Category: Crypto News

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Crypto News Illegal Markets Regulation

SEC Wins Case Against LBRY – LBC Tokens Ruled as Securities

Gavel with a bookshelf background

A court ruling in favour of the US Securities and Exchange Commission (SEC) that upholds allegations that LBC tokens were illegally sold as securities has caused the token’s value to plummet by over 36 percent.

US District Judge Paul J. Barbadoro said in his ruling that the evidence shows “LBRY promoted LBC as an investment that would grow in value over time through the company’s development of the LBRY network.”

Following its loss, LBRY tweeted it would not give up, and warned that the ruling had set “an extraordinarily dangerous precedent that makes every cryptocurrency in the US a security, including Ethereum.”

Upon news that LBRY had been found to have violated the law by offering its LBC tokens as unregistered securities, LBC’s value dropped sharply and was trading at just US$0.012636 at the time of writing. 

LBC token price plunges. Source: CoinMarketCap

Precedent Applied Could Cripple US Crypto

Founder and CEO of the LBRY network, Jeremy Kauffman vented his frustration on Twitter: 

Kauffman also tweeted his belief that the ruling “threatens the entire US cryptocurrency industry.” 

The blockchain-based LBRY network is a protocol for building apps that enable creators and users to publish and purchase digital content including videos, music and ebooks.

Judge Barbadoro said he was not persuaded by LBRY’s argument that it hadn’t received fair notice that its offering was subject to securities laws, particularly given the network did not issue an Initial Coin Offering (ICO).

He said the SEC’s case was backed by a Supreme Court precedent that had been applied in hundreds of cases for more than 70 years. “While this may be the first time it has been used against an issuer of digital tokens that did not conduct an ICO, LBRY is in no position to claim that it did not receive fair notice that its conduct was unlawful,” Barbadoro said.

“Because no reasonable trier of fact could reject the SEC’s contention that LBRY offered LBC as a security, and LBRY does not have a triable defense that it lacked notice, the SEC is entitled to judgment.” 

US District Judge Paul J. Barbadoro
Categories
Binance Crypto News FTX Markets

Binance to Liquidate FTX Token Holdings Following a Balance Sheet Report on FTX’s Sister Company

Speculation about the financial position of the Sam Bankman-Fried backed companies FTX and Alameda Research has led to Binance dumping its FTT and shaken the value of the crypto tokens. 

On November 7, Binance CEO Changpeng “CZ” Zhao tweeted that the company would liquidate the FTT it holds “due to recent revelations that have came to light…” and would aim to avoid impacting the market.

Those “revelations” arise from a recent report by CoinDesk that raised concerns about the ties between Sam Bankman-Fried’s two companies and how Alameda Research’s financials indicate its biggest asset is unlocked FTT.

FTX Financial Concerns “Unfounded”: SBF 

CEO of trading firm Alameda Research, Caroline Ellison, claimed on Twitter that the balance sheet that sparked the concern was incomplete and did not reflect more than $10 billion of assets held by the company. 

FTX founder and CEO of crypto exchange FTX, Sam Bankman-Fried took to Twitter to thank supporters and especially “those who stay level headed during crazy times” in light of what he describes as the “unfounded rumours” circulating. 

In his tweet about liquidating Binance’s FTT tokens, CZ Zhao said Binance encouraged industry collaboration and had no intent to hurt users or other platforms, stating: “Regarding any speculation as to whether this is a move against a competitor, it is not.”

The taint of scandal has already had an impact, with FTT down more than 12 percent in the past seven days, currently trading at $22.35. Many social media users are wary of the token’s collapse.

Bankman-Fried said the exchange would keep going:

“And in the end you should do what you want, and trade where you want.  We’re grateful to those who stay; and when this blows over we’ll welcome everyone else back.”

Sam Bankman-Fried, FTX CEO
Categories
Blockchain Crypto News NFTs Polygon Social media

Meta Announces NFT Marketplace on Instagram

Instagram will soon have a built-in NFT marketplace according to a November 1 announcement by Meta, the company behind social media apps Facebook and Instagram.

According to a statement from Meta, the marketplace will function as an ‘end-to-end’ NFT toolkit, allowing users to create, showcase and sell their NFT from within the Instagram app. Creators will be able to sell their NFTs — or digital collectibles as Meta calls them — both on Instagram and on other platforms.

The new marketplace will initially be tested with a small group of hand-picked US-based creators, including Amber Victoria, Dave Krugman and Isaac ‘Drift’ Wright, with plans to eventually expand access to creators throughout the world.

Marketplace Designed to Support Creators

Meta’s Head of Commerce and Fintech, Stephane Kasriel says the purpose of the new NFT marketplace is primarily to support creators and make it easier for them to monetise their work.

In a Medium post published the day after Instagram’s new NFT marketplace was announced, Kasriel made the case for blockchain and other Web3 technologies that solves many of the issues creators face, such as segmented audiences across multiple platforms and difficulty monetising their digital creations. 

“[Blockchain] makes it possible for creators to build more direct and profitable relationships with their audiences because it gives them more ownership over their work with blockchain-based assets that can be monetized, like NFTs. Blockchain also gives creators the ability to take their content and fans with them to different platforms.” 

Stephane Kasriel, Head of Commerce and Fintech, Meta

Marketplace to Run on Polygon, No Gas Fees

The new marketplace will use the Polygon blockchain, which is an Ethereum layer-2 scaling solution, and will initially be entirely fee-less — Meta says for now it won’t charge fees to use the marketplace and will also cover any Ethereum gas fees. According to Kasriel Meta doesn’t plan to start charging fees until 2024. 

All transactions made through the Instagram marketplace will however still be subject to the 30 percent ‘Apple Tax’ which applies to all apps on Apple’s AppStore.

The marketplace will also support video-based NFTs. Support for Solana and Phantom wallets are to be added at some stage in the future.

Meta has demonstrated it sees a bright future in Web3 technology, having previously launched its own blockchain-based system known as Diem. In May of this year, Instagram added a feature allowing users to display their Ethereum and Polygon-based NFTs. The launch of this new marketplace shows a significant deepening of Meta’s interest in leveraging Web3 technologies.

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Coinbase Crypto News Regulation Ripple

Coinbase Seeks to Support Ripple Against SEC

The US’ largest crypto exchange, Coinbase, has weighed in on the high-profile lawsuit brought against Ripple by the US Securities and Exchange Commission (SEC) by filing legal documents in support of Ripple.  

The amicus curiae brief submitted to the court by Coinbase argues that de-listing XRP from crypto exchanges in the wake of SEC’s legal action caused its market value to decline by US$15 billion, “resulting in significant losses to Coinbase’s customers.”

Coinbase’s brief pointed out it had previously urged the SEC to provide direction for the digital asset industry to provide certainty, and defended Ripple’s legal position:

“In the absence of a regulatory framework governing digital assets, Coinbase believes that parties like Ripple must be permitted to pursue fair notice defenses in matters where they are facing surprise enforcement actions like this one.”

Coinbase amicus brief in support of Ripple

Coinbase Support Strengthens XRP Position

Crypto payments network, Ripple, which has its own token called XRP, has been battling the SEC lawsuit since 2020 — disputing the regulator’s findings that Ripple conducted an illegal securities offering by selling XRP, which is the sixth largest crypto by market share. 

Amicus briefs offer information or insights relevant to a case from an organisation not involved in the legal proceedings and are accepted at the discretion of the court. 

In a Twitter thread about filing the brief, Coinbase Chief Legal Officer Paul Grewal said: 

“One of the fundamental due process protections guaranteed by our Constitution is that government agencies cannot condemn conduct as a violation of law without providing fair notice that the conduct is illegal. By suing sellers of XRP tokens after making public statements signaling that those transactions were lawful, the SEC has lost sight of this bedrock principle.”

Coinbase Chief Legal Officer Paul Grewal

The lengthy legal battle has been closely watched due to its ramifications for the crypto industry. Ripple’s CEO has denounced the SEC for its “shameful” behaviour and at one point, Ripple accused the SEC of deleting material relevant to the case.

Support for Ripple by Coinbase and others including the Blockchain Association further strengthens the crypto firm’s position, and a number of legal experts have also speculated that the SEC is likely to lose.

Some in the crypto community called on Coinbase to go one step further in their support by re-listing XRP on the exchange:

Categories
Crypto News Gaming Immutable X NFTs

GameStop Launches NFT Marketplace on ImmutableX

US-based video game retailer GameStop officially launched its NFT marketplace on October 31 in partnership with the Australian-based Ethereum layer-2 blockchain, ImmutableX.

GameStop’s partnership with ImmutableX was first announced in February of this year, with the NFT marketplace having been in open beta since July.

The crypto market’s reaction to the official launch of the marketplace has been subdued, with data from CoinGecko showing ImmutableX’s price was up just 0.2 percent on the day, at the time of writing.

Web3 Gaming & Carbon Neutral NFTs

GameStop’s new NFT marketplace will allow users to play Web3 games currently being developed on ImmutableX, such as Illuvium, Gods Unchained and Ember Swords. Users of the marketplace will also be able to trade additional NFT collectibles and in-game assets.

In a statement released Monday, GameStop explained that the new marketplace ‘…unlocks access to web3 games and millions of world-class, NFT gaming assets to tens of millions of GameStop players and GameStop Powerup Pro loyalty customers across the United States.’

According to GameStop, the new marketplace will also allow fee-free and carbon-neutral NFT minting:

“The integration between GameStop and ImmutableX will unlock some of the biggest web3 games, which are currently being built on ImmutableX. In addition, the partnership will allow for 100 percent gas-free and carbon-neutral minting and trading on the Company’s NFT marketplace.” 

GameStop Statement

GameStop Embraces Blockchain Technology

GameStop has been a leader among mainstream retailers in adopting blockchain technology. 

In addition to partnering with ImmutableX, in May of this year, the video game retailer launched its own non-custodial crypto wallet. In July it partnered with Loopring to process transactions on its NFT marketplace and just yesterday the Sam Bankman-Fried owned crypto exchange FTX teased an upcoming partnership with GameStop.

Categories
Crypto News Dogecoin Markets Social media

Dogecoin Surges Over 90% Following Elon Musk’s Twitter Takeover 

With Elon Musk finally taking the reins at Twitter last week, the value of Dogecoin rallied by more than 90% — jumping from US$0.05 to $0.14 briefly on October 30 before dropping to 11 cents at the time of writing.

Seven-day price data for DOGE. Source: CoinMarketCap

Despite the latest surge, in defiance of the prevailing crypto winter, DOGE remains down 84% on its all-time-high of US$0.73 in May 2021 according to CoinMarketCap. Dogecoin now ranks eighth in the market, overtaking Cardano (ADA) with a market cap of US$15.6 million.

Musk has long been a supporter of the meme coin, and has been attributed as the cause of several major DOGE price pumps, including when he first announced his intent to buy Twitter. 

The Twitter acquisition process was fraught, with Musk seeking to renege his offer and then backflipping in early October —ostensibly to avoid legal action brought about by Twitter. At the time, Musk’s confirmation that he’d close the deal led to a small bump in Dogecoin’s value of around 9%. 

Officially becoming Twitter’s boss has come with some surprising learning opportunities for Musk:

Musk loves DOGE

CEO of electric car company Tesla and rocket manufacturer SpaceX, Musk has touted his admiration for Dogecoin in various tweets and interview mentions since 2019. He also began accepting Dogecoin as a payment in exchange for merchandise of his companies. 

Musk had also hinted that he was considering making DOGE a payment option for Twitter users to authenticate their accounts. Since the acquisition was finalised, Cardano’s founder and CEO Charles Hoskinson went as far as predicting DOGE could be integrated with the social media platform:

Musk’s support for DOGE has not been without controversy. In June this year a US$258 billion class-action lawsuit was filed against Musk and his companies, alleging Musk had been essentially running a Ponzi scheme — intentionally manipulating the price of the coin for profit.

Categories
Crypto Art Crypto News NFTs Social media

Twitter Will Allow Users to Buy and Sell NFTs Through Tweets

NFTs are set to become an even more prominent part of the Twittersphere, with Twitter sharing news today that it’s making it possible for NFT images and details to appear in tweets for the first time.   

Twitter’s development team announced that tweeting links to some NFTs —from select NFT marketplaces— will now show a larger picture and useful details like the artwork name and its creator. 

Potential Boom For NFT Sales

Not only will Twitter users be able to visually showcase their NFTs more easily, the new feature includes a link to marketplace listings, which could significantly boost sales and the value of the NFT market more broadly. 

NFT marketplaces included in the test include Rarible, Magic Eden, Dapper Labs, and Jump.trade.

Twitter is a popular playground for crypto and web3 enthusiasts, with Twitter’s own trends report released in March 2022 showing a huge jump in tweeted conversations on topics including NFTs, DeFi, DApps, and DAOs.

Twitter Developing for Dynamic Experiences 

Twitter began testing its customisable tweet formatting feature called Tweet Tiles in August this year with the accounts of major news outlets The New York Times, Wall Street Journal and The Guardian. In introducing Tile Tweets, Twitter said: “These formats are designed to easily engage with content and make your timeline more dynamic and visual.” 

This latest move to include embedded NFTs in Tweet Tiles expands the social media platform’s support for NFTs following its work earlier this year to allow users to use NFTs from their collections as their Twitter profile picture.

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Australia Crypto News Illegal Regulation

ASIC Sues Financial Firm Over Aussie Crypto Token ‘Qoin’

The Aussie company behind the controversial crypto token Qoin is being sued by the Australian Securities and Investments Commission (ASIC), alleging its marketing included false, misleading and deceptive claims about how investors could use the tokens.

ASIC’s civil court legal action against BPS Financial Limited — the company that launched Qoin in late 2019 — also alleges unlicensed conduct and that BPS falsely conveyed that the company and its wallet app were regulated and legally compliant.

In a statement issued on Tuesday October 25, ASIC Deputy Chair Sarah Court said:

“ASIC is particularly concerned about the alleged misrepresentation that the Qoin Facility is regulated in Australia, as we believe the more than 79,000 individuals and entities who have been issued with the Qoin Facility may have believed that it was compliant with financial services laws, when ASIC considers it was not.”

ASIC Deputy Chair Sarah Court

An announcement on the Qoin website states that BPS is reviewing the allegations, does not agree with ASIC’s position, and will be defending the matter. 

Limits on Exchanging Tokens Raises Concern for Consumers

The idea behind Qoin tokens is that they can be used by consumers as a digital currency within a large ecosystem of participating businesses, to enable secure and contactless payments — upon its launch, BPS claimed to have more than 35,000 merchants signed up. 

BPS also marketed that Qoin tokens could be swapped for crypto and Australian dollars, via Block Trade Exchange Limited, aka the BTX Exchange, which is linked to BPS and has the same directors.

Early critics argued this closed system reduced the token’s utility and created a potential conflict of interest. Frustrated investors have long been complaining about difficulties in selling Qoin.

Core allegations being made by ASIC related to the current civil court action include that BPS falsely assured investors that they could exchange their Qoin tokens for other crypto assets or fiat currency, and that they could use Qoin tokens to purchase goods and services from a growing number of merchants. 

“We allege that, despite what BPS represented in its marketing, Qoin merchant numbers have been declining, and that there have been periods of time where it was not possible to exchange Qoin tokens through independent exchanges.”

ASIC Deputy Chair Sarah Court

ASIC is seeking declarations, pecuniary penalties, injunctions and adverse publicity orders from the Court.

Coin’s Chequered Crypto Journey

In its short history, the Qoin token has been embroiled in controversies including: 

Categories
Crypto News Gaming NFTs Payments

Apple Bans NFT Utility  – Continues 30% NFT Commission

The news isn’t great for NFTs following tech giant Apple’s updated App Store review guidelines released Monday October 24 — the rules allow for displaying in-app NFTs but ban the use of NFTs to unlock additional content or features within apps.

In addition to restrictions on NFT usage, the guidelines also state that apps must use Apple’s ‘in-app’ purchase functionality exclusively for any payments required to mint, list or transfer NFTs. The use of any other external payment method, including crypto, is not allowed. 

Apple forces apps to use its ‘in-app’ purchase functionality because it allows the company to collect what’s colloquially known as the ‘Apple Tax’ — a 30 percent surcharge applied to every payment made using ‘in-app’ purchases.

For context, NFT marketplaces like OpenSea and Magic Eden charge a 2.5 percent commission on sales.

No Token-locked Content on App Store

Apple’s updated guidelines seem to intentionally limit the functionality of NFTs by preventing some of their most interesting use cases. For example, the guidelines specifically state that NFTs cannot be used to unlock token-locked functionality within the app:

“Apps may allow users to view their own NFTs, provided that NFT ownership does not unlock features or functionality within the app.” 

Apple’s App Store review guidelines

Banning the use of NFTs in this way will substantially restrict their utility in apps available on Apple’s App Store and may even impact NFT prices.

No External Payments, Including Crypto

The guidelines also specifically ban the use of external links to non-Apple payment methods:

“Apps may allow users to browse NFT collections owned by others, provided that the apps may not include buttons, external links, or other calls to action that direct customers to purchasing mechanisms other than in-app purchase.”

Apple’s App Store review guidelines

While banning external forms of payment is standard practice for Apple — enabling them to collect a 30 percent surcharge on transactions— it seems to make less sense in the context of NFTs since they’re a form of crypto and are most often traded using other cryptocurrencies, not fiat currencies.

The new guidelines also updated some language around crypto exchange apps intended to ensure they’re compliant with local regulations:

“Apps may facilitate transactions or transmissions of cryptocurrency on an approved exchange, provided they are offered only in countries or regions where the app has appropriate licensing and permissions to provide a cryptocurrency exchange.”

Categories
Crypto News Hong Kong Investing Regulation

Hong Kong Looks to Legalize Retail Crypto Investing

The Hong Kong government has introduced a bill to allow retail investors to directly invest in digital assets, marking a stark departure from mainland China’s blanket ban on crypto. 

The move was confirmed in a speech by Hong Kong’s Secretary for Financial Services and the Treasury (SFST), Christopher Hui, at the SFST’s Executive Roundtable on October 21.

Hong Kong Looks to Embrace Web3

Hui’s confirmation follows comments reported earlier in the week from the head of Hong Kong’s Securities and Futures Commission (SFC), Elizabeth Wong, who said the Special Administrative Region was looking to introduce a bill which would allow retail investors to “directly invest into virtual assets.” 

Wong’s comments came during a panel discussion held by InvestHK on October 17, during which she highlighted how important the ‘one country, two systems’ approach to the regulation of Hong Kong’s financial sector had been in the past, saying it “forms the basic foundation to Hong Kong financial markets.”

Wong added that the SFC was also actively considering tabling a bill allowing retail investors to invest directly into digital assets.

Hui’s speech has since confirmed the introduction of this bill, with the Secretary stating:

“On virtual assets, we have introduced a bill to propose establishing a regulatory regime for virtual asset service providers.”

Secretary for Financial Services and the Treasury (SFST), Christopher Hui

Hui spoke more broadly about fintech, revealing that the theme of this year’s Hong Kong Fintech Week, which runs from October 21 to November 4, will be “Pushing Boundaries, Reaping Benefits”, and will focus on emerging Web3 technologies such as metaverse. For the first time, the event will also issue NFTs, in what Hui describes as an effort to “test their ability to engage participants.”

In a further sign of Hong Kong’s enthusiasm for crypto, Hui said that during Hong Kong Fintech Week the government plans to issue a policy statement outlining their plans for the development of virtual assets which he says is intended to demonstrate to the global virtual assets community the government’s “…vision of developing Hong Kong into an international virtual assets centre.” 

Significant Change From Past Stance

This new proposed framework in Hong Kong differs considerably from the government’s previous approach to crypto. For the past four years the SFC has restricted crypto trading using centralised exchanges to professional investors, which means only individuals with portfolio’s valued at over US$1 million could invest in crypto using centralised exchanges.

According to Wong, over the past few years crypto markets have become more compliant and generally safer for average investors to participate in and should therefore be made accessible to all retail investors, explaining:

“We think that this may be actually a good time to really think carefully about whether we will continue with this professional investor-only requirement.”

Head of Hong Kong’s Securities and Futures Commission (SFC), Elizabeth Wong

Hong Kong’s new approach follows the launch of a US$3.8 billion fund designed to attract business and investment back to the Special Administrative Region after something of an exodus following several years of political turbulence and strict COVID-19 lockdowns.