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ICO Crackdown: 11 Class-Action Lawsuits Filed Against Cryptocurrency Companies

05/04/2020 by Idelto Editor

A number of class-action lawsuits have been filed against various digital asset firms and exchanges on Friday. The U.S.-based “litigation boutique,” Roche Cyrulnik Freedman, filed the lawsuit for three plaintiffs in the Southern District of New York. All three lawsuits claim that organizations like the Tron Foundation, Bitmex, Binance, Bibox and Block.one allegedly sold unregistered securities to retail investors.

Also read: IMF Declares Global Recession, 80 Countries Request Help, Trillions of Dollars Needed

The Crypto Industry’s “Litigation Boutique” Files 11 Class-Action Lawsuits Against Various Digital Currency Firms

The New York law firm Roche Cyrulnik Freedman has been busy, as the attorneys have multiple high-profile lawsuits right now that stem from the crypto industry. The publication Bloomberg Law recently called the firm a “litigation boutique” that specializes in cryptocurrency cases. The two cases Roche Cyrulnik Freedman have been involved with before Friday’s filing include; the trillion-dollar lawsuit against Tether Limited and the Kleiman v. Wright court case. The case against the self-proclaimed Bitcoin inventor Craig Wright far exceeds $5.1 billion USD worth of BTC before punitive or treble damages.

Offshore Alert was the first to spot the lawsuits as the publication specializes in sharing information about offshore lawsuits, regulations, and other forms of litigation.

The class-action lawsuit filings were initiated by the defendants’ Eric Lee, Chase Williams, and Alexander Clifford. Court filings were found by the offshore news and research outlet, Offshore Alert, a think-tank that distinguishes themselves as offshore financial center experts. Crypto operations being sued by the plaintiffs include KayDex, Quantstamp, KuCoin, HDR Global Trading, BitMEX, Bprotocol, Status, Block.one, Civic and Binance. Developers and executives like Dan Larimer, Changpeng Zhao (CZ), Vinny Lingham, Arthur Hayes, and Brendan Blumer are all mentioned in each court filing. The class-action lawsuits filed, mentions the allegation of “unlicensed activity” and the sale of unregistered securities through initial coin offerings (ICO) or initial exchange offerings (IEO).

Roche Cyrulnik Freedman has 15 lawyers and 12 of them stem from Boies Schiller. Bloomberg Law calls the law firm a “litigation boutique” and they also represent the Kleiman Estate against Craig Wright, and a trillion-dollar class-action lawsuit against Tether Limited as well.

For example, the plaintiff Chase Williams’ class-action complaint against Binance and founder Changpeng Zhao says the exchange sold unregistered securities as digital tokens. Tokens named in the lawsuit include EOS, BNT, SNT, QSP, KNC, TRX, FUN, ICX, OMG, LEND, ELF, and CVC. All of the lawsuits were filed with the Southern District of New York court on April 3. There’s a total of 42 defendants named in the class-action suits and the individuals stem from countries like South Africa, Switzerland, Taiwan, the U.S., China, Seychelles, Singapore, Japan, Hong Kong, British Virgin Islands, and the Cayman Islands.

The 11 class-action lawsuit filings were initiated by Eric Lee, Chase Williams, and Alexander Clifford in the Southern District of New York’s courthouse.

Plaintiffs Say Centralization Was Not Apparent at Issuance to a Reasonable Investor

The plaintiffs and the litigation firm Roche Cyrulnik Freedman will likely have a difficult time battling jurisdictions. Moreover, there really hasn’t been a government standard or conclusion toward the unregistered securities argument thus far and regulators still seem up in the air. This has been the case with the ongoing Ripple lawsuit, which also alleges that XRP was sold as an unregistered security. In every one of the filings submitted on April 3 by Roche Cyrulnik Freedman, the allegations claim these token sales were completely centralized. The accusation against the Tron Foundation notes:

The creation of TRX tokens thus occurred through a centralized process, in contrast to Bitcoin and Ethereum. This, however, would not have been apparent at issuance to a reasonable investor. Rather, it was only after the passage of time and disclosure of additional information about the issuer’s intent, the process of management, and success in allowing decentralization to arise that a reasonable purchaser could know that he or she had acquired a security. Purchasers were thereby misled into believing that TRX was something other than a security, when it was a security.

Nobody knows how these 11 cases will turn out, but the crypto community is discussing the subject with great fervor. The attorney Stephen Palley who specializes in cryptocurrencies and litigation explained that the defendants will likely try to get the cases dismissed.

“These lawsuits will be dismissed by the defendants in press releases as ambulance-chasing lawsuit trolling,” Palley said. “But it’s not quite that black and white upon closer inspection,” the lawyer added.

What do you think about the lawsuits against 11 crypto companies? Let us know in the comments below.

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If You Don’t Trust Yourself, These Crypto Vaults Will Help You Hodl Safely

18/03/2020 by Idelto Editor

Hodling in difficult times has historically proven to be a long-term winning strategy. Keeping your cryptocurrency in your own cold storage is by default a good idea as far as security is concerned. But if you don’t trust yourself to not lose a small hardware device or a piece of paper, then there are alternatives that involve trusting others, for good or bad.

Also read: An In-Depth Look at the Multi-Currency Cold Storage Card Ballet

Bunker in the Alps Sounds Like a Good Option

Companies providing vault storage services for crypto assets gained prominence a couple of years ago, following the Bitcoin boom that brought many new investors into the space. A few of them have already established themselves as reliable platforms for crypto storage. Hong Kong-headquartered bitcoin wallet and cold storage provider Xapo is a good example. In the spring of 2018, it was revealed that the company held an estimated 6.25% of BTC’s almost $160 billion market capitalization at the time, or more than 1,000,000 BTC.

Xapo, founded by Argentine entrepreneur Wences Casares, attracted media attention with its focus on building ultra-secure facilities for cryptocurrency storage. The company had reportedly built a network of underground vaults on five continents, most notably one in a decommissioned military bunker in Switzerland, where clients’ private keys are kept on encrypted drives behind steel doors designed to withstand a nuclear blast and guarded by security personnel and systems. Even owners would need a couple of days to get access to their money.

In August 2019, U.S. crypto exchange Coinbase bought Xapo’s institutional businesses. Announcing the acquisition, the trading platform revealed that its Coinbase Custody subsidiary had grown to over $7 billion in assets under custody in just over a year since its launch in July 2018. The funds are stored on behalf of more than 120 clients in 14 countries, the company detailed. Coinbase acknowledged Xapo’s expertise in security techniques. Its custody arm now serves hedge funds, family offices, endowments, and proprietary trading desks, supporting major cryptocurrencies like BTC, ETH and XRP. The assets are insured by global leaders such as Lloyd’s of London.

Switzerland a Magnet for Crypto Riches

With its crypto-friendly regulations, Switzerland is very attractive for companies operating with cryptocurrencies and over 800 of them are based or represented in the country, including providers and developers of crypto custody solutions. Another company working in the niche, California-based Bitgo, announced in February the establishment of new custodial entities in Switzerland and Germany, which introduced a licensing regime for crypto custodians. The Swiss subsidiary is based in Zug, epicenter of the Alpine nation’s Crypto Valley. Both firms are regulated in their respective jurisdictions and will address increased European demand.

Bitgo is a major player with global presence in the market for institutional grade security solutions for blockchain-based currencies. Its Bitgo Custody platform employs a multi-signature system to secure your digital assets including security tokens. It supports a total of more than 100 coins and tokens that can be held with the Bitgo Trust Company, a qualified custodian and liquidity provider, in a cold storage bank-grade vault.

The service implements various controls including multiple approvals, spending limits, and whitelists, Bitgo’s website explains. The company’s $100 million insurance policy covers crypto assets when the private keys are held exclusively by Bitgo Trust Company or Bitgo Inc., in the event of third-party hacks, copying, theft or loss of private keys, insider theft or dishonest acts by Bitgo employees or executives.

Bitcoin Suisse is a Zug-based company specializing in crypto-financial services offering cold storage for digital assets. The Bitcoin Suisse Vault has been built to provide institutional-grade and fully audited crypto asset custody. The platform caters to the specific needs of its clients allowing them to customize the multi-signing process and define who can view and withdraw the stored assets. Besides corporate users such as financial service providers and institutional investors, private investors can also use it to store a list of cryptocurrencies including BTC, BCH, ETH, XRP, LTC as well as ERC20/223 tokens.

Bitcoin Suisse Vault is based on a solution developed by Swiss Crypto Vault AG, a wholly owned subsidiary of Bitcoin Suisse AG. Clients can deposit funds into the Swiss Crypto Vault by sending the coins to a unique public address, and their holdings are never mixed with assets belonging to others. Withdrawals are initiated by filing a request through the online portal which has to be verified independently by the user, Swiss Crypto Vault and Bitcoin Suisse before its execution, which can still be canceled by controllers appointed by the client. Before a transaction can be broadcasted to the blockchain, it must also get the green light from approvers, again chosen by the account holder.

Cryptocurrency Payment Gateway Gocrypto Onboards 1,000 Locations Worldwide

02/03/2020 by Idelto Editor

On February 28, Gocrypto CEO Dejan Roljic revealed the payment gateway has officially onboarded 1,000 merchant locations during a recent company update that expanded upon the firm’s growth. Roljic also explained Gocrypto now has several locations in five countries and the company recently started expanding into South America in November 2019. The Latin American expansion means Gocrypto will be open in 13 new markets and the team hopes to onboard as many stores in the region as possible.

Also read: MTV Airs Only the Negative Parts of Crypto Youtuber ‘Ya Girl’ Rachel Siegel’s Bitcoin Analysis

1,000 Locations and International Expansion

The payment gateway Gocrypto has been making strides toward cryptocurrency adoption and this week the firm’s CEO Dejan Roljic announced the team has onboarded 1,000 locations worldwide. News.Bitcoin.com first reported on Gocrypto in June 2018, when the business helped create a “genuine Bitcoin City” within the confines of Slovenia’s largest shopping center.

Slovenia is Gocrypto’s home base and after the launch of Bitcoin City, the company continued to make headway onboarding merchants throughout the country. Last year, news.Bitcoin.com explained that Slovenia has the most BCH-accepting physical locations worldwide and this was fueled by Gocrypto’s efforts. Roljic’s CEO update on Friday not only announced that Gocrypto has captured 1,000 locations worldwide, but the firm has been expanding internationally.

“We entered Croatia in May 2019 and continued our expansion to Switzerland, Hungary and Bulgaria,” Roljic wrote. “Gocrypto is also available for customers in the United Kingdom, Czechia, Slovakia, Romania, and Portugal.”

Roljic further highlighted that Gocrypto is now present in South America and the company recently partnered with Xpay.cash. “[The startup Xpay] is a partner provider of easy crypto payments [and is] successfully growing its presence in Columbia and Venezuela,” Roljic’s update explained. “150 locations strong, they are also planning on expanding to other South American countries.” The Gocrypto CEO said that now that the firm has legal approval in the region, the company plans to “boost these markets with a systematic approach.” Roljic stated:

Our SWAT mobile sales teams will open up to 13 new markets; in each, the goal is to onboard 20–50 stores to start accepting Gocrypto payments, launch the ambassador program and acquire as many PSPs as possible.

Gocrypto Plans to Upgrade the Merchant Dashboard and Offer New Point-of-Sale Terminals

Additionally, Roljic revealed that a new merchant dashboard is being constructed and soon merchants can become a crypto exchange by leveraging the firm’s hardware point-of-sale (PoS) terminals.

“We are in the final stage of testing our own physical PoS terminals that will enable merchants to buy and sell selected cryptocurrencies as well as to accept crypto payments,” Roljic stressed. Lastly, the firm is also in the midst of attempting to obtain a license for financial services from the central bank. Roljic conceded that the project is “demanding” but will represent “a big step forward in the crypto industry.”

Roljic added that Gocrypto wants to conquer the world, and in the future they can envision every merchant having the ability to become their own exchange by being able to sell digital currencies at the counter. The Slovenia-based firm is also currently talking with companies worldwide that manage “millions of physical merchants” and the firm aims to integrate Gocrypto into their point-of-sale (PoS) or cashier systems.

What do you think about Gocrypto’s expansion and the 1,000 locations the company has onboarded to-date? Let us know what you think about this subject in the comments section below.

Image credits: Shutterstock, Pixabay, Map.Bitcoin.com, Fair Use, and Gocrypto.

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Swiss Savers View Cryptocurrencies as Option, Now That Bank Accounts Don’t Save Them From Inflation

20/02/2020 by Idelto Editor

Cryptocurrencies are gradually becoming a viable alternative for savers in Switzerland, according to a new poll. The Alpine nation’s crypto-friendly business climate and increasing regulatory clarity makes them a relatively easy addition to investors’ portfolios. Many Swiss people can afford and regularly do put some money aside but bank accounts are no longer offering inflation protection.

Also read: Swiss Financial Watchdog Proposes $1,000 Client Identification Threshold for Crypto Transactions

13% of Young Swiss Think Cryptos Will Be More Important in the Future

For a few years now, cryptocurrencies have been gaining ground in Switzerland. The Crypto Valley in the canton of Zug has already attracted over 800 companies creating more than 4,000 jobs. The expansion of the blockchain sector facilitated by accommodating regulations has created conditions for Swiss banks to work with fintech companies and offer new crypto-related products and services to their clients. The Swiss Financial Market Supervisory Authority approved two crypto banks in August.

Zurich-based Migros Bank has become the latest traditional financial institution to include cryptocurrencies in its scope of interests. It recently published a report on the savings behavior of various age groups that demonstrated the growing popularity of decentralized digital assets. The gathered data shows that it’s not at all unusual anymore for people to store value in cryptocurrency investments.

The survey conducted by market research institute Intervista on behalf of Migros reveals that 7% of the respondents in two age groups, 18 to 29 and 30 to 55 years old, now own cryptocurrencies. Furthermore, 13% of the younger participants believe that digital coins will become even more important for them, or state their intentions to invest in crypto in the future, compared to 7% in the second group.

Older investors are more pessimistic and remain wary of the new investment class, as Swissinfo reported this week, with only a fraction of those aged over 55 years (0.5%) expecting cryptocurrencies to appreciate and grow significantly in the long run. Yet, even in that age group, one in every 100 savers currently owns digital money.

90% of Swiss People Save Regularly, Most Put Aside up to 1,000 Francs a Month

Intervista carried out the poll online with over 1,500 respondents aged 18 and over from the German and French speaking regions of Switzerland as well as the Italian-speaking canton of Ticino. The researchers established that Swiss people from all ages are good savers. For example, over 90% in the 18 to 55-year bracket and 80% of those over 55 years regularly put money aside. That’s 88% of the adult Swiss population. 67% of the young, 52% among 30 to 55-year-olds and 61% among people over 55 save up to 1,000 Swiss francs per month.

The majority of 18 to 29-years-olds still chose to use their savings accounts even for long-term purposes and a third of them keep over 70% of their funds in this type of account, despite no longer being offered protection against inflation. The policy rate set by the Swiss National Bank has been in negative territory for years and it’s currently at -0.75%. The young cite two major reasons for not switching to financial market investments – that they are not familiar with them (52%) and that there’s a limited amount of wealth they can set aside (48%).

Many of the young Swiss are afraid of making a wrong move with alternative investments. The lack of knowledge is considered to be the greatest risk by the surveyed 18 to 29-year-olds. At the same time, these respondents are quite open to closing the knowledge gap, the authors of the study point out. 41% of them are interested to learn more about financial and investment matters compared to 37% in the 30 to 55 years segment and 32% among older participants. Curiosity is what led many to discover Bitcoin, too, and that opens another opportunity for cryptocurrencies to attract more investors, especially among young people in Switzerland.

Do you think the popularity of cryptocurrencies will continue to grow among Swiss savers? Share your expectations in the comments section below.

Images courtesy of Shutterstock, Intervista.

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Regulatory Roundup: Trump’s Cryptocurrency Proposals, IRS Changes Rule, China Quarantines Cash

18/02/2020 by Idelto Editor

In this roundup, we cover numerous cryptocurrency regulatory developments in the U.S., including President Trump’s crypto proposals, testimonies by the Federal Reserve chairman and the Treasury secretary, a crypto-friendly SEC proposal, and the IRS changing a crypto tax rule. We also cover China quarantining yuan bills, its central bank filing 84 digital currency patents, 40 German banks wanting to offer crypto services, several blockchain initiatives by the Indian government and more.

Also read: Regulatory Roundup – New US Crypto Tax Bill, Central Banks Join Forces on Digital Currencies

Trump’s Budget, Fed Chair’s Testimony, SEC Proposal

It has been a busy week for the U.S. government trying to regulate the crypto space. Perceiving cryptocurrency as a threat, President Donald Trump proposed a few measures to increase oversight of the industry in his new budget. He wants to return the Secret Service to the Treasury “to create new efficiencies in the investigation” of crimes, including those involving cryptocurrencies. He also proposed a budget of $127 million for the Financial Crimes Enforcement Network (FinCEN) “to combat emerging virtual currency and cybercrime threats.”

Also last week, Federal Reserve Chairman Jerome Powell testified before the House of Representatives Committee on Financial Services and Treasury Secretary Steven Mnuchin testified before the Senate Finance Committee. After answering questions about a digital dollar, Powell said “The idea of having a ledger where you know everybody’s payments is not something that would be, you know, particularly attractive in the United States context. It’s not a problem for China.” Mnuchin revealed that the Treasury will soon release new crypto regulations to increase transparency. Independently, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, called bitcoin and other cryptocurrencies “a giant garbage dumpster.”

While the Department of Justice (DOJ) is criminalizing onchain privacy starting with mixers, the U.S. Office of the Director of National Intelligence is seeking researchers to determine how cryptocurrency could undermine the dollar as the world’s reserve currency. The director is the head of the Intelligence Community comprising 17 agencies, including the Federal Bureau of Investigation (FBI), the Central Intelligence Agency (CIA), the Department of Homeland Security (DHS), and the National Security Agency (NSA). In addition, the U.S. is auctioning over 4,040 seized bitcoins, currently worth approximately $40 million.

In the financial sector, token projects may see a sign of relief from the U.S. Securities and Exchange Commission (SEC) as crypto-friendly Commissioner Hester Peirce has unveiled her “Token Safe Harbor Proposal.” It is designed to give token projects a three-year grace period before deciding whether they involve the offering of a security. Meanwhile, the pro-crypto presidential candidate Andrew Yang has dropped out of the race to become the president of the United States.

IRS Backtracks on In-Game Tokens

Soon after the U.S. Internal Revenue Service (IRS) started accepting tax filings this year, it modified the text of a page on its website which details the tax treatment of cryptocurrency. The agency announced on Feb. 14: “The IRS recognizes that the language on our page potentially caused concern for some taxpayers. We have changed the language in order to lessen any confusion.”

The topic of confusion is in-game currencies. Previously, the IRS listed “bitcoin, ether, Roblox, and v-bucks” as examples of a convertible virtual currency. However, it quietly removed everything except bitcoin last week. The tax authority clarified:

Transacting in virtual currencies as part of a game that do not leave the game environment (virtual currencies that are not convertible) would not require a taxpayer to indicate this on their tax return.

China Quarantines Banknotes

China is currently combating the coronavirus which has killed more than 1,500 people and infected more than 66,000 people in the country. The government is now scrubbing and quarantining banknotes to stop the spread of the deadly virus by touching the bills. The central bank, the People’s Bank of China (PBOC), explained that banks use ultraviolet light or high temperatures to disinfect yuan bills. They are then sealed and stored for seven to 14 days, depending on the severity of the outbreak in a particular area, before being recirculated.

As for the impending launch of a central bank digital currency, the PBOC has reportedly filed 84 patents relating to its digital yuan. “Virtually all of these patent applications relate to integrating a system of digital currency into the existing banking infrastructure,” patent attorney Marc Kaufman commented.

German Banks Declare Intent to Offer Crypto services

More than 40 financial institutions in Germany have reportedly declared to the Federal Financial Supervisory Authority (BaFin) that they are interested in offering cryptocurrency custody services under the new German law. The law implementing the amendment to the Fourth EU Money Laundering Directive entered into force on Jan. 1.

The regulator told news.Bitcoin.com that financial services companies as of that date must submit their intent to apply for a license by March 31 and complete a license application by Nov. 30. The length of time it takes for an applicant to be granted a license depends on the individual case.

Furthermore, German banks are still struggling to cope with the negative interest rate policy maintained by the European Central Bank (ECB). At least 41 banks in the country are now charging their customers negative interest rates and the number is rising.

Australia Has 312 Registered Crypto Exchanges

The Australian Transaction Reports and Analysis Centre (AUSTRAC), the country’s financial intelligence agency and anti-money laundering regulator, has confirmed to news.Bitcoin.com that it has registered and enrolled 312 digital currency exchange providers.

“Since April 2018, AUSTRAC has regulated digital currency exchange providers to minimize the risk of criminals using them for money laundering, terrorism financing and cybercrime,” a spokesperson for the regulator said.

Indian Government Dives Deep Into Blockchain While All Await Supreme Court Verdict on RBI Ban

The government of India has been ramping up its efforts to integrate blockchain technology into its existing infrastructures. Last week, the country’s Chief Election Commissioner revealed that the Election Commission is working on a blockchain system for voting.

Earlier this month, the government’s premier policy think tank, Niti Aayog, released a report identifying key blockchain use cases in India. It followed a report entitled National Strategy on Blockchain, compiled by the National Institute for Smart Government as directed by the Ministry of Electronics and Information Technology (MeitY). It calls for the central bank, the Reserve Bank of India (RBI), to issue a digital rupee. Moreover, the Telangana state government has launched a blockchain accelerator in partnership with Tech Mahindra and IBC Media.

While the Indian government has not made a decision on whether to regulate or ban cryptocurrencies in the country, Prime Minister Narendra Modi recently awarded a young entrepreneur for her work on a cryptocurrency app. Additionally, the supreme court has yet to announce its verdict on whether to lift the banking restriction imposed on crypto businesses by the RBI. The court wrapped up hearing the arguments against the ban several weeks ago and has reserved judgment on the case.

Switzerland to Lower User-Verification Threshold

The Swiss Financial Market Supervisory Authority (FINMA) has published a proposal for a follow-up crypto regulation. It proposed amending the client identification threshold values in its Anti-Money Laundering Ordinance from CHF 5,000 ($5,092) to CHF 1,000 for crypto exchange transactions. FINMA says it’s “acknowledging the heightened money-laundering risks in this area.” The regulator is holding a consultation on this follow-up regulation until April 9.

What do you think of the crypto regulatory developments covered in this roundup? Let us know in the comments section below.

Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

Images courtesy of Shutterstock and the Financial Times.

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