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Miami-based Cblocks has announced that it will relocate to Canada, citing a lack of regulatory clarity regarding cryptocurrency in the United States as the principal catalyst for the move.
Cblocks to Relocate to Canada
Cblocks, a Miami-based company that generated $ 32,000 in a month through selling beginner traders mystery boxes of assorted cryptocurrencies, has announced its intention to move to Canada.
Cblocks has cited regulatory hurdles as the principal reason for the relocation, claiming that lawyers from two different legal firms were unable to determine the precise legal classification and legislative apparatus governing the company’s operations.
Cblocks sells an encrypted USB containing five random cryptocurrencies that are chosen on behalf of customers in exchange for a $ 50 USD service fee. Despite the company’s primary product tangibly comprising a USB drive, Cblocks could be considered a money services business under U.S. law – as the cryptocurrencies distributed by the company may be considered to be securities.
“They can’t agree as to whether we’re a money services business or not,” Cblocks chief executive officer and co-founder, Auston Bunsen said. “Canada has much friendlier regulation when it comes to cryptocurrencies. They only require a federal registration,” Mr. Bunsen added.
Canadian Regulatory Apparatus Less Expensive for Cblocks
In addition to stringent anti-money laundering requirements, being classified as a money services business would incur significant registration fees. In Canada, complying with the same money services regulations will not incur fees, further motivating the company’s relocation.
Cblocks expects to be officially incorporated within a few weeks, anticipating to launch for Canadian customers during May. Despite the company’s official relocation, Cblocks’ founders will stay in Miami, and exclusively target Canadian users for the time being, however, at least one Canadian citizen is needed on the company’s board in order for Cblocks to qualify for Financial Transactions and Reports Analysis Centre of Canada licensing.
Growing Calls for Regulatory Clarity From Crypto Industry
Managing Director of United Kingdom-based online trading platform, Iqbal Gandham, also chairs a trade group seeking greater clarity regarding the regulatory implications for
“The benefits of regulation are clear,” Mr. Gandham said. “An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself.”
Mr. Gandham advocates the development of a regulatory apparatus tailored to the particularities of cryptocurrency, criticizing suggestions that existing financial legislation can be stretched to govern the operations of the cryptocurrency companies. “Given that we are dealing with new and nascent technology, we wouldn’t want to simply cherry pick from existing regulation developed for other asset classes,” Mr. Gandham said.
Marc Ostwald, global strategist for ADM Invest Services International in London, emphasized the significance of anti-money laundering considerations for businesses operating with cryptocurrency. “This is all about where the burden of proof lies for anti-money-laundering, so wanting regulations seems very sensible,” Mr. Ostwald said. “Even if you’re making a killing in trading, someone could come up with an unexpected piece of regulation that puts a big red line through your business plan.”
Eric Demuth, the co-chief executive officer of Vienna-based Bitpanda, stated: “We’d be happy to have regulations, so we know where we stand.”
Do you think that cryptocurrency regulations are in need of reform? Share your thoughts in the comments section below!
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President Donald Trump blocks Broadcom’s $ 117 billion hostile offer for Qualcomm over national-security concerns, quashing what would have been the biggest-ever tech deal.
WSJ.com: What’s News Asia
Dick’s Sporting Goods said Wednesday that it will no longer sell assault-style rifles or high-capacity magazines and will not sell guns to anyone under 21 after the shooting massacre at a Parkland, Fla., high school that left 17 people dead.
Walmart Inc. also said Wednesday it will no longer sell…
For a century, L.L. Bean Inc. has offered lifetime returns on its rugged gear, apparel and boots. Now, thanks to growing abuse of the program, the company is drastically cutting back its generous policy.
The Freeport, Maine-based company will impose a one-year limit on returns, executives announced…
In a move that will surprise few observers, Bitconnect has announced that it is closing its lending and exchange platform. The company has widely been accused of operating a Ponzi scheme and was recently rocked by cease and desist notices in two US states. Immediately after the firm declared its intention to wind things up, its BCC coin plummeted from $ 290 to under $ 10 before recovering slightly. With the exchange offline, many holders have been left locked out and powerless to sell their heavily deprecated assets.
Bitconnect Bids Bye Bye
Pressure has been mounting on Bitconnect for months, with leading figures within the crypto community, from Vitalik Buterin to Jameson Lopp, speculating that the exchange was not all it was cracked up to be. News.Bitcoin.com reported on these rumors back in November before revealing, less than a fortnight ago, that the company had been slapped with an emergency cease and desist order in Texas. Among many red flags to have set alarm bells ringing were Bitconnect’s extremely odd marketing videos, described by one commenter as being “like scientology merged with hillsong infused with dorks and used car salesmen”.
In an update posted on the Bitconnect website, the company said it was halting its lending and exchange service due to the spate of cease and desist notices coupled with “bad press” and a string of DDoS attacks. Unfortunately, due to the ongoing DDoS attacks, the blog post can’t be accessed at this time. The “bad press” that Bitconnect cites, otherwise known as accurate reporting, has been invaluable in helping guide crypto newcomers away from the platform.
A Secret Blend of Herbs and Spices
The exact workings of Bitconnect’s secret sauce that purportedly makes its investors generous returns has never been disclosed, but the general consensus is that the whole operation is little more than a pyramid scheme. It is almost certain that Bitconnect’s “intelligent trading bot” which makes profitable trades and then shares those dividends with the community, does not exist.
It is not clear whether the news of Bitconnect’s lending service shutdown heralds the end of the company altogether, although it is hard to imagine it being able to limp on in any shape or form after shuttering its main hub. DDoS attacks are a tactic that a number of deep web marketplaces have used to sow confusion ahead of an exit scam. It is impossible to ascertain the origins of the distributed denial of service the site is under, though it it is not beyond the realms of possibility that the attack may have originated from close to home.
Bitconnect Token Falls Through the Floor
Historically, Bitconnect’s BCC token has been remarkably stable, maintaining steady growth in a pattern not dissimilar from that of bitcoin. But as news.Bitcoin.com noted back in November:
With most of the BCC in existence locked in the company’s exchange, if its founders were to perform an exit scam or wind up behind bars, millions of dollars of bitcoin would instantly be locked up and BCC would be rendered worthless.
That prophecy has now come to pass. Coinmarketcap reports zero trade volume on the Bitconnect platform in the last 60 hours, leaving its token still listed at $ 290 there. On other platforms though, such as Coinexchange, which recorded 24-hour BCC trade volume of $ 1.26 million, the token dropped to $ 8 before recovering to around $ 25 at the time of publication. Coinmarketcap, the web’s go-to cryptocurrency checker, has previously come in for criticism for hosting ads promoting Bitconnect. Coincodex, in comparison, has elected to post a notice alongside BCC warning investors away. Its CEO Marko Stokelj previously told news.Bitcoin.com:
Bitconnect employs a number of dubious methods in order to operate and promote its business. The business model outlined by the company is economically unsustainable with the current level of returns unable to be validated by any legally known investment system.
While some observers in the crypto community may feel a touch of schadenfreude at Bitconnect’s demise, it is worth being mindful of the many victims who will have suffered heavy losses. Thanks to its marketing strategy, including use of referral schemes, Bitconnect preyed on newbs who lacked the necessary understanding to differentiate legitimate cryptocurrencies from get rich quick schemes.
If the news emanating from Bitconnect’s 404’d website does prove to be terminal – and it’s hard to imagine the company coming back from this – there will at least be some good to come out of this story. A number of similar sites with names such as Ethconnect have appeared in recent months, each with the same opaque business model. The fall of Bitconnect will hopefully serve as a warning to other crypto startups not to go down the same route. For Bitconnect bag-holders, though, this cautionary tale will provide little consolation.
Do you think today’s news spells the end for Bitconnect? Let us know in the comments section below.
Images courtesy of Shutterstock, Coincodex and Coinmarketcap.
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Bank regulators have given Wells Fargo & Co. a poor grade when it comes to serving low-income communities, the bank said Tuesday.
In a regulatory filing and news release, the San Francisco bank said that the Office of the Comptroller of the Currency had given it a rating of “needs to improve” on…