REPORT: ETHERDELTA SEC TEA LEAVES: What Are The Regulatory Lessons To Be Learned From An Exchange Shut Down?

The Securities and Exchange Commission (SEC) announced on Thursday that it settled charges against Zachary Coburn, the founder of EtherDelta, a digital “token” trading platform. This is the SEC’s first enforcement action against a platform operating as an unregistered national securities exchange.   

The SEC stated that over an 18-month period, EtherDelta’s users executed more than 3.6 million orders for ERC20 tokens, including tokens that are securities under the federal securities laws.   Almost all of the orders placed through EtherDelta’s platform were traded after the SEC issued its 2017 DAO Report, which concluded that certain digital assets were securities and that platforms that offered trading of these digital asset securities would be subject to the SEC’s requirement that exchanges register or operate pursuant to an exemption.   

Without admitting or denying the findings, Coburn consented to the order and agreed to pay $300,000 in disgorgement, plus $13,000 in prejudgment interest, and a $75,000 penalty.   The order also recognizes Coburn’s cooperation, which the SEC considered in determining not to impose a greater penalty.

SEC Warned Exchanges of Registration Concerns in March

The SEC issued a statement in March asserting that it will continue to “focus on platforms that offer trading of digital assets and their compliance with the federal securities laws” to protect investors.

The statement also reiterates the SEC’s position that platforms that offer “trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, must register as a national securities exchange or be exempt from registration.” 

Despite these Warnings, Exchanges Did Not Register with the SEC

In early June, Brett Redfearn, SEC Director of the Division of Trading and Markets, raised concerns over the lack of self-reporting by digital asset exchanges. Redfearn stated that the SEC was “underwhelmed by the enthusiasm for coming within the regulatory structure”.   

Redfearn also explicitly stated that there are a “number of exchanges out there trading ICOs” and the SEC would like to see “more registrations” from these existing digital asset exchanges.   

Digital asset firms may have initially declined to self-report with the SEC because they feared the SEC may take enforcement action against them. Exchanges may also have been reluctant to self-report, as they were waiting for concrete guidelines to be issued by SEC. In some cases, exchanges may have been unwilling to register, as they would have had to de-list unregistered digital assets, which would have reduced earnings. 

Exchanges Considering Registering with the SEC 

In May, Kraken’s Chief Executive Officer Jesse Powell said that the company would “probably get registered” with the SEC. The firm, however, qualified its statement by noting that before it registered, it would require “more clarity from the regulator about which digital coins are securities and how those tokens can trade legally”. 

In June, Prometheum Inc. filed for registration with the SEC to establish an exchange to conduct secondary trading of digital assets. 

Jeremy Allaire CEO of Circle Internet Financial Ltd. (“Circle”) also confirmed in June that the firm had discussed registering as an exchange with the SEC. Allaire stated that the company was interested in becoming a registered exchange through the SEC application process or by purchasing a platform that is already registered with the SEC. 

Digital Asset Firms Acquiring or Partnering with Companies Already Registered with the SEC

Circle is not the only firm to consider forgoing registering with the SEC and purchasing a company already licensed as an exchange.

In June, Coinbase, Inc. (“Coinbase”) announced that it acquired Keystone Capital Corp., (“Keystone”) a financial-services firm. The acquisition of Keystone will allow Coinbase, after receiving federal approval, to take part in broker-dealer, digital asset exchange, and investment advisor activities. 

Other firms are partnering with existing companies that are already licensed as an exchange. In August, Bittrex announced it was partnering with Rialto Trading Technology (“Rialto”), a U.S.-registered trading platform for fixed income products. Under terms of the agreement, Rialto will expand its exchange operations to include digital assets that are registered securities. 

Penalties Against Firms that Self-Report May be Limited

The case against Coburn indicates that the SEC is willing to reduce penalties for individuals who cooperate with investigations. Coburn’s cooperation in the investigation only resulted in a low-six-figure fine. Coburn was not banned from participating in any market activities.  

Operators of unregistered exchanges may take this as an indication that it is time to register with the SEC. If so, the enforcement action against Coburn may herald a wave of registrations. 

SEC Likely to Intensify Enforcement Efforts against Unlicensed Exchanges, but Direction of Future Investigations Unclear 

If exchanges do not register, the SEC will likely bring more cases against unlicensed digital asset exchanges. 

Based on the SEC order against Coburn, however, it may be difficult for market participants, advisors, and investors to determine the direction of future SEC enforcement actions. 

The SEC would likely initiate an investigation against an unregistered decentralized exchange that, like EtherDelta, provides a marketplace for bringing together buyers and sellers for digital asset securities through the combined use of an order book, a website that displayed orders, and a “smart contract” that operated on the Ethereum blockchain.

The SEC would also likely initiate an investigation into an unregistered decentralized exchange that uses smart contracts that are coded to validate the order messages, confirm the terms and conditions of orders, execute paired orders, and direct the distributed ledger to be updated to reflect a trade. 

The order against Coburn, however, does provide the market participants with a basic understanding of which digital assets are explicitly considered securities by the SEC. This will likely be clarified in future enforcement actions or-more likely-through the issuance of comprehensive digital asset guidelines that eventually will be issued by the SEC.

_____________________________________________________________________

This report was prepared by Trifin Roule.

For nearly two decades, Mr. Roule provided for the U.S. government legal analysis of anti-money laundering, counterproliferation financing and counterterrorist financing laws and regulations dozens of jurisdictions, and international standards, as detailed through intergovernmental bodies (e.g. Financial Action Task Force (FATF)), and financial institutions (e.g. banks’ financial intelligence units and compliance offices).

In addition, Mr. Roule has provided in-depth analysis of digital asset accounting, auditing, customer due diligence, exchange, licensing, mining, initial coin offering (ICO), private key storage, and record-keeping practices and regulations.

Mr. Roule is a former Assistant Editor at the Journal of Money Laundering Control, a peer-reviewed journal that provides detailed analysis and insight on the latest issues in the law, regulation, and control of money laundering and related matters. Mr. Roule has published dozens of articles on anti-money laundering, and counterterrorist financing laws and regulations.

Trifin Roule is the Publisher of our new division, Abacus Legal, and his and his team’s reports will be free to read for the next 45 days. After that time they will be dubbed premium content and require a subscription.

The post REPORT: ETHERDELTA SEC TEA LEAVES: What Are The Regulatory Lessons To Be Learned From An Exchange Shut Down? appeared first on Abacus Journal – Cryptocurrency News.

REPORT: ETHERDELTA SEC TEA LEAVES: What Are The Regulatory Lessons To Be Learned From An Exchange Shut Down?

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A Blockchain is a growing list of records, called blocks, which are linked using cryptography. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries. Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank.

Blockchain 101 · Crytpo Currency Market
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Trezor: Hardware Wallet
Binance: Exchange for Traders
Ledger Nano S: Hardware Wallet
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Blockchain technology will be used to liquidate assets tokenized in Singapore Exchange

Singapore has just successfully completed its first trial on the use of Blockchain technology as a tool for tokenized assets settlements.

According to a report published yesterday, reveals that the Singapore Exchange Limited (SGX) and the Monetary Authority of Singapore (MAS), joined forces with Anquan, an Asian technology company, the U.S. stock market Nasdaq and one of the world’s leading companies in terms of consulting, taxes, legal, financial and auditing, Deloitte, to execute the project.

Last August, the joint effort between the aforementioned corporations began, resulting in an efficient way to use Blockchain technology on Delivery versus Payment (DvP) for the tokenized assets settlement.

The study states:

“The Monetary Authority of Singapore (MAS) and Singapore Exchange (SGX) have successfully developed Delivery versus Payment (DvP) capabilities for the settlement of tokenized assets across different Blockchain platforms. This will help simplify post-trade processes and further shorten settlement cycles.”

In relation to the pleasing results of the trial, FinTech’s director of the Monetary Authority of Singapore, Sopnendu Mohanty, affirmed that the assets tokenization, as well as the Blockchain technology, are leading a new worldwide innovation wave.

“This project has demonstrated the Blockchain technology value and the benefits it can offer to the financial industry in the short to medium term. The assets tokenization concept, as well as other lessons learned from this project, can be usefully applied to a broad economy spectrum, creating a new world of opportunities,” he said.

Singapore and Blockchain technology

Unlike other Asian countries such as South Korea – which maintains an unfriendly and reserved position regarding digital currencies and Blockchain technology – both Singaporean government and different companies are actively testing Blockchain solutions in different areas.

A key element that influenced this stance was the favorable position concerning cryptocurrencies that the Monetary Authority of Singapore (MAS) assumed, labeling them as an emergent and developing phenomenon, instead of as a threat to the economy, which marked the beginning of a series of strategies to include them in their economic model.

favorable position concerning cryptocurrencies that the Monetary Authority of Singapore (MAS) assumed

An example is Ubcoin Blockchain, a platform similar to eBay that announced the inauguration of a Singapore office to promote its Ubank mobile payment app that allows to purchase or sale real assets using cryptocurrencies, before the year ends.

Similarly, the Singaporean electricity and gas company, SP Group, used Blockchain technology to promote the acquisition and sale of solar energy through renewable energy certificates.

For its part, CrimsonLogic, a government company intended to design and execute innovative and sustainable services, announced the creation of its cross-border Blockchain network to increase the efficiency of trade corridors between the countries of the Association of Southeast Asian Nations (ASEAN).

La entrada Blockchain technology will be used to liquidate assets tokenized in Singapore Exchange se publicó primero en Crypto Economy.

A Blockchain is a growing list of records, called blocks, which are linked using cryptography. Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank.

Blockchain 101 · Crytpo Currency Market
—————————————————
Trezor: Hardware Wallet
Binance: Exchange for Traders
Ledger Nano S: Hardware Wallet
Coinbase: Exchange for Investors
CoinSwitch: Wallet-to-Wallet Exchange

NEM Skyrockets as Coincheck Resumes Trading, Altcoins Trade Up Amidst Bitcoin Stability

NEM (XEM) is currently trading up nearly 20% as cryptocurrency exchange Coincheck resumes its normal trading activity.

NEM’s meteoric price rise comes amidst overall market stability, with Bitcoin (BTC) trading steadily at $6,400, and most altcoins trading up.

At the time of writing, Bitcoin is trading at $6,400, recovering from a slight dip into the mid-$6,300 region. Bitcoin is still trading firmly in its long-established trading range between $6,200 and $6,700, and its prolonged sideways trading trend has proved to be a positive thing for the altcoin markets.

Currently, NEM is leading Monday’s market surge, trading up 17.8% at its current price of $0.11. Following Coincheck’s announcement that they were resuming trading activity on their exchange, NEM surged to highs of $0.114, before falling to $0.103 as a result of profit taking. Its price has since climbed back up and is currently sitting near its current highs.

NEM’s sustained price pump has also been fueled by rising trading volume, which jumped from about $5 million prior to the Coincheck announcement, to its current levels of over $48 million.

Following the massive $500 million hack Coincheck was the victim of early this year, the exchange has had a difficult time fixing their management issues, security issues, and meeting the new, stricter, regulatory requirements being set forth by Japanese regulators.

The Tokyo-based exchange first announced that they would be resuming new account openings and customer deposits in late-October, but limited the cryptocurrencies available to trade to BTC, ETC, LTC, and BCH.

Related Reading: Cryptocurrency Market Update: Has NEM Awoken

Altcoins Trade Up

Although NEM has thus far been the leader of today’s cryptocurrency market surge, other altcoins have posted gains as well.

At the time of writing, XRP is the highest preforming major alt, currently trading up nearly 4% over the past 24-hours, at its current price of $0.52. XRP has had a choppy week of trading, first rising to highs of $0.56 on November 6th before falling to lows of $0.49. Since then, its price has gradually drifted upwards towards its current levels.

Bitcoin Cash (BCH) is one of today’s worst performing major alts, currently trading down just over 1% at its current price of $520. It is currently down 18% from its weekly highs of $635.

Bitcoin Cash’s poor performance over the past few days comes after it witnessed a massive rise from lows of $415 in mid-October, to highs of $635 earlier this week. This rise was fueled by increased buying volume stemming from the imminent hard fork event which is scheduled to occur in three days, on November 15th.

Many investors expected its price to continue rising prior to this event, but it now appears that investors are less interested in acquiring the forked units than they are in profiting from its rise prior to the event.

Featured image from Shutterstock.

The post NEM Skyrockets as Coincheck Resumes Trading, Altcoins Trade Up Amidst Bitcoin Stability appeared first on NewsBTC.

NEM Skyrockets as Coincheck Resumes Trading, Altcoins Trade Up Amidst Bitcoin Stability

A Blockchain is a growing list of records, called blocks, which are linked using cryptography. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries. Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank.

Blockchain 101 · Crytpo Currency Market
—————————————————
Trezor: Hardware Wallet
Binance: Exchange for Traders
Ledger Nano S: Hardware Wallet
Coinbase: Exchange for Investors
CoinSwitch: Wallet-to-Wallet Exchange

Picking the Right Altcoin in Anticipation of a Bullish Market

The cryptocurrency market, after reaching all-time highs last year, came crashing down throughout most of 2018. The downward spiral resulted in some cryptocurrencies losing anywhere between 90-100% of the gains made during the previous year. The scene has since then changed, and the market has stabilized to a great extent.

As we inch closer towards the end of the year, the community is waiting for the much-anticipated bullish market run that has occurred in the previous years. Historic trends show many of the virtual currencies performing well towards the last quarter of the year. The cryptocurrency industry as a whole has undergone transformation and the growth of assets is no longer dependent on promising ICOs and their whitepapers, but real-world applications of the blockchain platforms and their respective cryptos.

In this new phase, in order to make profits during the bull-run, the community has to conduct sufficient due-diligence while purchasing the tokens.

Choosing the Right Altcoin

The flagship cryptocurrency, Bitcoin is no longer the preferred investment option for traders, unless looking for long-term storage of value. Bitcoin has become the epitome of stability in the cryptocurrency market (excluding stablecoins), as its price is least affected by day to day developments in the crypto sector. This leaves altcoins as the preferred investment option, and there are a few things one has to consider before picking the right altcoins.

A Few Options

Investors should consider actual use cases of altcoins in real-world scenarios, market cap, the reputation of the team behind it and historic trends. Currently, there are three altcoins, Stellar Lumen (XLM), Lisk (LSK) and NAGA Coin (NGC), showcasing huge potential which makes them worth looking into.

Stellar

Stellar is designed as a decentralized financial protocol fueled by its native lumen (XLM) tokens. The platform is positioned as a competitor of Ripple (XRP) and has gained significant ground as of late. Stellar recently announced the official mainnet launch of StellarX – a zero-fee decentralized crypto exchange based on its own protocol.

Lisk

Similarly, Lisk is a blockchain platform that enables developers to create dApps. In recent days, Lisk has relaunched itself and migrated to the mainnet. The Lisk Ecosystem includes components like Lisk Core, Lisk Elements, Lisk Commander and Lisk Hub, which will all be updated.

NAGA COIN

NAGA Coin (NGC) backed by The NAGA Group AG, a publicly traded company, is the preferred currency of the entire NAGA Ecosystem which provides a suite of products and services for the community. NAGA Coin works seamlessly with the predominant fiat ecosystem by enabling users to access funds in three different currencies via USD, GBP, and EUR. NAGA Wallet handles multiple fiat and cryptocurrencies, acts as one application to manage a user’s entire finances within the NAGA Ecosystem. NAGA Card complements the wallet, by providing an easy way to spend the funds, just like any other credit or debit card, all over the globe.

And then there is NAGA Trader – a platform to trade a wide range of instruments including commodities, futures, cryptocurrencies, forex, stocks etc., while NAGA Virtual – provides the necessary trading and marketplace infrastructure for traders, gaming enthusiasts and even game studios to list, sell, purchase and trade virtual products.

Market Cap and Price Trend

When it comes to the use cases, NGC tops both XLM and LSK which signifies a potential rise in demand in the future and hence value. However, XLM tops the charts with a market cap of over $5.5 billion, followed by LSK at $362 million and NAGA at $17 million. XLM is well established and has gained recognition from mainstream financial institutions, and it has been around for a long time. LSK has been through its ups and downs but developers are gradually starting to accept it. NGC being the recent entrant to the segment will still take some time to achieve higher market caps, but signs show that it is sure to get there.

And finally, when the price trend of all the three altcoins over the past few months is considered, NAGA has shown great stability even at times of distress in the market, which certainly works in its favor.

Taking all the factors into consideration, one can pick their favorite altcoin and prepare themselves to make the most out of the upcoming, inevitable bull-run.

 

The post Picking the Right Altcoin in Anticipation of a Bullish Market appeared first on NewsBTC.

Picking the Right Altcoin in Anticipation of a Bullish Market

A Blockchain is a growing list of records, called blocks, which are linked using cryptography. Cryptography is the practice and study of techniques for secure communication in the presence of third party adversaries. Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank.

Blockchain 101 · Crytpo Currency Market
—————————————————
Trezor: Hardware Wallet
Binance: Exchange for Traders
Ledger Nano S: Hardware Wallet
Coinbase: Exchange for Investors
CoinSwitch: Wallet-to-Wallet Exchange

Great Lakes Science Center in the US to Accept Bitcoin [BTC]

The Great Lakes Science Center in downtown Cleveland, Ohio will begin to accept Bitcoin as payment for its services. Great Lakes is a museum and educational facility housing display pieces from some of the leading national agencies such as NASA.

Starting this Tuesday 13th November, the facility will begin accepting Bitcoin as payment through its mobile application. In a statement, the CEO of Great Lakes Science Center, Kirsten Ellenbogen has said that the facility opted to accept bitcoin as payment with the intention to promote the adoption of the technology within the local community. She said:

“There is a lot of excitement around the conference. Accepting bitcoin is just a small part of the momentum to grow a blockchain ecosystem in Cleveland.”

The Great Lakes museum has in the recent past shown its innovative efforts to adopt new technology when last year it integrated augmented and virtual reality capabilities to its mobile application. In the statement, Ellenbogen said,

“Last year we launched our mobile app that uses augmented and virtual reality to allow guests to experiment with flames in space and test spacecraft designs re-entering Earth’s atmosphere when they visit the NASA Glenn Visitor Center, and now they’ll be able to use their phone to pay for their admission using Bitcoin.”

The Great Lakes museum

This latest development puts The Great Lakes museum at third to implement bitcoin as a payment alternative after Museum of the Coastal Bend in Texas and St. Petersburg Museum of History in Florida both of whom have been accepting Bitcoin for quite some time now. The Museum of the Coastal Bend was the first to accept bitcoin and at the time, the museum spokesperson said:

“I have to admit, I’m skeptical that anyone will visit and use BTC. But it doesn’t cost us anything to try, and it’s pretty cool to say that we’re the first. Also, admission is pay-what-you-want, in case anyone was wondering how many of their hard-earned BTC they would need to spend here.”

As the cryptocurrency industry celebrates its tenth anniversary, more conservative institutions are accepting it as an alternative to making payments. This development lends the industry an air of legitimacy that it sorely needs after its first decade has been marred with negative perceptions from the technology first being adopted by nefarious internet users.

La entrada Great Lakes Science Center in the US to Accept Bitcoin [BTC] se publicó primero en Crypto Economy.

A Blockchain is a growing list of records, called blocks, which are linked using cryptography. Cryptocurrency is a digital currency that uses encryption (cryptography) to regulate the generation of currency and verify the transfer of funds, independently of a central bank.

Blockchain 101 · Crytpo Currency Market
—————————————————
Trezor: Hardware Wallet
Binance: Exchange for Traders
Ledger Nano S: Hardware Wallet
Coinbase: Exchange for Investors
CoinSwitch: Wallet-to-Wallet Exchange