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The Daily: Trustology Raises $8 million, SEC Fines Crypto Fund Coinalpha

December 9, 2018 |

The Daily: Trustology Raises $  8 million, SEC Fines Crypto Fund Coinalpha

U.K.-based startup Trustology, which develops storage solutions for digital assets, has raised $ 8 million in funding and we’ve got the news in this edition of The Daily. We also look at the SEC’s decision to fine another crypto company for breaching U.S. securities laws and HTC’s decision to have Brave as the default web browser on its Exodus 1 smartphone.  

Also read: Binance Offers Multiple Accounts, Huobi Plans Institutional Exchange

Crypto Security Startup Raises $ 8 million

The Daily: Trustology Raises $  8 million, SEC Fines Crypto Fund CoinalphaLondon-headquartered crypto startup Trustology has received $ 8 million in seed funding in a round led by Two Sigma Ventures, Reuters reported. The company develops a technology that helps investors enhance the security of their digital assets. According to CEO Alex Batlin, Trustology plans to use the capital to expand globally and provide support for more cryptocurrencies.

The product offered by the British company is designed to secure crypto assets. It provides investors with a simple solution to safeguard the private keys that give them access to their cryptocurrencies – hardware security modules. These are specialized processors that store passwords and digital keys.

Alex Batlin noted that Trustology’s product had been initially designed for banks but the startup is currently focusing more on crypto hedge funds and individual investors. He commented:

The original thinking was we would build the tech and sell to the banks. They are not moving as quickly as we are and we have quite a lot of demand from individuals, as well as crypto funds.

According to Matt Jacobus, a venture partner at Two Sigma, similar solutions are needed to develop a larger trading ecosystem around digital assets for institutional investors. Blockchain technology developer Consensys also participated in the funding round.

SEC Fines Cryptocurrency Fund Coinalpha

The Daily: Trustology Raises $  8 million, SEC Fines Crypto Fund CoinalphaThe U.S. Securities and Exchange Commission (SEC) has gone after another crypto company that, according to the regulator, sells securities without registration. The SEC, which has determined that Coinalpha does not qualify for an exemption, has fined the cryptocurrency fund manager and issued a cease and desist order on Dec. 7, 2018.

The California-based Coinalpha Advisors, registered as a Delaware limited liability company, had been operating two digital asset funds – Coinalpha Falcon and Coinalpha Index, Finance Magnates reported. According to an announcement by the commission, the owners of the company have agreed to pay a civil money penalty of $ 50,000.

Coinalpha also agreed to halt its offerings and pay back the fees it had collected from customers. The digital asset fund has already raised more than $ 600,000 from 22 investors in five states. The company has also promised to conduct a review of its online platform and marketing materials.

Although the regulatory status of cryptocurrencies in the United States is still unclear, the SEC has already fined and issued cease and desist orders to a number of crypto businesses after concluding that securities laws apply to the tokens they were issuing.

Brave Is the Default Browser on HTC Exodus 1

Privacy-oriented web browser Brave, which supports opt-in ads and cryptocurrency payments between users, has been announced as the default browser on the new HTC Exodus 1 phone, according to posts on crypto forums and social media. The application supports a crypto tipping system which relies on Brave’s basic attention token (BAT) and enjoys growing popularity in the crypto community.

The Daily: Trustology Raises $  8 million, SEC Fines Crypto Fund Coinalpha

HTC has made its new smartphone available for buyers willing to pay in cryptocurrency. The device, which has been advertised as a blockchain-powered phone, can be purchased with three major digital coins. It has been offered at fixed prices in bitcoin core, ethereum and litecoin – 0.15 BTC, 4.78 ETH, and 19.84 LTC (around $ 500 at the time of writing). However, a message on HTC’s website reads “This product is currently out of stock.”

The news comes days after the launch of another blockchain smartphone called Finney, which has been developed by Sirin Labs. The device has an integrated cold storage cryptocurrency wallet and can be purchased on the company’s website for $ 999.

What are your thoughts on today’s news tidbits? Tell us in the comments section.


Images courtesy of Shutterstock, Trustology, HTC.


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The post The Daily: Trustology Raises $ 8 million, SEC Fines Crypto Fund Coinalpha appeared first on Bitcoin News.

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SEC Hits Floyd Mayweather and DJ Khaled With Fines for Unlawful ICO Promotion

November 30, 2018 |

The U.S. Securities and Exchange Commission has hit two celebrities with record fines for shilling initial coin offerings (ICOs). Boxer Floyd Mayweather Jr. and music producer DJ Khaled were taken to task for failing to disclose payments they received for touting the projects. The case marks the first time the SEC has taken against celebs for ICO promotion.

Also read: Deutsche Bank Headquarters Raided by 170 Police Officers Over Money Laundering

Centra ICO Censured Again by SEC

The SEC has settled charges with Mayweather and Khaled for ICO violations pertaining to Centra. The agency had previously charged the project’s founders over matters relating to securities fraud. Its latest settlement is the first time the SEC has gone after celebrity promoters of cryptocurrency projects however.

“Without admitting or denying the findings,” explained the press release issued on Nov. 30, “Mayweather and Khaled agreed to pay disgorgement, penalties and interest. Mayweather agreed to pay $ 300,000 in disgorgement, a $ 300,000 penalty, and $ 14,775 in prejudgment interest. Khaled agreed to pay $ 50,000 in disgorgement, a $ 100,000 penalty, and $ 2,725 in prejudgment interest.”

Paying Penance for the Excess of 2017

SEC Hits Floyd Mayweather and DJ Khaled With Fines for Unlawful ICO Promotion
Floyd Mayweather posing with his Centra card

In the halcyon days of summer 2017, everyone seemed to be launching ICOs, buying into ICOs, and shilling ICOs. In the cold light of 2018, however, many of those projects have failed, a handful have been prosecuted, and an unknown number are believed to be under investigation for securities violations. Tweets such as “You can call me Floyd Crypto Mayweather from now on” and Khaled’s “Game changer” description of Centra after receiving a $ 50,000 payment from the project have come back to haunt the pair.

“These cases highlight the importance of full disclosure to investors,” said Stephanie Avakian of the SEC’s Enforcement Division. “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.” While ICOs have not died, despite the prolonged bear market and spate of SEC enforcements, the era of celebrity endorsements is effectively now over.

Do you think this action by the SEC will put an end to celebrity ICO endorsements? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post SEC Hits Floyd Mayweather and DJ Khaled With Fines for Unlawful ICO Promotion appeared first on Bitcoin News.

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US Federal Court Fines Bitcoin Ponzi Schemer Over $2.5 Million

October 21, 2018 |

US Federal Court Fines Bitcoin Ponzi Schemer Over $  2.5 Million

A U.S. federal court has fined a New York firm and its chief executive officer over $ 2.5 million in the first anti-fraud action involving bitcoin filed by the Commodity Futures Trading Commission. The Ponzi scheme involved a fake pooled investment strategy and a “fake computer ‘hack’ that supposedly caused the loss of nearly all customer funds,” the derivatives regulator detailed.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

CFTC’s First Bitcoin Anti-Fraud Action

The U.S. Commodity Futures Trading Commission (CFTC) announced on Thursday that a New York federal court has ordered two defendants “to pay in total over $ 2.5 million in civil monetary penalties and restitution” in a bitcoin fraud case.

US Federal Court Fines Bitcoin Ponzi Schemer Over $  2.5 MillionThe orders against New York corporation Gelfman Blueprint Inc. (Gbi) and its CEO Nicholas Gelfman were entered by Judge P. Kevin Castel of the U.S. District Court for the Southern District of New York. According to the commission, this case was “the first anti-fraud enforcement action involving bitcoin” filed by the CFTC.

The derivatives watchdog explained that “Gelfman was liable as a controlling person for Gbi’s violations” while “Gbi was liable as a principal for the violations of Gelfman and its other officers, agents, and employees.”

Noting that the complaint was originally filed against the defendants on Sept. 21, the CFTC wrote in Thursday’s announcement:

In addition to requiring Gbi and Gelfman, respectively, to pay $ 554,734.48 and $ 492,064.53 in restitution to customers and $ 1,854,000 and $ 177,501 in civil monetary penalties, the orders impose permanent trading and registration bans on Gbi and Gelfman.

The orders also “permanently enjoin them from further violations” of the CFTC Act and regulations. While the defendants are required to repay victims, the agency emphasized that the orders “may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets.”

More Than 80 Customers Defrauded

From approximately 2014 to January 2016, “Gelfman and Gbi, by and through its officers and agents and employees, operated a bitcoin Ponzi scheme,” the CFTC wrote. “They fraudulently solicited more than $ 600,000 from at least 80 customers.”

US Federal Court Fines Bitcoin Ponzi Schemer Over $  2.5 MillionThe scheme promised to place customers’ funds “in a pooled commodity fund that purportedly employed a high-frequency, algorithmic trading strategy executed by defendants’ computer trading program called ‘Jigsaw.’” The CFTC noted that the defendants posted on social media statements such as “We are a software development firm, currently offering customers access to a high-frequency BTC trading program called ‘Jigsaw’ (2% weekly BTC return).”

However, the commission asserted:

The strategy was fake, the purported performance reports were false, and — as in all Ponzi schemes — payouts of supposed profits to Gbi Customers in actuality consisted of other customers’ misappropriated funds.

US Federal Court Fines Bitcoin Ponzi Schemer Over $  2.5 MillionFurthermore, in order to conceal “trading losses and misappropriation,” the defendants “made and provided false performance reports to pool participants.” Among the fake reports were statements showing positive bitcoin trading gains “when in truth defendants’ Jigsaw trading account records reveal only infrequent and unprofitable trading,” the CFTC described. The orders additionally detail:

Gelfman, in order to conceal the scheme’s trading losses and misappropriation, staged a fake computer ‘hack’ that supposedly caused the loss of nearly all customer funds.

What do you think of this CFTC’s enforcement action against Gbi and its CEO? Let us know in the comments section below.


Images courtesy of Shutterstock.


Need to calculate your bitcoin holdings? Check our tools section.

The post US Federal Court Fines Bitcoin Ponzi Schemer Over $ 2.5 Million appeared first on Bitcoin News.

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SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration Token

August 15, 2018 |

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration Token

The U.S. Securities and Exchange Commission (SEC) has taken action against an oil and gas exploration company and its founder who “perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.” The token sale failed to raise money but the tokens were issued as part of a bounty program, which the SEC considers securities.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

SEC Took Action

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration TokenThe SEC announced Tuesday that it has taken action against David Thompson Laurance and the oil and gas exploration company he founded, Tomahawk Exploration LLC. Laurance attempted to raise money by issuing digital tokens, tomahawkcoins (TOM).

Founded by Laurance in 2010, Tomahawk “engaged in an offering of Tomahawk securities that constituted penny stock,” the SEC described. The 76-year-old California resident is the sole managing member of Tomahawk.

“The SEC’s order finds that Tomahawk and Laurance violated the registration and antifraud provisions of the federal securities laws,” the Commission detailed, adding:

Without admitting or denying the SEC’s findings, Tomahawk and Laurance consented to a cease and desist order and Laurance consented to an officer and director bar, penny stock bar, and a $ 30,000 penalty.

The SEC has obtained a permanent officer and director bar against Laurance which prevents him from serving as an officer or a director of any SEC-reporting company.

The penny stock bar prohibits him from owning a penny stock in his own account as well as engaged in any activities related to an offering of a penny stock including acting as a promoter, finder, consultant, agent, broker, dealer, or issuer.

The Founder and his Company

According to the SEC, Laurance “perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.”

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration TokenHe used “inflated projections of oil production that were contradicted by the company’s own internal analysis” in his promotional materials. In addition, he “misleadingly suggested that Tomahawk possessed leases for drilling sites when it did not,” the Commission clarified.

Tomahawk’s promo materials described Laurance as having a “flawless background,” omitting information about his prior criminal conviction for his role in fraudulent securities offerings. “Tomahawk also claimed that token owners would be able to convert the tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens,” the SEC detailed.

Robert A. Cohen, Chief of the SEC’s Cyber Unit, warned:

Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.

No Money Raised but Bounty Tokens are Securities

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration TokensTomahawk originally wanted to raise $ 5 million through the ICO after failing to raise funds through private investments and public capital markets.

The company, however, “failed to raise money through the ICO…[but] issued approximately 80,000 TOM as part of a ‘bounty program’ in exchange for online promotional and marketing services,” the SEC noted. Based on the facts and circumstances of the case, “TOM tokens are securities because they are investment contracts…and because they represent a transferable share or option on a security,” the Commission elaborated:

Tomahawk’s issuance of tokens under the bounty program constituted an offer and sale of securities because the company provided TOM to investors in exchange for services designed to advance Tomahawk’s economic interests and foster a trading market for its securities.

The SEC concluded that Tomahawk and Laurance violated the Securities Act by “offering and selling TOM without having a registration statement filed or in effect with the Commission or qualifying for an exemption from registration with the Commission.”

What do you think of the SEC’s action against Tomahawk and its founder? Let us know in the comments section below.


Images courtesy of Shutterstock and the SEC.


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The post SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration Token appeared first on Bitcoin News.

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Wells Fargo to pay $1 billion in fines over auto, mortgage lending abuses

April 20, 2018 |

Federal regulators slapped Wells Fargo & Co. with a fine of $ 1 billion on Friday, punishing the San Francisco bank for abuses that harmed mortgage and auto loan borrowers, and for what regulators said was a pervasive and “reckless” lack of risk management.

The penalty, announced by the Office of…


L.A. Times – Business

State fines lenders for pushing borrowers into high-cost loans

March 13, 2018 |

High-cost lender Advance America will pay refunds to hundreds of California customers after a state regulator accused the firm of charging illegally high interest rates topping 100%.

The action, announced Monday, comes a few months after the Department of Business Oversight took actions against…


L.A. Times – Business

FCC fines Cesar Chavez Foundation over promotions on its radio stations

February 5, 2018 |

The Federal Communications Commission has levied a record fine against two farmworker radio stations in California and Arizona for overstepping restrictions against commercial advertising.

The Cesar Chavez Foundation, a nonprofit social service affiliate of the United Farm Workers union, agreed…


L.A. Times – Business

Judge fines CashCall $10.3 million, a fraction of what was sought by CFPB for lending law violations

January 24, 2018 |

A federal judge in Los Angeles has ordered Orange County lender CashCall Mortgage and its owner, J. Paul Reddam, to pay $ 10.3 million for violating consumer protection laws — a fraction of the $ 287 million in penalties and restitution sought by a federal regulator.

District Judge John Walter in…


L.A. Times – Business

EU Fines Qualcomm $1.23 Billion for Payments to Apple

January 24, 2018 |

Qualcomm was slapped with a $ 1.23 billion antitrust fine by the European Union for illegal payments it made to Apple for exclusively using its chips in smartphones and other products.
WSJ.com: US Business

South Korea Announces Crypto Traders Could Face Fines Under New System

January 14, 2018 |

South Korea Announces Crypto Traders Could Face Fines Under New System

The South Korean government has announced that cryptocurrency traders will be fined if they do not convert from existing virtual accounts, which allows for anonymous trading, to real-name accounts. Regardless of their service levels to crypto exchanges, banks have been ordered to implement the new system this month as planned.

Also read: South Korea Urges 23 Countries, EU, and IMF to Collaborate on Curbing Crypto Trading

Crypto Traders Facing Fines

South Korea Announces Crypto Traders Could Face Fines Under New SystemThe South Korean financial authorities said on Sunday that cryptocurrency traders in the country “will be fined for refusing to convert their virtual accounts into real-name ones,” Yonhap reported.

Currently, crypto traders are able to trade anonymously by using virtual accounts. However, the authorities have banned banks from issuing new ones and mandated them to install the new system “that ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges to be used for deposits and withdrawals,” the news outlet detailed, adding that:

Cryptocurrency traders will be allowed to convert their virtual accounts into real-name ones within this month, but those who refuse to accede to real-name identification will face fines.

“People who have traded virtual currency have been told that if they refuse to check their real name, they will be penalized for depositing into an existing account,” the Kyunghyang Shinmun elaborated. Only withdrawals will be allowed from existing virtual accounts.

South Korea Announces Crypto Traders Could Face Fines Under New SystemSouth Korea first enforced the Real Name Financial Transaction System on August 3, 1993, forcing all financial transactions to be conducted under real names.

Until that time, financial transactions of large amounts between private parties were often conducted under false names or pseudonyms. In 2014, this law was revised and penalties of imprisonment of up to five years or a fine of 50 million won (~USD$ 47,000) were introduced.

While the amount of the fine has not been determined for violations by cryptocurrency traders, Yonhap pointed out that “In 1993, violators of the country’s real-name financial transaction system were slapped with fines amounting to 60 percent of their financial assets.”

Furthermore, Chosun quoted a government official saying, “Currently, we are establishing a taxation plan for virtual currency transactions centered on the accounting department. If a virtual currency real name verification system is introduced, we will be able to obtain data on individual traders.”

Banks Must Install the New System Regardless

The financial authorities started inspecting 6 major Korean banks at the beginning of last week for their anti-money laundering compliance related to virtual account services. The inspection was supposed to end on January 11 but the authorities decided to extend it to January 16. Following the extension announcement, banks became reluctant to implement the real-name system as mandated by the cryptocurrency regulation.

South Korea Announces Crypto Traders Could Face Fines Under New SystemShinhan Bank was the first to announce its decision not to implement this new system. The bank immediately sent a letter to each exchange it currently provides virtual account services to, informing them of its decision. Among them was Bithumb, South Korea’s largest cryptocurrency exchange. Following Shinhan’s move, other banks were also reportedly ready to follow suit and delay the implementation of the real-name system.

However, on January 13, the government held a meeting with representatives of the 6 banks and asked them to implement the new real-name system as planned, regardless of whether they decide to service crypto exchanges or not. A financial official was quoted by Hankook-Ilbo:

Even if virtual currency transactions are entirely illegal, the real name verification system needs to be introduced by itself.

Following the government’s instruction, banks reportedly agreed to implement the new system as planned.

What do you think of the Korean government imposing fines on cryptocurrency traders? What do you think of them making banks install the real-name system regardless? Let us know in the comments section below.


Images courtesy of Shutterstock and Shinhan Bank.


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The post South Korea Announces Crypto Traders Could Face Fines Under New System appeared first on Bitcoin News.

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