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.
“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.
New Regulatory Framework From Bahrain Set To Regulate Virtual Currencies
“This regulatory framework will address the demand from the market for these services and the need to also recognize this innovation in financial services. The CBB’s (Central Bank of Bahrain) experience with the participants within the Regulatory Sandbox was insightful in shaping these rules.”If you are wondering what the sandbox part means, Hamad refers to Bahrain FinTech regulation framework for companies to test their ideas while under stricter regulations. The guidelines come as a boost to the companies that wanted to be a part of reducing government spending through the blockchain technology. The draft bill that was introduced by the Central Bank of Bahrain will cover all of the requirements for financial resources and licensing as well as protecting customers’ interests and precautious cybersecurity measures. The draft paper is available on the website of the Central Bank and the Bank is even open to feedback and opinions about the draft until the year ends. Bahrain is currently starting a fintech revolution in the country starting with the creation of the Fintech Bay which is a home to more than 30 companies that work with the blockchain technology, cryptocurrencies, and digital payments. The entire Middle East is now becoming slowly an attractive destination for crypto startups mostly because of the easy access to great infrastructure and great geographical position.
European Asset Manager Encourages Regulators To Outlaw Crypto
“You should outlaw it [crypto]. I am personally surprised that regulators haven’t stepped in harder.”Recently, the G20, which is a global forum that hosts government officials from 20 of the largest world economies, came to a consensus to regulate the crypto space primarily and ensure that digital assets are not used to fund criminal activities or launder money. As a declaration released by the G20 stated:
“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF [Financial Action Task Force] standards and we will consider other responses as needed.”With this initiative to regulate crypto, many governments could refrain from imposing a blanket ban on this industry. Doing so could leave governments in the dark while individuals and institutions continue to use consensus currencies for different use cases. So, the need for building a sustainable crypto ecosystem is bigger than ever. Some smaller economies such as Malta, Singapore and Switzerland have recently brought multi-billion dollar businesses and fast-growing startups by doing so. Still, the risk of money laundering and crime financing is still big - mainly seen through two banks (Danske and Deutsche Bank) which suffered two big scandals that surpass the entire market cap of cryptocurrencies.
CEO Of Allianz: Regulators Should Step In Harder And Outlaw Cryptocurrencies
“I am personally surprised that regulators haven’t stepped in harder.”He was especially addressing the head of Britain’s Financial Conduct Authority Andrew Bailey who was sitting right next to him at the panel discussion. Bailey noted that Utermann’s opinions were ‘’quite strong’’ but he did agree that cryptocurrencies don’t have intrinsic value. Bailey made sure that the FCA is watching closely and that they have the initial coin offering sector under surveillance. Utermann’s stance doesn’t leave any room for negotiation but some of his colleagues at Allianz are more optimistic about the use of blockchain technology. The chief economist at Allianz Mohamed El-Erian said that he also doesn’t believe that cryptocurrency will ever be able to replace fiat money but they will become more widespread. He said:
“Cryptocurrencies will exist. They will become more and more widespread, but they will be part of an ecosystem. They will not be dominant, as some of the early adopters believed them to be.”El-Erian explained that crypto is not dead and the technology isn’t dead also. He is sure that we are about to see more widespread adoption by the private sector but also from the public one. El-Erian concluded that the last year’s frenzy was ‘’unwarranted’’.
Danish Tax Agency To Go After Its Nationals Who Secretly Trade Bitcoin
“If you have traded with bitcoins on the specific Finnish bitcoin exchange and have not specified any winnings, then you can hear from us so we can get your taxes in place’’.The tax inspectors in Denmark are carefully going over each case so they can sum up the gains and losses made by these offshore trades. The chairman of the personal data department of SKAT explained that there are two types of trades, one called a curious trade where you invest a few thousand dollars and then there’s trading that involves huge amounts. Lawyers from Denmark confirm that bitcoin is taxable in the country and the country will impose charges when an asset such as BTC isn’t purchased properly or even sold properly for profits. Bergen noted:
“It’s probably just the tip of the iceberg. Although the Finnish company is a relatively small bitcoin exchange, the information they have revealed is a precious source, which clearly shows trends and patterns in the area.”
Join us on Facebook
- Telecom Giant AT&T Interested In A Blockchain-Based Social Media ‘Mapping’ System
- Binance Labs Introduces Us To The ‘First Batch’ Of (Final) Blockchain Projects
- Coinbase Adds PayPal Withdrawals To Its Platform (For U.S. Citizens)
- Bitcoin Plunges To A Yearly Low, Market Is ‘Prepared’ To Go Below $100 Billion
- TRON’s DApp Usage Jumps 48% To +1 Million Transactions Last Week
UPCOMING EVENTS RECOMMEND BY DC FORECASTS
Blockchain News5 days ago
Calgary Becomes The First Canadian City To Launch Local Digital Currency
Blockchain Archive4 days ago
You Can Pay With BTC In These Companies (Updated)
Bitcoin News5 days ago
Square Just Overtook Coinbase, Becoming The #1 Bitcoin Buying App
Blockchain News4 days ago
HTC Puts Brave As A Default Browser On Its Blockchain Smartphone
Ethereum News4 days ago
The Coinbase Effect: 3 Of 4 Ethereum Tokens Rally Against BTC On Their Day Of Listing
Blockchain News2 days ago
CEO Of Overstock Expects A Blockchain Products Market In 2019
Analysis5 days ago
The Recovery Weakens, Bitcoin Drops By 4.5 Percent
Blockchain Archive5 days ago
Best Bitcoin Casinos For 2019