Hundreds of ICOs Being Secretly Investigated by SEC, Claims Report

'Secret' US Investigations into 'Hundreds' of ICOs, SEC 'Tightens Noose,' According to Report

Hundreds of startups are reportedly being “secretly” targeted by the U.S. Securities and Exchange Commission for their involvement with initial coin offerings. Companies that participated in ICOs are now scrambling to clarify whether their token constituted a security, and, if so, whether it was properly registered with or exempted by the SEC.

Also read: Europe, Japan and the ‘Drug’ of Quantitative Easing

SEC ‘Tightens the Noose’ on Startups That Used an ICO

Hundreds of ICOs Being Secretly Investigated by SEC, Claims ReportYahoo Finance and Decrypt claims that “Hundreds of startups that did token sales are finding out they’re in violation of securities law— including many that were sure they did it the right way.”  

The auspicious beginning of the present year came with subpoenas, characterized by the Commission as informational in scope. There appears to be more than mere cataloging of the crypto landscape, as “the Securities and Exchange Commission has significantly widened its crackdown on certain initial coin offerings, putting hundreds of cryptocurrency startups at risk.” The agency “has returned to many of those companies, and subpoenaed many more—focusing on those that failed to properly ensure they sold their token exclusively to accredited investors,” Decrypt notes.  

Formal litigation can be costly, taxing a given regulatory bureaucracy’s workload and clogging up courts and judges. It also appears the agency is at first moving to have suspected companies in violation settle. “In response,” Roberts explains, “dozens of companies have quietly agreed to refund investor money and pay a fine. But many startups that have been subpoenaed say they are left in the dark struggling to satisfy the SEC’s demands, and are uncertain of how others are handling it, according to conversations with more than 15 industry sources.”

IPOs Died in the US, Startups Resorted to ICOs

Compounding matters is how this widespread investigation was unearthed: anonymous sources due to the fact the agency formally “restricts them from discussing the matter,” Decrypt insists. Initial coin offerings are a twist on initial public offerings, IPOs, which have been effectively strangled out of existence in the United States within just the last few decades. Legacy American stock markets, for example, have something close to half the number of public companies listed as they might have otherwise.

'Secret' US Investigations into 'Hundreds' of ICOs, SEC 'Tightens Noose,' According to Report

Saddled with regulations, barriers to entry and countless legal frictions only hordes of lawyers can battle, smaller companies have been priced out of the IPO model for bringing a business to public market in the US. Instead, those that might have participated at one point wait in the queue at merger and acquisition wings of established juggernauts. That, or they leave the US altogether and try their hand in places such as Hong Kong, which has, sure enough, seen an IPO boom recent years.

ICOs, then, are at least part of a response to that environment. Unaccredited investors, with minimal friction, have accomplished in ICOs at least two things most analysts agree: financial democratization and innovation, but at the expense of a wildcat space filled with scams. A startup can in a manner of clicks become presentable enough to sell a proprietary digital token quickly.

A Game of Definitions

About a month after subpoenas were sent by the agency, Chairman Jay Clayton seemed to make the regulator’s opinion going forward very clear. During a Senate hearing on the subject of cryptocurrencies, Clayton stated flatly, “I believe every ICO I’ve seen is a security.” But what constitutes an ICO then becomes the question if every initial coin offering is subject to their jurisdiction. The agency “does not care” about semantics, the report scolds, even though some “companies that did ICOs called their offering something else, such as a ‘utility token’ or a ‘SAFT’ (Simple Agreement for Future Tokens, an ICO method in which investors buy a reservation for tokens yet to be launched).”  

'Secret' US Investigations into 'Hundreds' of ICOs, SEC 'Tightens Noose,' According to Report

Due to the cat and mouse nature of the space, “It is hard to say precisely how many ICOs occurred during the past four years,” Decrypt acknowledges. Thousands for sure, and more than “$20 billion has been raised in ICOs to date, but the ICO boom peaked in January 2018. Concerns over the legality of token sales have had a chilling effect.”

However, it is well known that all US firms anywhere near to offering a security are governed by the SEC in one form or another. And the agency does offer a formal exemption which asks participation be limited to vaunted “accredited investors” who earn more than $200,000 per year, for two years, and hold a net worth of at least $1 million – factors that probably led the company to seek an ICO in the first place. At that same Senate hearing, Clayton was asked how many had sought SEC approval. The answer came back ominously: almost none.

Will the SEC sorting out ICOs lead to a positive outcome for crypto markets? Let us know in the comments below. 


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Venezuela Demands Citizens Pay for Passports With Petro

Venezuela Demands Citizens Pay for Passports With Petro

Venezuelan authorities have found another way to impose the adoption of the state-issued cryptocurrency, the petro. Citizens will soon have to pay with the government-controlled digital coin if they want to obtain a travel document. Hundreds of Venezuelans are leaving the crisis-hit country every day.

Also read: New Stablecoins: From Cryptopound and Metal-Backed Swiss Coin to Mongolian ‘Candy’

‘Embracing’ Maduro’s Crypto

Venezuela Demands Citizens Pay for Passports With PetroVenezuelans might not have embraced the national cryptocurrency yet but their government has adoption on the agenda and it’s looking for ways to enforce it. Citizens of the economically battered South American country have been leaving their homeland despite its president’s attempts to restrain the record hyperinflation, resuscitate the ruined economy and circumvent mounting U.S. sanctions. The introduction of El Petro, the oil-backed, state-issued token, has been at the core of Nicolas Maduro’s plans to improve the socioeconomic situation.

Many Venezuelans don’t have great expectations about his proposed reforms, including the idea that a government-controlled cryptocurrency can bring tangible change. They have continued to depart at a daily rate of 5,000 people. To do that they need a passport. To obtain it, they’ll have to overcome another obstacle – travel documents will be issued in return for petro.

President Maduro and his leftist administration have not spared efforts to promote the digital coin that has raised many doubts – some say it’s not backed by anything, others claim it’s not really a crypto. Recently, authorities in Caracas made it an official unit of account, along with the redenominated, petro-pegged Venezuelan fiat currency, Bolívar Soberano, the “sovereign bolivar”. The government tried to impose it in this role both on businesses and banks. Now it has decided to put it into the wallets of Venezuelans, those who are trying to leave, and then take it as a fee.

Two Petros, One Passport

Venezuela Demands Citizens Pay for Passports With PetroNew Venezuelan passports will cost two petros, equivalent to 7,200 bolivars ($115 USD) or four minimum monthly wages, Maduro’s deputy, Vice-President Delcy Rodriguez stated Friday during a televised press conference, local and foreign media reported. By the way, the token has not even been issued to the public yet – it’s expected to go on sale on November 5.

Earlier this year, Maduro and his people announced the coin had attracted $735 million on the first day of its private presale. Earlier Venezuela issued a whitepaper for the petro. A new document published recently, reportedly copied from Dash, shows that the crypto isn’t backed by oil only but also by some of the country’s other riches such as gold, diamonds, iron, and aluminum.

This week, Venezuela’s socialist leader was quoted saying that the petro doesn’t need to be mined like other digital currencies as it already has a value. Maduro said the Venezuelan coin will be launched as a national currency and claimed it was already “present in the world’s six topmost international exchange houses,” as news.Bitcoin.com reported.

Venezuela Demands Citizens Pay for Passports With PetroThis past Friday, Venezuelan authorities announced the creation of a new police unit tasked to deal with migration issues, the South China Morning Post reported. Tired of constant food shortages, lack of running water and power outages, many Venezuelans have been leaving the country through illegal border crossings mainly on the 2,200-kilometer long border with neighboring Colombia. Almost a million of Maduro’s compatriots have already moved there. Vice-President Rodriguez said the new force will guard 72 exit points, ports and airports – another hurdle for Venezuelan emigrants.

What do you think about the situation in Venezuela and its state-issued cryptocurrency? Share your thoughts on the subject in the comments section below.


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US Regulator Moves to Sanction Plexcoin’s Lacroix and Paradis-Royer

United States Security and Exchange Commission (SEC) is reportedly seeking further sanction against alleged crypto scammers Dominic Lacroix and Sabrina Paradis-Royer of Plexcoin fame. According to Maria Nikolova of Financefeeds, the two continue to defy court orders.

Also read: 3D Gun File Company Reorganizes After Cody Wilson Resigns

SEC to Further Sanction Alleged Crypto Scammers

Financefeeds is reporting the US SEC seeks sanctions against individuals behind alleged cryptocurrency scam Plexcoin, Dominic Lacroix and Sabrina Paradis-Royer. It is claimed the two, who have been the subject of the regulator’s ire for nearly two years, continue to disobey court orders.

US Regulator Moves to Sanction Plexcoin's Lacroix and Paradis-Royer
Dominic Lacroix and Sabrina Paradis-Royer

Almost a year ago, these pages documented the then new Cyber Unit division of the SEC. Less than three months later, the division filed its first charges against what it alleged was an initial coin offering (ICO) scam. “Release 2017-219, SEC Emergency Action Halts ICO Scam,” we wrote, “termed Canadian Dominic Lacroix ‘a recidivist Quebec securities law violator.’ Mr. Lacroix and his company, Plex Corps, are accused of offering a token capable of yielding ‘a 1,354 percent profit in less than 29 days.’”

It also appears “Mr. Lacroix was found in contempt of court in October of this year, ‘following an application filed by the Autorité des marchés financiers,’ the Quebec-based regulator noted. This came after a Tribunal over the summer found Mr. Lacroix guilty of violating securities law,” we documented, showing the current SEC action wasn’t the first time he has been accused of skirting court orders.

US Regulator Moves to Sanction Plexcoin's Lacroix and Paradis-Royer

Defiance

The ongoing case by the SEC against the pair seems to have no end in sight. The case “continues at the New York Eastern District Court, with the US regulator having hard time to make the defendants co-operate, or, at the very least, comply with Court orders,” Financefeeds notes. This week the SEC asked the court to to compel and sanction the two, as “defendants continue to ignore court orders concerning discovery, accounting of assets and repatriation of assets.”

US Regulator Moves to Sanction Plexcoin's Lacroix and Paradis-RoyerThe court has had an ongoing issue as far back as last year, when it demanded accounting for the money taken by the various alleged schemes. Deadlines were extended. But still, according to reports, nothing. No bank statements. No sworn documentation. “Furthermore,” Ms. Nikolova insists, “in August this year, the Court ordered that, by September 18, 2018, the Individual Defendants are to submit to the Commission all items ordered produced by the December Order, including, but not limited to, the accounting of investor funds and the list of Individual Defendants’ accounts and assets. Nevertheless, the defendants have neither produced the ordered accounting and list of assets nor repatriated any funds.”

The SEC action in the first place was to get a handle what regulators saw as a hemorrhaging of money from unsuspecting investors. There is now the worry a court dragging its feet on formal sanctions and motions could potentially push effective regulating of the ICO pair into impotence. “The regulator warns that,” Financefeeds continues, “absent the sanction it requests, the defendants could employ this strategy indefinitely, including potentially after the entry of a preliminary injunction. Delaying the inevitable final judgment only increases the likelihood that Dominic Lacroix and Sabrina Paradis-Royer will continue to dissipate investor assets in violation of this Court’s orders, the SEC says.”

Do you think the SEC will succeed in their battle with the alleged scammers? Let us know in the comments below. 


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Cofound.it Voluntarily Winds Up, Prompting Suspension of Token Trading

Cofound.it Voluntarily Winds Up, Prompting Suspension of Token Trading

In a surprise move, tokenized project Cofound.it has elected to cease operations. The project, whose CFI token traded on Bitfinex, has decided to call it a day after reflecting on the changing market and the downturn that has turned once vibrant projects into barely going concerns. Onlookers will be watching to see whether Cofound.it’s decision will inspire other projects to follow suit, or go down in crypto history as an isolated case.

Also read: Bittrex to Launch Crypto Exchange in Malta Next Month

Cofound.it Bows Out of Crowdfunding

Cofound.it Voluntarily Winds Up, Prompting Suspension of Token Trading2018 hasn’t been kind to tokenized projects. Even those that have secured listing on major exchanges, Cofound.it included, have struggled to gain traction and secure adoption. In a frank and forthright blog post, the Cofound.it team explains, “The core idea of Cofound.it was to create an alternative VC ecosystem built around crowdfunding, democratisation and transparency. Instead, the larger ecosystem developed and transformed into something completely opposite.”

They continue: “Instead of waiting for the market to turn around, we have decided to opt for creative destruction, wind Cofound.it down and distribute the assets to the token holders.” As a result of this latter promise, the CFI token surged by 20% on exchanges today. Zooming out shows a familiar picture however: a token that is down from a peak of $0.43 in January to a little over 2 cents.

Cofound.it Voluntarily Winds Up, Prompting Suspension of Token Trading
Cofoundit’s token is up 20% today but down significantly from its January ATH.

It’s Better to Burn Out Than Fade Away

While critics will seize upon Cofound.it’s decision as evidence of a dying ICO market, the team’s decision is arguably more honorable than that which most projects will pursue: to slowly fade into ignominy while maintaining the pretense that everything is fine. Circumstances change and business models evolve and Cofound.it’s dissolution does not herald the failure of the movement to “tokenize the world”. But it may give emerging projects pause for thought. Does their project really require a token, and if so, what can be done to ensure it has genuine utility and long-term appeal?

In addition to bearish market conditions, exacerbated by a surfeit of tokenized projects, there is a growing consensus that simple app tokens are not enough to capture value and drive network usage. To justify a native token, mechanisms must be incorporated that incentivize investors and platform users. ICO consultants Amazix have recently entered the field of token model design in response to the growing desire, among project teams, for tokens whose value is determined by more than mere speculation.

All Good Things Come to an End

Cofound.it Voluntarily Winds Up, Prompting Suspension of Token TradingSumming up, Cofound.it writes: “The state of technology today does not match the hopes raised by thousands of ICO projects. The blockchain space has been full of over-promises, and it’s largely the community that has had to take the blows so far.”

They finish: “But what happens when the market realizes what has been going on? The core market disappears, there is no liquidity and there are hundreds of interesting existing projects with prototypes waiting for the core layers and infrastructure to develop and mature. From this perspective, the recovery of the market will take time.”

Do you think other failing token projects should follow Cofound.it’s lead? Let us know in the comments section below.


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Crypto Market Loses $9 Billion in Hours as Tokens Drop 10% on Average

In merely three hours, the crypto market has lost more than $9 billion of its valuation, as the price of tokens and small market cap cryptocurrencies dropped substantially. Tokens Plunge 10% Off of 2% Decline of Bitcoin After demonstrating a relatively strong corrective rally, the crypto market saw a decline in the value of tokens, … Continued

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Russian Shipwreck and ‘Treasure’ Linked to Crypto Exchange

Russian Shipwreck and 'Treasure' Linked to Crypto Exchange

A South Korean firm claimed to have found the wreck of a Russian warship sunk in 1905 with $130 billion worth of gold on board. The cruiser and its treasure are linked to a crypto exchange and token which the firm reportedly promised to distribute to anyone signing up with the exchange. As the country’s financial watchdog investigates the company’s claims, the firm has changed its story.

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

Russian Warship Found with Reports of Gold on Board

A Russian warship that sank 113 years ago, the Dmitrii Donskoi, was reportedly found off the coast of a South Korean island last week. A Korean firm, Shinil Group, claims to be the one who found the wreck. Reuters described:

Shinil Marine said last week it had discovered the wreck of the Dmitrii Donskoi, a Russian armored cruiser sunk in 1905 after fighting Japanese warships off South Korea’s Ulleung Island, and that a staggering 150 trillion won ($130 billion) of gold was on board.

Russian Shipwreck and 'Treasure' Linked to Crypto Exchange
The Dmitrii Donskoi.

As soon as the news of the gold coins being found broke, South Korea’s Financial Supervisory Service (FSS) began investigating “whether the company’s claims were part of any share price manipulation or other unlawful trade,” the publication elaborated. In addition, FSS Governor Yoon Suk-heun said that the agency is investigating related “cryptocurrency issues.”

However, Shinil Group has now backtracked on its claims. The news outlet reported CEO Choe Yong-seok admitting during a news conference in Seoul on Thursday that the company “has not verified the existence of any gold.” He was quoted saying, “The [unverified] reports said the Donskoi held 200 tonnes of gold but that would only be 10 trillion won [~$9 billion] at current value … We apologize to the public for the irresponsible citation.”

Korean Government Investigates Crypto Issues

With the group’s original discovery announcement of the Dmitrii Donskoi, local media reported a crypto exchange and token associated with the ship. According to Dtoday, Shinil Group said it will use the gold coins found on board, once salvaged, to back a new cryptocurrency they will launch called Shinil Gold Coin. The exchange’s website contains the name and picture of the Dmitrii Donskoi. Reuters detailed:

A website under Shinil Group’s name links the find to a ‘Donskoi International’ cryptocurrency exchange that says it will hand out its virtual currency to anyone who signed up with the exchange.

According to the exchange’s roadmap, the coin and its wallet have already been developed. The token is expected to be listed on 10 exchanges, “including Shinil Group’s Donskoi international exchange and domestic/overseas global exchanges from September to October 2018,” its website claims.

Russian Shipwreck and 'Treasure' Linked to Crypto Exchange

However, Reuters reported Thursday that “Shinil Marine denied any connection with the cryptocurrency it said was run by a different company with the same name, and said it had changed its name. A phone number on the cryptocurrency exchange’s website led to the company until last week.”

What do you think of the discovery of this Russian ship and its link to a crypto exchange? Let us know in the comments section below.


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Markets Update: HODLers Pray for Higher Lows, Prospective Coinbase Listings Rally

Markets Update: HODLers Pray for Higher Lows, Prospective Coinbase Listings Rally

The BTC markets are currently attempting to establish a higher low above $6000 after failing to break above resistance at $6800 at the end of June, whilst BCH appears to have bounced off the critical support area of $600 – $650 for the second time in 2018. In recent altcoin market action, Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX) have produced gains of roughly between 10% and 20% after Coinbase confirmed on the 14th of June that it is currently “exploring” listing said markets.

Also Read: Australian Bank Bans Use of Mortgage Funds for Crypto Speculation 

BTC Rangebound Between $5800 and $6800

Since gaining 18% from the 29th of June low of approximately $5800 to the local high of roughly $6840 on the 7th of July, the BTC markets have retraced by over 8% during the last seven days – with current prices hovering at approximately $6250.

Market sentiment is mixed, with price action currently testing a key support level on the daily charts after failing to break above the significant resistance area of approximately $6800, however, appearing to produce what could turn into an inverse head and shoulders formation – should support at $6200 hold, thus producing a higher low.

Looking at the stochastic RSI, one can see that both the 1-week, 1-day, and 12-hour charts appear heavily oversold – with the stoch RSI below the 20 threshold, whilst the 3-day chart is showing a retrace from a test of the 80 threshold.

BCH Markets Retrace Heavily in Recent Weeks

As of this writing, the BCH markets are sitting at approximately $700 after testing the critical support area of roughly $650 earlier this week.

Looking at the weekly charts, the markets have produced three weeks of sideways consolidatory action after losing nearly 60% of its value over the course of the preceding seven weeks.

When measuring against BTC, Bitcoin Cash currently appears to be forming a green doji candle after five consecutive weeks of downward momentum. As of this writing, BCH is trading for roughly 0.1125 BTC

Coinbase Considers Adding Five New Cryptocurrencies

Major exchange and cryptocurrency unicorn, Coinbase, has published a blog post announcing that it is currently “exploring the addition of several new assets” – specifically Cardano (ADA), Basic Attention Token (BAT), Stellar Lumens (XLM), Zcash (ZEC), and 0x (ZRX). The news produced sharp bullish momentum across the aforementioned markets – with the fiat-value of said cryptocurrencies all posting quick gains of between roughly 10% and 20%.

The company states that it “will be working with local banks and regulators to add them in as many jurisdictions as possible,” adding that “Unlike the ongoing process of adding Ethereum Classic, which is technically very similar to Ethereum, these assets will require additional exploratory work and we cannot guarantee they will be listed for trading.”

The exchange claims to have announced the new prospective listings “internally at Coinbase and to the public at the same time,” emphasizing its intention to “remain transparent with [its] customers about support for future assets.”

Coinbase also notes that its “listing process may result in some of these assets being listed solely for customers to buy and sell, without the ability to send or receive using a local wallet,” elaborating that “We may also only enable certain ways to interact with these assets through our site, such as supporting only deposits and withdrawals from transparent Zcash addresses.”

Markets React to News of Prospective Listings

Despite Coinbase emphasizing that it “cannot commit to when or whether these assets will become available at this time,” the announcement of the prospective listings caused sudden bullish surges of over 9.5% across each of the cryptocurrency markets in question. Whilst each market currently appears to be consolidating, it is not yet clear as to whether the upward moves will evolve into meaningful longer-term rallies, or fail to produce anything more than short-term spikes.

The seventh-ranked cryptocurrency by market capitalization, Stellar, quickly gained 9.5% from approximately $0.1847 to $0.2023 in less than two and a half hours. When measuring against BTC, the markets gained from 2794 satoshis to 3244 satoshis. As of this writing, Stellar has a market capitalization of $3.76 billion, and is trading for $0.2 and 3209 satoshis.

Stellar, Coinmarketcap, Jul 8th – Jul 15th

Cardano, the eighth largest cryptocurrency by market cap ($3.5 billion), enjoyed a sudden gain of 11.5% from roughly $0.1265 to $0.1411 following Coinbase’s announcement. When measuring against BTC, the markets gained from 2036 satoshis to 2270 satoshis in just half an hour. ADA is now consolidating at approximately $0.1363 and 2185 satoshis.

Cardano, Coinmarketcap, Jul 8th – Jul 15th

Zcash, the twenty-first largest cryptocurrency with a market capitalization of $754.5 million, gained 17.5% from $157.5 to 185.1 and from roughly 0.02536 BTC to 0.02977 BTC in half an hour following the news of the possible Coinbase listing. As of this writing, ZEC is trading for approximately $173.4 and 0.02774.

Zcash, Coinmarketcap, Jul 8th – Jul 15th

0x, the twenty-fifth largest cryptocurrency by market capitalization ($521 million), responded with 15% bounce from approximately $0.87 to $1.00 and 0.0001395 BTC to 0.0001614 BTC over the course of two hours. ZRX is now trading for roughly $0.974 and 0.00015 BTC.

0x, Coinmarketcap, Jul 8th – Jul 15th

Basic Attention Token, the thirty-seventh largest cryptocurrency market with a total capitalization of $334.3 million, produced the strongest bounce of the markets confirmed to be in consideration for a Coinbase listing. BAT gained 19.3% from roughly $0.2777 to $0.3314 and 4464 satoshis to 5335 satoshis over the course of one and half hours, before producing a secondary high of $0.3403 and 5466 satoshis three hours later.

Basic Attention Token, Coinmarketcap, Jul 8th – Jul 15th

Which markets do you think Coinbase will list? Join the discussion in the comments section below!


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No Insider Trading, Market Manipulation and Misleading Ads – Malta’s New Crypto Law

No Insider Trading, Market Manipulation and Misleading Ads - Malta's New Crypto Law

Malta has enacted three bills into law on Wednesday that are meant to create a clear regulatory framework that will enable the establishment of cryptocurrency businesses on the island. A number of issues that can have an impact on traders and exchanges pop up when examining the new regulations. A prohibition on insider trading, market manipulation and misleading ads or ICO whitepapers.

Also Read: The Daily: Malta Enacts Crypto Bills, Bermuda Wants New Banks, Dotcom Loses Appeal

New Definitions

No Insider Trading, Market Manipulation and Misleading Ads- Malta's New Crypto LawThe Maltese legislatures have gone out of their way to ensure they won’t use any terms that might appear to put them in odds with current European sentiment. So they don’t refer to Bitcoin, Cryptocurrency, ICO or anything that might ring familiar to anyone with a negative perception of these. Instead they make up new definitions to govern the “Distributed Ledger Technology” industry.

“DLT asset” means a virtual token; a virtual financial asset; electronic money; or a financial instrument, that is intrinsically dependent on, or utilises, Distributed Ledger Technology. “DLT exchange” means any trading and, or exchange platform or facility, on which any form of DLT asset may be transacted.

A”virtual financial asset” or “VFA” means any form of digital medium recordation that is used as a digital medium of exchange, unit of account, or store of value and that is not – electronic money; a financial instrument; or a virtual token. An “initial VFA offering” means a method of raising funds whereby an issuer is issuing virtual financial assets and is offering them in exchange for funds. “VFA exchange” means a DLT exchange operating on which only virtual financial assets may be transacted.

The purpose of the new definitions is to create categories for crypto businesses which want to establish themselves in Malta (and willing to pay fees and hire locals to do so). So expect to soon see some exchanges promoting themselves as a “Certified DLT Exchange” or “Registered VFA Platform” or a variation on these terms based on the new Maltese definitions.

Penalties and Liabilities

No Insider Trading, Market Manipulation and Misleading Ads- Malta's New Crypto LawThe Maltese law also touches a number of points of contention within the cryptocurrency community. These include the prohibition of insider trading, market manipulation and misleading whitepapers, practices that exchanges and ICOs have been accused of at times.

“Insider dealing,” recommending or inducing another person to engage in insider dealing, shall constitute an offence when committed intentionally. It is defined as when a person possesses inside information and uses that information by acquiring or disposing of, for its own account or for the account of a third party, directly or indirectly, virtual financial assets to which that information relates.

“Market manipulation,” shall constitute an offence in severe cases or when committed intentionally. It is defined as the manipulation or attempted manipulation of a virtual financial asset or a benchmark through the employment of an abusive strategy that may be carried out by any available means of trading or other means.

Regarding civil liability for misstatements in an ICO whitepaper, advertisements and website, the law states that: The issuer shall be liable for damages sustained by a person as a direct consequence of such person having bought virtual financial assets, either as part of an initial VFA offering by such issuer or on a DLT exchange, on the basis of information deemed to be untrue…misleading or otherwise inaccurate or inconsistent, either wilfully or in consequence of gross negligence. And it is also considered an offence.

And the law also seems to have serious deterrent against infractions beyond just administrative penalties or losing a license. A person guilty of an offence shall be liable on conviction to a fine of up to fifteen million euro (€15,000,000) or up to three times the profits made or losses avoided by virtue of the offence, whichever is the greater, or to imprisonment for a term not exceeding six years, or both such fine and imprisonment.

Can the law really protect against different forms of market abuse? Share your thoughts in the comments section below. 


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Bitcoin in Brief Monday: Chief Strategist Quits Bitfinex, Cryptos Climb Capitol Hill

Bitcoin in Brief Monday: Chief Strategist Quits Bitfinex, Cryptos Climb Capitol Hill

In today’s edition of Bitcoin in Brief, “U.S. person” Phil Potter, Chief Strategy Officer at crypto exchange Bitfinex, is departing the company as it pivots away from the United States. In America, the Supreme Court mentions Bitcoin and cowrie shells in the context of money. On Capitol Hill, congressmen have been warned to disclose their crypto holdings, while a Republican Rep. calls for “light touch” ICO regulations.

Also read: This Week in Bitcoin: McAfee Backs Off, Crypto World Cup and the Mystery of 21e8

Chief of Strategy Leaves Trading Platform Bitfinex

Bitcoin in Brief Monday: Chief Strategist Quits Bitfinex, Cryptos Climb Capitol HillPhil Potter, the Chief Strategy Officer of Bitfinex, is leaving his post at the exchange, Reuters reported quoting both him and the company. Potter will be replaced by Chief Executive JL van der Velde, Bitfinex announced. Speaking of new opportunities he did not specify, Potter stated:

As Bitfinex pivots away from the U.S., I felt that, as a U.S. person, it was time for me to rethink my position as a member of the executive team.

Bitfinex, currently the fourth-largest cryptocurrency exchange by trading volume, is owned by a company based in the British Virgin Islands. The platform offers traders the opportunity to buy and sell cryptocurrencies such as bitcoin and ether. In April, Bitfinex also introduced trading for 12 altcoins.

Bitcoin in Brief Monday: Chief Strategist Quits Bitfinex, Cryptos Climb Capitol Hill

The exchange shares management with Tether Limited, the company that issues the Tether token (USDT) which, according to its developers, is pegged to the U.S. dollar. The claim, however, has been contested by critics who doubt the company holds $1 USD in reserve for every minted coin.

According to a research paper by the University of Texas, Tether may have been used to manipulate the price of bitcoin last year – an allegation that Bitfinex rejects. An investigation opened by the U.S. Justice Department into possible manipulations is believed to be one of the main reasons for the recent crypto market losses.

US Supreme Court Mentions Bitcoin

Bitcoin in Brief Monday: Chief Strategist Quits Bitfinex, Cryptos Climb Capitol HillSince the announcement of the US DOJ probe, several other interesting developments have been reported in the U.S. In a ruling not directly related to cryptocurrencies, the Supreme Court of the United States mentioned Bitcoin, arguably for the first time. The dissenting opinion in the Wisconsin Central Ltd. v. United States case, authored by Justice Stephen Breyer, puts forward the first cryptocurrency as an example of how views regarding money are changing over time.

The case is centered on a taxation dispute stemming from the government’s assertion that the railroad company’s stock option payments to its employees represent “money remuneration” and should be taxed, while Wisconsin Central and its workers claim the opposite. The majority opinion, written by Justice Neil Gorsuch, supported the company’s view in a 5-4 vote stating that stock options were not money and could not be subject to taxation under the Railroad Retirement Tax Act of 1934.

However, the dissenting opinion, authored by Breyer and backed by three of his colleagues, argued that the stock options were in fact money remunerations. Justice Breyer specifically refers to Bitcoin, stating that “[…] what we view as money has changed over time. Cowrie shells once were such a medium but no longer are […]; our currency originally included gold coins and bullion, but, after 1934, gold could not be used as a medium of exchange […]; perhaps one day employees will be paid in Bitcoin or some other type of cryptocurrency […]. Nothing in the statute suggests the meaning of this provision should be trapped in a monetary time warp, forever limited to those forms of money commonly used in the 1930’s.”

US Congressmen Advised to Disclose Crypto Holdings

The members of the House of Representatives will have to disclose information about their investments in bitcoin and other cryptocurrencies. The obligation covers holdings of more than $1,000 in US dollar equivalent, according to an announcement issued last week by the Committee on Ethics of the congressional lower house. The “Memorandum to All House Members, Officers and Employees” reads:

In particular, the Committee has determined that with respect to financial disclosure, cryptocurrencies will be treated as an “other forms of securities” and are therefore subject to reporting both on a financial disclosure filer’s annual Financial Disclosure Statement (FD Statements or Statements) and on Periodic Transaction Reports (PTRs) throughout the year.

The Committee also recommends, “due to the evolving nature of cryptocurrencies,” that anyone with questions about digital currencies or intentions to participate in Initial Coin Offerings (ICOs) contact the Committee for guidance prior to investing. In addition, House members are now obliged to report, within 45 days, any transactions with crypto assets, again in excess of $1,000 USD, The Wall Street Journal reported.

Congressman Calls for Light ICO Regulations

Speaking of crypto investments and the Capitol, a call was issued last week to adopt a “light touch regulatory framework” for the young crowdfunding industry. In an interview with CNBC, Rep. Warren Davidson (R-OH) said: “We want to make sure that the United States’ capital markets stay strong and vibrant, and one of the ways to do that is to provide regulatory certainty.”

Bitcoin in Brief Monday: Chief Strategist Quits Bitfinex, Cryptos Climb Capitol HillDavidson, who is a member of the House Financial Services Committee, said lawmakers have been working with representatives of the industry, including regulators, to determine how regulations should be shaped in order to drive capital. He also noted that “right now there are concerns that there is a regulatory arbitrage going on” and that “everything starts looking as a security to a securities’ regulator.”

The congressman also shared concerns that without coherent regulations the ICO sector in the U.S. may end up being regulated by a disparate patch of court rulings. “We want to protect that market,” Warren Davidson emphasized.

What are your thoughts on today’s Bitcoin in Brief topics? Let us know in the comments section below.


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Zimbabwe’s Golix Exchange Enters Kenya, Uganda, South Africa

Zimbabwe’s Golix Exchange Enters Kenya, Uganda, South Africa

Crypto exchange Golix is entering three other African markets in an effort to survive the ban imposed by the central bank in its home country – Zimbabwe. Moreover, the troubled trading platform claims the move is part of a strategy to offer its services across the whole continent. Golix says the shortage of infrastructure has slowed down the adoption of cryptocurrencies in Africa.

 Also read: Johannesburg Gets a New Crypto ATM, Ban Threatened Harare May Lose One

Golix Moves On After Ban, Expands in Africa

Trying to stay afloat after the crackdown by the Reserve Bank of Zimbabwe (RBZ), Golix has turned its attention to Kenya, Uganda, and South Africa. Zimbabwe’s leading cryptocurrency exchange hopes to continue trading in these African countries, despite the ban imposed by financial authorities in Harare.

In a statement quoted by News Day, Golix head of growth, Panashe Tapera, noted that moving outside the country was part of a new strategy – the trading platform plans to expand operations across the entire continent. Tapera said:

As part of our strategy, starting from Friday, June 1, people in Kenya, South Africa and Uganda will be able to start trading from Golix. This is one of our plans to be the leading exchange in Africa, which is inspired by the vision to provide financial autonomy in the continent.

Golix has been offering exchange services in Zimbabwe for the past three years and was the only crypto trading platform there for quite some time, processing transactions worth $20 million and having 50,000 local users. Now it’s planning to continue to do the same in more and larger markets, saying that shortage of crypto infrastructure has slowed down the adoption of digital currencies in Africa.

Zimbabwe’s Golix Exchange Enters Kenya, Uganda, South Africa

The Republic of South Africa, the region’s economic powerhouse, has the highest number of cryptocurrency exchanges on the continent. Its central bank has set up a special unit tasked to review its position on cryptocurrencies and a “self-regulatory” approach has been proposed by legal experts working in the crypto sector. Uganda has been mentioned recently as a crypto-friendly destination, where the leading crypto exchange Binance wants to open a new office.

Challenging the Central Bank in Court

The announcement comes after last month the central bank in Harare issued a circular to banking institutions instructing them to stop providing bank accounts to cryptocurrency companies. The new guidelines effectively banned all crypto-related activities in the country. The RBZ gave local banks and cryptocurrency operators 60 days to comply.

Zimbabwe’s Golix Exchange Enters Kenya, Uganda, South AfricaGolix has since sent several letters to its clients informing them that they would not be able to trade digital coins or deposit fiat currency, and also helping them withdraw their funds.

According to local media, the operator of the exchange, Bitfinance Limited, has filed a lawsuit against the central bank. Later, it was reported that the country’s High Court has ruled in favor of the company’s argument that the RBZ has no authority to ban digital currencies.

Last week, Golix said it had been granted “an interim relief.” In further communication with its customers, the exchange shared that its accounts had not been restored and the legal proceedings were still ongoing. “Nevertheless, please note that we are in the middle of promising engagements with a financial institution which is willing to process our fiat withdrawals through a prepaid debit card,” the platform told its clients.

Golix Takes Its Token Sale to the New Markets

The Zimbabwean exchange intends to enter and operate in Kenya, Uganda and South Africa by also conducting its $32 million token sale there. The aim of the coin offering is to enable instant remittances and international payments through cryptocurrencies.

According to Golix lead of special projects, William Chui, “Since the onset, our main agenda is to provide financial autonomy in Africa. The GLX token is going to be used to facilitate and realize this agenda.”

Zimbabwe’s Golix Exchange Enters Kenya, Uganda, South Africa

Clients from different countries will be able to buy the GLX token from the exchange with fiat currencies, he explained. Then, the coin issued by Golix will be used to purchase other cryptos on its trading platform at zero transaction fees.

Zimbabwe’s first crypto exchange also promises lower fees, in comparison with traditional banking methods, for remittances and international transfers facilitated by the GLX token. The Golix representative believes that will contribute to the GDP growth in African countries.

Do you think the expansion to new markets will help Golix survive the ban in Zimbabwe? Tell us in the comments section below.


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Bitcoin in Brief Saturday: Spanish Parties Back Crypto Draft, Slovenia Adopts Crypto Action Plan

Bitcoin in Brief Saturday: Spanish Parties Back Crypto Draft, Slovenia Adopts Crypto Action Plan

All parties represented in the Spanish Congress have voiced support for a new draft legislation introducing favorable crypto regulations in the country. We’ve covered the details in today’s edition of Bitcoin in Brief. Also, Slovenia adopts a crypto action plan, Estonia drops plans to issue a national cryptocurrency, and Hungary claims it’s ready to join the global blockchain market.  

Also read: Bitcoin in Brief Friday: Expanding Horizons in a Bearish Month

Spanish Parties Call for Favorable Crypto Regulations

Lawmakers in Spain, who have earlier this year reviewed proposals to introduce incentives for crypto companies, have now issued a unanimous call for adopting regulations that favor the implementation of crypto and blockchain technologies. These should be introduced to the market “through controlled testing environments.” A draft legislation aimed at achieving the goal, proposed again by the ruling People’s Party, has just won support from all parliamentary groups in the Finance and Public Function Committee of the Spanish Congress.

The legislative initiative calls for promoting the advantages of the technology that underpins cryptocurrencies like bitcoin, including cost savings through the elimination of intermediaries in payments and transfers and the benefits it offers when it comes to raising capital, especially for startups. Its sponsors urge support for projects to build authorized blockchain technology networks, Europa Press reported.

Bitcoin in Brief Saturday: Spanish Parties Back Crypto Draft, Slovenia Adopts Crypto Action Plan

The draft approved by Spain’s leading parties also turns attention to the perils associated with crypto-related operations, calling for “adequate dissemination of information about the risks” assumed by investors, as well as their rights and the guarantees they can rely on. According to Spanish deputies, the approach will help to avoid “economic damages that are impossible to repair”, such as those linked to high-risk financial products.

Lawmakers call on the government in Madrid to support the initiative and join the efforts of the National Securities Market Commission and the Bank of Spain in that direction. They also insist on reaching a common position in regards to the use and the regulation of cryptocurrencies on European level and ask the executive branch of power to work with other EU countries and institutions to achieve that.

Slovenia Adopts Crypto and Blockchain Action Plan

Bitcoin in Brief Saturday: Spanish Parties Back Crypto Draft, Slovenia Adopts Crypto Action PlanThe government in Ljubljana has adopted an action plan to underpin the implementation of blockchain technology in Slovenia and create a regulatory framework for cryptocurrencies. According to the Economy Ministry, the plan entails a series of measures designed to also regulate Initial Coin Offerings (ICOs). Slovenian authorities hope to establish a safe and stable legal environment to help the creation, growth and development of blockchain technology-based projects and startups.

Another goal is to transpose in the national legislation the legal provisions adopted by European and other relevant institutions, STA reported. Local officials believe that the application of blockchain technologies can improve the competitiveness of the Slovenian economy. The government also backed the creation of a European Blockchain Hub as a link between public and private stakeholders in the field, both in Slovenia and within the EU. On Thursday, the Slovenian Ministry of Economy was tasked to get actively involved in the hub.

Estonia Backpedals on Plans for National Crypto

Estonian officials have scaled down plans to issue a national cryptocurrency, which were criticized some time ago by both the European Central Bank and local banking authorities. According to Siim Sikkut, who is in charge of the country’s IT strategy, Estonia has dropped its intentions to peg the Estcoin to the common European currency and offer it to all citizens. The digital tokens will instead be distributed as an incentive to e-residents of the Baltic country, Sikkut said in an interview, Bloomberg reported. These are foreign nationals who use Estonia’s electronic identification system to remotely sign documents and set up companies.

Bitcoin in Brief Saturday: Spanish Parties Back Crypto Draft, Slovenia Adopts Crypto Action Plan

The tech-savvy former Soviet republic was one of the first European nations to come up with plans for a national cryptocurrency. Similar initiatives have been discussed in Sweden, Switzerland, Poland, the UK, and other countries. The idea, however, was not appreciated by the ECB management. In September, the bank’s president, Mario Draghi, criticized the proposal declaring that “No member state can introduce its own currency. The currency of the Eurozone is the euro.”

“We agreed in discussions with politicians that Estcoin will proceed as a means for transactions inside the e-resident community. Other options aren’t on the table. We’re not building a new currency,” Siim Sikkut said. This was confirmed by the author of the Estcoin plan, Kaspar Korjus, who also noted that the details are still being analyzed for potential benefits. Estcoin “would definitely not be a national ‘cryptocurrency’,” he emphasized. Estonia’s e-residency program has so far issued ID cards to more than 35,000 foreigners. The majority of the participants are from Finland, the Russian Federation and Ukraine.

Hungary Prepared to Join the Global Blockchain Market

Blockchaineum 2.0, arguably the largest blockchain summit in Central and Eastern Europe, recently gathered major stakeholders in Budapest to discuss blockchain-based solutions and other hot topics related to the implementation of the technology around the world. While many in Europe are just starting to take blockchain seriously, Hungary has been preparing for some time and now claims it’s ready to join the global blockchain market.

Bitcoin in Brief Saturday: Spanish Parties Back Crypto Draft, Slovenia Adopts Crypto Action Plan“Many regulatory rules have been laid down recently on European level, and it is in Hungary’s best interest to make use of them in order to become a regional center. Although, this won’t happen because of regulation, but rather on purely market basis,” said Tamás Czeglédi, quoted by the Budapest Business Journal. He is one of the organizers of the event and is working to put his country on the European blockchain map.

Hungarian business wants to jump on the blockchain bandwagon ahead of regional competitors and it has created a Blockchain Competence Center (BCC) earlier this year to prove its intentions. “Whereas the EU had been focusing on regulation until around a year ago, the past few months saw a shift towards a more practical approach,” said Péter Benedek, the CEO of BCC. “The newly established Ministry for Innovation and Technology, along with the enhanced national digital wellbeing strategy, can help local blockchain players embrace innovative solutions and improve their fundraising potential,” he added.

What are your thoughts on today’s Bitcoin in Brief topics? Let us know in the comments section below.


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Russian Duma Adopts Three Crypto Bills on First Reading

Russian Duma Adopts Three Crypto Bills on First Reading

Russian State Duma has approved its first reading of the long-awaited legislation package regulating crypto-related matters and activities. The legal texts, voted almost unanimously, will open the way for legalization of cryptocurrencies in the Russian Federation, including their exchange and circulation under certain conditions. Deputies now have about two weeks to propose amendments before they proceed to final adoption of the three bills.

Also read: Cryptocurrency is Property in Russia, Justice Minister Confirms

The Bills Regulate Crypto Assets, Crowdfunding and Digital Rights

The lower house of Russia’s parliament, the Duma, has accepted and approved on first reading three pieces of legislation tailored to regulate different aspects of the crypto ecosphere in the country. This week, the bills – “On Digital Financial Assets,” “On Attracting Investments Using Investment Platforms,” and “On Digital Rights” – hit the house floor. All of them were voted almost unanimously, the Russian Association of Cryptocurrencies and Blockchain announced on social media.  Some interesting ideas, like tax breaks, have been pitched already during parliamentary discussions.

Russian Duma Adopts Three Crypto Bills on First ReadingThe first two drafts were introduced on March 20 by a group of deputies led by the chairman of the Financial Market Committee, Anatoly Aksakov, while the third one, which amends the country’s Civil Code, was filed on March 26 by the speaker of the Duma, Vyacheslav Volodin, and the head of the parliamentary Legislation Committee, Pavel Krasheninnikov.

The new legislation incorporates legal concepts like “digital right” and “smart contract” and defines cryptocurrencies and tokens as property, not as legal tender. It establish the sequence of actions in a token sale and the rules governing ICO projects. The texts form the basis for legalizing crypto mining but the legal definition of this economic activity will be expanded and refined between the two readings. Other amendments may be introduced in the next couple of weeks. Some proposals, including a moratorium on the taxation of miners, have been discussed in parliament already.

Cryptocurrency Is Electronic Property, Not Legal Tender

The bill “On Digital Financial Assets”, № 419059-7, prepared by the Finance Ministry, was voted by Russian legislators with only one “nay”. It regulates the relations arising from the creation, issuance, storage, and circulation of digital financial assets. The draft also establishes the exact procedures for conducting crypto transactions and concluding smart contracts, including the exercise of rights and the performance of obligations.

Last week, Russian prime minister Dmitry Medvedev said that common words like “cryptocurrencies” and “tokens” will be replaced with the legal terms “digital money” and “digital rights” in the new legislation. The text of this particular draft, however, contains definitions of the original, colloquial terms. It reads: “Digital financial asset – property in electronic form, created using cryptographic tools.” It also says that property rights in this case are certified by making digital records in a register of digital transactions.

Russian Duma Adopts Three Crypto Bills on First Reading

“Digital financial assets include cryptocurrency, token,” the document states, emphasizing that these assets are not legal tender in the Russian Federation. According to the authors, tokens can have a single issuer, while cryptocurrencies can have multiple issuers, like the miners. Both can be exchanged with rubles and foreign currencies under rules determined by the Central Bank of Russia (CBR). They will not be considered a mandatory means of payment, account and transfer like the ruble, but individuals and businesses will be able to use them for payments within the frame of the law.

According to Russian media reports, the draft states that crypto purchases and sales should be performed only through providers of exchange services for digital financial assets – brokers, dealers, and corporate entities – acting as custodians. That includes cryptocurrency exchanges which will offer individual accounts and wallets to their customers. The rules governing these activities shall be developed by the Central Bank in consultation with the Council of Ministers.

Crowdfunding and Crowdinvesting Regulated

The bill also describes the sequence of actions involved in issuing digital tokens, stating that their release should be carried out through public offering. Entities behind initial coin offerings (ICOs) will be required to disclose detailed information about their projects. The organizers of token sales need to prove they control at least 5 million rubles (~$81,000) of capital. Banks and non-credit financial institutions won’t be allowed to conducts ICOs. The law also regulates crypto mining and implies that miners should register with the Federal Tax Service, as either individual entrepreneurs or legal entities, and pay taxes.

Russian Duma Adopts Three Crypto Bills on First Reading

The Law “On Attracting Investments Using Investment Platforms”, № 419090-7, regulates specifically crowdfunding and crowdinvesting in Russia. The draft reads that both legal entities and individual entrepreneurs can be involved in such activities and prescribes the norms that the organizers of digital fundraising should abide by.

According to its provisions, private citizens can participate in crowdfunding without any registration but the investment platform operators should be registered with the CBR. The bank will also determine the maximum amount an “unqualified investor” can spend on a single project as well as and the limit of their yearly investments in digital tokens.

Only Tokens with Economic Value to Be Recognized as ‘Digital rights’

Russian Duma Adopts Three Crypto Bills on First ReadingThe third draft passed on first reading, the bill “On Digital Rights” – № 424632-7, amends the Russian civil law. It introduces basic provisions allowing legislators to regulate the market of tokens and cryptocurrencies and creating conditions for digital transactions. The text develops the legal concept of “digital right” to define tokens.

According to the authors, only tokens with significant economic meaning will be recognized as digital rights, unlike loyalty points or virtual coins used in online gaming, for example. A holder of a “digital right” is described as a person with unique access to the coin’s digital code.

Besides regulating the circulation of tokens and the execution of token transactions, the law is also expected to ensure judicial protection for their owners. The introduction of digital rights creates a legal basis for taxation of economic activities related to token sales, as well.

Do you think the new legislation will open the way for mass adoption of cryptocurrencies in Russia? Tell us in the comments section below.


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HomeMine ICO – Passive Mining on Household Electrical Appliances for Everyone

HomeMine ICO

HomeMine ICO – Passive mining on household electrical appliances for everyone.

The days are long gone when you could earn money at home by simply using the capacity of your personal computer. Hashing is becoming more and more complex, and today the mining entry threshold for an average person has become critically high – both in terms of equipment costs and necessary competencies.

HomeMineCoin OÜ responded to this challenge with its HomeMine project to be launched for ICO on May 21st. This project reveals new opportunities for passive mining with the use of conventional household electrical ...

Get latest cryptocurrency news on bitcoin, ethereum, initial coin offerings, ICOs, ethereum and all other cryptocurrencies. Learn How to trade on cryptocurrency exchanges.

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Pump and a Ponzi? Bithumb Criticized For Prematurely Listing a Cryptocurrency Created by its Developers

Earlier this week, Bithumb, South Korea’s second-biggest cryptocurrency exchange – behind UPbit – that is known for its rigorous verification process for new cryptocurrencies, announced the airdrop of Popchain, a cryptocurrency which the global community has not heard about previously. Two Weeks Into Development Hankyung, one of the leading mainstream media outlets in South Korea,

The post Pump and a Ponzi? Bithumb Criticized For Prematurely Listing a Cryptocurrency Created by its Developers appeared first on CCN

Bitcoin in Brief Saturday: “Social” Coins, Crypto Vending, Blockchain Mileage

Bitcoin in Brief Saturday: “Social” Coins, Crypto Vending, Blockchain Mileage

Reports suggest that Facebook may develop its own crypto. The plan is worth a mention, especially on the backdrop of the crypto ban imposed by the social media network. In Saturday’s Bitcoin in Brief, we also cover Telegram’s advance towards implementing its payment system using the Gram token. Some blockchain stories with beers and beamers complete today’s round-up.

Also read: Bitcoin in Brief Friday: China Mulls Blockchain Standard, Zcash Fights Chinese ASICs

Facebook Mulls Own Token, Reports Say

Bitcoin in Brief Saturday: “Social” Coins, Crypto Vending, Blockchain MileageFacebook is reportedly considering creating its own cryptocurrency. Sources familiar with the matter told the financial news outlet Cheddar that the social media giant is serious about the project to introduce global crypto payments on its platform. A digital token would allow its two billion users around the world to take advantage of crypto transactions and skip state-issued fiat currencies.

Facebook announced recently that it had formed a team whose main task will be to explore the uses for blockchain technologies that the company can utilize to improve its business. The group is headed by David Marcus, former head of Facebook Messenger and ex-president of Paypal, who currently sits on the board of Coinbase.

The development of the payments system, however, is likely to take some time, possibly years. Marcus, who is a crypto enthusiast and an early investor, has been quoted as saying that crypto payments are still very slow and expensive. Facebook is not planning to hold an initial coin offering (ICO) to fund the project. In January, the social network banned crypto-related ads, including advertisements of token sales.

Telegram Moving Forward with Crypto Payments

Bitcoin in Brief Saturday: “Social” Coins, Crypto Vending, Blockchain MileageTelegram, on the other hand, has already raised enough money to fund its own blockchain project and payment system. The messaging service, which is popular with the crypto community, has already attracted $1.7 billion dollars to finance its Telegram Open Network (TON). The company, founded by Russian entrepreneur Pavel Durov, has decided to call off a planned public ICO.

According to Russian media reports, Telegram is now conducting closed tests of a new service designed to store users’ information and documents for verification purposes. Telegram Passport will be used to keep personal details and copies of IDs, banking statements, and utility bills which will be used to identify users on Telegram’s blockchain TON.

The identity verification feature is needed to facilitate payments using Telegram’s own crypto token called Gram. Once uploaded, the personal information can be potentially shared with partners within the platform, but also on their systems. Telegram Passport, which should be launched by the summer, is expected to prevent anonymous crypto payments.

Crypto Beer Vending Machine to Check Age

Bitcoin in Brief Saturday: “Social” Coins, Crypto Vending, Blockchain MileageCivic, a San-Francisco-based startup, has recently announced plans to introduce a “crypto beer vending machine.” The project, which will be realized in partnership with a leading US beer producer, aims to also prove that blockchain can be used to verify if a thirsty guy or girl have 21 years of age to legally consume the alcoholic beverage. To get a cold can, one has to install Civic’s app on their smartphone, verify their ID, and then walk up to the machine, Futurism reports. The project’s success depends on the readiness of government authorities to accept identity verification performed on a blockchain. Civic’s beer vending machine is still a prototype.

BMW Tracking Mileage on a Blockchain

Another blockchain partnership aims to track the mileage of cars. A team at BMW, the German automobile manufacturer, has been tasked with finding a way to better preserve the resale value of vehicles leased by the company. Collecting reliable data for the mileage, amortization and maintenance of these cars is crucial for achieving the best price on the second-hand market.

Bitcoin in Brief Saturday: “Social” Coins, Crypto Vending, Blockchain MileageThe blockchain startup DOVU has been invited by BMW to establish a partnership with Alphabet, the auto giant’s leasing and fleet vehicle branch, and BMW’s Innovation Lab in order to develop a system to collect and keep record of the important information. The companies behind the project hope to also evaluate how effective tokenization can be in encouraging customers’ cooperation.

In a pilot program implemented by the partners, BMW drivers are prompted by a custom wallet app to take a picture of their dashboards once a week. All submissions are added to DOVU’s blockchain which is used by Alphabet to compile consistent and unalterable data reflecting the exploitation of the vehicles. The information is then used to assess the mileage and the depreciation of the used cars and ultimately determine their resale value.

What do you think of today’s Bitcoin in Brief stories? Let us know in the comments section below.


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What’s In a Name? The Identity Crisis for Initial Coin Offerings

What's In a Name? The Identity Crisis for Initial Coin Offerings

Aaron Kaplan, securities attorney and COO of Prometheum, is guest author for this Opinion/Editorial. 

Initial Coin Offerings (ICOs) have become the investment du jour while the understanding of what ICOs are has become desperately convoluted. Every huckster, scammer and opportunist has tried to hop on the bandwagon. (I’m talking to you, Casey Ryback) Many of these ICOs were a means for scammers to raise money over the internet from unsophisticated investors whose “FOMO” outweighed the obvious red flags associated with such offerings.

Also read: Ver’s Sci-Fi Novel Life, Voorhees Buys Tucker’s Tie for $27k

Identity Crisis for Initial Coin Offerings

The rapid growth of the ICO industry ($6+ billion) and the inherent scams and related investor losses forced the SEC to consider ICOs in the context of the Federal Securities Laws (FSLs).  The SEC’s recent broad subpoena sweep marked the SEC’s official declaration that ICOs are securities. Now that ICOs must comply with the FSLs, it should come as no surprise that a new type of trickster is trying to hijack the innovation through either a) selling illiquid tokens to wealthy investors or b) selling traditional securities that are registered on a blockchain.

To set the record straight, and provide much needed clarity, here is a condensed description of ICOs and their intended benefit. ICOs are an innovative means of capital formation. Issuers offer a securitization of user interest in an ecosystem as an investment to the general public. Assuming the issuer has reasonable token economics, then the greater the user interest in the ecosystem, and the utility of the underlying token, the more the value of such token should increase. It’s supply and demand, but the price is not reflected in the common stock; rather, it is reflected in the cryptographic token representing the user interest. 

What's In a Name? The Identity Crisis for Initial Coin Offerings
Aaron Kaplan

Furthermore, an ICO should have two key features:

1. It should be available to the general public, and

2. It should be able to freely trade on the secondary market when the token is issued.

The securities of ICOs to date have not and cannot achieve both those goals. Such securities are illiquid and only available to accredited investors/institutions.

As the industry matures through compliance with all relevant rules and regulations, I fear we are losing the spirit of ICOs, which some argue may not be sustainable under the FSLs.

Issue 1: Reg D/SAFT ICOs

The Filecoin Reg D token offering in mid-2017 was an important point for honoring the Federal Securities Laws. Reg D ICOs raise capital with proper offering documents (a requirement under the FSLs) by selling tokens that have proposed utility in an ecosystem. While such ICOs are legal by nature, companies conducting ICOs in a Reg D (or a SAFT) offering forgot how an ICO was supposed to function.

These Reg D and SAFT ICOs inherently contradict the spirit of an ICO- a token sale that should be open to all investors (both accredited and non-accredited), and freely trading in the secondary market. Reg D and SAFT issuers’ token sales are only open to accredited investors (i.e. wealthy individuals and institutions) and are restricted securities (meaning they can’t trade freely on the secondary market until the issuer files current public information and essentially registers such securities with the SEC).

What's In a Name? The Identity Crisis for Initial Coin Offerings

These issuers, while understanding that ICOs are securitizations of user interest, missed the mark. Their ICOs are illiquid and limit participation to the wealthy. Investors won’t have the ability to trade those tokens, and are stuck with illiquid (untradeable) securities that have the same issues as those associated with traditional venture funding – waiting for a buyout event or going public (which is extremely rare) before investors can realize a return on their investment.

Issue 2: ICOs vs. Traditional Securities Issued Over a Blockchain

Opportunistic companies are also trying to use the concept of an ICO, turning an innovative method of monetizing an ecosystem into a cheap marketing ploy. The most frustrating example of this practice are companies who say they are raising capital for an ICO, but in reality they are just issuing traditional equity or debt securities that are represented by a cryptographic token. These aren’t ICOs, but rather traditional securities registered (like a transfer agent’s log) over a blockchain. While many (including me) believe blockchain securities are the future of securities ownership, a preferred equity token is not an ICO. It is a traditional security that is issued over a blockchain.

What's In a Name? The Identity Crisis for Initial Coin OfferingsSecurities issued over a blockchain MUST be distinguished from ICOs. An appropriate definition of an ICO in 2018 is the following: an ICO is a securitization of user interest. It is not a debt or equity security, but rather a new type of security – an investment whose value is related to the user’s interest in an ecosystem and the utility of the actual token in that ecosystem. It is essential that the industry understands the difference.

In late March, a company tried to issue a blockchain security for a building. Such cryptographic tokens represent ownership in the building and trade over blockchain. That is a traditional Reg D security, and not an ICO. The company received news coverage for being the first company to sell interests in a building using a blockchain. However, many companies have sold interests in real property online. This company is doing the same thing – basically putting lipstick on a pig.

So how do we define an ICO?

ICOs are innovative ways to unleash/monetize potential value from the user interest in an ecosystem. ICO tokens represent a new type of security whose value is related to the user appetite in that ecosystem (daily average use, recurring use, etc.). Ideally, an ICO should be available to all types of investors (accredited and non-accredited) and be freely tradable when the underlying network goes live.

With ICOs officially coming under the FSLs regime, the industry should take a moment to reflect on what an ICO is and will be under the FSLs before it morphs from a genuine innovation into a marketing ploy.

This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com does not endorse nor support views, opinions or conclusions drawn in this post. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.


Who is your favorite bitcoin/crypto pioneer? Share your thoughts in the comments section below. 


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Telegram Reportedly Testing Service to Store Data for Identity Verification

Telegram Reportedly Testing Service to Store Data for Identity Verification

Telegram has been testing a new service that will store users’ information and documents for verification purposes, according to Russian media reports. Telegram Passport will be used to keep personal details and copies of IDs, banking statements, and utility bills to identify users on Telegram’s blockchain platform TON. 

Also read: After Telegram, Viber May Be Blocked, Russian Minister Says

Telegram Passport to Prevent Anonymous Crypto Payments

Developers at Telegram are conducting closed tests of a new service designed to store personal data, according to sources quoted by Russian media. Telegram Passport will be used to verify identities of users on the messenger’s Telegram Open Network. They will be able to buy goods and pay for services on the TON blockchain platform with Telegram’s crypto token called Gram.

Customers will provide their personal details and documents, such as copies of IDs, passports, drivers’ licenses, utility bills, bank statements, and possibly photographs. Once uploaded, the information can be potentially shared with Telegram’s partners within the platform, but also on their systems, Vedomosti reported, quoting two sources close to the company.

Telegram Passport, which may be launched by the summer, is expected to effectively prevent anonymity associated with crypto payments, which is a worrisome aspect for regulators around the world, explained Alexander Filatov, partner at SP Capital. His consulting company has invested in TON and facilitated investments of other interested parties.

Telegram Reportedly Testing Service to Store Data for Identity Verification

A number of partner businesses will be able to take advantage of the service. The Russian payments services provider Qiwi has already been granted access to the system, according to the report. The company is said to be cooperating with the messenger on the launch of Telegram Passport.

Initially, only the users, not even Telegram, will have access to their details and documents. They will be able to secure the data with a password and two factor authentication. The company will use the information only with the account holder‘s consent, according to information shared on the closed pages of telegram.org cited by the Russian outlet. Once Telegram’s partners receive the data, they can verify it according to their own standards.

Others are Working on Similar Concepts

Telegram’s main competitors in that field are mature systems that use authorization services provided by third-party platforms via Google, Facebook, or Windows Live, said Dmitry Ufaev, head of the Russian operations of Bitfury, a leading manufacturer of software and hardware blockchain solutions. In his words, Telegram Passport will allow the messenger to circumvent these established services, providing greater privacy and data security to its users. This will be a reputational advantage, Ufaev noted.

Other major companies are working in the same direction as well, and Telegram is likely to face hefty competition. The Chinese messenger Wechat has already implemented money transfers for users and service providers on its platform. The company is currently testing a digital identity verification system with face detection functionality which should be more efficient than verification based on copies of documents. The tech giant Apple is also working on its Face ID system.

According to Alexei Prokofiev, partner at two venture capital funds, states will eventually switch to identity verification based on biometrics. “It’s a matter of digital sovereignty,” he believes. In his opinion, if Telegram does not establish relations with government authorities, it may fail to acquire licenses for providing services in jurisdictions where biometric verification is required by law.

Telegram Reportedly Testing Service to Store Data for Identity Verification

News that Telegram is working on its blockchain platform TON came out in January. The company founded by entrepreneur Pavel Durov was able to attract investments worth a total of $1.7 billion dollars to finance the project. Goods, services and other content on TON will be paid with Gram, Telegram’s own crypto. Recently, the messenger called off a planned public initial coin offering.

Durov’s company has been involved in a bitter conflict with authorities in Moscow following its refusal to hand over its encryptions keys to FSB, the Federal Security Service. Despite some interruptions, attempts by Russian regulators to block the service in the country have been unsuccessful so far. Russia’s telecom regulator Roskomnadzor has been trying to restrict access to the messenger since April 16 after a decision by a district court in Moscow from April 13.

What do you think of Telegram’s plan to introduce identity verification for users of services offered on its blockchain platform? Tell us in the comments section below.  


Images courtesy of Shutterstock, Yarcube, Wikipedia.


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Major Cryptocurrencies Record Strong Gains, Ethereum Price up 7%, Bitcoin at $9,300

The cryptocurrency market has recorded strong gains once again over the past 24 hours, as the valuation of the market broke the $440 billion, moving one step closer to the $0.5 trillion region. Bitcoin, Ethereum, Cardano, Bitcoin Cash, and other major cryptocurrencies demonstrated large short-term gains. Ethereum Leads Market The price of Ether, the native … Continued

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Bitcoin in Brief Friday: World Satoshi Summit Canceled, Pump and Dump Scheme Exposed

Bitcoin in Brief Friday: World Satoshi Summit Canceled, Pump and Dump Scheme Exposed

In today’s Bitcoin in Brief we’re covering disappointing news for the crypto community: the World Satoshi Summit in Delhi has been canceled because of “regulatory issues” according to its organizers. Also, an alleged crypto pump and dump scheme has been exposed. There is more than one opinion on the case, as you’ll see below.

Also read: Bitcoin in Brief Thursday: Big Money Wears Big Horns, Claws Are In the Closet

World Satoshi Summit Canceled

A major crypto conference, scheduled to be held in Delhi in May, has been canceled. “Due to certain regulatory issues in India, World Satoshi Summit currently stands cancelled,” reads a message on the event’s website. All refunds will be processed over the next few weeks, the organizers promise. They encourage participants to reach out on hello@worldsatoshisummit.com in case of any further queries.

“I feel very sad to inform you that due to certain regulatory issues in India like crypto ban, our most anticipated event, World Satoshi Summit, stands postponed/cancelled. I deeply regret that we have to make such a harsh decision at the eleventh hour, when we were all set for the conference,” Sanjay Goswami, head of marketing for the summit told the Indian outlet Crypto News.

Bitcoin in Brief Friday: World Satoshi Summit Canceled, Pump and Dump Scheme Exposed

Indian crypto media have asked the organizers to provide more details and clarity on the reasons for the cancelation. In recent months, the cryptocurrency and blockchain community in the country has been targeted by both regulators and banks. While authorities are working on a new bill to regulate the crypto sector, the Reserve Bank of India has prohibited commercial banks from servicing businesses dealing in cryptocurrencies. Bitcoin trade on local exchanges has dropped as much as 90% in a couple of months.

Pump and Dump Scheme – Exposed?

An alleged crypto pump and dump scheme has been reportedly exposed in a Steemit post. The accusations have been made against the Discord chat group Bitcoin Bravado by a supposed member. The publication contains screenshots of Telegram messages between members of the group. The author claims they indicate a plan for a pump and dump operation on a token called Haven Coin through price manipulation.

The whistleblower says he was invited to join the group’s Telegram channel where he saw the messages. According to the screenshots, members of the group discussed how much cryptocurrency would be needed to control 25% of the trading volume, how long it should be held, and when it should be dumped. The blogger, named “cryptomedication”, has contacted the U.S. Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI) regarding the suspicious conversations. “I’m not here to hide at all”, he says providing his twitter account, as well – @CryptoMedicated.

Bitcoin in Brief Friday: World Satoshi Summit Canceled, Pump and Dump Scheme Exposed

In an open letter, Bitcoin Bravado called the publication a “slender article”. It also said that none of the people involved in the conversations from the screenshots write for or have equity in the company. “It’s important for everyone to understand our company’s structure.​ Though a few of the members shown in those telegram chats have been friends​ and supporters​ to Bitcoin Bravado, they write none of the content ​and have no ownership or equity ​in the company. They have their own business, we have ours. They’re almost completely inactive in the day to day operations and have been removed from our Discord channel,” the statement reads.

First Ad in the Blockchain

TD Ameritrade claims to have become the first company to embed an advertisement in the blockchain. The ad of the brokerage firm is made up of ASCII art. It can be viewed on a landing page, which also links to information about each bitcoin transaction and how the ad was built. The advertising agency Havas New York also participated in the project.

Bitcoin in Brief Friday: World Satoshi Summit Canceled, Pump and Dump Scheme ExposedThe two companies placed the ad in a function of the blockchain called OP_Return, which works like the memo space on a check, Digital News Daily reports. Simple messages and characters can be placed within transactions on the blockchain and the authors decided to create the image by linking 68 individual transactions with 80 characters each.

According to Denise Karkos, Chief Marketing Officer at TD Ameritrade, there is “no expectation beyond creating a little buzz for the brand” and enjoying the process. “Wouldn’t it be fun to be the first to advertise in the blockchain,” she said, noting that her company was also the first brokerage to provide access to bitcoin futures.

Parity Has No Intention to Split the Ethereum Chain

Parity Technologies has reaffirmed its “commitment to ethereum and a decentralized future”. In a blog post, the company said: “We are deeply sorry to those users who remain unable to access their ether as a result of a bug in our code.” The startup has been in constant conversation with affected projects. It also believes that those who have stuck ether through the wallet freeze have a case for attempting to recover the property.

Bitcoin in Brief Friday: World Satoshi Summit Canceled, Pump and Dump Scheme ExposedIn December, the team behind Parity asked for a hard fork of ethereum to overcome the consequences of the bug, which allowed an ethereum hobbyist to break their multi-signature wallet. As a result, an amount of more than half a million ether was permanently locked and the multi-sig functionality was temporarily disabled.

The company acknowledges that the debate around the recovery has “clearly shown the importance of a transparent governance process” that can respond to the community’s position on contentious issues such as ASIC resistance, supply caps, and contract restorations. “Let us make clear: we have no intention to split the Ethereum chain […] We have all dedicated a great deal of time and effort to developing the ethereum ecosystem, and have no intention of harming what we have helped build,” its team stated. Its members insist they remain committed to making the etherium platform “open, scalable, and safe”.

What are your thoughts on the subjects we’ve covered in today’s Bitcoin in Brief? Share them in the comments section below.


Images courtesy of Shutterstock, World Satoshi Summit, TD Ameritrade, Parity Technologies.


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Nasdaq-Listed Company Xunlei Faces Class-Action for Disguising ICO

Nasdaq-listed technology firm Xunlei has become the subject of multiple class-action lawsuits from investors who purchased the company’s digital token, Linktoken. Xunlei is accused of misleading investors to disguise an initial coin offering (ICO) through which Linktoken was distributed.

Also Read: Survey: 89% of Visa, Mastercard, Unionpay Users Know Crypto – 53% Have Purchased

Xunlei CEO Rejects ICO Allegations

Nasdaq-Listed Company Xunlei Faces Class-Action for Disguising ICOThe chief executive officer of Xunlei, Chen Lei, has rejected accusations that the company misled investors in order to illegally conduct an ICO in China.

Xunlei’s Linktoken was distributed to users in exchange for a contribution of idle internet bandwidth, according to South China Morning Post. Chen Lei has claimed that the Linktoken distribution did not comprise an ICO due to the company not raising any funds through the issuance of the tokens, and due to Linktoken comprising a utility token that is not allowed to be traded. “By making a public offering, really you need to use it to raise money. We have never used a coin to raise any money at all, that’s never our intention,” Mr. Lei stated.

In October 2017, Linktoken was launched in conjunction with other efforts by Xunlei to enter the booming blockchain industry. Whilst the distribution of the Linktoken appears to have been the catalyst for many weeks of sharp bullish action, the value of Xunlei’s stock has more than halved since posting 500% gains and setting record highs of $25 USD in November 2017.

Xunlei’s Stock Plummets

Nasdaq-Listed Company Xunlei Faces Class-Action for Disguising ICOSince then, the price of Xunlei’s shares had plummeted to approximately $10 by early April, prompting some U.S.-based investors to seek action against the company for allegations of giving false and/or misleading statements regarding the legitimacy of the company’s cryptocurrency-related activities between October 2017 and January 2018. Among other allegations, investors have pointed to the requirement that they purchase hardware from Xunlei in order to share bandwidth and claim the digital tokens in return.

Chen Lei has refuted the allegations, stating “We are a small capital company, so our stock price does fluctuate, but I don’t think there’s any basis for the lawsuit because we’re operating in China and it is the Chinese law and regulations that we need to observe,” adding that “the definition of [an] ICO has to be interpreted in the Chinese market.” Mr. Lei also indicated that Xunlei is currently in the process of hiring legal counsel to refute the allegations.

Chen Lei Claims to Support Regulatory Action Against ICOs

Nasdaq-Listed Company Xunlei Faces Class-Action for Disguising ICOChen Lei also criticized initial coin offerings and advocated for greater regulatory action to be taken against such, stating “ICOs are terrible, and give a bad name to blockchain technology. Governments should clamp down on these practices – a crackdown is the only way blockchain can rebuild its reputation.” Mr. Lei added: “We have been very straight on our business practices – we do not sell tokens.”

China’s National Internet Finance Association (NIFA), a self-regulatory body established by the People’s Bank of China and authorized by China’s State Council, conducted an investigation into Xunlei’s token distribution, concluding in January the company had evaded regulations through conducting an “initial miner offering.”

NIFA stated “In the case of Lianke issued by Xunlei, for example, the issuing company in effect substitutes Lianke for the duty to pay back project contributors with legal tender, making it essentially a financing activity and a form of disguised ICO. In addition, with frequent promotional activities and publishing of trading tutorials, Xunlei has lured many citizens without sound discernment into IMO activities.”

Xunlei Shares Bounce After Blockchain Launch

Nasdaq-Listed Company Xunlei Faces Class-Action for Disguising ICODespite the controversy and ongoing class-action lawsuits, Xunlie’s stock has bounced in recent days following the company’s announcement that its “Thunderchain” blockchain platform designed to facilitate the development of decentralized applications has been launched.

Xunlei’s shares (XNET) are currently trading at $13.46, after retracing from highs of $14 on the 20th of April.

Do you think that Xunlei will be successful in evading ICO status regarding its Linktoken issuance? Share your thoughts in the comments section below


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