SEC Suspends Trading of Three Companies With Ties to Cryptocurrency

SEC Suspends Trading of Three Companies With Ties to Cryptocurrency

The U.S. Securities and Exchange Commission (SEC) has suspended trading in the stocks of three companies with ties to cryptocurrency. One of the three is also planning an initial coin offering. The SEC says it is concerned about the nature of the companies’ business operations and the value of their assets.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

SEC Suspends Trading of Three Stocks

The SEC has “suspended trading in three companies amid questions surrounding similar statements they made about the acquisition of cryptocurrency and blockchain technology-related assets,” the agency announced on Thursday. They are Cherubim Interests, PDX Partners, and Victura Construction Group. The three stocks are traded over-the-counter, with a market capitalization of less than $5 million each, according to Factset. The suspension is temporary, beginning on February 16 and ending on March 2.

SEC Suspends Trading of Three Companies With Ties to CryptocurrencyThe agency stated that the three companies issued press releases claiming that they have “acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology, among other things.” However, the SEC says there are questions regarding the nature of the companies’ business operations and the value of their assets.

In addition, Cherubim Interests also announced that it will launch an initial coin offering (ICO). The trading suspension of this company’s shares is also due to its delinquency in filing annual and quarterly reports with the Commission.

Acquisitions and ICO

The three companies’ press releases list the same chief executive officer, Patrick J. Johnson, “who played for the Oregon Ducks and the Baltimore Ravens in the NFL,” wrote the Oregonian.

SEC Suspends Trading of Three Companies With Ties to CryptocurrencyJohnson told the publication that PDX Partners makes iPhone apps, adding that last month the company “acquired $350 million in assets belonging to a private equity firm called NVC Fund Holding Trust, whose portfolio includes ‘cryptocurrency and business financial services’.”

Cherubim Interests and Victura Construction Group have also made similar acquisitions. Furthermore, the former announced on January 3 that it has “executed a financing commitment of $100,000,000 to launch [an] initial coin offering for The Self Sustaining Intentional Communities Coin (Symbol SJT),” adding that “The sale of the coins will generate the capital to create self-sustaining intentional communities across the US and across 57 nations.”

Regulators’ Warnings

In August of last year, the SEC issued an Investor Alert about public companies making ICO-related claims. “The SEC’s Office of Investor Education and Advocacy is warning investors about potential scams involving stock of companies claiming to be related to, or asserting they are engaging in, Initial Coin Offerings (or ICOs),” the agency wrote, adding that “Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams.”

The SEC’s action against the three companies come at the same time another US regulator, the Commodity Futures Trading Commission (CFTC), issued a warning about dump-and-pump schemes involving “thinly traded or new ‘alternative’ virtual currencies, digital coins or tokens.”

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


Images courtesy of Shutterstock and SEC.


Need to calculate your bitcoin holdings? Check our tools section.

The post SEC Suspends Trading of Three Companies With Ties to Cryptocurrency appeared first on Bitcoin News.

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

The U.S. Commodity Futures Trading Commission (CFTC) has issued its first warning against pump-and-dump schemes involving cryptocurrencies while giving advice on how to buy crypto. This warning follows previous warnings by two other U.S. regulators.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

CFTC’s Warning

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoThe CFTC issued a Customer Protection Advisory on Thursday to warn the public to “beware of and avoid pump-and-dump schemes that can occur in thinly traded or new ‘alternative’ virtual currencies, digital coins or tokens.”

CFTC Director of Public Affairs Erica Elliott Richardson explained, “As with many online frauds, this type of scam is not new – it simply deploys an emerging technology to capitalize on public interest in digital assets,” adding that:

Pump-and-dump schemes long pre-date the invention of virtual currencies…The CFTC encourages all customers to thoroughly research potential investments, stay informed about tactics commonly used in investment fraud, and avoid investment opportunities they don’t fully understand.

Common Pump-and-Dump Tactics

The agency explained that “the organizers of the scheme will commonly spread rumors and urge immediate buying,” often through social media, noting that:

Some pump and dumps use false news reports, typically about a famous high-tech business leader or investor who plans to pour millions of dollars into a small, lesser known virtual currency or coin. Other fake news stories have featured major retailers, banks, or credit card companies, announcing plans to partner with one virtual currency or another.

After a certain length of time following the pump, the Commission states, the dump will begin. “The price falls and victims are left with currency or tokens that are worth much less than what they expected. From beginning to end, these scams can be over in just a few minutes,” the agency describes and immediately advises: “Customers should avoid purchasing virtual currency or tokens based on tips shared over social media.”

What Crypto Buyers Should Do

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoCiting that its job is to maintain “general anti-fraud and manipulation enforcement authority over virtual currency cash markets as a commodity in interstate commerce,” the CFTC revealed that it has received complaints from customers who have lost money to pump-and-dump schemes. Emphasizing that ultimately, “Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes,” the Commission stated:

Customers can best protect themselves by purchasing only alternative virtual currencies, digital coins, or tokens that have been thoroughly researched – to separate hype from facts.

Last month, the CFTC took action against three cryptocurrency operators and their founders for commodity fraud and misappropriation.

CFTC Joins SEC and Finra in Warnings

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoThe U.S. Securities and Exchange Commission (SEC) has repeatedly warned against pump-and-dump schemes as well as market manipulations involving any financial instruments that can be classified as securities. In August, the agency issued a statement alerting investors of pump-and-dump schemes involving initial coin offerings (ICOs).

SEC Chairman Jay Clayton made a statement in December cautioning investors against “promoting or touting the offer and sale of coins without first determining whether the US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Cryptosecurities laws apply to those actions,” specifically those related to cryptocurrencies and ICOs. “Selling securities generally requires a license, and experience shows that excessive touting in thinly traded and volatile markets can be an indicator of ‘scalping,’ ‘pump and dump’ and other manipulations and frauds,” he described. The chairman then reiterated the same message last week.

In December, the U.S. Financial Industry Regulatory Authority (Finra) also issued a statement warning investors not to fall for crypto-related stock scams including pump-and-dump frauds, advising them to:

Do your research before purchasing shares of any company offering investment opportunities in cryptocurrency…Don’t be fooled by unrealistic predictions of returns and claims made through press releases, spam email, telemarketing calls or posted online or in social media threads. These actions may be signs of a classic ‘pump and dump’ fraud.

What do you think of the CFTC’s guidance? Let us know in the comments section below.


Images courtesy of Shutterstock, CFTC, SEC, and Finra.


Need to calculate your bitcoin holdings? Check our tools section.

The post US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto appeared first on Bitcoin News.

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

You’ve probably heard of The DAO and you’ve certainly heard of the ICO. Now say hello to the DAICO, an “innovative fundraising model” that aims to combine the best of both frameworks. The Abyss Platform is the first project to utilize this hybrid organizational structure, which has been credited as the brainchild of Vitalik Buterin. There’s just one problem with The DAO, the ICO and the mutant DAICO it’s spawned – the public couldn’t give a damn about key tenets such as voting rights and community governance. All they want is cheap tokens they can flip for a quick profit.

Also read: U.S. Corporate Customers Barred From Bitfinex’s Margin Markets

Live and Let DAICO

The DAO (decentralized autonomous organization) was the first major project to be launched on the Ethereum blockchain, complete with a novel governance structure that replaced a board of directors with a community-run model. It didn’t end well. A vulnerability in the code saw one third of the ether committed to the project stolen and The DAO collapsed. As prominent crypto critic and agent provocateur Preston Byrne explains:

The original DAO could pass resolutions with a simple majority drawn from quorum of 20% (meaning as little as 10% +1 of the investors could bind the remaining 90%). No resolution ever passed because none of the tokenholders actually cared enough about what the DAO was doing in order to participate. Their primary motivation was to sit on their hands and wait for their investment to pay off.

Byrne may be a perennial bitcoin bear, but as a practising English solicitor, he knows more than most when it comes to the sort of legal matters that DAOs and DAICOs were meant to solve. Take a look at many of this year’s ICOs and you’ll find, somewhere in their roadmap, talk of token holders being empowered to vote on key protocol changes including platform developments and new features. It all sounds very progressive and democratic, but the trouble is even the loyalest of community members don’t care enough to want to micromanage decisions using the power invested in them by tokens. The real reason why ICOs are so eager to assign voting rights to their investors is to add legitimacy to their claim that the token is a utility and not a security.

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

Good Intentions Lost in the Abyss

The Abyss “merges some of the benefits of Decentralized Autonomous Organizations (DAOs), aimed at upgrading and making the initial ICO concept more transparent and secure”. It allows “token holders to control the fund withdrawal limit, also providing an option to vote for refund of the remaining contributed money in case the team fails to implement the project, with Oracles (appointed industry leaders) acting as arbitrators.” The idea is plucked from a concept Vitalik Buterin mooted a few weeks back.

Token Holders Don’t Give a Damn About Voting Rights and Community Governance

In his scathing critique of the DAICO, Preston Byrne writes: “I feel like I’m taking crazy pills here, because the SEC literally wrote a report about the original DAO scheme, likened it to a security, and cited as authority for this proposition not one but TWO cases relating to an infamous 1970s pyramid scheme that landed its promoter in federal prison for nearly a decade.”

He finishes: “A DAICO is nothing more than a new acronym for the same old bad ideas. The broken DAO concept, in particular, requires extensive rethinking and movement onto private/permissioned blockchains in order to shed its pyramid scheme-like qualities and serve a useful function. On account of which I am completely amazed that anyone would want to combine the DAO and ICO concepts under any circumstances.”

Original thinking deserves a chance to flourish, and blockchain governance – for all its pitfalls – may yet find a way to work. It probably won’t arrive in the form of the DAICO though or any of the other “revolutionary” governance models being used to float the current crop of crowdsales. Good ideas will ultimately prevail, while the ones deemed too wacky and unworkable will return to the abyss that spawned them.

Do you think blockchain democracy and token-based voting is a viable concept, or is it destined to fail? Let us know in the comments section below.


Images courtesy of Shutterstock, Twitter, and Ethersear.ch.


Get our news feed on your site. Check our widget services.

The post Token Holders Don’t Give a Damn About Voting Rights and Community Governance appeared first on Bitcoin News.

This Week in Bitcoin: Who Do You Believe?

This Week in Bitcoin: Who Do You Believe?

The bitcoin space is a constant battle of truth versus untruth, rumor versus fact and optimism versus pessimism. With market manipulators up to their usual tricks and salty altcoiners crying FUD, it can be hard to tell what’s real and what’s fake. This week truly had it all: keks, lies, and videotape beamed live from the U.S. Senate. Throw in the obligatory multi-million dollar hack, and you’ve got all the makings of another seismic week in bitcoin.

Also read: Japan Cracks Down on Foreign ICO Agency Operating Without License

The Rumor Mill Goes Into Overdrive

The week started with rumors that China was banning bitcoin – yes, again. Not only that but they would be cracking down on mining too and laying the banhammer in Hong Kong into the bargain. It turns out the story was actual fake news, but that didn’t stop a couple of lesser publications from running with it. It was an elaborate hoax that showed much more sophistication than the average Nigerian phishing email, and was clearly an attempt at shorting the markets for monetary gain. As we reported:

The objective of the bogus email’s senders was to spread rumours and panic, in the hope of manipulating the price of bitcoin, after taking short positions on bitcoin futures and betting that the price of bitcoin will fall, said Leonhard Weese, president of the Hong Kong bitcoin association.

Discrediting fake news is one thing, but what about news that’s yet to occur? Who do you believe when it comes to predicting bitcoin’s future movements? Two very different sources gave their views on where bitcoin’s headed this year, one pessimistic, the other largely optimistic. While a central banker was trotting out the usual apocalyptic proclamations about bitcoin being a Ponzi and a disaster, a group of luminaries were predicting more positive price movements for the year ahead.

This Week in Bitcoin: Who Do You Believe?

Bitcoin Gets The Hero It Deserves

Tuesday saw  the Senate hearing on cryptocurrencies, which was interpreted as mostly positive for bitcoin, despite SEC chairman Jay Clayton opining that every ICO to date has issued tokens that constitute a security, not a utility. The hearing was also noteworthy for the first recorded usage of the word “HODL” in the U.S. Senate, a feat which made an instant hero of CFTC chairman Chris Giancarlo, whose Twitter follower count “did a bitcoin” and grew exponentially in the aftermath of the hearing.

Other major stories that got heads talking this week include Forbes’ Crypto Rich List which is either harmless fun or a gross invasion of privacy depending on your perspective. Weiss Ratings defended its decision to give bitcoin a C+, and there was good news from Korea, where the PM confirmed that crypto exchanges are in no danger of being shut down provided they play by the rules. As always, you’ll catch the best of this week’s stories in the This Week in Bitcoin podcast, embedded below.

Bitcoin Springs a Bear Trap

It looked like bitcoin was back on track after a glorious green candle sent it scurrying above $9k, but the joy was to be short lived. Possibly feeling the effects of the global slump induced by the sliding stock market, bitcoin was dragged back into the low $8k territory, where it’s been floundering every since. Eric Wall sees a clear correlation between the crypto markets and the U.S. stock market. Watching the bitcoin price ticker rise and fall can be heart-stopping stuff; you can’t blame Steve Wozniak for tapping out and selling the bulk of his BTC.

This Week in Bitcoin: Who Do You Believe?

Finally, Ripple came in for scrutiny after Bitmex Research revealed just how centralized the XRP is, and the IOTA mafia were out in force after Andreas Brekken dared to deliver a few home truths in his latest shitcoin review. Still, better to be an irate IOTA holder than a Nano holder with your XRB in Bitgrail. $170 million of cryptocurrency lost due to a withdrawal bug that was mercilessly exploited for months. Next week can we please have no hacks, no phishing attacks, no bulls, and no baseless cries of “FUD”?

What was your favorite story from this week in bitcoin? Let us know in the comments section below.


Images courtesy of Shutterstock, and Twitter.


Need to calculate your bitcoin holdings? Check our tools section.

The post This Week in Bitcoin: Who Do You Believe? appeared first on Bitcoin News.

The Satoshi Revolution – Chapter 5: ICOs – Peril or Menace or Expression of Satoshi Spirit? (Part 2)

ICOs - Peril or Menace or Expression of Satoshi Spirit?

The Satoshi Revolution: A Revolution of Rising Expectations.
Section 2 : The Moral Imperative of Privacy
Chapter 5: Implementing Crypto Privacy
by Wendy McElroy

ICOs: Peril or Menace or Expression of Satoshi Spirit? (Chapter 5, Part 2)

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way…

– Charles Dickens, A Tale of Two Cities

Crypto advocates differ dramatically on the impact of Initial Coin Offerings (ICOs). They are a valuable dynamic that financed Ethereum’s smart contract; they are a blank cheque for scammers; they give government a wedge with which to separate cryptocurrency from freedom. The damnable thing is that all the assessments may be correct.

What does this have to do with privacy? In my opinion, current ICOs are regulation bait. The bad behavior of some ICOs and the recent hacks of others provide the perfect justification for governments to clamp down, not only on ICOs but, perhaps, on all cryptocurrency. Just as centralized exchanges are becoming quasi-banks, which are the “trusted third parties” Satoshi reviled the most, ICOs could come to resemble securities or private equities. In some places, that process is underway. The regulation gives government access to additional funds, of course, but it also provides detailed information on every investor. It nationalizes another bastion of free-market finance.


What is an ICO?

An ICO is a type of crowdfunding or crowdsale for startups, which allows them to generate capital while bypassing the restrictive requirements and costs of regulatory compliance and of dealing with intermediary financial organizations. A startup allocates a specified number of “tokens” to early investors in exchange for an established “money,” often bitcoin. The token is a pre-mined cryptocurrency that is issued by the startup. If the crowdfunder’s financial goal is not met, then the money is supposed to be returned to investors.

Some startups add incentives, which vary: dividends on future products, or services, for example. But the main incentive: if the financial goal of the crowdfunding is met, and when the ICO goes public, the token holders may see their investment soar in value. The tokens become a functioning currency, with a value linked to that of the startup. In 2014, for example, Ethereum’s ICO raised $18 million, which made each Ether coin worth approximately $0.40 US. Today (January 26, 2017), the price hovers around $1050.


The Disagreement

Some crypto advocates believe ICOs embody the original spirit of Bitcoin. Marcel Chuo of bitcoin.com wrote, “ICOs allow any investors around the world to have complete freedom to choose how to invest their money. By contrast, private equity is restricted to ‘accredited investors’ which is the result of a bunch of rich people pressuring the government to set up barriers to the common folk making money…” It is a fair and accurate point.

An accredited investor is a person who is rich enough to qualify for a government-granted privilege; he is allowed to invest in so-called high risk ventures, like startups, while the average person is prohibited. It is a financial privilege accorded to the upper echelon of wealth. Regulations vary from country to country, but the American ones are typical. The Securities and Exchange Commission (SEC) offers one of three ways to qualify. The individual (or entity) must have an annual income of $200,000 or a joint one of $300,000; he must have a net worth of over $1 million; or, he must be a general partner, executive officer, or somehow in business with whomever is issuing the security. Common people are deemed to be too stupid or unsophisticated to take such financial risks. They are generally restricted to investing in mutual funds and other low-risk, low-return vehicles.

Importantly, accredited investors must file a regulatory disclosure form with the SEC, which lays open their finances to government.

Cryptocurrencies and non-regulated ICOs blow past the legal privileges of the rich. They open a wide window for the average person to invest by the same rules as the rich, while skirting reporting requirements. Cryptocurrencies and non-regulated ICOs give average people the chance to profit hugely by taking a risk.

Of course, it is also possible to lose hugely. Under the best of circumstances, startups are high risk. The best of circumstances include – and, perhaps, rest upon – the honesty of those conducting the ICO. But even legitimate startups can go bankrupt, be hacked, be shut down by government, or collapse for another reason. Without honesty, however, the ICO is a scam.

ICO scams seem to have increased in recent years. Several factors are at work.

A feeding frenzy for crypto has descended on investors, and many of them do not act wisely because they fear missing the next, best thing. ICOs have also become a fad, akin to the dot.com fad in the late 1990s; the dot.com bubble collapsed circa 2001. Like many of their ill-fated predecessors, some ICO offerings now seem to rest on nothing but talk. Yet, they draw investors. An article in Quartz (July 07, 2017) reported, “A cryptotoken called ‘Useless Ethereum Token’ has raised over $40,000 in just under three days. Here’s its pitch: ‘UET is a standard ERC20 token, so you can hold it and transfer it. Other than that… nothing. Absolutely nothing’.” The useless, gag crypto reportedly raised 310.445 in Ether, $324,120 in US currency, and it issued 3,965,716.097 tokens. The investments occurred despite a header on the main website, which declared, “You’re going to give some random person on the internet money, and they’re going to take it and go buy stuff with it. Probably electronics, to be honest. Maybe even a big-screen television. Seriously, don’t buy these tokens.”

Useless Ethereum called itself, “The world’s first 100% honest Ethereum ICO.”

But there are blatantly dishonest ICOs. Crypto-veteran Kai Sedgwick recently wrote, “Benebit, one of this year’s most hyped ICOs, has pulled an exit scam, making off with a reported $2.7 million of investor funds. Other estimates put the figure as high as $4 million. The fraud only came to light after someone noticed that the team photos had been stolen from a school website. Once this happened, the Benebit team scampered…” Benebit had been endorsed by many respected ICO forums and sites, such as the clearinghouse ICO Syndicate. In short, due diligence would not have saved investors from losing their life savings.

And, then, there are the honest ICOs and exchanges that are simply incompetent. On January 26, 2018, a team from the Japanese Coincheck exchange held a press conference to discuss the theft of between $400 and $534 million; the vagueness comes from whether the stolen funds are assessed at the time of investment or their current value. A hacker cleaned out the exchange’s crypto in a single transaction because it seems to have been held in one hot wallet, which had no multi-sig. In short, the security resembled swiss cheese. Coincheck was one of the respected exchanges; ICOs are far more notorious for bugs and vulnerabilities.

Phoney or incompetent ICOs may seem humorous to non-investors, but there is sobering aspect that could easily affect them. Bad ICOs draw government regulation. In fairness, both ICO successes and scams are regulation bait.

An instance of attacking their success: In early September, 2017, China banned ICOs as being disruptive to financial stability. Translation: crypto and free-market ICOs were so popular that government could not control them. The ban appears to have been a means to clear the financial decks in order to allow only ICOs that function under government control to return. A headline (January 26, 2018) in The Bitcoinist stated, “Chinese Official: New Regulations for 2018 May End ICO Ban.”

If so, only “official” ICOs will be permitted, including ones conducted by government agencies.

Meanwhile, the SEC takes a different tack, which is no less damaging to financial freedom. It has started to classify some tokens as securities and to prosecute startups that issue them for violating federal security regulations. An article in CNBC (January 25, 2018), entitled “SEC devoting ‘significant’ portion of resources for catching cryptocurrency scams,” warned that the SEC “isn’t making much distinction between security and utility tokens, and that securities law applies to at least some cryptocurrencies.” Soon, SEC regulation may apply to all ICOs. Even if it does not, who would issue tokens with the risk of SEC persecution hanging over the process?

Complying with securities regulations is an onerous process. Of course, there are exceptions to when an investment is labelled a “security.” One is if only accredited investors are accepted. This returns the rich to a position of financial privilege, which may be part of the SEC’s goal.

Conclusion
ICOs started as innovative vehicles that allowed average people to invest in startups, and allowed startups to bootstrap themselves without government obstruction. There was always room for scamming, however. Many ICOs now defraud innocent people and give government a perfect excuse for regulation.

Government will only accept crypto and its related manifestations, such as ICOs, if it can be in control of them. Grabbing the wealth is certainly one goal but social control is another. The key to both is information. The looting of data is about to accelerate. Precaution should as well.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post The Satoshi Revolution – Chapter 5: ICOs – Peril or Menace or Expression of Satoshi Spirit? (Part 2) appeared first on Bitcoin News.

SEC to Focus on Cryptocurrency and ICO Fraud as Top Priority

SEC to Focus on Cryptocurrency and ICO Fraud as Top Priority

The financial inspectors of the SEC publish their top priorities at the beginning of every year in an effort to improve compliance, prevent fraud, monitor risk, and inform regulatory policy. This year, tacking fraud in the ICO and cryptocurrency markets takes center stage.

Also Read: Weiss Ratings Defends its Decision to Give Bitcoin Only a C+ Grade

SEC Priorities for 2018

SEC to Focus on Cryptocurrency and ICO Fraud as Top PriorityThe US Securities and Exchange Commission’s Office of Compliance Inspections and Examinations (OCIE) announced on Wednesday its 2018 examination priorities. A particular interest will be placed this year on matters involving critical market infrastructure, duties to retail investors, and developments in cryptocurrency, initial coin offerings, and secondary market trading. The investigators will continue to monitor the growth of cryptocurrencies and initial coin offerings (ICOs) and “examine registrants involved in their offer and sale to ensure that investors receive adequate disclosures about the risks associated with these investments.”

“I appreciate OCIE’s dedication to maximizing the effectiveness of their resources with a keen eye toward asset verification, market infrastructure, and duties owed to retail investors,” commented SEC Chairman Jay Clayton.

“As the markets continually evolve and the products and services available to investors adapt, OCIE remains committed in its risk-based examination program to prioritizing the interests of retail investors and examining those aspects of securities firms posing risks to investors and the proper functioning of our capital markets,” added OCIE Director Pete Driscoll.

Protecting Retail Investors

SEC to Focus on Cryptocurrency and ICO Fraud as Top PriorityIn the program document, the regulators explain that: “The cryptocurrency and ICO markets have grown rapidly and present a number of risks for retail investors. Along with the growth of these products and markets, the number of broker-dealers and investment advisers engaged in this space continues to grow as well. We will continue to monitor the sale of these products, and where the products are securities, examine for regulatory compliance.”

Areas of focus will include, among other things, “whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation, and whether financial professionals are providing investors with disclosure about the risks associated with these investments, including the risk of investment losses, liquidity risks, price volatility, and potential fraud.”

Why have American regulators decided to focus on cryptocurrency and ICOs in 2018? Tell us what you think in the comments section below.


Images courtesy of Shutterstock.


Do you like to research and read about Bitcoin technology? Check out Bitcoin.com’s Wiki page for an in-depth look at Bitcoin’s innovative technology and interesting history.

The post SEC to Focus on Cryptocurrency and ICO Fraud as Top Priority appeared first on Bitcoin News.

Thai Government Cannot Stop Crypto Use – Regulatory Framework Expected in a Month

Thai Government Cannot Stop Crypto Use - Regulatory Framework Expected in a Month

Thailand’s financial agencies have agreed that regulators cannot stop the use of cryptocurrencies within the country. The relevant ministries will meet and discuss the regulatory framework for digital currencies and initial coin offerings, which is expected to be finalized within a month.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Can’t Stop Crypto – Forced to Regulate

Thailand’s Finance Minister Apisak Tantivorawong said on Thursday that “The government will not ban cryptocurrency trading,” the Bangkok Post reported, adding that “A regulatory framework to govern digital currencies will become clearer within a month.” At the “Thailand Takeoff 2018” seminar, he emphasized:

After a recent discussion, related agencies agreed that regulators cannot stop the use of virtual currencies but will have to regulate and control them in an appropriate manner.

Thai Government Cannot Stop Crypto Use - Regulatory Framework Expected in a MonthThe Thai Securities and Exchange Commission (TSEC), the Ministry of Finance, the Anti-Money Laundering (AML) Office, and the Bank of Thailand (BOT) will soon meet to discuss this matter in detail, according to Thai Rath.

In addition, “Mr. Apisak said that the best authority to take care of digital currency is the [T]SEC, because the [T]SEC is responsible for the oversight of securities,” the news outlet wrote. The finance minister also indicated that the Bank of Thailand is not the appropriate organization to oversee cryptocurrencies since they are not recognized as legal tender.

The regulators are “currently drafting legislation to oversee and regulate the use of digital currency, [which is] expected to be finalized within 1 month,” Channel 7 reported.

Regulating ICOs

Thai Government Cannot Stop Crypto Use - Regulatory Framework Expected in a MonthThe Thai government will also regulate ICOs. The finance minister asserted that if Thailand is to improve its fintech sector, it must be able to regulate cryptocurrencies and ICOs, Prachachat Turakij details.

Recently, a mobile distributor listed on the Thailand Stock Exchange (SET), Jaymart, announced plans to let its subsidiary, J Ventures, raise funds through an ICO. With a pre-sale in February and the official ICO in March, the company aims to raise 660 million baht (~USD$20.8 million) and will use the funds to “develop a decentralised digital lending platform” using blockchain technology, the Bangkok Post describes.

Finance permanent secretary Somchai Sujjapongse explained that the TSEC is taking responsibility for this matter and is conducting a public hearing on ICOs, the publication noted and quoted him saying:

There is no law governing ICOs, so Jaymart has not done anything wrong – but don’t cheat people.

Do you think the Thai government is taking the right approach to regulating cryptocurrencies and ICOs? Let us know in the comments section below.


Images courtesy of Shutterstock and Thai SEC.


Need to calculate your bitcoin holdings? Check our tools section.

The post Thai Government Cannot Stop Crypto Use – Regulatory Framework Expected in a Month appeared first on Bitcoin News.

Grayscale Plans to Launch a Cryptocurrency ‘Large Cap Fund’

Grayscale Plans to Launch a Cryptocurrency 'Large Cap Fund'

This Wednesday Grayscale Investments, the sponsor of the Bitcoin Trust (OTCQX: GBTC) has announced a new cryptocurrency investment vehicle is coming. The company plans to launch the ‘Grayscale Digital Large Cap Fund’ (the “Fund”) that intends to hold the top digital assets within the cryptocurrency economy.

Also Read: Phony PBOC Email Sent to U.S. Media Aimed to Manipulate BTC Price

Grayscale Launches a New Cryptocurrency Fund

Grayscale Plans to Launch a Cryptocurrency 'Large Cap Fund'The managers of the popular bitcoin investment fund GBTC and the ethereum trust, Grayscale, have decided to create a much larger investment product comprised of a basket of top-performing cryptocurrencies. According to Grayscale’s announcement, the basket will consist of litecoin (LTC) bitcoin cash (BCH) ripple (XRP) bitcoin core (BTC), and ethereum (ETH) for now.

“We’re excited to further expand the universe of Grayscale’s product offerings as interest in the digital currency asset class continues to grow,” said Barry Silbert, CEO, and founder of Grayscale Investments.

As a trusted and experienced manager, Grayscale is committed to creating investment structures that are familiar to qualified investors and provide secure access to this emerging asset class.

The Fund Targets 70% Coverage of the Digital Asset Market

Grayscale Plans to Launch a Cryptocurrency 'Large Cap Fund'
Grayscale’s Barry Silbert.

The sponsors first funds consisting of ETH and BTC have done phenomenally well following alongside the prices rises of spot markets. When Grayscale launched its first product back in 2013 at the time BTC was averaging $127 per coin and GBTC became one of the first mainstream investment vehicles tied to bitcoin reserves. In July of 2017, the firm initiated its ethereum trust which is framed in a similar fashion. For the new ‘Grayscale Digital Large Cap Fund’ the sponsor may also hold cash and assets that arise from forks and airdrops. Shares will reflect the platform Tradeblock’s Digital Asset Reference Rate at 4 pm EDT.

“Through a rules-based portfolio construction process, the Fund targets 70% coverage of the digital asset market — The Fund will be rebalanced on a quarterly basis to remove existing digital assets or include new digital assets in the Fund’s portfolio in accordance with certain criteria established by Grayscale,” explains the announcement.

One Year of Holding and Risk  

According to Grayscale the Fund is a Cayman Islands limited liability company but based in the United States. The product is also not registered with the U.S. Securities and Exchange Commission (SEC), and is not subject to American based securities laws.

Moreover, Grayscale details that the investment product is “highly speculative in nature,” and the Fund is subject to a one-year holding period. This means investors have to “bear the risks” for an entire year, but after the holding period assets can be “resold without restriction,” Grayscale concludes.

What do you think about Grayscale’s new ‘Digital Large Cap Fund?’ Let us know what you think in the comments below.


Images via Shutterstock, Twitter, and Grayscale. 


Do you like to research and read about Bitcoin technology? Check out Bitcoin.com’s Wiki page for an in-depth look at Bitcoin’s innovative technology and interesting history.

The post Grayscale Plans to Launch a Cryptocurrency ‘Large Cap Fund’ appeared first on Bitcoin News.