Crypto-Flashbacks: How the Media Pumped the ICO Known as Paycoin

Crypto-Flashbacks: How the Media Pumped the ICO Known as Paycoin

Just recently Josh Garza was sentenced to 21 months of prison and six months of home confinement for his role in the many Ponzi scams like Gaw Miners, Zen Miners, Hashlets, and of course the controversial Paycoin that appeared in 2014. Back then lots of people were scammed by Garza’s schemes but he had a bunch of help bolstering his fraudulent ideas. Unfortunately, mainstream media and a slew of other online publications did a really good job in assisting Garza’s pump-n-dump schemes and the Paycoin scam.

Also read: Josh Garza Sentenced to Prison and Fined $9M over GAW & Paycoin Scam

Did Online Publications Printing Garza’s Lies Bolster His Fraudulent Schemes?

Like Mark Karpeles and Paul Vernon, Joshua Homero Garza is an infamous character that’s been known for a lot of fraudulent cryptocurrency-related scams. Garza the controversial cryptocurrency executive and a few other associates are now paying for their crimes, but if it wasn’t for mainstream media and other online publications his scams probably wouldn’t have gone as far as they did.

Crypto-Flashbacks: How the Media Pumped the ICO Known as Paycoin
So many publications printed Josh Garza’s lies.

If you were involved in the Bitcoin scene around November of 2014 you definitely would have heard about Josh Garza and Gaw Miner’s Paycoin launch from the likes of Tech UnboxedYahoo Finance, Wall Street Journal, Market Wired, Payment Eye, Finance Magnates, Data Center Knowledge, and many more online news outlets. Of course, some of the editorials were paid for but some people unwittingly published Garza’s gross lies. Garza even did an illustrious interview with Techcrunch (with plenty of backlinks to Garza scams) explaining how he got all the money to purchase the domain BTC.com. Ironically Garza explains that his company was created because he was once scammed.        

“GAW Miners was born after someone ripped me off during an ASIC purchase,” Garza explains to Techcrunch in August of 2014. Then Garza further explains to Techcrunch just how successful Gaw Miners had become that year. The founder makes some very bold claims stating:

The company was an overnight success and achieved over $10 million in sales during its first month and is on schedule to do $100 million in this first year.

Paycoin the So-Called ‘Bitcoin Challenger’ Catches Fire From Real Journalism

Garza’s Paycoin was considered by many people to be one of the first high-profile initial coin offerings (ICO) that also claimed to offer ‘stablecoin‘ features. Basically, people could purchase Paycoin (XPY) and his operation would guarantee to buy them back at $20 USD per XPY. The promises Paycoin offered was all described in great detail in the XPY white paper that was widely distributed on the web four years ago.

Crypto-Flashbacks: How the Media Pumped the ICO Known as Paycoin

The well-known journalist and Wall Street Journal ‘Bitbeat’ blogger, Michael Casey, wrote a pretty contentious story on Paycoin back in 2014 as well. The story’s headline actually refers to Paycoin as a ‘bitcoin challenger’ and highlights quite a bit of Garza’s claims. Of course, the article immediately had criticisms towards Paycoin and Garza in the comment section not long after the article was published. The comment section below Casey’s Bitbeat story has a bunch of individuals complaining about misleading claims and outright fraud.

Crypto-Flashbacks: How the Media Pumped the ICO Known as Paycoin However, in 2014 and early 2015, not every online publication and journalist gave credence to Garza and Paycoin’s claims. On October 15, 2014, the online cryptocurrency publication Coin Fire (which is now called 99 Bitcoins) published a story that revealed Gaw’s Hashlet mining operation didn’t have any miners. A few months later Coin Fire published more incriminating details about the misleading claims Garza and Gaw told the public and media. Gaw Miners fired back at the Coin Fire editorial team and threatened them with legal action over the articles. On November 22 the news outlet outlined all the business partnerships that Gaw Miners lied about, and Coinfire’s claims were later confirmed by the US Securities and Exchange Commission’s Gaw Miners investigation.

The Multitude of Phony ICOs and Bank-Blockchains Bolstered by the Media Over the Last Few Years Shows There Are Still Plenty of Garzas and Paycoins

Now a lot has changed in the last four years since Garza, Gaw Miners, and the Paycoin ICO scam took place within the cryptocurrency-community. However, there are definitely lots of fraudulent ICOs out there today, and plenty of so-called collateralized stablecoins with many more on the way. Furthermore, we’ve reported on the many ‘next generation’ snake oil blockchain projects being bolstered by mainstream media and other online publications these days.

The community is well aware of scammy ICOs throughout 2017-2018, but just because a financial incumbent sends out a press release saying they’ve produced a ‘world-class blockchain’ doesn’t mean its true. However, we’ve seen many news outlets report on these blockchains when they never even seen the software, let alone tested it themselves. There are plenty of Josh Garza’s and Paycoin projects out there today that raise similar red flags but still get wide media coverage.

What do you think about this story? Let us know what you think about this subject in the comment section below.


Images via Shutterstock, Pixabay, Paycoin archives, WSJ, Techcrunch, and DCK.  


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Josh Garza Sentenced to Prison and Fined $9M over GAW & Paycoin Scam

GAW/Paycoin 2014 Scam: Josh Garza Sentenced to 21mos Prison, $9M Fine

U.S. Attorney’s Office District of Connecticut has announced Homero Joshua Garza (Josh Garza) has been sentenced to “21 months of imprisonment, followed by three years of supervised release, the first six months of which [Mr. Garza] must spend in home confinement, for his role in his companies’ purported generation and sale of virtual currency.” The so-called stablecoin founder was also ordered to pay restitution of more than $9 million. After sentencing, he was released on bond, having been also ordered to report for incarceration at the start of next year.

Also read: Mt. Gox Victims Must Take Claims to Tokyo, Not US, Judge Rules

Josh Garza Is Finally Sentenced, 21 Months in Prison, $9 Million Fine

Slightly more than four years ago, nearly a lifetime in the crypto space, Mr. Garza, 33, is alleged, over an eight-month period, to have “through GAW, GAW Miners, Zen Miner, and Zen Cloud, companies he founded and operated, defrauded victims out of money in connection with the procurement of virtual currency on their behalf,” according to a press release from the US Attorney from Connecticut.

GAW/Paycoin 2014 Scam: Josh Garza Sentenced to 21mos Prison, $9M Fine
Mr. Garza during better times.

Mr. Garza and cohorts were involved in selling miners, access to them, and an alternative cryptocurrency called Paycoin, described as one of the first stablecoins, along with what were known as hashlets. According to the complaint, subsequent indictment, and eventual conviction, a hashlet “entitled an investor to a share of the profits that GAW Miners or Zen Miner would purportedly earn by mining virtual currencies using the computers that were maintained in their data centers. In other words, hashlet customers, or investors, were buying the rights to profit from a slice of the computing power owned by GAW Miners and Zen Miner.”

He was also alleged to have made false promises to potential and real investors, including “that GAW Miners’ parent company purchased a controlling stake in Zen Miner for $8 million and that Zen Miner became a division of GAW Miners,” prosecutors maintain. He pushed hashlets, a kind of early cloud mining, which the government claims was fraudulent. His “companies sold more hashlets than was supported by the computing power maintained in their data centers.”

Josh Garza Imprisoned and Fined $9M over GAW Paycoin Scam
Even at its peak, Paycoin failed to maintain its promised $20 peg, reaching a peak of $15.92.

An Early Crypto Ponzi

Then there were the alleged pump and dump schemes. According to authorities, he “also stated that the market value of a single Pay Coin would not fall below $20 per unit because [his businesses] had a reserve of $100 million that the companies would use to purchase Paycoins to drive up its price. In fact, no such reserve existed.”

GAW/Paycoin 2014 Scam: Josh Garza Sentenced to 21mos Prison, $9M FineAll of it turned out to a be a classic Ponzi, whereby Mr. Garza is alleged to have taken money from one company to prop up another, essentially borrowing from newer investors while trying to keep older ones from getting too concerned. “The payments were money that the companies owed the older investors based on the purported mining GAW Miners and Zen Miner had done on the investors’ behalf. Through this scheme,” the government charges, he “defrauded hundreds of individuals around the world of a total of $9,182,000. Judge Chatigny ordered [Mr. Garza] to pay restitution in the equivalent amount.”

Josh Garza Sentenced to Prison and Fined $9M over GAW & Paycoin Scam
Mainstream media and go-to pundits such as Mr. Casey were often unwitting cheerleaders of scams (thanks to Jamie Redman for source and graphic).

It was one of the very first US crypto crime cases, involving multiple law enforcement and regulatory agencies from the Federal Bureau of Investigation to the Securities and Exchange Commission (SEC), and the US Department of Justice. Summer of last year, Mr. Garza struck a plea deal with authorities over criminal matters. A suit by the SEC remains ongoing, however, and could very well dampen things for Mr. Garza even further. 

Was justice served in the Garza case? Let us know in the comments section below.


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Former RBI Governor Stirs Up PMO India – Time For Better Banks

Former RBI Governor Stirs Up PMO India – Time For Better Banks

Bank frauds in India have opened a can of worms this year, leaving the public questioning concepts such as board, governance, public sector, bankruptcy, and investor transparency with anxiety and anger. As a former RBI Governor raises more questions with the Prime Minister’s Office, it’s time to bring crypto finance to the debate.

Also read: Thai Government Approves Crypto Exchange, Wants Own Wallet

Rajan and RBI – Fraud Concerns Continue

In a note to the Chairman of Estimates Committee, former RBI Governor Raghuram Rajan has put together a list of high profile cases of banking frauds. It has been sent to the Prime Minister’s Office (PMO) for a coordinated action.

Former RBI Governor Stirs Up PMO India – Time For Better Banks
A series of financial fraud cases has been reported in India.

The note to the Parliamentary panel details serious concerns as to the rise in size of frauds in the public sector banking system. Urgency and speed has been expected by ex-RBI Rajan, who mentions use of new tools, stringent penalties for non-compliance, swift enactment of the Bankruptcy Code and an AQR (Asset Quality Review) process.

Fraud cases at a number of public sector banks – as well as private banks – have brought the opacity of the current banking business model into the spotlight along with awareness of the oversight of the Board of Directors.

Stop Spinning the Wheel – Reinvent It

A recent report on Indian digital customers by payments company FIS indicates 18% of them have reported a fraud in the past year. The most affected age group was between 27 to 37 years – also the ones who are more inclined to use digital banking apps.

With recapitalization plans as huge as Rs 1.35 trillion announced last year, and the total capital infusion into banks over the past decade rounding to some Rs 2.65 trillion as per other media reports, this is also a time to bring more transparency and disintermediation into the overall radar of RBI in India. After the 2008 crisis in the US, and bail-outs to many collapsing global economies across the world, the global financial world can use some radical ways to rethink banking and money.

Former RBI Governor Stirs Up PMO India – Time For Better Banks

Something that can complement or fill the gaps that erstwhile banking systems have inflicted upon investors and customers – something like blockchain and cryptocurrency, perhaps. Where trust is not subject to the dangers of being broken via such frauds, and where trust, ironically, exists in the DNA of a trustless system.

A decentralized fabric of transactions may not be a plug-and-play answer to some of the present woes of the BFSI sector, but it could be a parallel or phased answer perhaps. There is no harm in considering more options, including cryptocurrency-based solutions, to inject some much-needed transparency into the industry.

What solutions would you suggest to fight fraud in the banking sector? Let us know in the comments section below.


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Belgium Warns of 28 New Fraudulent Crypto Platforms – 78 in Total

Belgium Warns of 28 New Fraudulent Crypto Platforms – 78 in Total

Belgium’s Financial Services and Markets Authority (FSMA) has published a list of cryptocurrency platforms showing signs of fraud. The list currently contains 78 crypto platforms, including 28 platforms added on Tuesday. Despite warnings, the FSMA continues to receive complaints from consumers about these crypto firms.

Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals

FSMA’s New Warning

Belgium’s Financial Services and Markets Authority (FSMA) announced Tuesday, September 4, that it has “updated its list of cryptocurrency trading platforms regarding which it has received questions/complaints from consumers and vis-à-vis which it has identified signs of fraud.”

The agency wrote:

Despite its earlier warnings the FSMA continues to receive new complaints of consumers who have invested in cryptocurrencies through these trading platforms. Hence, the FSMA repeats its warning against the fraudsters behind those platforms who are using cryptocurrencies to swindle consumers.

Belgium Warns of 28 New Fraudulent Crypto Platforms – 78 in TotalThe agency started keeping a list of crypto trading platforms showing signs of fraud in February. Currently, there are 78 platforms on the list, including the latest 28 which the agency added on Tuesday.

Fraudsters “try to attract customers online through fake cryptocurrencies and huge profits,” the agency noted, emphasizing that “the only thing they actually do, however, is take the customers’ money and disappear. It is as simple as that.”

28 New Crypto Platforms Showing Fraudulent Signs

Belgium Warns of 28 New Fraudulent Crypto Platforms – 78 in TotalThe 28 new platforms the ESMA warned about are 1st-cryptobank.com, bitc-international.com, boursebitcoin.com, ccg-investment.com, crownmanagers.com, crypto.bnd-group.com, crypto-access.com, cryptofrancecapital.com, cryptorama-bank.com, cryptos-marketplace.com, cryptowallet24.com, e-cryptoney.com, ecrypto-international.com, emarketstrade.com, executivecrypto.com, fair-oakscrypto.com, fast-coin.eu, globalmarkets-group.com, ldc-crypto-com, lgsinvestpartners.com, london-exchange.com, minedecrypto.com, mondial-investissement.com, placementcrypto.com, primecryptobank.com, truetrade-capital.com, vechain-wallet.com, and wallet-coins.com.

The financial watchdog emphasized:

This list of cryptocurrency trading platforms is based solely on the findings of the FSMA, in particular as a result of consumers’ reports. As such, it does not include all the companies which might be operating unlawfully in Belgium in that sector.

Many fraudulent platforms “claim to be active in the cryptocurrency trade,” the agency noted. However, after investing in cryptocurrencies through these platforms, consumers either “never recover the funds invested,” or “they simply have heard nothing further from the company after investing their money.”

Furthermore, the FSMA added that “some of these platforms also offer other financial products with cryptocurrencies as underlying asset,” such as “savings accounts with supposedly guaranteed returns, servicing rights or derivative products such as CFDs.”

What do you think of the FSMA’s list of crypto platforms showing signs of fraud? Let us know in the comments section below.


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The Daily: Chinese Crackdown Continues, ICO Head Faces 15 Years in Prison

The Daily: Chinese Crackdown Continues, ICO Head Faces 15 Years in Prison

In today’s edition of Bitcoin in Brief we cover stories about the latest development in the ongoing Chinese government crackdown on online crypto forums, an ICO head who faces up to fifteen years in a US prison for securities fraud, and more.

Also Read: Investor Portal Launches Jobs Board for Cryptocurrency Industry

Chinese Crackdown Continues

The Daily: Chinese Crackdown Continues, ICO Head Faces 15 Years in PrisonThe Chinese government has recently begun another crackdown on cryptocurrency investors. And the latest stage in this effort is focused on the country’s big three internet giants Baidu, Alibaba and Tencent (commonly referred to together as BAT). The Baidu search engine, known as China’s Google, has reportedly closed a number of its popular crypto chat rooms, including “Digital Currency Bar” and “Virtual Currency Bar,” only explaining that this was done “in accordance with relevant laws, regulations and policies.” Alibaba’s Ant Financial announced it will restrict or ban Alipay accounts if they would take part in cryptocurrency trades. Tencent stated it will monitor its Wechat network in real-time to block crypto trading using the app.

This comes after already shutting down the Wechat social media accounts of several local crypto news outlets, blocking access to 124 foreign exchanges said to be targeting Chinese and banning hotels and other venues from hosting blockchain-related events.

ICO Head Faces 15 Years in Prison

Eran Eyal, the CEO and Founder of Shopin which raised over $42.5 million in an ICO back in April, is facing up to fifteen years in prison. The New York State Attorney General has charged Eyal with allegedly defrauding $600,000 from investors when he was the CEO of Springleap, Inc., a global crowdsourcing company. The heart of the accusations is about making false representations. To attract investors, he allegedly lied, or greatly overexaggerated, regarding the company’s management team, advisory board, creative professionals, and client base.

“As we allege, this massive securities fraud scheme bilked investors out of hundreds of thousands of dollars,” said AG Barbara Underwood. “Defrauding New Yorkers through false representations and fabrications about a business will not be tolerated by my office – and we’ll continue to do what it takes to root out and prosecute securities fraud.”

Hackers Hit Brazilian Atlas

The Daily: Chinese Crackdown Continues, ICO Head Faces 15 Years in PrisonHackers have allegedly stolen clients’ personal details from the Brazilian crypto investment firm Atlas Quantum. While no funds were reported lost, the data of 264,000 people was compromised. CEO Rodrigo Marques issued a statement, explaining that: “We believe that an unauthorized party has gained information about our customers’ names, e-mails, phones, and balances. All other data, such as passwords, is encrypted and secure. There was no access to the funds in our custody. We are conducting an investigation, supported by our information security team, in addition to authorities. The entire database and information were sealed the moment we heard about it. We emphasize that we are constantly monitoring all activities within our environment. Some features of the platform have been temporarily disabled as a precaution to ensure the safety of our customers against possible fraud attempts. We are working to restore it as soon as possible.”

He added: “We are aware that this type of incident should be avoided at all costs. That is why, on behalf of all Atlas Quantum employees, I reiterate that we will ensure that all security is strengthened and we will continue to work closely with partners and authorities to ensure the integrity of our customers.”

International Soap Opera

Thai police investigators are expected to expand their probe of an alleged theft of over 5000 BTC from a Finnish investor who was duped with promises of high returns in a casino ICO token in Macau. The case made headlines with the arrest of a local soap opera actor, 27-year-old Jiratpisit “Boom” Jaravijit, for colluding with his sister and brother on the scam. His parents were also questioned by police on Monday and denied any involvement.

According to court documents cited by Thai media, the suspects have conspired to commit fraud and engage in money laundering of 5,564.4 BTC sent by 22-year-old Aarni Otava Saarimaa. They promised the funds would be invested in a company called Expay Software Co. and in Dragon Coin. Instead, the BTC was converted into fiat Thai baht and sent to 51 bank accounts belonging to seven people, with part of the money used to buy land in and around Bangkok.

What do you think about today’s news tidbits? Share your thoughts in the comments section below.


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Thailand Updates ICO Licensing Progress, Warns Firm Issuing Token Without License

Thailand Updates ICO Licensing Progress, Warns Firm Issuing Token Without License

The Thai Securities and Exchange Commission has revealed the number of applications it has received from businesses wanting to operate initial coin offering portals in the country. However, at least one company is already issuing a token without obtaining approval. Meanwhile, the first Thai Stock Exchange-listed company to launch a token has a new plan to revitalize its coin.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

ICO Portal Applications

The Thai Securities and Exchange Commission (SEC), the country’s main cryptocurrency regulator, has revealed the number of companies that have applied to operate initial coin offering (ICO) portals in the country.

Thailand Updates ICO Licensing Progress, Warns Firm Issuing Token Without LicenseAccording to the Bangkok Insight, Mrs. Praopon Senanarong, the Assistant Secretary of the Thai SEC, said that the regulator is reviewing six applications for ICO portals, which are expected to be approved in the fourth quarter of this year. In addition, 12 more portals are interested but have not formally applied for a license.

Furthermore, the SEC will set up a committee of ICO experts and SEC representatives to oversee ICOs and ICO portals in September.

Firm Issuing Token Without License

The SEC issued a public warning last week about DB Hold Plc soliciting investments in shares and a token without approval after receiving inquiries from investors regarding the company.

Thailand Updates ICO Licensing Progress, Warns Firm Issuing Token Without LicenseAfter investigating, the SEC found that the company has been soliciting investors through social media for company shares and pre-ICO tokens in the amount of 500 million baht (~US$15,346,130).

Emphasizing that DB Hold Plc is not authorized to issue tokens, the SEC says that it has ordered the company to cease all activities relating to the issuance of the token. Furthermore, the regulator reiterates that no company has been granted approval to issue new tokens. Companies that launched their tokens prior to the adoption of the country’s crypto regulations, however, are exempt from having to apply for a license.

New Plan for First ICO by Thai Stock Exchange-listed Company

Jmart Plc is the first company listed on the Stock Exchange of Thailand to issue a token. The company issued Jfincoin through its subsidiary, Jventures Plc. Despite much effort, the coin’s value has fallen from 6.60 baht (~$0.20) per coin in February to about 1.70 baht (~$0.05) within 6 months of launch, Mgr Online reported.

Thailand Updates ICO Licensing Progress, Warns Firm Issuing Token Without LicenseAdding to the loss of investor confidence is the allegation that a former Jventures executive was involved in the high-profile bitcoin fraud case involving a well-known soap actor scamming a Finnish bitcoiner, the news outlet detailed.

The company has now come up with a new plan. Jmart is seeking permission from the Bank of Thailand and the SEC to use Jfincoin for payments in stores, starting with its own Jmart stores. If approved, this coin will be the first legal token that can be used for payments in the country, the publication conveyed.

What do you think of the way Thailand is handling ICOs? Let us know in the comments section below.


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$1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction

$1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction

The US Commodities Futures Trading Commission (CFTC) helped bring a fraud case to court, hoping to both assist in its ultimate prosecution and establish precedent. The New York Eastern District Court decided in the CFTC’s favor, ending in a combined over $1.1 million decision in fines and restitution. It also established the regulator as having jurisdiction over cryptocurrencies. 

Also read: China Continues Crackdown: No Hotels, Malls, Offices Used as Crypto Venues

CFTC Wins Precedent Setting Case to Regulate Crypto

It’s rare a legal case accomplishes two firsts. In the proceedings taken against Patrick K. McDonnell, Cabbage Tech, and Coin Drop Markets, the New York Eastern District Court decided to not only rule against the defendant, but also wound up establishing standing for US regulator Commodities Futures Trading Commission (CFTC).

$1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction

Until the decision handed down on August 23rd, 2018 in a 139-page Memorandum, it was assumed the Securities and Exchange Commission (SEC) would be the lone regulator when it came to cryptocurrencies in the US. As a result, part of the case involved the CFTC arguing for its jurisdiction when it came to crypto scams in general.

In what amounts to a permanent injunction, the defendant was ordered to pay more than a quarter million dollars in victim restitution along with a fine of more than $800,000, bringing the grand total to more than $1.1 million.

Politically Motivated?

It was alleged during the first six months of 2017, the defendants fraudulently lured victims into believing they were purchasing and trading under the expert advice of Mr. McDonnell and Cabbage Tech. Evidently, Mr. McDonnell was listed as Chief Technology Officer, insisting he and Cabbage Tech had offices in places such as Wall Street, among other falsehoods about the company’s infrastructure, prosecutors claim.

$1.1 Million Landmark Crypto Fraud Case Establishes CFTC Jurisdiction
Investigations revealed the company was a one man enterprise operated from Mr. McDonnell’s home. By summer of last year, the company’s website posted about being hacked, and declared it would suspend all activity. Not long after, the website and its chatroom, along with social media accounts, had been shuttered. Customers were left to wonder. By the beginning of this year, the CFTC charged defendants with “a deceptive and fraudulent virtual currency scheme for purported virtual currency trading advice; for virtual currency purchases and trading misappropriated [investor] funds.”

Though the CFTC prevailed, Mr. McDonnell maintained he was the subject of a political prosecution. As he explained to news.Bitcoin.com just a few months ago, he believed the “CFTC was grandstanding in Washington just weeks later of the complaint asking for a budget increase and pointing at their most recent ‘cryptocurrency’ enforcement. Much of this will come to light throughout the trial and you will see the CFTC was reckless in an attempt to force regulation. They needed something to point at,” Mr. McDonnell complained.

Is having the SEC and now the CFTC going after crypto scams a good thing? Share your thoughts in the comments section below.


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Bitcoin ETFs Rejected Again: SEC Denies 9 Hopefuls in 3 Decisions

Bitcoin ETF Rejections: SEC Shoots Down 7 Hopefuls in 2 Decisions

The United States Securities and Exchange Commission (SEC) has issued three published decisions, covering nine different Bitcoin ETF. Applications put forward by Direxion, Pro Shares, and Granite Shares were rejected along largely the same lines of argument.

Also read: Meet Bitmain Founder Jihan Wu: A Most Important Man in Crypto

Bitcoin ETFs Denied in Three Published Decisions

The heavily footnoted rejection document runs some 24 pages, but the heart of the matter very well could be tucked away on page 22, under the heading “Protecting Investors and the Public Interest”. In its analysis section, the SEC notes, “The Commission acknowledges that, compared to trading in unregulated bitcoin spot markets, trading a bitcoin-based ETF on a national securities exchange may provide some additional protection to investors,” a concern many bitcoin mainstreaming enthusiasts point out as reason enough to join regulated exchanges.

Bitcoin ETF Rejections: SEC Shoots Down 7 Hopefuls in 2 Decisions

Evidently the SEC doesn’t see it that way. As the denial details further, “the Commission must disapprove a proposed rule change filed by a national securities exchange if it does not find that the proposed rule change is consistent with the applicable requirements of the Exchange Act—including the requirement under Section 6(b)(5) that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices.”

More Clarity, But a Surprise to Some

That order shot down all five proposals by Direxion. The heavy work out of the way, the SEC basically used the same arguments in Release no. 34-83904; file no. SR-NYSEArca-2017-139, also of August 22, 2018. Similarly titled, “Order Disapproving a Proposed Rule Change to List and Trade the Shares of the Pro Shares Bitcoin ETF and the Pro Shares Short Bitcoin ETF,” it dashes eager hopefuls immediately.

Bitcoin ETF Rejections: SEC Shoots Down 7 Hopefuls in 2 Decisions

In even more heavily footnoted pages and a longer publication of 26 pages, the agency nearly word for word reprints the above rationale, concluding a paragraph later, “Thus, even if a proposed rule change would provide certain benefits to investors and the markets, the proposed rule change may still fail to meet other requirements under the Exchange Act. For the reasons discussed above, the Exchange has not met its burden of demonstrating an adequate basis in the record for the Commission to find that the proposal is consistent with Exchange Act Section 6(b)(5), and, accordingly, the Commission must disapprove the proposal,” ending Pro Shares current bid.

Lastly, Granite Shares fell victim to the same reasoning as the other two companies above in the SEC’s “Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Order Disapproving a Proposed Rule Change to List and Trade the Shares of the GraniteShares Bitcoin ETF and the GraniteShares Short Bitcoin ETF,” it titled its denial.

For Bitcoin ETF proponents this an obvious setback, one perhaps they were not expecting (though a decision was rumored by this Thursday). A positive takeaway for future litigation with the agency is the extent it took to deny these ETF tries. There is a lot of information yet to be digested by concerned parties. A careful reading, the right configuration, and perhaps a new day can be had. For now, the SEC is not budging.

Do you think this will have a negative impact on the ecosystem? Share them in the comments section below.


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FTC Warns of Rise in Bitcoin Blackmail Scams Targeting Cheating Husbands

The Federal Trade Commission (FTC) is attempting to combat bitcoin blackmail scams by offering consumers advice through its website. In a bulletin published on Aug. 21, the FTC Division of Consumer and Business Education posted a sample quote from a typical BTC blackmail scam: “I know about the secret you are keeping from your wife

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Thai Central Bank Defends Cryptocurrencies

Thai Central Bank Defends Cryptocurrencies

In the high-profile Thai crypto fraud case involving an actor, Thailand’s central bank has clarified that the fraud is not related to cryptocurrency trading, but a general misuse of money. Thailand has recently legalized seven cryptocurrencies, authorized seven crypto firms, and the Bank of Thailand has green-lighted commercial banks’ subsidiaries for crypto activities.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Bank of Thailand’s Clarification

Thai Central Bank Defends Cryptocurrencies
Mr. Veerathai Santiprabhob.

The current high-profile fraud case involving over 5,564 BTC has received much attention in Thai media. It involves a well-known soap actor and model, Jiratpisit Jaravijit, also known as “Boom”.

The Thai News Agency reported on August 20 that the Bank of Thailand (BOT) Governor, Mr. Veerathai Santiprabhob, has clarified that this fraud case is not about crypto trading. He pointed out that, as far as he knows, the scheme was not dependant on using cryptocurrencies. He emphasized that in this case:

The money is used for the wrong purpose. It is not a fraud that occurred during crypto trading.

Mr. Veerathai continued to warn investors that crypto investing is risky due to price volatility, reminding them that they should understand the risks and only invest what they can afford to lose.

Further Development of the Case

This case involves a Finnish bitcoiner and his partner being duped into investing in fraudulent investments including tokens called dragon coins, as news.Bitcoin.com previously reported.

Thai Central Bank Defends CryptocurrenciesAccording to local media, the Thai police’s Crime Suppression Division (CSD) summoned eight scam suspects on Thursday. They were Boom, members of his family, two businessmen and a former soldier, the Bangkok Post detailed.

The publication also reported that “a ‘whale’ investor in the Stock Exchange of Thailand (SET) and staff at up to three Thai banks are suspected of being complicit” in the fraud. Three of the country’s largest banks – Bangkok Bank, Siam Commercial Bank and Kasikornbank – were named. “All handled transactions involving part of the swindled money,” the publication noted and quoted the police explaining:

Police said several of the banks’ employees failed to report money transfers of 2 million baht [~US$61,040] or higher, a serious violation of bank rules. Staff are required to inform the Anti Money Laundering Office (Amlo) when sums of this value change hands.

Thai Central Bank Defends CryptocurrenciesThailand has recently enacted its cryptocurrency regulations. The country’s main crypto regulator, the Thai Securities and Exchange Commission (SEC), has authorized seven crypto firms, five of which are crypto exchanges, to legally operate in the country. The regulator is also reviewing other applications. The seven cryptocurrencies that can be legally traded for the Thai baht are BTC, ETH, BCH, ETC, LTC, XRP, and XLM.

In addition, the SEC has revealed that about 50 initial coin offering (ICO) projects are seeking to launch, five ICO portals plan to open for business, and 20 crypto exchanges have applied for a license. Meanwhile, the Bank of Thailand has green-lighted subsidiaries of commercial banks to engage in crypto activities.

What do you think of the Bank of Thailand’s action? Let us know in the comments section below.


Images courtesy of Shutterstock and the Bank of Thailand.


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Playboy Sues Wallet Developer for Failing to Integrate Crypto Across Its Platforms

Playboy Sues Wallet Developer for Failing to Integrate Crypto Across Its Platforms

Playboy is reportedly suing a Canadian cryptocurrency firm for allegedly failing to integrate a “wallet that would support a range of cryptocurrencies across the company’s online media, digital and casual gaming businesses.” Playboy.tv was supposed to be the first of the company’s platforms to feature the new crypto wallet and payment options.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Playboy Sues Canadian Crypto Company

Playboy Sues Wallet Developer for Failing to Integrate Crypto Across Its PlatformsPlayboy Enterprises Inc., the parent company of the Playboy magazine empire founded by Hugh Hefner, is suing a cryptocurrency firm listed on the Canadian Securities Exchange (CSE) “on allegations of fraud and breach of contract,” the LA Times reported Monday.

In the lawsuit filed in Los Angeles, Playboy claims that Global Blockchain Technologies (CSE: BLOC) “failed to live up to an agreement to integrate blockchain technology into Playboy’s online media channels,” the publication elaborated. The Beverly Hills-based company is seeking unspecified compensatory and punitive damages.

Global Blockchain Technologies, on the other hand, dismissed the suit as a “normal dispute” between two firms, calling the fraud allegation “frivolous.” In a statement to the news outlet, the Vancouver-based company wrote, “Global believes it has a strong defense to the action and will be vigorously defending same.”

Playboy’s Crypto Integration Plan

The two companies made an agreement in March, according to the lawsuit. At that time, Playboy announced:

The company is developing an online payment wallet that will support a number of cryptocurrencies across the company’s online media, digital and casual gaming businesses.

Playboy Sues Wallet Developer for Failing to Integrate Crypto Across Its Platforms“Playboy.tv will be the first of the company’s media platforms to feature the new digital wallet,” the company wrote, adding that it “will enable the online platform to accept vice industry token (VIT), among other leading cryptocurrency tokens, for access to the brand’s exclusive content.” The crypto wallet is expected to be “available before the end of the year,” Playboy confirmed at the time. Playboy.tv currently advertises over 80 TV shows and over 2,000 episodes.

Launched in April, VIT aims to be a payment medium for the adult, gambling, and cannabis industries. Its market cap quickly rose to a high of $7 million after launch but has been falling steadily to just above $1 million today, with each token currently worth two-thirds of a penny at the time of this writing.

Playboy Sues Wallet Developer for Failing to Integrate Crypto Across Its PlatformsGlobal Blockchain Technologies made a separate announcement in May that it was “building a cryptocurrency wallet for Playboy that can hold VIT” to be integrated into “the Playboy.tv web media portal.” The company also confirmed at the time that “the integration of VIT into Playboy.tv and the wallet is set to be launched before the end of 2018.”

However, in the lawsuit filed, the LA Times reported:

Playboy said GBT [Global Blockchain Technologies] hasn’t made good on the deal and also failed to pay the $4 million it promised as part of the agreement.

What do you think of Playboy suing Global Blockchain Technologies? Do you think Playboy will find another way to integrate crypto? Let us know in the comments section below.


Images courtesy of Shutterstock, Global Blockchain Technologies, and Playboy.


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