typically attributed to Mastercoin.  Mastercoin’s ICO in 2013 raised over $5 million in Bitcoins through the sales of their own Mastercoin tokens.  There have been many other ICO offerings but recently, much to the chagrin of the purveyors of these ICO’s, on December 11, 2017, the SEC recently issued a cease and desist order for the Munchee or MUN token offering that recently took place.  A key question for all ICO offerings: “Is the coin or token a security?”

In October and November of this year, Munchee, a California business that created an app to review restaurant meals sought to raise capital through the sale of a “MUN token” that would be issued on a blockchain or distributed ledger. They sought to raise $15 million dollars and assured investors that the tokens would appreciate as the company’s fortunes improved and that the token would be able to be sold on secondary markets. On December 11th, the SEC issued an order stating clearly that such a token constituted a “security” pursuant to Section 2(a)(1) of the Securities Act and that the company violated  Sections 5(a) and 5(c) of the Securities Act in not offering and selling these securities pursuant to a registration statement filed or in effect with the SEC. In essence, the SEC ruled that an ICO is no different than an IPO and that the rules in place for IPO’s must be followed.

On December 11, 2017, SEC Chairman Jay Clayton issued a public statement on ICO’s saying: “I believe that initial coin offerings – whether they represent offerings of securities or not – can be effective ways for entrepreneurs and others to raise funding, including for innovative projects.  However, any such activity that involves an offering of securities must be accompanied by the important disclosures, processes and other investor protections that our securities laws require.”

How does the Blockchain work? Stay tuned for our next article….


Special Industry Innovators Hosted by Shiboleth LLP, Bank Leumi, Feature Forward, Inbar Haham, C-Bridge Capital Partners, and Lifion by ADP

Shiboleth LLP hosted a special Industry Innovators in partnership with Bank Leumi, Feature Forward, Inbar Haham, C-Bridge Capital Partners, and Lifion by ADP. The event featured an exclusive investor panel and a unique lineup of companies including, GreenScreens, Toonimo, and Unpakt.

Photos from the evening can be found by clicking the link below:

More information on each of our presenters, investor panel, and hosts can be found at