SEC, CFTC, FBI Take Action Against Bitcoin-Funded Securities Dealer 1Broker

SEC, CFTC, FBI Take Action Against Bitcoin-Funded Securities Dealer 1Broker

Regulation Three U.S. agencies have taken action against international bitcoin-funded securities dealer 1pool Ltd., aka 1Broker. The Securities and Exchange Commission (SEC) says 1Broker violated federal securities laws. The Commodity Futures Trading Commission (CFTC) says it violated the Commodity Exchange Act. Meanwhile, the company says it is working on letting customers withdraw their funds. Also read: 160 Crypto Exchanges Seek to Enter Japanese Market, Regulator Reveals SEC’s Action The SEC announced Thursday that it has filed charges against Marshall Islands-registered 1pool Ltd., aka 1Broker, and its Austria-based CEO, Patrick Brunner, “for allegedly violating the federal securities laws in connection with security-based swaps funded with bitcoins.” The agency explained: Investors could open accounts by simply providing an email address and a user name – no additional information was required – and could only fund their account using bitcoins. The SEC alleges that an undercover special agent with the Federal Bureau of Investigation (FBI) “successfully purchased several security-based swaps on 1Broker’s platform from the U.S. despite not meeting the discretionary investment thresholds required by the federal securities laws.” The commission further alleges that Brunner and 1Broker failed to transact these swaps “on a registered national exchange, and failed to properly register as a security-based swaps dealer.” The SEC’s complaint “seeks permanent injunctions, disgorgement plus interest, and penalties.” CFTC’s Action On the same day, the CFTC filed a civil enforcement action against 1pool Ltd. and Brunner, stating: The CFTC’s complaint charges the defendants with engaging in unlawful retail commodity transactions, failing to register as a Futures Commission Merchant (FCM), and supervisory violations for failing to implement procedures to prevent money laundering as required under federal laws and regulations. From at least February 2016, the defendants “offered or engaged in unlawful retail commodity transactions in the form of ‘contracts for difference’ (CFDs) that had as underlying assets commodities,” the CFTC alleges. However, these transactions are not conducted in accordance with the Commodity Exchange Act (CEA). The agency detailed: The CFTC seeks disgorgement of ill-gotten gains, civil monetary penalties, restitution, permanent registration and trading bans, and a permanent injunction against further violations of the CEA and CFTC regulations as charged. FBI’s Action Also on Thursday, the FBI seized the 1Broker.com domain. A notice on the agency’s website states three violations: money laundering,…

Ripple Leads Crypto Coalition Seeking Gov’t Oversight Encouraging Crypto, Blockchain

Ripple Leads Crypto Coalition Seeking Gov’t Oversight Encouraging Crypto, Blockchain

Ripple will lead a group of crypto startups to lobby lawmakers and financial regulators in D.C. to support crypto and blockchain innovation, Bloomberg reported on Thursday, September 27. According to the report, the coalition of San-Francisco-based crypto firms is planning to pay Klein/Johnson Group, a bipartisan lobby group, to assist the crypto and blockchain community in conveying to regulators that the industry needs support from the government. The new group, called the Securing America’s Internet of Value Coalition, aims to soften the government’s stance in order to encourage innovation and support competition in the ecosystem of global crypto markets. The coalition, together with the lobby group, will raise issues with Congress, as well as the Securities and Exchange Commission (SEC), the Internal Revenue Service (IRS), and other agencies that have relations to cryptocurrencies. According to the preliminary agreement, the fintech lobby group Klein/Johnson will reportedly receive around $25,000 a month and 10,000 in Ripple (XRP) from the coalition. As Bloomberg reports, the company is planning to convert the cryptocurrency into dollars by the time it discloses the payments on federal lobbying forms. Along with Ripple, as well as independent foundation RippleWorks, the coalition will also feature digital payments firm Coil, crypto investment company Yaka, and PolySign, a startup that is set to launch a crypto custodian. Chris Larsen, executive chairman of Ripple, commented that while the company admits that the matter is “really complicated,” due to a great deal of “misinformation,” there is still “a lot of interest in this topic in D.C..” The companies’ lobbying move follows the increased attention of Congress and other agencies like the SEC towards cryptocurrencies. Yesterday, a group of Congress lawmakers sent a letter to the SEC, urging the regulators to provide more clarity in regard to cryptocurrencies. Specifically, the lawmakers have reportedly requested the SEC to confirm whether digital tokens can be identified as securities or not. On September 26, the U.S. House of Representatives passed a bill to establish a crypto task force to combat terrorist use of cryptocurrencies. In June, SEC chairman Jay Clayton claimed that major cryptocurrency Bitcoin (BTC) is not a security due to its function as a replacement for sovereign currencies. Around a week later, a senior SEC official claimed that the top…

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

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

Altcoins Following some notable premiers in the genre recently, the next batch of stablecoins is on the way. A British startup is partnering with a bank to launch a GBP-pegged crypto, a Swiss commodities trader wants to mint a coin backed by metals, and a Mongolian telecom has been licensed to issue the country’s first digital currency with the same value as the national fiat. Also read: European Regulator Renews Restrictions on Crypto-Based Derivatives   Pound-Pegged Stablecoin on the Horizon in the UK The last couple weeks saw the arrival of new stablecoins in the crypto space. The US dollar-pegged Tether (USDT) will have to compete against two alternative cryptocurrencies boasting similar features to those that made Tether popular among traders and speculators. Gemini Dollar (GUSD) and Paxos Standard (PAX), both approved by the New York State Department of Financial Services, are ERC20 tokens backed one-to-one with US fiat currency. And both, like Tether, sparked controversy almost immediately with allegations that the authorized issuers, Gemini Trust and Paxos Trust, can freeze accounts and funds if required by the law. Several new announcements related to stablecoin projects were made this week. UK-based OTC crypto-trader and exchange operator LBX, London Block Exchange, intends to launch a cryptocurrency pegged to the British pound. The platform revealed yesterday it had reached an agreement with a banking partner to issue the new digital currency called Lbxpeg which will be backed by reserves of British fiat money. The participating financial institution has not been revealed yet. Quoted by Business Insider, LBX CEO Benjamin Dives said, “We would be ready for the first cryptopound to be minted in the next 10 days.” He added that the reserves underpinning the coin will be audited by a leading accountancy firm on a regular basis. According to details released by LBX itself, their stablecoin will be tied to the value of the pound sterling (GBP) and held in a UK bank account on a 1:1 basis. The exchange noted that Lbxpeg will allow users to transfer the digital equivalent of GBP “quickly, easily and on a global scale.” The company said this will be happening on a decentralized network – initially, the project will be utilizing the Ethereum blockchain to develop, distribute and manage the crypto.…

Precious Commodities: CFTC Shows Force Against Crypto Scammers, but Maintains ‘Do No Harm’ Approach

Precious Commodities: CFTC Shows Force Against Crypto Scammers, but Maintains ‘Do No Harm’ Approach

This week, a United States federal district judge ruled that an allegedly fraudulent crypto token meets the definition of a commodity. That brought the case under the Commodity Futures Trading Commission’s (CFTC) purview, which has long argued that virtual currencies constitute commodities. Here what it means — and how the watchdog has been supporting its stance on cryptocurrencies’ legal status. Are cryptocurrencies commodities or securities? Well, they can be both The regulatory approach to cryptocurrencies in the U.S. is complex. While the Congress holds supreme power over federal regulatory agencies like the Securities and Exchange Commission (SEC) and the CFTC, it has not issued any guidelines on the matter to date. Because there’s no definitive set of rules that all agencies can abide by, every regulator takes its own approach, even if it clashes with other perspectives. Namely, the SEC views cryptocurrencies as securities while the CFTC treats them as commodities, and both watchdogs have attempted to secure their viewpoints in court. However, those different approaches actually seem to coexist. As CFTC Commissioner Brian Quintenz explained to Bloomberg in October 2017, “Crypto-tokens offered in a presale can transform. They may start their life as a security regulated under the SEC from a capital-raising perspective but then at some point — maybe possibly quickly or even immediately — turn into a commodity.” In February 2018, the agencies held a joint session on their roles in the crypto industry, where they mentioned they were willing to work together to create a regulatory framework. Further, in May 2018, CFTC Commissioner Rostin Behnam delivered a speech that further stressed the increasing collaboration between his agency and the SEC: “I spoke about my position on the CFTC and the SEC efforts to harmonize rules. Given the large number of dually registered market participants and overlapping policy, there is a real opportunity for the CFTC and SEC to harmonize redundant rules and leave both market participants and regulators in a stronger position.” Soon after that, in June, the SEC Corporation Finance Director William Hinman clarified that his agency doesn’t view either Bitcoin (BTC) or Ethereum (ETH) as securities, because they have become largely decentralized “in their present state,” and that it would focus instead on Initial Coin Offerings (ICOs). The CFTC,…

Cryptocurrency Markets Mainly See Red, Bitcoin Hovers Below $6,600

Cryptocurrency Markets Mainly See Red, Bitcoin Hovers Below $6,600

Saturday, September 29: crypto markets are mainly seeing red today, with only five out of the 20 top cryptocurrencies by market cap seeing some growth by press time, according to CoinMarketCap. The daily trade volume has dropped below $16 billion, currently amounting to $15.6 billion. Market visualization from Coin360 Bitcoin (BTC) has failed to hold $6,700 support, dropping below the $6,600 price point over the day. The top cryptocurrency is down around 1.8 percent over a 24 hour period, and is trading at around $6,539 at press time. Shortly after testing $6,700 yesterday, Bitcoin has again plunged below its weekly and monthly gains, down 2.1 and 6.5 over the past 7 days and 30 days respectively. Bitcoin’s dominance on the market is also down around 0.6 percent over the day. Bitcoin 7-day price chart. Source: Cointelegraph Bitcoin Price Index In contrast, Ethereum (ETH), the second cryptocurrency by market cap, is seeing some gains today. Ethereum is up around 1.8 percent over the past 24 hours, trading at around $231. The top altcoin has seen some fluctuation down over the day, with its intraday low amounting to $215. Ethereum 7-day price chart. Source: Cointelegraph Ethereum Price Index Third top cryptocurrency Ripple (XRP) has seen more gains over a 24 hour period. XRP is up almost 3 percent over the day, trading at about $0.56. While the monthly growth of over 60 percent represents an increasing price trend in the long term, Ripple is slightly down over the week, seeing losses of around 2 percent. The market capitalization of Ripple is around $1.18 billion less than Ethereum’s market share, amounting to about $22.26 billion at press time. Ripple 7-day price chart. Source: Cointelegraph Ripple Price Index Total market cap has been hovering around the $220 billion point over the day: at press time, total market cap is equal to around $221 billion. The number of cryptocurrencies listed on CoinMarketCap has declined, with the total amount down back below 2,000. Total market capitalization 7-day chart. Source: CoinMarketCap While most of top 20 cryptocurrencies have been unable to hold weekly gains, some coins have managed to hold significant momentum despite daily losses or relatively small gains. Bitcoin Cash (BCH) is seeing the largest gains over the past 7 days,…

CFTC Charges Two Defendants for Defrauding Investors and Impersonation of CFTC Officials

CFTC Charges Two Defendants for Defrauding Investors and Impersonation of CFTC Officials

The U.S. Commodity Futures Trading Commission (CFTC) has filed a suit against two defendants for the allegedly fraudulent solicitation of Bitcoin (BTC), according to an official press release published on Friday, September 28. The CFTC’s complaint — filed in the U.S. District Court for the Northern District of Texas — charges the two defendants with running two fraudulent businesses and misleading the public to invest in leveraged or margined foreign currency contracts, such as forex, binary options, and diamonds. The first defendant, who goes by the name Morgan Hunt, is reportedly from Arlington, Texas, and owns the company Diamonds Trading Investment House. The second defendant, Kim Hecroft, purportedly of Baltimore, Maryland, reportedly ran First Options Trading. According to the press release, Hunt and Hecroft have defrauded at least two investors starting in January 2017. The defendants had allegedly been offering to invest in trading for the benefits of their clients via email and Facebook. Among the other accusations, the CFTC mentioned that the defendants were impersonating a CFTC investigator, as well as using forged official documents to pose as the CFTC’s General Counsel with CFTC’s official Seal as a part of the scam. While the CFTC is not actually involved in any activity involving tax collection, the fraudsters reportedly impersonated CFTC officials in order to require fake tax payments on cryptocurrency accounts. In a complaint to the court, the CFTC seeks restitution for the defrauded investors, disgorgement of illegal profits, civil monetary penalties, and permanent trading and registration bans, as well as a permanent ban from further violations of CFTC regulations and the Commodity Exchange Act. Earlier this week, a U.S. federal district court ruled that an alleged fraudulent crypto token from the firm “My Big Coin Pay” was a commodity, bringing the case under CFTC regulations. Yesterday, another U.S. financial regulator, the Securities and Exchange Commission (SEC), filed charges against international securities dealer 1pool for the alleged offering of Bitcoin-funded security-based swaps.

Markets Update: Digital Asset Consolidation and Accumulation Continues

Markets Update: Digital Asset Consolidation and Accumulation Continues

Market Updates On Saturday September 29, cryptocurrency prices are meandering along after an interesting two weeks of ups and downs. Since last week’s crypto market dips, digital asset markets have been seemingly less volatile and many cryptocurrencies are following a tight wedge formation indicating a possible accumulation phase. Also read: Ebang Announces 44 Terahash E-11 Miners With 10nm Chips The Cryptocurrency Economy Gains US$13 Billion This Week The weekend is here and digital asset traders are trying to figure out what’s next in the land of crypto trading. There’s been some improvement since our last markets update four days ago as the entire crypto-economy at the time was valued at US$210 billion. Today, thanks to gains stemming from ethereum, ripple, and bitcoin cash, the overall market capitalization has gained over $13 billion as it currently rests at $223.7 billion. The top assets today with the most 24-hour trade volume include bitcoin core (BTC), tether (USDT), ethereum (ETH), ripple (XRP), eos (EOS), and bitcoin cash (BCH). Top ten digital asset markets on Saturday, September 29, 2018. Bitcoin core (BTC) prices are hovering around $6,587 today, but markets are down 0.86 percent over the last 24-hours, and 1.5 percent for the week. BTC has an overall market valuation of around $113 billion and trade volume is meandering around $4.6 billion this weekend. Ethereum (ETH) is up 3.6 percent this Saturday and one ETH is trading for $232 per coin at press time. Ripple (XRP) markets have seen a 7.5 percent gain over the last 24-hours and 0.11 percent over the week. XRP is trading for $0.56 per coin and the market valuation for ripple today is $22.7 billion. Lastly, eos (EOS) has lost 0.96 percent today and 2.86 percent for the last seven days. One eos is swapping for $5.75 per token with a market capitalization of around $5.2 billion. Bitcoin Cash (BCH) Market Action Bitcoin cash (BCH) markets are continuing to do well this week as prices have gained 13 percent over the last seven days. However, BCH markets over the past 24 hours are down 0.18 percent leading to a price of around $542 per BCH. Currently, the market capitalization for bitcoin cash hovers around $9.42 billion and trade volume is about $639 million at the time…

Wendy McElroy: Crypto’s Means Are Its End – as Crypto-Statists Well Know

Wendy McElroy: Crypto’s Means Are Its End – as Crypto-Statists Well Know

News The Satoshi Revolution: A Revolution of Rising ExpectationsSection 4: State Versus SocietyChapter 10, Part 6Crypto’s Means are Its End, as Crypto-Statists Well Know The problem of the Means is, as I see it, a twofold problem: first, the problem of End and Means; second, the problem of the People and the State, that is, the means by which the people can supervise or control the State….[M]eans must be proportioned and appropriate to the end, since they are ways to the end, so to speak, the end itself in its very process of coming to existence. So that applying intrinsically evil means to attain an intrinsically good end is simple nonsense and a failure. -Jacques Maritain, Man and the State The 20th century French Christian philosopher Jacques Maritain saw End and Means as the problem of political philosophy. He based his conclusion on political science, religion, and the lessons of history. The French Revolution provided a model of how an End failed because the Means used to achieve it were “intrinsically evil.” France transformed from an absolute monarchy that ravaged the rights of common people into “a superior person called the Nation State” that acted the same way. “Liberté, Égalité, Fraternité” never materialized. The Revolution did not achieve the “final aim and most essential task of the body politic or political society,” which is to “better the conditions of human life itself” and “to procure the common good of the multitude, in such a manner that each concrete person, not only in a privileged class…may truly reach that measure of independence which is proper to civilized life.” Maritain’s point can be expressed colloquially: You can’t get there from here. Means that contradict a goal will never achieve it; an acorn cannot turn into a tomato plant. Repression will not breed freedom. Violence will not lead to peace. The means of the French Revolution led it into a different form of statism. Cryptocurrency resolves the problem of political philosophy because it is a means and an end at the same moment. The strategy: decentralize financial exchanges through a blockchain in order to bypass trusted third parties and return monetary control to the individual. The political end: decentralize financial exchanges in order to bypass trusted third parties…

Braiins OS Publishes Open Source Firmware for Mining Rigs

Braiins OS Publishes Open Source Firmware for Mining Rigs

Mining This week the software developers behind the mining operation Slush Pool have announced a new organization alongside releasing an open source operating system (OS) for cryptocurrency devices. The new offshoot company called Braiins has produced a Linux based system for bitcoin mining rigs and they plan to extend the OS to other digital currency software embedded devices. Also Read: Developers Unveil Two New Bitcoin Cash Full Node Clients Written in Go Slush Pool Developers Launch Braiins Operating System The cryptocurrency mining ecosystem relentlessly transforms every single day as the race to capture these digital assets becomes ever more competitive. This week the programmers who have been developing and operating Slush Pool since its inception have introduced a new company called Braiins. The Braiins team has released its first project called the Braiins OS which is an open source Linux (Openwrt) operating system for cryptocurrency software embedded devices such as an application-specific integrated circuit (ASIC). “Braiins OS is the very first fully open-source, Linux based system for cryptocurrency embedded devices — This initial release is targeted on mining devices, however since we used OpenWrt as a base, its features can be extended in many directions,” explains the team. The first iteration of the Braiins OS is currently focused on two mining devices: images for Bitmain’s Antminer S9 and Halong Mining’s Dragonmint T1. Some miners have been asking the company on Twitter if the OS is compatible with other machines and series variations. Braiins says they created the OS for two reasons: the group believes in open source software and throughout the years of working with Slush Pool they have gained experience in the competitive mining sector. The team says the Braiins OS monitors the Antminers and Dragonmint machines while also efficiently handling errors and providing data. Modified Firmware Downside: A Mining Rig’s Warranty From the Manufacturer will Likely Void The developers say the OS will be seeing some performance improvements and more features in the near future. The firmware is also customizable as the developers explain they have created a build which can modify the image. However, Braiins details the operating system is in its alpha stage and they don’t recommend large farms swapping over to the OS until more testing is done. The developers say they are…

Bitcoin Wallet Samourai Ditches Fiat References

Bitcoin Wallet Samourai Ditches Fiat References

Wallets In what could be construed as calling the casual enthusiast’s bluff, BTC maximalists at the Samourai project announced, “All fiat currency conversions have been removed from Samourai Wallet. We understand this may inconvenience some, it may even be enough to cause us to lose some users, but we believe it is fundamental that our existing and future users understand that when they transact within the Bitcoin network, when they participate in the Bitcoin economy, they are transacting with the token native to the Bitcoin network, BTC, and nothing else.” Also read: Colombia Crypto Exchange Asks New President for Banking Help Samourai Wallet Increases Native Languages, Gives Fiat Currencies the Boot “0.98.87 – Welcome new international users, and saying adieu to fiat currency”, came the ad hoc title alerting users to a wallet update through Google Play and Github. The notoriously privacy-obsessed project revealed, “Samourai Wallet is now available in 12 languages with French and Chinese added in this release. These aren’t generic computer translations, these are translations by actual bitcoin users from the local region, and as such are extremely high quality and contextual.” Languages incorporated into the platform now include Brazilian Portuguese, Bulgarian, Chinese, French, German, Indonesian, Italian, Portuguese, Russian, Spanish, and Turkish. They claim to have “already seen the side effects with installs increasing dramatically from international user bases with a native translation, usually in places where they need Samourai the most.” And while the above will inevitably lead to more adoption, at least for their wallet, the real tension in the post came with the announcement Samourai was ditching fiat almost entirely. Nearly all cryptocurrency communities have lofty goals of creating their own ecosystem, self-supporting, self-referencing. It appears the Samourai community is tired of debate, of hoping, of dreaming for that future.   Government Money Is a Crutch “In 2015 when we first launched Samourai Wallet,” they continued, “we reasoned that a fiat based conversion rate would be a convenient feature for users who wished to have a rough idea of what their BTC stash was worth in fiat currency at any given time. We said ‘users aren’t ready’ to give up fiat in the wallet, and we ended up including what we called the ‘Street Price’ – the fiat conversion…