Showing posts with label sec. Show all posts
Showing posts with label sec. Show all posts

SEC Chairman Gives Positive Outlook On Crypto to Senate Banking Committee... But Should We Trust Him?

Video via CSPAN

SEC Chairman Jay Clayton sounded generally positive when it comes to the future of cryptocurrency "I am optimistic that developments in distributed ledger technology can help facilitate capital formation, providing promising investment opportunities for both institutional and Main Street investors”.

He also repeated his stance that he believes a balance between regulation and innovation must be found, saying: "Overall, I believe we have taken a measured, yet proactive regulatory approach that both fosters innovation and capital formation while protecting our investors and our markets."

But if we know anything about government officials (of any nation), talk is cheap, and the SEC has taken surprising actions in some cases. For example, companies like Kik for launching an ICO, accusing them of foul play for raising and losing less investor money than companies like Uber, who have their blessing.

It's a magical world where a blockchain company losing $3 million must be a 'scam' - but a company listed on the stock market can lose $25 million and it's just 'a rough year'.

Earlier this year we published an article that made its way around Washington DC, in it our chief editor exposed how even some people within the SEC think they shouldn't have oversight over cryptocurrency.  Laws around 'securities' simply don't fit what cryptocurrencies are.

A "win" here isn't the head of the SEC saying something pro-crypto, it's the SEC being removed from the picture entirely.

Then an agency like the CFTC could be given oversight, scams and lying to investors remains illegal, and cryptocurrencies become legally classified the same as gold or silver (a commodity).

A concept being talked about behind closed doors with policy makers more than many are aware of, according to our sources within industry lobbying groups.

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Author: Justin Derbek
New York News Desk


SEC Chair Says Crypto Industry Has "Made Progress" Addressing Issues Needed for Bitcoin ETF Approval...


Sec Chair Jay Cayton previously shared the concerns that were holding him back from approving a Bitcoin ETF. 

They including custody, and price manipulation - specifically the potential for foreign exchanges with little oversight being able to manipulate price.

Asked if the industry has made any progress addressing these concerns, he says - yes!


Blockchain in Chains: It's Time To Strip The SEC Of Authority Over Cryptocurrency - and Some SEC Officials Agree!

SEC and cryptocurrency


Before you think this is an extreme view - you should know that members of the US Congress from both political parties, and even some of the SEC's own leadership agree - the SEC, and the regulations for trading securities are both the wrong agency, and wrong laws, to oversee the emerging cryptocurrency space.

Let's look at how we got to where we are now, what's going wrong, and the path we can take to correct it.

The big boom, and the SEC's entry into crypto...

Back in 2017, there was a lot of money flying around, we had a flood of new people rush the market, each wanting their piece of the pie.  Unfortunately, with the masses comes those who target them.

The cryptocurreny world really was the perfect target, people felt they needed to get in quick, and a lot of people had no idea what they were buying.

As the media talked about how rich people who bought Bitcoin years ago are now, scammers were right behind them promising their new coin would be next to follow this path.  The lies went viral, I remember seeing conversations between people online, where literally not 1 person involved knew what they were talking about - it was the blind leading the blind on social networking, and many of the scams were spread from victim to victim because of this.

Then as these various scams began collapsing, the SEC appeared.  Issuing cease and deists, and in some cases pressing charges against company founders.

Things had gotten so bad, even people typically against government involvement could be found cheering on some of the SEC actions.  It's hard to feel bothered by one of these companies being taken down, and at the time the SEC seemed like the lesser of two evils.

But things have changed...

Since then, the crypto world didn't just 'wise up' to scammers - we've become downright paranoid.

Today practically every startup in crypto is considered a scam until they prove otherwise, guilty until proven innocent. This doesn't really bother me, legitimate projects will have no problem proving themselves.

But one thing I know for sure - the scams of 2017 would never get off the ground today.

So, what is the SEC up to now?

Well, you've likely heard the news this week, they're targeting a well known and established tech company, KIK. They have a messaging app under the same name, and in 2017 they launched their own cryptocurrency called "KIN".

The SEC is suing them for $100 million, the amount the company raised.

While the SEC has laid out the case of a company losing money turning to an ICO to stop the bleeding, which they summarized in court documents with:

Faced with a shrinking financial “runway,” Kik decided to “pivot” to an entirely different business and attempt what a board member called a “hail Mary pass”: Kik would offer and sell one trillion digital tokens in return for cash to fund company operations and a speculative new venture.

Well, that sure sounds shady.  That's why initially, I didn't have negative reaction to this news.

Then it hit me - that's total bullshit.

That happened when I read another headline a couple hours later, saying that since becoming a publicly traded company, UBER has just released their first earnings report - a loss of $1 BILLION!

Investing in companies losing money is actually extremely common, and as far as the actual numbers go - Kik is actually on the low end, with an estimated $3 million per month operating cost. Uber loses that in a few days. So does companies like Tesla, which lost nearly $500 million so far this year - and that's an improvement for them over 2018.

In the case of Kik, it's supporters were seen pushing Kik and implementing it into their app as a way to turn things around.  Another very common, thing for a company to do - seek new investors to fund an improvement, that could turn a company losing money into a profitable one.

So what did Kik really do? Sold an "unlicensed security" - and people over estimate how easy it is to earn that label.

If someone from the company leadership implies that their cryptocurrency could go up in value - that's it, you've crossed the line and turned your token into a 'security'.

The SEC is no longer taking down scams for our own good...

What we're really getting is the SEC yelling "leave America, or else" at every company that could be considering implementing tokenized assets.

And they are leaving the country - taking their jobs, and tax dollars with them.

America's loss has been other nation's gain. Governments that have embraced the cryptocurrency and blockchain explosion are reaping massive rewards. 

There's a whole area of Switzerland now being called 'crypto valley' - they found an easy way to give their economy a huge boost - just do what Silicon Valley should have been doing this whole time.

There's hope - if the US Congress would do their job...

Already introduced in Congress by Congressmen Warren Davidson (Republican) and Darren Soto (Democrat) - the Token Taxonomey Act would officially remove the 'security' label from many digital assets.

This does not mean the crypto market becomes the wild west.  Digital assets would be treated as a commodity (like gold or silver) and regulated by the CFTC.

Think of it this way - every scam ICO violated laws beyond being an unregistered security. Lying to investors is fraud, disappearing with their money is fraud and theft - these would still be illegal, and there would still be an agency in charge of preventing this, or punishing those who do it.

Even some of the SEC's own leadership are open to the idea...

In a surprising turn - in a speech from SEC commissioner Hester M. Peirce, he highlighted the Congressman's proposed solution, saying:

"Congress may resolve the ambiguities engendered by Howey by simply requiring that at least some digital assets be treated as a separate asset class. Congressmen Warren Davidson and Darren Soto recently introduced a bill in the House intended to amend the federal securities laws to do just that, provided that the token truly operated in a decentralized network."

So where do things stand? The last update on the bill was following it's official introduction into the Congress, this is typically followed by various committees evaluating it, proposing possible changes/amendments, then it goes up for a vote.

How long this process takes greatly varies, but it's becoming clear that this should be treated as an urgent matter.

What US lawmakers need to understand...
Artificial Intelligence and blockchain own the title of today's 'hottest' emerging technologies, and there's no way to put a number on the long term economic damage caused by one of these fleeing the United States to avoid SEC overreach.

It's years too early to even guess who will be the Apple or Microsoft of blockchain, and release that blockchain powered product that includes implementation of a native token  - but until things change we can be sure it won't be an American based company.

As the reporter who broke the story on the Token Taxonomy Act, I have been informed members of Congress have shared, and even used some of my arguments in it's favor internally.

We will make sure this reaches the offices of those we have contact with already, and with the utmost respect I would like to suggest - research Switzerland's Crypto Valley, and see the results of the government doing things right.

This is the model we should aim to replicate in the United States. 

*Details updated 7/19/19
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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM

San Francisco News Desk

US Crypto Traders - Claim Your $25 BTC...

Shady ICOs beware - US SEC warns that the next wave of action against fraudulent token offerings is coming...

The "fiscal year" as it relates to the institutions that regulate the financial markets technically came to a close on Sept 30th - the idea is anything ongoing at the point is likely to continue into the next year as lawmakers return home from Washington, and anything beyond that date will be considered part of their 2019 actions.

On that note, the US Securities and Exchange Commission released their annual report covering the 2018 fiscal year, where they touched on the topic of cryptocurrencies several times, first stating:

"In the past year, the Division has opened dozens of investigations involving ICOs and digital assets, many of which were ongoing at the close of FY 2018."

The SEC says they've helped recover over $68 million for 'duped investors' participating in ICOs that purposely mislead the public.

Among those - a story I broke here following an insider leaking documents to the Global Crypto Press regarding Titanium Blockchain, who raised over $12 million before it was discovered their CEO lied about business relationships with everyone from Apple to PayPal.

Also included in their biggest busts was TokenLot, which stands accused of operating as an unregistered broker/dealer.

Adding some relief for legitimate investors, they made a point they've made before - that only those committing fraud have reason to fear SEC intervention, saying:

“The Enforcement Division recognizes the need to balance its mission to protect investors from the risk posed by fraud and registration violations against the risk of stifling innovation and legitimate capital formation”

Which is a case often made in response to those saying the cryptocurrency markets need more regulation and oversight - that so far existing laws have been sufficient and it's been impossible for someone to operate a scam in the cryptocurrency world that didn't violate existing laws as well - meaning new regulations aren't only unnecessary, but also come with the risk of slowing innovation and growth.

The full report is available on the SEC's official site here.
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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk


Securities and Exchange Commission launches new division that will help ICOs and other financial tech companies navigate regulatory framework...

They're calling it the "Strategic Hub for Innovation and Financial Technology" or "FinHub" for short.

It's purpose is to both interact with the public and hear their concerns over emerging technology in the financial sector, and to guide the companies launching new projects in this sector - specifically mentioning blockchain and digital assets among the issues they're ready to address.

"The FinHub provides a central point of focus for our efforts to monitor and engage on innovations in the securities markets that hold promise, but which also require a flexible, prompt regulatory response to execute our mission." says SEC Chairman Jay Clayton.

The SEC's FinHub will be led by Valerie A. Szczepanik, Senior Advisor for Digital Assets and Innovation and Associate Director in the SEC's Division of Corporation Finance "By launching FinHub, we hope to provide a clear path for entrepreneurs, developers, and their advisers to engage with SEC staff, seek input, and test ideas." she added.

Launched today with the announcement is a new form on the SEC website, where FinTech based companies, including ICOs can request to speak directly with the SEC for guidance with compliance issues.

Here's why this is a big deal - currently in the cryptocurrency markets we've been doing things in reverse - an ICO will launch, and then hope they never hear from the SEC and find out they did or said something wrong.

Now, before an ICO even begins they can share their plan with the SEC - and let their investors know they've already received a thumbs up from regulators.
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Author: Justin Derbek
New York News Desk


Senior regulator with the US SEC states Ethereum not a security - markets respond with $17 billion market cap boost!

While not an official ruling, this does provide an insight into the conversations regarding cryptocurrency going on behind closed doors of the US government.

Speaking at the All Markets Summit in San Francisco, an event presented by Yahoo, US Securities and Exchange Commission director of corporate finance William Hinman stated:

"Based on my understanding of the present state of ether, the ethereum network and its decentralized structure, current offers and sales of ether are not securities transactions."

An important factor to consider - this quote was part of written prepared comments from Mr. Hinman - not an off the cuff remark or response to a question.  The fact this comment was prepared in advance leads me to believe we are likely hearing the same conclusions the SEC has come to internally.

Now here's the biggest part of this - the reason for Ethereum not meeting the standard of security is 'its decentralized structure' - meaning if this is how the SEC will make this determination, many other cryptocurrencies are also now in the clear.

But, he did elaborate with a warning for ICO's, saying:

"Even digital assets with utility that function solely as a means of exchange in a decentralized network could be packaged and sold as an investment strategy that can be a security."
So the rules seem pretty straightforward - talk about all the great things a coin can do, but do not tell people to buy it because it's going to go up in value - do not sell a coin as a for-profit investment.

Markets have responded today with green candles everywhere, and a market cap rise of $17 billion at the time of publishing.
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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk


Titanium under investigation from the SEC - assets frozen as agents visit US office...

Titanium Blockchain, which trades under 'TBAR' has been visited by the SEC in their US offices - seizing computers, cell phones - and freezing all company assets, virtually placing the company under SEC control until the investigation is over.

GCP has obtained the SEC documents to review the case - which reads...

"by evidence establishing a prima facie case and reasonable likelihood that defendants Titanium Blockchain Infrastructure Services, Inc. (“TBIS”), EHI Internetwork and Systems Management, Inc. aka EHIINSM, Inc. (“EHI”), and Michael Stollery, aka Michael Stoller, aka Michael Stollaire (“Stollaire”) (collectively, “Defendants”) have engaged in, are engaging in, are about to engage in, and unless restrained and enjoined will continue to engage in transactions, acts, practices, and courses of business that constitute violations of Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5"

We attempted to reach Titanium staff via their official Telegram channel, but was told "We cannot comment on that" by an admin.

It would appear this is part of 'Operation Crypto Sweep' - a joint investigation between US and Canadian officials that is underway now - looking in to hundreds of recent ICOs. Our sources say up to 70 may be served with similar restraining orders for further investigation.

*UPDATE* - There are new developments to this story here.

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Author: Ross Davis
E-Mail: Ross@GlobalCryptoPress.com Twitter:@RossFM
San Francisco News Desk


DJ Khaled may have just played himself - the ICO he and Floyd Mayweather endorsed is under criminal investigation...

Centra claimed they had developed a debit card that would allow users to link their cryptocurrency wallets to it, then spend their Bitcoin or Ethereum anywhere Visa and MasterCard is accepted.  Even going so far to claim they had a partnership in place with the credit card companies to make this happen.  The ICO went on to raise $32 million.

But the US Government says - that partnership never existed, and is now the SEC is pursuing Centra for fraud.

“They claimed, for example, to offer a debit card backed by Visa and Mastercard that would allow users to instantly covert hard-to-spend cryptocurrencies into US dollars or legal tender. In reality,  Centra had no relationships with Visa or MasterCard.” reads the SEC complaint which can be read in full here

However, Centra did have two other real partnerships - with celebrity endorsers DJ Khaled and Floyd Mayweather.

Also cited in the SEC complaint "As we allege, the defendants relied heavily on celebrity endorsements and social media to market their scheme".

So far however Khaled and Mayweather haven't been charged with any crimes.  But that doesn't mean they're in the clear yet - they may have violated securities law by promoting the ICO without disclosing the amount of their compensation. 

At this point the SEC investigation is focused on the company founders - but the case still could expand to include Khaled and Mayweather.

*Update* - Centra's token has also now been delisted by Binance.
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Author: Ross Davis
San Francisco News Desk


US SEC is hunting down pump & dump groups - preparing for legal action, and offering rewards to whistleblowers!


A couple weeks ago I covered the SEC's first face to face with US Congress members (link) - the results had the cryptocurrency world overjoyed - they were surprisingly supportive of it - but made one thing clear: scammers beware.

One of those scams is an old one, the "pump and dump" - where a group of people get together, and pump funds into a stock, or cryptocurrency - sending the price up, that's the "pump". The hope is innocent investors see this rise and want to get on board too - that's when they "dump" - taking their profits, sending the price back down and leaving the later-comers holding massive losses.

Today the SEC announced - they're on the hunt for these groups. Stating in a consumer advisory notice:

"Blow the whistle on pump-and-dump schemers. Virtual currency and digital token pump and-dump schemes continue because they are mostly anonymous.

If you have original information that leads to a successful enforcement action that leads to monetary sanctions of $1 million or more, you could be eligible for a monetary award of between 10 percent and 30 percent.

For more information, or to submit a tip, visit the CFTC’s whistleblower.gov website."

Some of these groups are surprisingly easy to find, and bold enough to literally put the words "pump and dump" in their name. They can be found virtually on every social network or mobile chat app like Telegram or Slack.

We assume the SEC has already found those, but others have been a bit more cautious, some even charging a monthly fee to be a member or require going through some kind of approval process.

That's where putting together a group of greedy, shady investors will backfire - with the SEC offering a hefty reward for information, let the backstabbing begin!

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Author: Ross Davis
San Francisco News Desk


Breaking: US SEC meets congress and gives anti-fraud, but pro-cryptocurrency stance...

The meeting that just took place today has been worrying the markets for the last week - but at least for now it appears to have been for nothing.  The hearing was a surprisingly positive view of the innovation and technology, with concerns of fraudsters taking advantage of the excitement - which frankly, is a valid concern to have.

"We must crack down hard on those who try to abuse enthusiasm with fraud and manipulation" Chris Giancarlo, chairman of the Commodity Futures Trading Commission said.

But careful not to come off as a crack down on the cryptocurrency market in general, the Trump appointed Securities and Exchange Commission Chairman Jay Clayton added “These warnings are not an effort to undermine the fostering of innovation through our capital markets – America was built on the ingenuity, vision and spirit of entrepreneurs who tackled old and new problems in new, innovative ways” .

Another surprisingly positive quote comes from Senator Mark Warner (D) - an early investor in the cell phone technology, said he sees a similarities between mobile phones then, and cryptocurrencies today. "The same kind of transformation is about to take place." Warner expressed he believes the possibility that cryptcurrencies will hit $20 trillion in value, saying "this rises potentially to the level of a systemically relevant event."

There was one set of challenges discussed - how to classify a cryptocurrency.  A currency? A security? Something else entirely?

"What's so challenging about bitcoin is that it has characteristics of multiple different things" Giancarlo said.

Chairman Clayton said currently, they are not asking for any new laws - but in the future "We may be back with our friends from Treasury and the Fed to ask for additional legislation."

Markets appear to be in rebound following the news, with Bitcoin dipping into the $5900's briefly earlier - already at $7623 at time of publishing this article.
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Author: Ross Davis
San Francisco News Desk


SEC suspends "The Crypto Company" from trading....


The Crypto Company has been forced to suspend trading of it's stock by the The Securities and Exchange Commission.

The Crypto Company describes itself as having a "diversified portfolio of digital assets" with plans to "rollout of a full scale, high frequency cryptocurrency trading floor."

But movement in it's stock and proposed splits caught the eye of regulators.  Following a 160% rise over the last week - giving them an $11 Billion value at $575 a share.


This caused the CEO to announce a plan for a 10 to 1 split of the stock, in order to lower the entry price for a round of new investors - making the stock $57.50 per share. CEO Mike Poutre said it's "the responsible thing to do" and cited companies like Apple, and Mastercard, which also split shares to make their stock accessible to everyday investors.

The SEC has now halted trading citing "concerns regarding the accuracy and adequacy of information" - the suspension will expire January 3rd, where it can either be extended or fully lifted depending on the outcome of the SEC's investigation.

And an odd bit of information - the company went public in June of this year by acquiring the already public company "Croe"... which makes fitness bra's for women.

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Author: Oliver Redding
Seattle News Desk