70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes

70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes

Forty regulators in the US and Canada are reportedly collaborating in the largest coordinated crackdown on cryptocurrency scams to date by state and provincial officials. The operation has triggered over 70 investigations so far, with 35 cases completed or pending.

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

Mass Crackdown

The North American Securities Administrators Association (NASAA) said Monday that US and Canadian securities regulators have launched nationwide investigations on suspicious cryptocurrency investment schemes, the Washington Post reported. This is “the largest coordinated crackdown to date by state and provincial officials on bitcoin scams,” the news outlet wrote. CNBC elaborated:

More than 40 state and provincial watchdogs are participating in ‘Operation Crypto-Sweep,’ which has triggered at least 70 investigations so far.

70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto SchemesNASAA is a voluntary association whose members are securities administrators from states, provinces, and territories in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico. According to its website, the association is the oldest international organization devoted to investor protection.

The association, which helps coordinate Operation Crypto-Sweep, confirmed that “as many as 70 investigations have been opened in the sweep, with more expected in the coming weeks.” Furthermore, the Washington Post detailed, “As many as 35 cases are pending or already completed, with some resulting in cease-and-desist letters warning the alleged schemes that their unregistered activity violates state securities law.”

The efforts focus on “unregistered securities offerings that promise lucrative returns without adequately informing investors of the risks” as well as initial coin offerings (ICOs), the regulators explained.

Fighting Fraud

By posing as members of the public, the NASAA task force found roughly 30,000 crypto-related domain name registrations, the news outlet described, adding that “Many of the alleged scams use fake addresses, slick marketing materials and promises of over 4 percent daily interest,” the news outlet described. “A few have even used unauthorized photos of high-profile individuals, such as Supreme Court Justice Ruth Bader Ginsburg, to portray themselves as aboveboard.”

70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto SchemesThe director of enforcement at the Texas State Securities Board, Joseph Rotunda, was quoted saying, “Although the international task force’s work is far from complete, my suspicions have already been confirmed: The market for cryptocurrency investments is saturated with fraud, and our work is only revealing the tip of the iceberg.”

Last week, the Wall Street Journal published a study showing that out of 1,470 ICOs, 271 were found to contain “red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.” Investors have poured more than $1 billion into these 271 ICOs, the publication added. In addition, a Chinese government-backed industry organization also published its fake crypto analysis last week, claiming that its monitoring system has detected 421 fake cryptocurrencies.

Massachusetts’ Secretary of the Commonwealth, William Francis Galvin, emphasized on Monday:

Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution.

NASAA president and the director of the Alabama Securities Commission, Joseph Borg, explained that “consumers face higher risks of being misled at a time when the intense demand for bitcoin has prompted many retail investors to take extreme steps to gain exposure to the currency, such as taking out a bigger mortgage.”

What do you think of Operation Crypto-Sweep? Let us know in the comments section below.


Images courtesy of Shutterstock and NASAA.


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China Has Found 421 Fake Cryptocurrencies

China Has Found 421 Fake Cryptocurrencies

A Chinese government-backed industry organization has published a report on fake cryptocurrencies. As of April, its monitoring platform has found 421 fake cryptocurrencies, 60% of which are deployed overseas. The Committee has also outlined major red flags of these cryptocurrencies.

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

421 Fake Cryptocurrencies

China Has Found 421 Fake CryptocurrenciesThe National Committee of Experts on the Internet Financial Security Technology (IFCERT), a Chinese government-backed industry organization, published the results of its analysis on fake cryptocurrencies on Friday.

China Has Found 421 Fake CryptocurrenciesCiting that “In recent years, virtual currencies represented by bitcoin, litecoin, ethereum, etc. have received continuous attention,” IFCERT pointed out that “some criminals are engaged in financial fraud or pyramid schemes under the cover of virtual currency.” The Committee added that fake cryptocurrencies frequently appear, “causing investors to suffer major losses.”

IFCERT’s National Internet Financial Risk Analysis Technology Platform continuously monitors fake cryptos, the Committee detailed, elaborating:

As of April 2018, the technology platform has found 421 fake virtual currencies, of which more than 60% of fake virtual currency website servers are deployed overseas. Such platforms are difficult to find and difficult to track.

The Red Flags

China Has Found 421 Fake CryptocurrenciesThe Committee outlined some major red flags of these fake cryptocurrencies. Firstly, they adopt “pyramid-based” business models, claiming that their cryptocurrencies will generate high returns.

Secondly, they have no real code, IFCERT described, noting that they either do not have a blockchain or cannot generate blocks for one.

Thirdly, they will not be traded on legitimate cryptocurrency exchanges, “so they often trade on over-the-counter or proprietary exchanges,” the report detailed, adding that:

There is a phenomenon that prices [on these platforms] are highly controlled by institutions or individuals, which tends to cause the illusion of rapid price increase. However, users often cannot conduct transactions or withdraw cash.

IFCERT emphasized that fake cryptocurrencies have no value and are illegal, asserting that “Many of these platforms do not have business premises and business information, and servers are often deployed overseas,” so it will be difficult to recoup any losses for victims.

271 Fake ICOs

On Thursday, the Wall Street Journal independently published its finding after a review of documents produced for 1,450 initial coin offerings (ICOs). The publication “has found 271 with red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.”

Investors have poured more than $1 billion into these 271 ICOs, the publication detailed, adding that “some of the firms are still raising funds, while others have shut down. Investors have so far claimed losses of up to $273 million in these projects, according to lawsuits and regulatory actions.”

Do you think there are many more fake cryptocurrencies? Let us know in the comments section below.


Images courtesy of Shutterstock and IFCERT.


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ICO Project Polymath Is Trying to Buy a Stake In a Real Stock Exchange

If one announcement summarizes the ambitions of crypto project Polymath, it might be Wednesday's acquisition of the domain "Tokens.com" One of its several this week, it cuts to the heart of the project's aims to dominate the issuance of tokenized securities. But the plans go beyond just the acquisition of potentially popular domain names. In the […]

Launching an ICO Token on Ethereum in Less Than Thirty Minutes

Launching an ICO Token on Ethereum in Less Than Thirty Minutes

Over the past few years since the launch of the Ethereum network and other blockchains that can create tokens, initial coin offerings (ICOs) have been all the rage as all of these token projects have raised billions of dollars in ether, bitcoin, and other cryptocurrencies. A great majority of the ICOs today are ‘ERC-20 tokens’ created by the Ethereum Virtual Machine (EVM) with no more than a few hundred lines of code. Unfortunately, there’s a big misconception that a bunch of nerdy geniuses created these blockchain-based tokens, and today we’re going to show you just how easy it is to create an ERC-20 token — In less than thirty minutes.

Also read: Introducing the ‘Do Nothing Technologies’ Blockchain-Based ICO

Posternut (PNT): The ERC-20 Token Created in Less Than 30 Minutes

Today we decided to create a contract using the programming language Solidity, in order to create a custom token using the Ethereum network. We want to demonstrate just how easy it is for anyone with very little coding knowledge to launch a coin. There are lots of ICOs out there in the crypto-space and a great majority of them are ERC-20s derived from the public Ethereum blockchain. Essentially an ERC-20 token is a contract written in Solidity that sets the parameters of the coins attributes, like where the tokens are stored, the token’s name, ticker symbol, supply, and more.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes
We used this code here found in the walkthrough written by Moritz Neto and the code was developed by an Ethereum developer called ‘BokkyPooBah.’

The Necessary Requirements

Finding out how to create a token only takes a minute with a quick Google search on the subject. We followed a short walkthrough written by Moritz Neto, and watched a quick video filmed by the Youtuber Ivan on Tech. Both instructions detailed the creation of an ERC-20 token that can be done in less than 20 minutes, and we created a token called ‘Posternut (PTN) in 25 minutes. In light of our first time creating a Solidity contract, we used ETH testnet tokens on the Ropsten Network so no real funds were lost.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes
Using a text editor to modify the copied Solidity code is helpful as you can find the lines of code that need to be updated more easily. The max supply, token name, address output, and token symbol are just some of the things you can change within the code.

Next, we decided to download the Metamask Chrome extension Ether wallet, a fairly smooth platform but still in beta. Other wallets can be used to create a token contract as well, like Mist and the My Ethereum Wallet (MEW) platform. You are also going to need some testnet ETH for the ‘gas’ (network fee) to create the contract on the Ropsten Network, and there are a bunch of Ropsten faucets that dispense testnet ETH. We stocked up on some coins and then found a contract which we got in Moritz Neto’s guide, but there are all types of solidity contracts that can be re-written. Basically, we left this page open in the browser to copy and paste the Solidity contract, and all that is needed next is some slight modifications.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes
Using Remix to set the parameters of the code, double check it and deploy on the Ethereum Ropsten Network. This entire process can also be done on the ETH mainnet with real funds.

Then we went to a website called remix.ethereum.org which is used to launch the contract. This process can also be processed on the aforementioned wallets above as well, but we used the Remix Solidity IDE platform. After copying a token contract you need to paste the code into the Remix platform and edit a few parameters. This is when you want to choose the tokens name, the token’s symbol, the max supply, and the Ethereum address to deposit the tokens. After all of that is chosen and changed within the copy and pasted code, the next option is to ‘run’ the codebase you edited. If there are any warnings that are ‘critical’ the Remix platform will tell you something is wrong. In the ‘run’ section choose ‘Injected Web (Ropsten)’ and the name of your contract.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes
Deploying the contract and confirming it using Remix and Metamask. After this step simply wait for an error or wait for the transaction to confirm and when it does your token will be complete.

From here the Metamask address is also tethered to our account and we simply pressed deploy. If something is wrong with the contract then it will display warnings in yellow or red and you may need to fix these issues before deploying the code to the Ropsten Network. After pressing ‘deploy,’ the transaction will be sent across the network. As soon as the transaction confirms the contract should be complete as long as there were no errors.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes
After Posternut (PTN) token was created we then sent the newly minted coins to another Metamask wallet address.

Things Needed to Deploy a Token Contract on the ETH Network in Thirty Minutes:

  • An Ethereum wallet. (Mist, MEW, Metamask)
  • Testnet Ethereum or real ETH can be used for gas.
  • A Solidity token contract.
  • A platform to deploy the contract either on testnet (Ropsten, Rinkby) or mainnet. (Remix, MEW, Mist)

The Simplicity of Launching an ICO

The name of our token is called ‘Posternut (PNT)’ and there are 100Mn tokens now in existence on the Ropsten network. Creating the token took only 25 minutes and the same thing can be done on the main Ethereum network with less than $20 USD worth of real mainnet ETH for gas. Most of the time-consuming parts of the process is basically studying the directions on how to create an ERC-20 token, and following each step. After creating the Posternut tokens we decided to send the 100Mn PTN to another address which was sent with no issues.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes
The Posternut (PTN) token was created on May 10, 2018, on the Ethereum Ropsten Network by Jamie Redman.

As we stated above, it doesn’t take a genius to build an ERC-20 contract and now that you have seen the different Solidity contracts that make this process work, you can also see if an ICO project used this same method. Simply look at the contract code to see if it resembles something copied from another project, as you’d be surprised to find quite a bit of them. After creating the Posternut tokens there are only a few other things needed to launch an ICO. Observers will find that all a team needs to push a project, is a website, and a white paper. We all know that these ICOs raise a lot of money as token sales have raised over $5.6Bn in 2017 alone, and continue to raise funds this year. If all it takes is a website, 25 minutes of coding, and a white paper this may be why over 46 percent of ICOs fail.

Launching an ICO Token on Ethereum in Less Than Thirty Minutes

Before Investing in Token Sales, Do Yourself a Favor and Research These Projects

So before investing in an ICO do some research on the project and make sure it is not some ‘fly by night’ guy who coded a coin in less than thirty minutes. The fact is just because a person(s) can build an ERC-20 token doesn’t mean the project is worthy, and investors should diligently research ICO teams and the tokens they are selling. Otherwise, you could be purchasing a quickly made coin, and buying into a word salad white paper written to make you believe Posternut (PTN) tokens are the future of decentralization.

What do you think about launching an ERC-20 in less than thirty minutes? Let us know in the comments below. 

Disclaimer: Walkthrough editorials are intended for informational purposes only. This is a guide using testnet coins as real funds could be lost experimenting with this method. There are multiple security risks and methods that are ultimately made by the decisions of the user. There are various steps mentioned in reviews and guides and some of them are optional. Neither Bitcoin.com nor the author is responsible for any loss of funds, mistakes, skipped steps or security measures not taken, as the ultimate decision-making process to do any of these things is solely the reader’s responsibility. For good measure always cross-reference guides with other walkthroughs found online.


Images via Shutterstock, Twitter, and Jamie Redman. 


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Ripple Sued for Alleged Violations of US Securities Laws

Ripple Sued for Alleged Violations of US Securities Laws

A class action lawsuit has been filed against Ripple Labs, its CEO, and subsidiary. The plaintiff alleges that the defendants have violated the state and federal securities laws, engaging in schemes to raise hundreds of millions of dollars through the sale of unregistered ripple tokens (XRP).

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

Class Action Lawsuit

Ripple Sued for Alleged Violations of US Securities LawsSan Diego resident Ryan Coffey has filed a “securities class action” lawsuit against Ripple Labs Inc, its CEO Bradley Garlinghouse, its wholly owned subsidiary XRP II LLC, and ten related persons. Attorney James Taylor-Copeland representing Coffey filed the lawsuit with the Superior Court of the State of California, seeking damages on behalf of Coffey and all others similarly situated.

According to the court document dated May 3, Coffey purchased 650 XRP at $2.60 per token around January 6 and sold them at approximately $1.70 per token around January 18. Coffey described:

[The lawsuit] arises out of a scheme by defendants to raise hundreds of millions of dollars through the unregistered sale of XRP to retail investors in violation of the registration provisions of state and federal securities laws.

‘XRP Genesis and the Never-Ending ICO’

Ripple Sued for Alleged Violations of US Securities LawsCoffey detailed in his filing, “unlike cryptocurrencies such as bitcoin and ethereum…all 100 billion of the XRP in existence were created out of thin air by Ripple Labs at its inception in 2013.”

Citing that 20 billion tokens were given to Ripple Labs’ founders and 80 billion to the company itself, he alleges that the defendants “earned massive profits by quietly selling off this XRP to the general public,” adding:

From 2013 to the present, [the] defendants have been engaged in an ongoing scheme to sell XRP to the general public in a never ending ICO…Defendants’ sales of XRP to the public accelerated rapidly in 2017 and early 2018.

He also claims that “these ICOs have become a magnet for unscrupulous practices and fraud.”

Coffey alleges that the “defendants market XRP to drive demand and increase [its] price,” including “blur[ring] differences between Ripple Labs’ Enterprise Solutions and XRP.” Other tactics include offering a bribe to Coinbase and Gemini exchanges to list XRP and promising R3, an enterprise software firm with a network of banks and financial institutions, a 5 billion XRP option, Coffey added.

At the time of this writing, XRP is trading at $0.91 on Bitfinex, a 73% drop from its high of $3.30 in January.

Ripple Sued for Alleged Violations of US Securities Laws

Violations of Securities Laws

Citing that the US Securities and Exchange Commission (SEC) has made it clear that digital tokens including XRP often constitute “securities and may not be lawfully sold without registration with the SEC or pursuant to an exemption from registration,” Coffey elaborated:

The XRP offered and sold by [the] defendants have all the traditional hallmarks of a security…However, [the] defendants did not register XRP with the SEC, and many of the representations [the] defendants made regarding XRP were designed to drive demand of XRP, allowing defendants to obtain greater returns on their XRP sales.

Last month, the SEC stated that both XRP and ether could be classified as securities. However, Ripple’s chief market strategist, Cory Johnson, told CNBC in early April:

We absolutely are not a security. We don’t meet the standards for what a security is based on the history of court law.

Do you think this securities class action lawsuit against Ripple has any legs? Let us know in the comments section below.


Images courtesy of Shutterstock, Trading View, and Ripple Labs.


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