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Regulation

SEC’s Paragon Ruling And The Possibility Of Sending ICOs To Bankruptcy

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As we have seen from the recent crackdown on two initial coin offerings (ICOs) by the US Securities and Exchange Commission (SEC,) Paragon and AirFox, the situation could also lead to many other blockchain and crypto projects that would declare bankruptcy in the coming months. This is what is making headlines in today’s crypto news.

As we reported earlier, both Paragon and AirFox were served a fine of $350,000 from the SEC and a refund to all the investors who participated in the token sale.

The problem, right now, is that the two tokens have been asked by the US SEC to refund $12 million and $15 million accordingly to their investors. Since their ICOs, the prices of cryptocurrencies like Bitcoin and Ethereum has declined substantially, blockchain projects have used most of their funds from their token sales in order to fund operations.

The official SEC document reads:

“Both companies have agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay penalties.”

Aside from this, another issue for ICOs is the right to sue projects to be compensated for their losses, which the SEC clearly outlined. In other words, if an investor invested in a token and recorded a 80% loss, they are eligible to file a lawsuit against the initiator of the token sale and eventually receive the funds back.

“On a date no later than sixty (60) calendar days… distribute by electronic means reasonably designed to notify each potential claimant,  notice and a claim form, both of which shall be in a form not objected to by Commission staff, informing all persons and entities that purchased PRG potential claims under Section 12 (a) of the Securities Act, including the right to sue “to recover the consideration paid for such security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if [the purchaser] no longer owns the security.”

Upon this crackdown, the co-director of the SEC’s Enforcement Division, Stephanie Avakian, heavily emphasized that the SEC will continue to investigate token sales which violated federal security laws with the intent of bringing down ICOs considered as securities by the commission.

“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities. These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets,” she concluded.

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Blockchain News

Russian State Duma To Review Crypto Regulation: Preparing For Oil-Backed Crypto

Our DC Forecasts crypto news site has always been active on the field of cryptocurrency regulation. Right now, the latest news show that the Russian State Duma (which is the lower house of the Federal Assembly of Russia) is planning to review and adopt new regulation efforts. It all started with the former Energy Minister Igor Yusifov who proposed an oil-backed crypto as the financial outlet Rambler reported on February 21st. The reports mention that the head of the Energia investment-focused corporation also has some tangible prospects for proposing an oil-backed cryptocurrency. The construction of the project's roadmap is almost at the final stage. In one interview, Yusifov said the introduction of a crypto settlement system on the energy market could allow for the avoidance of costs associated with the use of not-backed-up currencies and their fluctuations of the exchange rates. He also cites that the savings on currency exchange commissions and trade restrictions as other examples of advantages that the system could bring. Furthermore, Yusufov said that the blockchain would be used to track and verify every barrel of oil along the entire chain with no additional costs. The former head of the Federal Securities Commission of Russia, Igor Kostikov, suggested that not only oil and gas could be connected to it - but any exchangeable resource in general.
“Perhaps the oil-backed cryptocurrency will be the pioneering project that will create a reliable structure for the cryptographic market as a whole," he concluded.
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Regulation

Thailand Legislative Assembly Permits Issuing Of Tokenized Securities

The national legislative assembly of Thailand has officially allowed the issuing of tokenized securities on a blockchain according to the blockchain news coming from the local newspaper The Bangkok Post. According to the article, the government will amend the Securities and Exchange Act and after the changes come into effect, all tokenized securities can be issued on a blockchain officially. The Thai Securities and Exchange Commission will also provide further rules so all of the crypto platforms can seek a securities depository license. The Thai SEC secretary Tipsuda Thavaramara explained that the regulator will permit all of the crypto-related businesses or the businesses that function as depositories of securities to apply for the same licenses. The previously mentioned explained the Thailand Securities Depository Co Ltd as the only subsidiary of the Stock Exchange Of Thailand to have the permission to operate as securities depository. The Securities and Exchange Commission of Thailand will also decide if a security token offering is regulated within the current act or the royal decree. The decision depends on the rights of the particular token. At the start of this year, the Thai Ministry of Finance issued four licenses to crypto-related companies under the SEC recommendation but two of them failed to comply with the rules and later got rejected. As previously reported, the National Electronics and Computer Technology Center of Thailand is exploring how blockchain can be used in e-voting and the solution can end up being deployed in the short term for a smaller environment such as for the Thai nationals that live abroad to go to the embassy to vote and verify their identity on the blockchain.
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Regulation

Texas Regulator Reaches Agreement With Four Crypto Companies It Previously Accused

The state regulator in Texas is in our crypto news today after the announcement that it has reached an agreement with four crypto companies that were previously accused of selling unregistered securities according to a document that was released on February 21. The four companies, Mintage Mining, BC Holdings and Investments, Social Membership Network Holding and Nui social agreed to stop offering crypto tokens to investors. The respondents will also pay an administrative fine of $25,000. Last year in July, the Texas State Securities Board (SSB) accused the companies after it identified token offerings that didn’t go under the definition of securities according to the local legislation. The order from the regulator confirms this information and requires no further activity to take place until they become suitable to be licensed and not after all documents are collected. The order also constitutes the recent victory of the Texas State Securities Board on taking down unregistered securities sales that are ongoing in the crypto sectors. As previously reported, bad actors in the crypto space are always under scrutiny and always under bigger operations run by the United States Securities and Exchange Commission. At the start of February, the SSB revealed to have issued about 16 orders to industry players that were suspected of being scams. For example, BitConnect was included in the 16 orders as a Ponzi scheme which is not even under FBI operation. The regulator stated:
 “The orders cited a total of 60 individuals and entities. None of the individuals or firms were registered to sell securities in Texas.”
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Bitcoin News

US Regulators Decision On BTC ETF Will Set The Mood For The Crypto Market: KRX

An official at the Korea Exchange (KRX) from South Korea’s securities exchange operator believes that the industry should keep a close eye on the developments from the United States regulators regarding Bitcoin exchange-traded funds so this is why in today’s bitcoin news we find out more about what the official stated. ETFs are capable of tracking assets that are proportionately represented in the shares of the funds. They are believed to have high potential to increase the chances of widespread adoption of cryptocurrency. The US Securities and Exchange Commission has postponed or rejected its decision on crypto-related ETFs and the KRX official had to say something about that:
 “The US has been the front-runner on the cryptocurrency market and related derivatives, and there are strong voices supporting the launch of Bitcoin ETFs within the market — which is why we are observing the progress and response of the US SEC’s decision on Bitcoin ETFs.”
He added that the KRX is considering the provision of a solid Bitcoin index as well which will be required for the launch of such ETFs. South Korea’s blockchain market has seen the launch of blockchain ETFs by investment banks because of the incredibly lower level of scrutiny they get from the national watchdog. A professor at Korea University’s Graduate School of Information Security Lee Kyang-ho argued that the health of the blockchain sector in the country could eventually create a path for crypto ETF integration by saying:
 “With the government expanding its investment in research and development of blockchain technology, the projects are expected to minimize or eliminate the risk of integrating ETF transactions in the cryptocurrency market.”
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