3 more ICOs shut down by North Dakota securities watchdog

A North Dakota security watchdog is keeping tight reins on initial coin offerings (ICOs) in the U.S. state. Last Thursday, the commissioner of the North Dakota Securities Department (NDSD), Karen Tyler, issued a cease and desist order against three firms that were discovered to be involved in promoting fraudulent securities and illegal business practices related to ICOs in the state. The North Dakota financial regulator carried out an investigation, Operation Cryptosweep, to identify ICOs and cryptocurrency-related investments that pose a risk to North Dakota investors.

The investigation revealed that the companies involved—Crystal Token, Advertiza Holdings (Pty) Ltd., and Life Cross Coin aka LifecrosscoinGmbH—were selling securities without obtaining a license. Also, the companies were accused of using fraudulent statements on their websites whereby they all claimed to give high returns without any proof of how they would achieve them. Crystal Token was not registered with the Securities and Exchange Commission (SEC) and so the firm could not offer securities in the state, according to the NDSD. Equally, Advertiza claimed to offer securities which promised high returns through its virtual currency called “Tizacoin” (TIZA), while Cross Coin was found to have used a Berlin IP address that was already linked to ransomware and trojans. Generally, the investigation found out that the firms could be harmful to investors, according to the state regulator.

This was not the first time the department took action against ICOs in the state. Last month, the NDSD issued cease-and-desist orders against three other companies: BitConnect, Magma Foundation and the Pension Rewards Platform. Tyler said about the orders, “The continued exploitation of the cryptocurrency ecosystem by financial criminals is a significant threat to Main Street investors.”

The commissioner noted, “In formulaic fashion, financial criminals are cashing in on the hype and excitement around blockchain, crypto assets, and ICOs – investors should be exceedingly cautious when considering a related investment.”

Regulators are putting up more frameworks to protect investors. The SEC has announced that it will sue crypto companies offering pump-and-dump schemes, as well as ICO projects who have false SEC approvals.

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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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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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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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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BTC futures firm 1Broker hit with securities law violations

The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have filed separate charges against 1pool Ltd. and its owner Patrick Brunner, whose 1Broker trading platform had accepted orders paid with BTC.

According to the regulators, Brunner had not followed requirements under federal law, namely, registering as a security-based swaps dealer, and as a Futures Commission Merchant.

SEC’s Fort Worth Regional Office Director Shamoil Shipchandler said, “The SEC protects U.S. investors across a variety of platforms, regardless of the type of currency used in their transactions.”

Both the SEC and CFTC, who filed their respective complaints at the U.S. District Court for the District of Columbia, said that 1Broker traders were only asked for an email address and a user name, after which they were only allowed to pay in BTC.

A special undercover agent of the Federal Bureau of Investigation (FBI) had purchased several security-based swaps from the 1Broker website, “despite not meeting the discretionary investment thresholds required by federal securities laws,” said the SEC, adding that the swaps were not transacted on a registered national exchange.

The CFTC said, “Defendants failed to diligently supervise by failing to implement an adequate know-your-customer and customer identification program (KYC/CIP).”

CFTC Director of Enforcement James McDonald said that since “at least February 2016,” 1pool had offered or engaged in its transactions, specifically the selling of “contracts for difference,” which allowed investors to earn depending on price changes of underlying commodities, specifically, gold and West Texas Intermediate crude oil.

“The Defendants did not conduct these transactions on or subject to the rules of any board of trade that has been designated or registered by the CFTC as a contract market, as required by the Commodity Exchange Act (CEA),” the CFTC said.

Both the SEC and CFTC, in their complaints, sought disgorgement of all gains made through 1Broker, the imposition of monetary penalties, and a permanent trading ban.

1pool, whose 1Broker website was closed by the SEC, said, “Currently, our top priority is to allow customer withdrawals. The company holds enough funds to cover all withdrawal requests, of course. Before we can take the required steps to do that, we have to seek the permission from the authorities.”

It also maintained that “[t]he services offered by 1Broker posed no threat to investors and since the launch in 2012, we were able [to] build a very good reputation among traders.”

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 securities regulator chases enforcement against PlexCoin promoters

The U.S. Securities and Exchange Commission (SEC) has petitioned a court in New York for enforcement action against two individuals over their involvement in the “fast-moving” PlexCoin ICO investment scam.

Following investigations into the affair, the SEC has resorted to the courts, in pursuit of a motion “to compel” and “for discovery sanctions” against Sabrina Paradis-Royer and Dominic Lacroix over the promotion of PlexCoin, Finance Feeds reported.

Canadian courts ordered PlexCoin to suspend its ICO offering, but authorities said the organizers ignored the ruling and raised some $15 million for the project.

The SEC previously shut down the project, citing concerns over potential fraud. Now, they are looking to apply further pressure, following a lack of cooperation from the scheme’s promoters, including ignoring previous court orders.

According to the court filing, the securities regulator is seeking a default judgement on the grounds of “prejudice…to [Plexcoin’s] investor victims.” In particular, the SEC “seeks leave, pursuant to Rule 3(A) of this Court’s Individual Motion Practices and Rules, to file a motion to compel and a motion for discovery sanctions against Dominic Lacroix and Sabrina Paradis-Royer (collectively “Defendants”) under Rule 37(a) and Rule 37(b) of the Federal Rules of Civil Procedure.”

“Defendants’ dereliction coupled with the prejudice to the Commission and to Defendants’ investor victims warrants the serious sanction of a default judgment against them under Rule 37(b)(2)(A)(vi),” the filing read.

Lacroix and Paradis-Royer were sued by the SEC back in December, on grounds of securities fraud. At the time, their assets were frozen under an emergency order. Their assets were refrozen in June after it was alleged the pair had been using hidden accounts.

According to the SEC at the time, “Lacroix had been using secret accounts, including an account in his brother’s name … to improperly dissipate for personal use digital assets obtained from investors during the PlexCoin Initial Coin Offering.”

With the latest filing, the SEC has concluded the pair have no intention of cooperation, petitioning the court to grant the enforcement action and sanctions it demands. Whether this allows any further assets to be recovered remains to be seen.

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 open for comments prior to action on crypto ETF

The U.S. Securities and Exchange Commission (SEC), refraining from any action on the Vaneck Solidx BTC exchanged-traded fund (ETF) application, is now receiving comments from the public on the issues discussed.

In a release, the SEC said that it “seeks and encourages interested persons to provide comments on the proposed rule change” that would permit the Cboe BZX Exchange, Inc. (BZX) to list and trade SolidX shares. As of September 19, the commission said, it has received more than 1,400 comment letters regarding the matter.

“The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal,” it said.

The questions provided by the SEC seek, for the most part, to determine the transparency of the BTC markets, and the degree to which prices are subject to manipulation.

BZX had told the SEC that BTC would be less susceptible to manipulation than commodities that underlie existing exchange-traded products. The SEC also quoted BZX as saying that insurance coverage “eliminates exposure to the risk of loss to investors through fraud or theft, which in turn eliminates most of the custodial issues associated with a series of Commodity-Based Trust Shares based on [BTC].”

The SEC has said it would arrive at a decision by September 30. Aside from this application, the SEC has yet to decide on applications by ProShares, Direxion and GraniteShares, which were earlier rejected but placed under review a day after. Another application, by the Winklevoss Bitcoin Trust, was denied last July.

Among SEC commissioners, Hester Peirce has been outspoken in her  dissent over the rejection of the ETF applications, as well as critical of the SEC’s suspension of cryptocurrency-related products. In a recent conference of think tank Cato Institute, she said that the SEC mandate did not involve preventing people from engaging in high-risk investments. “We are directed to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets,” she said.

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.

The post SEC open for comments prior to action on crypto ETF appeared first on Coingeek.

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SEC open for comments prior to action on crypto ETF

The U.S. Securities and Exchange Commission (SEC), refraining from any action on the Vaneck Solidx BTC exchanged-traded fund (ETF) application, is now receiving comments from the public on the issues discussed.

In a release, the SEC said that it “seeks and encourages interested persons to provide comments on the proposed rule change” that would permit the Cboe BZX Exchange, Inc. (BZX) to list and trade SolidX shares. As of September 19, the commission said, it has received more than 1,400 comment letters regarding the matter.

“The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal,” it said.

The questions provided by the SEC seek, for the most part, to determine the transparency of the BTC markets, and the degree to which prices are subject to manipulation.

BZX had told the SEC that BTC would be less susceptible to manipulation than commodities that underlie existing exchange-traded products. The SEC also quoted BZX as saying that insurance coverage “eliminates exposure to the risk of loss to investors through fraud or theft, which in turn eliminates most of the custodial issues associated with a series of Commodity-Based Trust Shares based on [BTC].”

The SEC has said it would arrive at a decision by September 30. Aside from this application, the SEC has yet to decide on applications by ProShares, Direxion and GraniteShares, which were earlier rejected but placed under review a day after. Another application, by the Winklevoss Bitcoin Trust, was denied last July.

Among SEC commissioners, Hester Peirce has been outspoken in her  dissent over the rejection of the ETF applications, as well as critical of the SEC’s suspension of cryptocurrency-related products. In a recent conference of think tank Cato Institute, she said that the SEC mandate did not involve preventing people from engaging in high-risk investments. “We are directed to protect investors, facilitate capital formation, and maintain fair, orderly, and efficient markets,” she said.

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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Philippines’ SEC eyes September release for crypto exchange draft rules

The Philippines’ Securities and Exchange Commission (SEC) will soon release draft rules for cryptocurrency exchanges in the country.

According to news outlet BusinessWorld, Commissioner Ephyro Luis Amatong said after an en banc meeting that the draft guidelines are to be released “hopefully within the first half of September,” with the intention of receiving input for changes to be made. The SEC will then issue its finalized regulations by the end of the year.

The SEC will be basing the draft guidelines on regulations already being implemented in the U.S., Australia and Switzerland. “We want to create an environment where investors can feel more or less safe in investing in what are essentially securities that have a digital form… Instead of paper or securities that are housed within PDTC [Philippine Depository & Trust Corp.], the depository [will be] housed on a blockchain,” Amatong said.

The commissioner also noted that SEC has started discussions with the Philippine central bank, the Bangko Sentral ng Pilipinas (BSP), about sharing oversight on cryptocurrency exchanges. Already, the BSP has its regulations on cryptocurrency exchanges, released back in February 2017. In its circular, each “virtual currency exchange” (VCE) must register with the BSP “to operate as a remittance and transfer company,” and file annual and quarterly reports. As of July, there are five exchanges registered with the BSP.

Amatong pointed out that the BSP’s role was limited to the aspect of money changing in cryptocurrency exchanges. “But… all of the VCEs are applying to allow them to act as trading platforms. When it comes to trading platforms, it is a concern of the SEC to be discussed with the BSP,” he said.

In August, the SEC released its draft guidelines on initial coin offerings (ICOs), in which it outlines requirements for proposing an ICO, including the submission of a whitepaper to be updated as necessary.

The Philippines is among the first countries to issue its regulations in cooperation with existing industry players. The BSP has merely cautioned of the risks associated with investing in cryptocurrencies, but has not prescribed prohibitions on the matter.

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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