ICO falsely claiming SEC approval faces lawsuit

The Securities and Exchange Commission (SEC) has won the backing of a U.S. court to halt an initial coin offering (ICO) that has been making wild claims about its regulatory status.

In the latest example of the SEC ramping up efforts against scam coins and ICOs, the commission petitioned a court to secure an emergency order against Blockvest LLC and its founder, Reginald Buddy Ringgold III.

The order concerns pre-ICO sales being promoted by the firm, which had been found to be claiming registered status and approval from the SEC—claims which were in fact untrue. This allegedly also included the use of SEC graphics and logos, ostensibly to convince investors on a false prospectus.

In a statement, the regulator said using the SEC seal without permission is in itself a violation of federal law.

“Blockvest and Ringgold, who also goes by the name Rasool Abdul Rahim El, were using the SEC seal without permission, a violation of federal law, and falsely claiming their crypto fund was ‘licensed and regulated,’” according to the SEC.

The SEC complaint also claimed Ringgold promoted the ICO with a fake agency he created called the “Blockchain Exchange Commission,” using a graphic similar to the SEC’s seal and the same address as SEC headquarters.”

In response, a district court in California issued the order, which grants the SEC the powers to freeze company assets, while making several other provisions for emergency relief.

Robert A. Cohen of the SEC’s Enforcement Division Cyber Unit said, “We allege that this ICO is using both the SEC seal and a made-up crypto regulatory authority to trick investors into believing the ICO was approved by regulators…The SEC does not endorse investment products and investors should be highly skeptical of any claims suggesting otherwise.”

The case is the latest example of the SEC clamping down on misleading and fraudulent ICOs, with several similar enforcement actions initiating and concluding in recent weeks. With regulators now increasingly determined to tackle this dubious corner of the crypto sector, it looks like time is running out for promoters of dodgy ICOs.

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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South Korea’s Cashierest hit with lawsuit over price pumping schemes

A cryptocurrency exchange in South Korea has been sued over its alleged price-pumping schemes that involves token issuance. According to ZDnet Korea, Aone, a South Korean law firm, filed a complaint against Cashierest operator Newlink Co. Ltd., claiming that the exchange’s token violated the capital markets laws in the country.

The lawsuit, filed last Oct. 5, alleged that Cashierest engaged in “criminal pumping, the so-called ‘cage pumping,’ which induces price increases while restricting the withdrawa” of its dividend coin called CAP,” according to the news outlet. Aside from paying dividends, CAP also offers rebates on transaction fees.

Aone claimed the crypto exchange was involved in two illegal acts: the first was “violation of the securities issuance procedure,” under Article 119 of South Korea’s Capital Markets Act. The second was violation Article 178, which prohibits unfair trading.

The token in question was first issued in August. CAP has three features—dividents, referral mining, and trade mining. Its whitepaper claimed that CAP investors “can receive 100% of profits of Cashierest’s exchange charges,” while charges issued with each currency (KRW, BTC, ETH, and TUSD) will be 100% refunded in applicable currency.

On its website, Cashierest explained that CAP “pays the first dividend in KRW,” and that 100% of Cashierest transaction fee revenue” will be paid “in proportion to the customer’s CAP reserves by two snapshots a month.”

Aone claimed these, along with the other features listed on the Cashierest website, violate South Korean laws.

It seems Cashierest is not the only exchange involved in these illegal activities. According to Money Today, the law firm also plans to extend the lawsuit to include other exchanges such as Coinzest, Bithumb, and Coinbit.

Early this year, Cashierest made headlines after it was revealed that its users were allowed to withdraw up to five times their coin holdings due to a system glitch.

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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McAfee-linked MGT Capital Investments faces lawsuit over pump-and-dump scheme

Shareholders of crypto mining and investing firm MGT Capital Investments, which has previous ties to John McAfee, have filed a class-action lawsuit against the company over allegations of a pump-and-dump scheme that manipulated the price of MGT shares.

The lawsuit comes on the heels of a U.S. Securities and Exchange Commission (SEC) probe into a stock-pumping scheme involving a group of 10 investors and corporate executives, including former MGT Capital CEO Robert Ladd, former Riot Blockchain CEO John O’Rourke, and billionaire Phillip Frost.

John McAfee, who served as executive chairman and CEO of MGT Capital until his resignation in August 2017, was not named in the SEC investigation. However, he was named a defendant in the class-action lawsuit filed by Rosen Law Firm on behalf of current and former MGT shareholders.

According to the lawsuit, the defendants failed to disclose that they “were engaged in a pump-and-dump scheme to artificially inflate MGT Capital’s stock price,” that the “illicit scheme caused MGT Capital to make false and misleading statements, which would result in governmental scrutiny, including from the SEC,” that “the illicit scheme would ultimately cause MGT Capital’s stock to become delisted from” the New York Stock Exchange, which means that their statements regarding MGT Capital’s business prospects “were materially false and misleading and/or lacked a reasonable basis at all relevant times.”

The suit is asking the court to order MGT Capital to pay damages to the shareholders who were affected by the alleged manipulation of MGT shares, as well as cover the plaintiff’s court costs, and award further relief to aggrieved parties.

Recently, CoinGeek reported that McAfee has ceased promoting ICOs due to threats from the SEC.

Though not explicitly named in the SEC order, the complaint indicated that the defendants used dishonest promotion and manipulative stock trading to drive up the price of MGT shares, enabling them to net more than $9.4 million in just two weeks. However, MGT tells CCN that the firm has the ‘utmost confidence’ that the suit is without merit and that it will be dismissed.

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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US court junks My Big Coin Pay’s attempt to dismiss CFTC lawsuit

The issue of whether virtual currencies can be legally deemed commodities is an important one, at least as far as the U.S. Commodity Futures Trading Commission (CFTC) is concerned. The regulator only has jurisdiction over commodities, and without supportive interpretations of the law, they are powerless to act.

However, the CFTC has become increasingly aggressive towards alleged crypto scams in recent months, the latest concerning a virtual currency called My Big Coin (MBC), in which the regulator has been proactive in bringing enforcement action against its promoters.

This week, a court in Massachusetts has backed the CFTC in their interpretation of virtual currencies as commodities (and thus within the regulator’s jurisdiction), in the process dismissing a petition from the coin’s promoters to have the case set aside, Finance Feeds reported.

My Big Coin Pay, the company behind MBC, had argued that virtual currencies were not commodities as commonly defined, and as such, the CFTC had no jurisdiction in their case against Randall Crater of My Big Coin.

The complaints concern allegations of fraud and/or manipulation in connection with the virtual currency, and could see Crater and the other named defendants subject to further enforcement action at the hands of the CFTC. Now, with the court ruling against the defendants, the verdict comes as the latest judgement to support the CFTC’s position.

Summing up, Judge Rya W. Zobel said that there was no question CFTC had sufficiently satisfied the court that My Big Coin was in fact a commodity.

According to the ruling, “Here, the amended complaint alleges that My Big Coin is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin). That is sufficient, especially at the pleading stage, for plaintiff to allege that My Big Coin is a “commodity” under the Act.”

The allegations primarily focus on misrepresentations around My Big Coin, which was marketed as a fully functional virtual currency, along with a number of other falsehoods, including representations that My Big Coin was backed by gold and that it could be used for payment in any location that accepts Mastercard.

The CFTC further alleged the group intentionally switched the price of their cryptocurrency, in such a way as to mimic an organic market, with those caught up in the scheme subsequently unable to access their funds.

With the recent ruling falling in favour of the CFTC, the regulator now has a renewed impetus to tackle cryptocurrency scams.

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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Another win for crypto: Bank giants fined billions for malpractice

First, Visa and MasterCard settled a class-action lawsuit over price fixing that reportedly cost the credit card giants as much as $6.2 billion. Now, reports are surfacing that major banks could be fined as much as $400 billion by 2020 for malpractice. So much for crypto being the bad guy, as traditional finance pundits would have everyone believe.

Quinlan and Associates indicates that research into US and European banks could potentially face the huge fines by regulators. The majority of the penalties are a direct result of the financial crash from 2008. The $400 billion does not include fines from other areas, such as unfair billing practices or money laundering.

This past Monday, JP Morgan Chase was fined by the Commodity Futures Trading Commission (CFTC) $65 million after it was found guilty of not doing enough its part to protect the US Dollar International Swaps and Derivatives Association Fix (USD ISDAFIX) from 2007 to 2012. ISDA was established in 1998 and ISDAFIX is a reference rate value for fixed interest swap rates, correlated to dollars, pounds, Swiss Francs and Euros.

The CFTC said that JP Morgan published false interest rates just prior to the daily reference was captured between the five-year period. In submitting false data, the firm saw its derivatives positions benefit at the expense of other interest rate products that used the same common interest rate value.

BNP Paribas also received a hefty fine from the CFTC. The bank was ordered to pay $90 million after investigators determined that traders in the bank’s investment wing were actively bidding and executing trades at the moment the ISDAFIX was being released. This enabled them to influence the index, which impacted foreign exchange benchmark rates. The CFTC also fined the Royal Bank of Scotland $85 million for illegal practices similar to those of JP Morgan and BNP.

Some may recall that another bank, Well Fargo, has had its share of financial difficulties and missteps every year for the past couple of years. Most recently, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau hit the bank with fines of $500 million each after they determined that the bank had set unfair mortgage interest rates and forced customers to sign up for unnecessary car insurance.

Traditional financial giants may try to argue against crypto until they turn blue, but the truth is that crypto offers better protection and more transparency – and more confidence – than do the banks.

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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Credit card giants hit with $6.2B price fixing suit

Credit card giants Visa and Mastercard have often been accused of price fixing by disgruntled merchants. Now, the firms are prepared to settle on a class action lawsuit, which looks set to cost them over $6.2 billion, Bloomberg reported.

Visa and Mastercard have agreed to come up with around $4.2 billion in cash, with $4.1 billion of that burden falling on Visa. Equity in Bank of America, Citigroup and JP Morgan Chase will also be offered in part payment of the settlement.

The total settlement is hugely significant, almost equivalent to the entire market cap of Bitcoin BCH. It concerns a case around card processing fees brought by merchants unhappy with the service they were receiving—including hidden, excessive fees merchants allege they were left with no option but to pay.

Merchants in the United States alone currently generate as much as $90 billion in transaction fees for Mastercard and Visa every year. The lawsuit, brought under antitrust laws, dates back to 2005, when allegations of price fixing first began to surface.

Now, with the credit card companies’ willingness to settle, it looks as though merchants could be set to recoup some of those fees they allege were unfairly drawn.

The case shows the difficulties merchants face in dealing with centralised payment systems. In the case of Mastercard and Visa, both firms turnover in excess of $12 billion per annum and have a virtual stranglehold on merchant payments by credit and debit card.

However, with cryptocurrencies like Bitcoin BCH increasingly being adopted by merchants and consumers, it looks like another way is possible. Transaction fees are lower for merchants that accepting payments through credit and debit cards, while transaction processing speeds and reliability are also favourable for commercial use.

At the same time, Bitcoin is convenient and flexible for customers, increasingly being seen as the cryptocurrency of choice for online payments.

Without the centralisation of Visa and Mastercard, there is no monopoly on transactions around Bitcoin BCH. This is proving attractive to merchants looking to break their reliance on the large corporate payment institutions while providing customers with a more functional way to pay.

While the multi-billion dollar settlement will be seen as a positive sign for the merchants affected, cryptocurrency—Bitcoin BCH in particular—remains the best option for those looking for trusted, decentralised merchant payments.

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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