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70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes

May 22, 2018 |

70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes

Forty regulators in the US and Canada are reportedly collaborating in the largest coordinated crackdown on cryptocurrency scams to date by state and provincial officials. The operation has triggered over 70 investigations so far, with 35 cases completed or pending.

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

Mass Crackdown

The North American Securities Administrators Association (NASAA) said Monday that US and Canadian securities regulators have launched nationwide investigations on suspicious cryptocurrency investment schemes, the Washington Post reported. This is “the largest coordinated crackdown to date by state and provincial officials on bitcoin scams,” the news outlet wrote. CNBC elaborated:

More than 40 state and provincial watchdogs are participating in ‘Operation Crypto-Sweep,’ which has triggered at least 70 investigations so far.

70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto SchemesNASAA is a voluntary association whose members are securities administrators from states, provinces, and territories in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Canada, and Mexico. According to its website, the association is the oldest international organization devoted to investor protection.

The association, which helps coordinate Operation Crypto-Sweep, confirmed that “as many as 70 investigations have been opened in the sweep, with more expected in the coming weeks.” Furthermore, the Washington Post detailed, “As many as 35 cases are pending or already completed, with some resulting in cease-and-desist letters warning the alleged schemes that their unregistered activity violates state securities law.”

The efforts focus on “unregistered securities offerings that promise lucrative returns without adequately informing investors of the risks” as well as initial coin offerings (ICOs), the regulators explained.

Fighting Fraud

By posing as members of the public, the NASAA task force found roughly 30,000 crypto-related domain name registrations, the news outlet described, adding that “Many of the alleged scams use fake addresses, slick marketing materials and promises of over 4 percent daily interest,” the news outlet described. “A few have even used unauthorized photos of high-profile individuals, such as Supreme Court Justice Ruth Bader Ginsburg, to portray themselves as aboveboard.”

70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto SchemesThe director of enforcement at the Texas State Securities Board, Joseph Rotunda, was quoted saying, “Although the international task force’s work is far from complete, my suspicions have already been confirmed: The market for cryptocurrency investments is saturated with fraud, and our work is only revealing the tip of the iceberg.”

Last week, the Wall Street Journal published a study showing that out of 1,470 ICOs, 271 were found to contain “red flags that include plagiarized investor documents, promises of guaranteed returns and missing or fake executive teams.” Investors have poured more than $ 1 billion into these 271 ICOs, the publication added. In addition, a Chinese government-backed industry organization also published its fake crypto analysis last week, claiming that its monitoring system has detected 421 fake cryptocurrencies.

Massachusetts’ Secretary of the Commonwealth, William Francis Galvin, emphasized on Monday:

Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution.

NASAA president and the director of the Alabama Securities Commission, Joseph Borg, explained that “consumers face higher risks of being misled at a time when the intense demand for bitcoin has prompted many retail investors to take extreme steps to gain exposure to the currency, such as taking out a bigger mortgage.”

What do you think of Operation Crypto-Sweep? Let us know in the comments section below.


Images courtesy of Shutterstock and NASAA.


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

The post 70+ Investigations: 40 Regulators Crack Down on Suspicious Crypto Schemes appeared first on Bitcoin News.

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Korean Regulators Widen Investigation of Cryptocurrency Exchanges

May 14, 2018 |

Korean Regulators Widen Investigation of Cryptocurrency Exchanges

South Korea’s government is widening its probe on cryptocurrency exchanges, particularly the use of corporate accounts which the regulators say can lead to money laundering. This announcement follows the prosecutors launching an investigation on the country’s largest crypto exchange, Upbit.

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

Widening the Crypto Probe

South Korea’s top financial regulators are teaming up with prosecutors to widen their investigation of domestic cryptocurrency exchange operators. An official of the Financial Service Commission (FSC) was quoted by the Korea Times on Sunday:

Following a request by the Financial Supervisory Service (FSS) and the prosecution to address growing anti-money laundering compliance concerns and possible abuse of cryptocurrencies in money laundering and fraud, the FSC is looking into exchanges’ corporate accounts opened in local banks.

The use of corporate accounts for crypto transactions should have been discontinued when the government introduced the real-name system at the end of January. However, only 30% of all crypto accounts haveKorean Regulators Widen Investigation of Cryptocurrency Exchanges been converted into real-name ones so far.

The six banks that have the ability to issue real-name accounts have chosen to only service the country’s largest crypto exchanges: Upbit, Bithumb, Coinone, and Korbit. Nonetheless, not all accounts at these exchanges have been converted into real-name ones. In addition, all small and medium-sized exchanges continue to use corporate accounts for crypto transactions.

The regulators say that the use of corporate accounts can lead to fraud such as recently seen with Coinnest whose CEO was charged with embezzlement. The largest Korean crypto exchange by volume, Upbit, is also currently under investigation even though banks have been converting its accounts to real-name ones.

Collaborating with Other Countries

Korean Regulators Widen Investigation of Cryptocurrency ExchangesSouth Korea has been discussing a collaboration with other countries on cryptocurrency regulations. At a recent International Organization of Securities Commissions (IOSCO) Board of Directors and Annual General Meeting held in Hungary, FSC Vice Chairman Kim Yong-beom discussed cryptocurrency issues with major national supervisory bodies. The need for IOSCO to cooperate on cryptocurrency and ICO regulations was stressed at the meeting.

An official of the FSC was quoted by the Korea Times saying:

The FSC is collaborating with authorities in other countries. Our latest findings show that the domestic exchange faked its balance sheets and deceived investors. The FSC is checking Upbit’s computer system with prosecutors and the FSS to audit the exchange’s virtual currency holdings.

Meanwhile, the new FSS governor Yoon Suk-heun recently indicated that he will look into easing regulations on domestic cryptocurrency trading, citing that “there are some positive aspects to cryptocurrencies.”

What do you think of the Korean regulators widening probe on crypto exchanges? Let us know in the comments section below.


Images courtesy of Shutterstock and the Korean government.


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

The post Korean Regulators Widen Investigation of Cryptocurrency Exchanges appeared first on Bitcoin News.

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California regulators approve mandate for solar panels on new houses

May 9, 2018 |

California regulators on Wednesday mandated that all newly built single family houses have solar panels, part of the state’s aggressive push to combat climate change.

The California Energy Commission voted 5-0 to approve the measure, which also applies to multifamily buildings of three stories…


L.A. Times – Business

Greek Banks Get the All Clear From European Regulators

May 6, 2018 |

Greece’s biggest banks received a clean bill of health from Europe’s regulators, an important step toward the completion of an eight-year bailout program that has strained the country’s economy.
WSJ.com: What’s News Europe

Regulators sue Albertsons, saying it violated Latino workers’ rights by banning Spanish

May 5, 2018 |

Albertsons grocery stores violated the rights of Latino employees with a policy forbidding workers to speak Spanish around non-Spanish speakers — even when conversing with one another during breaks or helping Spanish-speaking customers, according to a new lawsuit.

The U.S. Equal Employment Opportunity…


L.A. Times – Business

Airline Regulators Call for Emergency Inspections of Boeing 737 Engines

April 21, 2018 |

U.S. aviation regulators in the wake of this week’s fatal Southwest Airlines accident imposed emergency inspection requirements for jet engines that power many Boeing 737 jetliners around the world.
WSJ.com: What’s News Asia

Big Money Meets Secretly with Regulators to Protect Ethereum

April 21, 2018 |

Big Money Meets Secretly with Regulators to Protect Ethereum

Big money venture capitalists and law firms met in secret, roughly a month ago, with the US Securities and Exchange Commission (SEC), according to two major media outlets. The SEC has been particularly active this year, causing those with interest in pet coins and projects to lobby the agency for special protection. Top of the list was a push to provide “safe harbor” for Ethereum.    

Also read: Telegram Uses Bitcoin in Effort to Thwart Russian Authorities

Big Money Lobbies for Ethereum in Secret

Andreessen Horowitz,  Union Square Ventures, along with powerhouse law firms Cooley, Perkins Coie, and McDermott Will & Emery, formed an ad hoc association, the Venture Capital Working Group. It appears to exist in an effort to influence what some see as inevitable, regulation. Almost weekly, the SEC has made noise about cryptocurrencies in one form or another, and the broader ecosystem continues to debate whether to go further underground or embrace government intervention.

Online political journal Politico broke the story, insisting a “group of venture capital firms with investments in digital currency-related companies has asked the SEC for a safe harbor from securities laws for certain projects.” Perkins evidently led the effort, flooding the SEC with a nearly 50 page note. The note “argues that while certain digital tokens sold to select investors before wider availability may qualify as securities, they should be granted protection from regulations once they are used for a non-investment purpose.”

Big Money Meets Secretly with Regulators to Protect Ethereum

It has been long thought if the SEC were to overtly designate a cryptocurrency coin or token a “security,” the weight of legal implications alone would probably kill it. Compliance would necessarily mean hoards of expensive lawyers, etc. The working group, therefore, wished to get ahead of that possible future by proposing safe harbor for some coins they feel are objectively not securities, hoping to secure what Politico refers to as “no action letters.”

Chief among the working group’s concern, evidently, is the second most popular cryptocurrency by market capitalization, Ethereum. Ether, the group’s plea to the SEC reads, “is a good example of this type of protocol token that has become so decentralized it should not be deemed a Security.” Saddling ether with the “security” tag, again, might sideline a great many future projects built on top of its network. Presumably, these are present and future companies the working group has heavily invested in.

Regulations for Thee, Not for Me

“Though many digital currencies run off code related to the Ethereum network that uses ether,” Politico was keen to point out, “the working group does not believe the safe harbor would necessarily apply to those tokens.” The key, then, just might be in what the term “decentralization” means, going forward. The document insists, “To remedy the uncertainty and confusion in this space, we are proposing a non-exclusive safe harbor to help provide guidance to the industry on what constitutes an ‘investment contract’ and how the investment contract law and guidance should apply to utility tokens.”

Ethereum has been credited/blamed for the boom in crowdfunding popularized with initial coin offerings, ICOs. The easy onboarding of ICOs has fueled a boom throughout most of 2017, and there appears to be little let up going into the second financial quarter. The SEC is on record as stating ICOs, to a project, are all securities, and so fall under the agency’s jurisdiction.

Big Money Meets Secretly with Regulators to Protect Ethereum

“Under the terms of the safe harbor,” Politico continues, “digital currencies would not be subject to securities law, including the so-called Howey test, once they achieve certain benchmarks centered on blockchain software functions. Pre-sales of tokens would continue to fall under securities law.”

The group, comprised of the two biggest venture capital funds within the ecosystem, “met with the S.E.C. in Washington on March 28 to present their idea for a safe harbor that would allow some tokens to be categorized as ‘utility tokens’ rather than securities,” according to the New York Times, who picked up the story a day later. Whereas coins such as bitcoin cash (BCH) did not arise from an ICO and have no central organizing body, they appear to be safe and sufficiently “decentralized.” Ethereum, however, is another matter altogether. It did sell ether initially through a primitive form of an early ICO. As of this writing, there is no word as to whether the SEC accepted the group’s definitions and requests.

Do you think it’s time for the ecosystem to embrace regulation? Let us know in the comments section below.


Images courtesy of Shutterstock. 


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

The post Big Money Meets Secretly with Regulators to Protect Ethereum appeared first on Bitcoin News.

Bitcoin News

Airline Regulators Call for Emergency Inspections of Boeing 737 Engines

April 21, 2018 |

U.S. aviation regulators in the wake of this week’s fatal Southwest Airlines accident imposed emergency inspection requirements for jet engines that power many Boeing 737 jetliners around the world.
WSJ.com: US Business

Shipping Regulators Reach Deal to Cut Carbon Emissions

April 15, 2018 |

Historic pact aims to reduce greenhouse gas emissions by half by 2050; the U.S. and Saudi Arabia offer only objections to otherwise unanimous agreement.
WSJ.com: US Business

Crypto Still Tax Free in Korea but Regulators Have Set Timeframe for Taxation

March 31, 2018 |

Cryptocurrency transactions are still tax-free in South Korea due to a lack of tax regulations. As the law stands, citizens are able to profit millions of won from cryptocurrencies without being required to pay taxes on them. However, the regulators have set a tentative timeframe for the introduction of the crypto tax law.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Still No Tax on Crypto Transactions

A lawyer in his early 40s recently revealed that he “made a profit of nearly 30 million won last year on investments in bitcoin and ether, but he did not pay any tax on virtual currency investments,” Money Today reported. The news outlet reiterated:

There is no obligation to pay tax even if you earn hundreds of thousands of won or even hundreds of millions of won in virtual currency investments.

Crypto Still Tax Free In Korea But Regulators Have Set Timeframe For TaxationMeanwhile, when selling stocks, there is a sales tax of 0.3% for listed securities and 0.5% for unlisted ones, the news outlet detailed.

“In the case of the ‘major shareholder,’ the obligation to pay tax on capital gains is also imposed. Unlisted shares also pay taxes on capital gains.”

Tax Regulation Timeframe

Crypto Still Tax Free In Korea But Regulators Have Set Timeframe For TaxationTo rectify the situation, the tax authorities have set up “a virtual currency taxation standard in the first National Tax Administrative Reform Committee in 2018,” Money Today informed. Furthermore, the 2018 economic policy direction, announced by the Ministry of Strategy and Finance, has a schedule set for crypto taxation plan for the first half of this year, the news outlet added, noting that:

Korea will be able to pass the tax bill in the first half of this year if it is included in the amendment bill of the August tax law. Virtual currency taxation will be implemented next year.

Recently, local media reported that “Virtual currency taxation will come out in June.” However, the Ministry of Strategy and Finance subsequently issued a statement, clarifying that, “we are currently considering the taxation data through virtual currency taxation task force regarding virtual currency taxation,” adding that the media report was “not true.” An official of the ministry confirmed:

We did not set a specific time frame but we are thinking about announcing a virtual money tax during the first half of the year.

Crypto exchanges will also pay taxes. While reiterating that “Virtual money exchanges will have to pay taxes,” an official of the ministry was quoted by local publications early this year explaining that “we have yet to decide the exact tax rates as we are in talks with the National Tax Agency.”

What do you think of South Korea’s tax plan for crypto transactions? Let us know in the comments section below.


Images courtesy of Shutterstock.


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

The post Crypto Still Tax Free in Korea but Regulators Have Set Timeframe for Taxation appeared first on Bitcoin News.

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