Companies struggle to keep up with ICO regulations: report

The regulatory environment for initial coin offerings (ICOs) remains uncertain, leaving thousands of firms open to sanctions, according to an investigative report published on Decrypt Media.

“Concerns over the legality of token sales have had a chilling effect,” read the report, a joint effort between Decrypt and Yahoo Finance.

Last September, a New York court ruled that ICOs involve the selling of securities and are covered by U.S. Securities and Exchange Commission (SEC) rules. However, the details for compliance remain over these firms’ heads.

According to Decrypt, companies that the commission had subpoenaed earlier this year are being checked up on. “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,” the report read, adding that the SEC has subpoenaed more companies since.

Because the commission already views ICO products as securities, and may not publish further regulations that are blockchain-specific, Decrypt said, “[T]here’s even a lack of clarity around whether there is a lack of regulatory clarity.”

SEC Chief of Enforcement Division Cyber Unit Robert Cohen said that companies’ efforts at complying with regulations to limit their offering to accredited investors varied. “Some companies tell us the name of the law firm that advised them, explain the know-your-customer procedures they followed, and show us an investor list that is limited to accredited investors. At the other end of the spectrum, some point to a website statement about limiting the ICO to some investors, and possibly checkboxes, and that’s it.”

The report said that many companies called on by the SEC are simply refunding customers, to avoid further legal complications and costs. One unidentified company said, “The last thing we want is a press release they put out with only our name on it.”

However, those who have already issued their tokens are not able to simply refund the money. Chainalysis CEO Jony Levin said, “In a lot of cases people bought tokens in ICOs through exchange accounts at places like Kraken. So you can’t just send tokens back to the address you got them from, because that’s an exchange address. If ICOs are made to refund buyers, it will have to be similar to the Mt. Gox case: you make a public announcement and people have to prove they were a contributor.”

The Decrypt Media-Yahoo Finance investigatory report was based on conversations “with more than 15 industry sources,” many of whom requested anonymity.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Crypto in Africa: Paxful looking at cryptocurrency’s potential in East Africa

Paxful, a peer-to-peer marketplace, is reportedly looking at the cryptocurrency market’s growth potential in East Africa. The startup has already set up shop in Rwanda, ventured into Kenya, and has grown over the last three years into a global peer-to-peer crypto marketplace. It reportedly handles $15 million in crypto transactions, BTC in particular, per week from across the world. This rapid expansion has solidified its place among major reputable crypto players and offers enhancements in both security and efficiency.

Paxful has over 1 million active monthly users from around the world. This is because it has partnered with popular payment platforms such as PayPal, Western Union, Amazon Gift Cards and iTunes Gift cards.

Paxful’s entry into the East African scene is at a time when crypto penetration in Africa is at an all-time high. According to recent studies, one in three Kenyans owns a crypto wallet. Additionally, Kenya’s M-PESA system, a mobile phone-based money transfer and micro-financing service, recently announced the launch of its own crypto device. This will make it convenient for Kenyans to buy and sell cryptos on peer-to-peer marketplaces.

A tokenization drive has been initiated in Rwanda to help steer the crypto market. It has helped connect buyers and sellers to easily trade cryptocurrencies like BTC. This has been aided by the fact that the platform has no buyer fee and a minimal 1% seller fee in online shopping, which has attracted the attention of many online shoppers.

In Rwanda, Paxful is engaged in a project called #BuiltWithBitcoin in conjunction with the non-profit organization Zam Zam Water. The project aims to a school for 6- to 15-year-olds. Previously, the charity initiative funded launched a school in Bugesera in the Nyamata Sector for 3- to 6-year-olds. The aim is to promote charity within the crypto community and to improve and change lives for a better world, according to Paxful CEO Ray Youssef.

The developments in Rwanda and Kenya reflect the growing demand for investing in crypto in East Africa. In Kenya, for instance, more and more people are becoming more confident in dealing with cryptocurrency despite it being new and coming with a learning curve. Most people have come to accept its plethora of benefits. It offers massive wealth distribution globally as well, and presents financial freedom to individuals.

Crypto ventures have the potential to be the initiator of many emerging fundamentals of economic growth in the East African region if the right balance is found.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Crypto companies in the UK now have a banking option

In a world where cryptocurrencies are still considered by some to be the black sheep, it’s nice to see strides being made to give them their proper place in society. One of the most common areas where they are shunned is in the banking sector, but that is changing. For example, the London Block Exchange (LBX) is introducing a new service that will give customers in the UK a banking option for both their fiat and their crypto assets.

The LBX platform, LBX Pay, will allow users to store, transfer and manage funds, whether they be “regular” currency or digital. It is going to be offered, at first, to the business market, but could eventually be rolled out to other sectors, as well. LBX states that the retail version will “provide all consumers with a whole new way to interact with their cryptocurrency.”

LBX Pay will be available to traders, investment fund managers and initial coin offerings (ICO). The platform is designed to give customers an easy way to convert traditional fiat to crypto without having to move funds between accounts or across multiple service providers.

Users can manage their balances, payments and trades – including third-party payments – using a single app. In the event a business customer needs support for significantly larger transaction volumes, LBX will provide access to its over-the-counter (OTC) trading desk. An application programming interface (API) is scheduled to be released early next year to facilitate the access.

As an added security measure, cryptocurrency will be held in cold storage, not connected to the Internet. Traditional fiat will be held in segregated bank accounts and each will have its own IBAN (international bank account number) for routing.

LBX launched its OTC desk in November of last year. It also serves as a crypto wallet services provider, which is registered with the UK’s Financial Conduct Authority. The LBX Pay platform is more than likely being facilitated through a partnership between LBX and Clearbank, a bank that was formed last year by Nick Ogden, founder of the Worldpay payment services company.

LBX supports Bitcoin BCH and Ethereum Classic (ETC) pairs against the British pound. That support was introduced this past May.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Shocker: Watts Miner not paying its bills

Nailed it. On August 1, serious doubts about the legitimacy of a new cryptocurrency mining rig manufacturer, Watts Miner, surfaced after an analysis of their products and website revealed serious issues. Barely two months later, the company is finding itself in hot water.

According to a press release by APO Group, a media relations company based in Africa, the company says that Watts Miner has defaulted on a payment of $14,955. That payment was for a contract between the two companies that tasked APO with publishing a number of press releases.

APO explains in the press release, “APO Group hereby notifies the public of the multiple reports of potentially fraudulent activities of the cryptocurrency manufacturing company known as Watts Miners Inc. (WMI), which has come to its knowledge. This report also comes on the heels of WMI’s willful default of the payment terms under an Agreement between WMI and APO Group whereby APO Group distributed several press releases on behalf of WMI and in respect of which a payment of USD 14,995 became due on 14 August 2018.”

If you’re going to defraud a company, it’s not smart to defraud one that has its finger on the trigger button of the largest distribution network of information in the world. Given that the company’s website was a failed attempt to use fake videos and images stolen off the Internet, however, it’s not surprising that they couldn’t be more intelligent.

APO has tried to contact the firm’s CEO, David Anderson, and its Chief Financial Officer, Nancy Lopez, several times to no avail. They must be too busy trying to figure out how sham companies are run.

Fortunately for APO, the non-payment hasn’t had a serious impact on the company’s bottom line. It added in the press release, “The revenue generation of APO Group businesses remains unaffected by today’s announcement.”

After exposing Watts Miners in August, the company immediately sent an email to CoinGeek, threatening to take action if the story wasn’t retracted. The company, in its normal nonsensical manner, argued that CoinGeek was in violation under the Digital Millennium Copyright Act, which is just as puzzling as the company saying that it is producing mining rigs that can mine five times faster than any other chip on the market.

While the company’s website is still up, it wouldn’t be surprising to soon find it replaced with a “This Space For Sale” sign.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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More higher education institutions turning to crypto investments

Cryptocurrency investments on an institutional level are gaining pace, despite the belief by some that the market is about to implode. A few days ago, the Ivy League school, Yale University, decided to invest in a large, $400-million investment fund offered by Paradigm. Now, five more universities are putting their endowments to good use and have invested in other funds.

According to a report that first surfaced by media outlet The Information, Dartmouth College, Massachusetts Institute of Technology, Harvard University, Stanford University and the University of North Carolina are now crypto investors. Each has invested in at least one cryptocurrency fund by way of their school’s endowments.

A source who wasn’t unidentified by name told The Information that the schools have collectively invested tens of millions of dollars in the funds. The funds are used to buy equity stakes in various cryptocurrency companies, as well as to invest directly into digital assets.

According to a journalist with the news outlet, Jon Victor, “A move by endowments into funds that will directly bet on cryptocurrencies signals a major shift in investor sentiment toward the asset class, in the same way that institutions over the past decade became more willing to invest in private tech companies. Backing from such closely watched institutions could help validate cryptocurrencies, which are still considered too risky by many institutional investors.”

Many have predicted that institutional investments in cryptocurrency were coming. Mike Novogratz of Galaxy Digital said over the summer that big investments were coming, but added that they would only be facilitated following the introduction of companies such as Goldman Sachs into the space. Ari Paul, a former portfolio manager for the University of Chicago and current crypto fund manager, has also said that educational institutions would jump on board once schools like Yale stepped in – he was apparently correct.

Institutional investors are notoriously more pragmatic about any investments and more so about crypto investments, given the volatility associated with the markets. However, a survey that was recently conducted by the Wall Street strategy firm Fundstrat revealed that these investors, once they are into crypto, turn more optimistic about crypto’s prospects than do retail investors.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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1Broker reopens platform to allow withdrawals

1Broker, a BTC futures trading firm, announced that it would be reopening withdrawals as of Thursday. The announcement comes several weeks after the firm was accused of acting as an unregistered security-based swap dealer, as well as for allegedly violating money-laundering and wire fraud laws.

1Broker started having issues when the U. S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC) and the Federal Bureau of Investigation (FBI) filed charges in the U.S. District Court for the District of Columbia against its CEO, Patrick Brunner, and its parent company, 1Pool, for not complying with the law. According to reports, an agent went undercover and made a few transactions on the platform, in violation with established regulations, including proper Know Your Customer processes as stated by the law.

1Broker reopened its platform in a read-only mode earlier this month. During this time, the platform announced that they are seeking legal counsel to help them work out the issues and to resume operations.

Many of its clients are happy with the latest announcement from 1Broker. Initially, when the domain was seized, the trading platform claimed to have enough funds to cover all withdrawals request by the customers and claimed it was waiting on approval from the authorities in order to process the transactions. Customers were allowed to start withdrawing at 12:00 UTC on Oct. 11.

Authorities are still seeking a permanent injunction against Brunner and 1Pool. They are also seeking to have the two pay monetary penalties.

1Broker, in its announcement, did not state if and when they will reactivate their operations and it is unclear when the authorities will allow the company to resume them. According to 1Pool, the platform has been running smooth and has created a respected working relationship with its customers. It stated that the company has been complying with established laws and hopes to clear the misunderstanding soon.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Thai authorities revoke passport of suspect in $24M crypto scam

A suspect involved in a Thailand cryptocurrency scam is unable to return home after the Foreign Ministry of Thailand revoked his passport, Bangkok Post  reported. This has prevented him to return home to face charges.

Prinya Jaravijit is now illegally staying in the United States, after the Thai government agency revoked his passport. According to the report, Jaravijit is allegedly the mastermind behind a big cryptocurrency scam that defrauded a Finnish investor out of $24 million in 2017.

Police claimed that Jaravijit had worked together with members of his family to defraud Aarni Otava Saarima and his business partner. The suspects had lured the two into investing BTC in a fake investment scheme. It is believed that the scammers used three gambling companies to operate the scheme, which was allegedly perpetrated using a crypto token called Dragon Coin.

The alleged scammers took the investors to a Macau-based casino for the transaction, claiming that the casino was accepting these tokens. The investors transferred the agreed amount of BTC to the suspected scammers’ wallets; however, they began to worry when they did not receive returns for their money. They also did not get any shareholder papers or proof of investments in Dragon Coin. The Finnish investor decided to report the matter to the authorities in January.

When the case was reported, Jaravijit was in the United States. Authorities asked him to surrender, giving him until September 17 to comply with the order. However, Jaravijit failed to do so, causing authorities to revoke his passport. Reports showed that he will soon be extradited to Thailand in order to face the charges against him.

According to reports, the Thai Anti-Money Laundering Office (AMLO) confiscated funds worth $6.4 million from Jaravijit’s family and other people who were suspected to be involved in the matter this past Tuesday. The family and the accomplices will be charged next week with money laundering.

Other people believed to be part of the operation include an investor, Prasit Srisuwan, and a businessman, Chakrit Ahmed. The two have reportedly agreed on a compensation plan with the Finnish investor.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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SEC wants subpoena enforced in $100M Cherubim ICO probe

The U.S. Securities and Exchange Commission (SEC) is taking steps to enforce a subpoena against an investment company and its sole trustee, over allegations of their fraudulent involvement in a $100-million initial coin offering (ICO).

In a statement published this week, the securities regulator said it was asking a district court to assist in enforcement action, as it continues to examine whether Jeffre James and Saint James Holding and Investment Company was involved in a “pump and dump” scheme around shares in Cherubim Interests, Inc.

The commission said it had reason to suspect Cherubim had misled investors around the SJTCoin. In particular, they suggest false public statements had been used to generate significant demand pressures in the market for Cherubim shares, which were later exploited by the Saint James and their trustee.

SEC said following its ongoing investigation, it has reason to believe that in a bid to “pump” its stock price, Cherubim issued false public statements in January 2018 claiming that the company had executed a $100,000,000 financing commitment to launch an ICO for St. James Trust.

“After Cherubim’s stock price and trading volume increased on this news, certain individuals associated with the company may have ‘dumped’ their overvalued Cherubim stock for significant profits,” according to the regulator.

Despite being personally served with court documents, neither James nor Saint James have responded to date. As a result, the SEC has now progressed matters through the courts, in a bid to obtain the requested documents from both parties.

The SEC said it is seeking “an order from the court compelling James and St. James Trust to produce all responsive documents.” The court must now decide whether to compel the parties to cooperate, in submitted the documents requested under the subpoena.

The news is in line with the SEC’s warning issued back in August 2017 that it would pursue those using ICOs to defraud and scam unsuspecting crypto investors.

It marks the latest high profile case involving the SEC, as the regulator continues to make its presence felt around dubious investments and outright scams blighting the cryptocurrency sector.

It remains to be seen whether Saint James, or Jeffre James himself, will now step up their cooperation with the authorities investigating the issue.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Embattled crypto exchange Zaif lays out plan for customer financial support

The embattled Japanese cryptocurrency exchange Zaif has published its plan for customer financial support, in the wake of a hack that cost the firm losses of up to JPY6.7 billion ($59.7 million). The attack resulted in Zaif’s parent company, Tech Bureau Inc., seeking external support to cover stolen customer assets.

With the details published on Wednesday, the firm has effectively announced its business will be transferred to Fisco Digital Asset Group, which is expected to conclude in November. In the documentation, Tech Bureau Inc. noted that the business transfer method was the best solution to the issue, factoring in the need to minimise risks and to protects its customers.

Tech Bureau reported that it had reached a basic agreement involving consideration last Sept. 20 to provide “financial support of JPY5 billion, enter a capital alliance enabling acquisition of a majority of the Company’s shares and allow for a majority of directors and the dispatch of an auditor.”

That deal, however, seeks “to pursue the business transfer method from the viewpoint of avoiding risk for those supporting and due to the requirement to implement a decision rapidly to protect customers.”

Monacoin holders caught up in the attack will be reimbursed in a 60/40 split of crypto to fiat, and at an agreed price of JPY144.548 per coin, or about $1.28. As of Wednesday, all Monacoin transactions on the platform have been halted, with an announcement on resuming trade expected at a later date.

All buying and selling in Bitcoin Cash (BCH), as well as BTC, remains unaffected, and will continue unimpeded. However, deposits and withdrawals have also now been frozen, to be resumed when the transfer of ownership to Fisco is complete.

The plan comes after Japan’s Financial Services Agency (FSA) issued another improvement notice to Zaif—the third notice of its kind demanding the exchange steps up its internal processes. The most recent notice, issued in September, follows on from similar notices from March and July of this year.

The plan shows the devastating impact of the theft on the exchange, and serves as a cautionary tale for other exchanges in the importance of robust security. It remains to be seen whether the deal will be enough to provide the support Zaif’s investors now so desperately need.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Indian authorities track down prolific ‘Kassh coin’ crypto scammer

Authorities in India have finally caught up with a prolific cryptocurrency scam artist, alleged to have been involved in a number of scams affecting dozens of investors in the country.

In a major coup for law enforcement agencies, Asif Ashraf Malkani was finally arrested after several months on the run, following complaints to police from aggrieved investors in his cryptocurrency scams, Times of India  reported.

The first, known as Kassh Coin, was launched two years ago at a lavish function, where Malkani hired models and dancers to entertain guests—including notable Bollywood celebrities. The air of credibility, however, was short lived after investors soon began complaining of a lack of the returns they were promised for investing in the project.

Over the last few weeks, authorities identified Malkani had moved to Uttar Pradesh, where he had been involved in running similar alleged scam—this time around a new cryptocurrency, dubbed V-flix.

Investigators said Malkani was also found to have been soliciting investment for a “commercially viable” video streaming service he had called V-Tube when authorities tracked him down. According to their findings, Malkani had also been involved in sending substantial bank transactions through his fake company, Puneet Enterprises.

After the initial success of their launch event, Malkani set up a number of satellite events across India and into Nepal, including “youth seminars,” designed to stoke interest from younger investors.

However, after Malkani and his co-conspirators withdrew their funds and disappeared, anger had been mounting amongst those caught up in his latest scam. His previous career track record looks equally dubious, with known involvement in several other scams and high profile frauds, including around real-estate and chain-marketing scams.

His arrest was confirmed by senior officers earlier this week. The case is just the latest example of a scammer turning to the crypto sector to cash in on unsuspecting investors.

The case shows the difficulties for investors in largely unregulated crypto markets, with countless instances of unsuspecting individuals being caught out by investment frauds linked to the sector.

Coupled with the threats inherent in older cryptocurrencies, perhaps most prominent with BTC, the case shows safety should still be a priority for anyone looking to get involved in investing in cryptocurrency.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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