Tag: SEC

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Crypto Videos

Ex Goldman Sachs VP Seeking SEC’s Approval to get into Crypto With His Company Skybridge!

https://youtu.be/JbnlqNJk5gc

https://youtu.be/JbnlqNJk5gc


Another Mainstream Company Seeking SEC’s Approval to get into Crypto

Investment firm SkyBridge, founded by Anthony Scaramucci, a former Goldman Sachs” vice president, is one of the latest companies trying to step into the world of cryptocurrencies.

The company is trying to put together a hedge fund that would include Bitcoin investment, according to a United States SEC filing from Oct 14. The prospectus states: “The Company may seek to gain exposure to Investment Funds or Investment Managers that may enter into derivative transactions. These can include total return swaps, futures, and options. Investments by the Company may also be made in companies that are providing technologies related to digital assets and cryptocurrencies, or other emerging technologies.”

After more than 10 years of progress, the cryptocurrency sector is starting to gain traction on an institutional level. Several mainstream companies as well as individuals have kicked off a notable trend of entering and promoting cryptocurrencies, and most notably Bitcoin.

Billionaire investor Paul Tudor Jones stepped into Bitcoin heavily earlier this year. He also recently stated how early he feels that the investment opportunity still is.

Despite SkyBridge’s interest in investing in Bitcoin, the company still requires approval from the Securities and Exchange Commission before moving forward with the investment. The prospectus includes: “Neither the Securities and Exchange Commission, Commodity Futures Trading Commission nor any other US federal or state governmental agency or regulatory body has approved or disapproved the merits of investing in these securities.”

The prospectus included a section that described” “digital assets” in which it touched on and explained their uses, risks, as well as other points of consideration. The document stated that “Digital assets have no intrinsic value other than being a method of exchange. They are not based on tangible security, commodity, contractual right, or legal obligation” The values of digital assets shouldn’t be expected to be connected or correlated to other traditional economic or market forces, as the value of the investments in digital assets could decline rapidly, and even reach zero” the prospectus says after pointing out the crypto sector’s “tremendous price volatility” seen since its inception. They also added that this kind of volatility goes against the norms shown in other mainstream investments.

Bitcoin has, on the other hand, risen to significant heights in recent weeks and is currently inches away from its all-time high of $20,000.

 

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Crypto Guides

‘Howey Test’ & The Role It Plays In The Token Ecosystem Of Blockchain?

Introduction

Introduction

Introduction

Blockchain has led to the emergence of the token economy and, thus, new business models. With the help of the token in the business, both the customers and the owners benefit immensely. We have seen two types of token so far, utility and security tokens.

Utility tokens can be compared to loyalty points up to a certain extent while they are much more in the designated environment. Security tokens allow them to own any material/securities in a digital format in a fungible manner. Security tokens allow people to own things in a never before way.

There is a deciding factor that differentiates between security and utility tokens called the Howey test. Utility tokens don’t need any regulatory requirements since it is intended for use in its designated environment only while security tokens represent a real asset in the real-world digitally. Hence security tokens are subject to regulations.

What is the Howey Test?

Howey test is a monumental case handled by the Supreme court of the USA in 1946, which laid foundations to determine whether a particular arrangement involves an investment contract or not. The case was between the SEC and Howey. Two Florida based corporate put up real estate contracts for tracts of land with citrus groves. The defendants came up with an offer where the buyers who bought the land can lease the land back to the defendants who can grow citrus, market them, and make money.

Most of the buyers did lease the land back to the defendants as they weren’t aware of the agriculture. This was deemed illegal by the Securities Exchange Commission (SEC) and sued the defendants. The arrangement was considered illegal as the defendants broke the law by not filing a securities registration statement with SEC. The defendant’s leaseback was indeed determined as security, and this led to a landmark judgment. Hence this was determined as a test whether a particular transaction is an investment contract or not.

A particular investment can be deemed as an investment contract if it fulfills the below criteria.

  1. It a monetary investment
  2. The investment is made in a common enterprise.
  3. There is an expectation of profit from the work of the promoters or third parties.

Even though the original Howey test used the term money later, it has been broadly classified into other investments and assets other than money. One more criterion is considered in determining a particular investment as security. If or if not, an investor has any control over the profits that come from the investor? If not, then the investment is generally considered as a security.

How the law applies to tokens generated based on blockchain technology?

SES guides that if a token clears all the criteria mentioned above, it can be deemed a security token. If it doesn’t follow, then it can be deemed as a utility token. Security tokens usually derive their value from the external, tradable asset. Hence security tokens are subjected to federal rules and regulations.

If the ICO doesn’t follow all the rules and regulations as prescribed, they are subjected to penalties. If followed, they offer a multitude of investment opportunities that were not possible before. If SEC determines any cryptocurrency as a security token, the founders are deemed to register the coin with SEC, and also, the investors should register their holdings with SEC.

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Crypto Guides

Knowing The Risks Involved While Using & Investing In Cryptocurrency

Introduction

Introduction

Introduction

Bitcoin, being the world’s largest virtual currency in terms of market cap, is aiming to give the financial space a new look. Also, blockchain technology, which is digital, distributed, and decentralized, has been powering transactions without the existence of intermediaries. With these features, it is believed to be a game-changer for the financial industry in the near future. However, apart from its primary features, it is essential to have a light on the risks involved in them.

Potential Risks Involved In Using Cryptos

Yet, cryptos have been the evolved way to look at currencies; there are ever-growing risks and concerns. Here are some reasons which show that using and investing in cryptocurrencies might not be a smart step.

Unavailability of traditional fundamental metrics

Cryptocurrencies lack the existence of fundamental metrics, which is useful for assigning value to an asset. In a stock, investors can get info about balance sheets, income statements, earnings reports, and many other fundamental factors to analyze a stock. However, with cryptocurrencies, there are no fundamental metrics that can be used by investors. Apart from processing speed and average daily transactions, the investors virtually get nothing about the power of digital currencies needed to analyze cryptocurrencies.

The SEC shall be of no help

A December 2017 statement from SEC chairman notes that decentralized trading can occur outside the confines of the US borders. And, as the transactions are considered to be anonymous, recovering the invested coins may not be possible.

Volatility

Though the cryptocurrencies have been in the market for quite a long time, the price fluctuation is still an issue. This could be due to the fact that people do not yet tend to trust these intangible funds. Moreover, even though a single entity doesn’t govern it, any major world news can the price of the cryptocurrency.

Lack of acceptance

While Bitcoin is welcomed in many countries, there are a few countries that still do not accept them due to its volatility and decentralized nature. Some nations have put a complete ban on it, and some have tried to cut off support from banking systems for its trading and use. Some countries that said ‘No’ to cryptocurrency are

🇨🇳 China

Bitcoin is officially banned in China. All financial institutions are prohibited from transacting with Bitcoin. The crypto exchanges in China are put to ban as well.

☭ Russia

Bitcoin is unregulated in Russia; however, its use as payments for goods and services is illegal.

🇻🇳 Vietnam

Vietnam’s government and its state banks claim that Bitcoin is not a legitimate payment method.

Thefts and Scams

Though cryptocurrency is intangible, there are possibilities of thefts and scams through hacking. Hackers have sophisticated tools that infiltrate cryptocurrency wallets and trading platforms to intercept transactions and send money to their wallets. Some of the Bitcoin scams with examples include,

Fake Bitcoin exchanges: BitKRK from South Korea
Ponzi schemes: Bernie Madoff
Fake cryptocurrencies: My Big Coin

Final Words

It is no doubt that cryptocurrencies have eased out the way of transactions. One can transfer coins to anyone, anywhere, and anytime anonymously of its decentralized nature. Having that said, the volatility, lack of acceptance, and thefts and scams can be viewed as a disadvantage and as a factor of risk.

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Crypto Daily Topic

The Mess That is Telegram’s $1.7 Billion Token Sale

The unexpected growth and ultimate dominance of messaging apps in the tech world – prime examples being WhatsApp, Facebook messenger, Viber, Telegram, and WeChat – has been phenomenal. Everyone who

The unexpected growth and ultimate dominance of messaging apps in the tech world – prime examples being WhatsApp, Facebook messenger, Viber, Telegram, and WeChat – has been phenomenal. Everyone who

The unexpected growth and ultimate dominance of messaging apps in the tech world – prime examples being WhatsApp, Facebook messenger, Viber, Telegram, and WeChat – has been phenomenal. Everyone who bought into the craze early enough will probably retire richer than they ever imagined.

Combine this staggering success with the emergence of blockchain technology, in particular, cryptocurrency, and you have a combination that no investment expert will advise against. If you doubt it, ask yourself why Facebook is so adamantly pursuing the Libra – or why a simple search for messaging brings up crypto as a related search.

Considering how privacy-focused the world of crypto is, and seeing how fast the crypto industry is evolving to revolutionize every other industry, it was only a matter of time before it catches up with messaging. This is where Telegram’s messaging app rules.

Telegram may not be the top messaging app in the world by number of users, but it ranks highly. This is largely because of its speed and history of focus on user security and privacy. The app’s enhanced privacy protection is one of the top reasons why it has grown from obscurity to having over 200 million active users in just over five years.

It is an open secret that Telegram enjoys fanatic following and loyalty in the crypto world, and it is for this reason that the company was able to raise over $1.7 billion from private token sales as it prepared to launch its ICO.

Telegram Open Network’s breakthrough private sales

Telegram’s most recent and most controversial endeavor has been the launch of its own token, the Gram or Telegram Open Network (TON). The third-generation blockchain token that promised ‘superior capabilities’ was an instant hit, with demand hitting the roof even before it was official. Telegram’s founder, Pavel Durov, launched the ambitious TON project as a future payment option that would be used outside the global regulatory system, a lot like Facebook’s Libra would have.

TON was supposed to have a record-breaking ICO that would see them develop a blockchain-based one-of-a-kind decentralized messaging internet. In an industry with over 2.5 billion users already and projected to have about 3 billion by the end of 2022, their idea for a new communication platform that is independent from traditional bottlenecks and detractors was grand.

The tightly controlled process the company used to raise funds ended in disarray as its earliest backers sold their tokens too early, earning good profits in the process. While the company initially aimed to raise $1.2 billion through invite-only private sales and public offerings, it extended its target to $1.7 billion, which it raised from private backers before the public sale was canceled altogether.

The trouble with SEC

There is a universal disdain from governments and regulatory bodies for companies and technologies that are outside their reach. This explains why Telegram is always under scrutiny, and unnecessary controversies world over. Shortly after the company raised the funds it needed to bankroll the TON, the United States Securities and Exchange Commission (SEC) abruptly declared that the token offering was illegal.

Telegram had raised the entire $1.7 billion by selling the tokens to qualified investors in two rounds. The company had submitted a Form D, required when selling securities without registering with the SEC, back in February 2018. However, SEC found fault in the process in that qualified buyers of Gram tokens resold their assets in violation of the Form D exemption.

The regulator quickly obtained a court order to stop Telegram from distributing the Gram and outlawing trading in it in the United States. Hearing for the case is scheduled for February 2020.

What does this mean for the buyers, the public with interest in the Gram, and, more importantly, for Telegram?

While the SEC has the authority to stop the sale of Telegram’s tokens in the US, there is little it can do to prevent it from being traded openly in the international market. The whole point of Telegram launching its own token was to beat such regulatory bottlenecks and launch a genuinely open asset that the entire world can use with minimal interference from the bureaucrats. However, the influence of the SEC should not be underestimated, considering how early in its stages of conception, the Gram is.

The move by the SEC has had multiple adverse effects on the investors of TON:

☑️ First, they have been forced to choose between making a guaranteed 23% loss on their investment on the token, or sitting tight and waiting (hoping for) the token’s official launch in April 2020.

☑️ Public investors who bought the TON at $4 will be under pressure to sell it off along with the first and second round private investors who bought it at $0.37 and $1.37, respectively.

☑️ The move by the SEC may have set a precedent that will deter the Gram, or any other such blockchain tokens, from ever successfully raising funds in the US.

Why does the Gram stand out?

There are thousands of crypto tokens in use and being traded in the US today. Despite the TON being launched by a popular messaging company with a strong foundation, what makes it so unique as to attract the wrath of SEC?

In our view, Telegram’s token has three major strengths that makes it stand out:

☑️ Telegram’s TON promises lightning transaction speed – the kind that no other blockchain platform is capable of. It is estimated that TON’s third-generation blockchain platform will be capable of executing over 10,000 transactions every second, a speed which even Ethereum is not capable of.

☑️ Great infrastructure: Telegram promises to deploy massive storage and processing power to the decentralization of TON’s files. The already-popular messenger app will be an added advantage for quick and easier user onboarding.

☑️ The platform is already popular and trusted. Telegram already has over 200,000 loyal and informed users and a brand that sells itself. The Gram does not need to start from scratch, and neither does it have a baggage of distrust like Facebook’s Libra.

There is a vast potential for growth and prosperity of the Gram, despite the mess with the SEC. Early investors have proven that the company has the backing of the crypto world, and the company has shown that it has the tech to deliver on its promises. It is unclear what the way forward is for the Gram, but for now, we just wait.