Tag: SEC

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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:

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Crypto News Illegal Regulation Social media

Kim Kardashian Fined $1.26 Million by SEC Over Unlawful Crypto Promo

Kim Kardashian adjusting hair

High-profile influencer and star of the reality TV show ‘Keeping Up With The Kardashians’, Kim Kardashian, has paid a total of US$1.26 million to settle charges brought against her by the US Securities and Exchange Commission (SEC) relating to her promotion of the cryptocurrency EthereumMax (EMAX) in 2021. 

The SEC filed the charges against Kardashian for failing to disclose that she received a US$250,000 payment to promote EthereumMax to her social media followers. 

Kardashian’s Promotion Biased, Banned From Promoting Crypto

The Instagram post from Kardashian that attracted the charges contained a link to the EthereumMax website and provided instructions to buy EMAX tokens, the cryptocurrency sold by EthereumMax.

Kardashian’s post was part of EthereumMax’s aggressive 2021 marketing push which saw numerous other celebrities, including boxer Floyd Mayweather Jr. and former basketball player Paul Pierce, endorse the cryptocurrency on social media. 

According to the SEC, Kardashian’s failure to disclose the payment she received for her part in the promotion was a breach of the anti-touting provisions of US federal securities laws, which are intended to protect consumers from biased and self-interested promotion of securities. Speaking about the case, SEC Chair Gary Gensler said:

“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion…Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”

SEC Chair Gary Gensler

As part of her settlement, Kardashian also agreed to cooperate with the SEC’s ongoing investigation into EthereumMax and to refrain from promoting any cryptocurrencies for three years.

What Is EthereumMax?

Despite having ‘Ethereum’ in its name, EthereumMax’s EMAX tokens aren’t related to Ethereum’s native ETH cryptocurrency. Rather EthereumMax is simply an ERC-20 token built on top of the Ethereum blockchain. It has a total supply of 2,000,000,000,000,000 — that’s right, two quadrillion tokens — and an unknown current circulating supply.

EthereumMax’s founders claim it’s a “progressive coin” that provides “lifestyle perks and financial rewards” to holders. However, it’s unclear exactly what these perks and rewards are. 

At the time of writing, EMAX is down over 98 percent from its all time high, which it hit on May 31, 2021, on the back of its aggressive celebrity endorsement drive.

SEC Charges Follow Investor Lawsuit

Kardashian’s charges aren’t the first legal stoush related to EthereumMax — in January 2022 a lawsuit filed in the US District Court of California’s Central District alleged the founders of EthereumMax, Steve Gentile and Giovanni Perone, and their celebrity spruikers were effectively running a pump and dump scheme. 

The complainant claims that while the celebrities pumped the price by promoting the cryptocurrency to their followers, they, along with the founders, were already dumping their EMAX tokens for a significant profit, while their followers were left holding the bag.

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Crypto News Social media

Elon Musk Wants Out of $44 Billion Twitter Deal, Twitter Likely to Sue

Elon Musk, CEO of SpaceX and Tesla, has retracted his US$44 billion offer to buy Twitter. A notice of termination was filed through the US Securities and Exchange Commission (SEC) alleging that Twitter had breached multiple provisions of its initial agreement with Musk:

‘Misrepresentations’ Made by Twitter

Just three months after Musk’s April announcement that he would purchase Twitter, the billionaire has declined to finalise the deal citing various breaches of the initial agreement, according to an SEC filing from his attorneys:

Twitter … appears to have made false and misleading representations upon which Mr Musk relied when entering into the merger agreement, and is likely to suffer a company material adverse effect.

Skadden, Arps, Slate, Meagher & Flom LLP

The SEC filing also suggests Musk had sought the necessary data to independently assess the prevalence of fake or spam accounts on Twitter’s platform. Twitter had reportedly failed or refused to provide this information:

Despite Musk’s change of heart, Twitter has no intentions to go down quietly. Bret Taylor, one of its chairmen, has shared that the company’s board seeks to close the transaction as per the original agreements. The social media giant says it will be pursuing legal action.

Initial Promise All About ‘Free Speech’

Musk initially purchased Twitter with the intention of privatising the social media giant. The billionaire touted the notion that freedom of speech would reign supreme, tweeting that he hoped that “even [his] worst critics remain on Twitter because that is what free speech means”. However, the decision was met with a sizeable backlash suggesting the move would be “dangerous for democracy”.

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Australia Bitcoin Crypto News Cryptocurrency Law Illegal Scams

Australian Man Pleads Guilty to $90 Million Crypto Hedge Fund Scam

An Australian crypto fund manager has pleaded guilty in a US court for the theft of almost $90 million of investor’s money. 

Stefan He Qin was charged with defrauding clients over a three year period between 2017 and 2021 through two cryptocurrency hedge funds that he founded. The US Securities and Exchange Commission (SEC) began investigating one of the 24-year old entrepreneur’s businesses, Virgil Capital LLC, in December last year.

It was discovered that Qin had attempted to funnel money from his second fund, VQR Multistrategy, to pay investors of the Virgil Sigma Fund. However, after years of risky investments and frivolous spending, much of the funds were gone, leaving investors empty-handed.

Judge Valerie Caproni found Qin guilty of the charges on 4 February 2021 brought forward by the United States Attorney’s Office for the Southern District of New York. US Attorney Audrey Strauss said Qin is now awaiting sentencing after being found guilty of draining “almost all of the assets from the $90 million cryptocurrency fund he owned, stealing investors’ money, spending it on indulgences and speculative personal investments, and lying to investors about the performance of the fund.”

Special Agent Peter C. Fitzhugh who had been investigating the case reiterated the charges, stating that Qin had been using investor’s funds to “live his extravagant lifestyle.”

“Qin orchestrated this reprehensible criminal scheme for many years, making misrepresentations and false promises that coaxed investors into pouring millions of dollars into fraudulent cryptocurrency firms, all the while stealing the hard-earned money of his investors,” he said.

Crypto Scams on the Rise

The case is reminiscent of the recent Mirror Trading International (MTI) scam perpetrated by South African Johann Steynberg. In December last year, Steynberg reportedly fled South Africa after the country’s financial regulator began investigating his company. The Financial Sector Conduct Authority (FSCA) found evidence suggesting that MTI’s broker, Trade 300, was owned and operated by Steynberg.

Despite several warnings issued during 2020, clients continued to invest money into the firm, which promised unrealistic returns of up to 10 percent monthly. The unlicensed firm has now gone into liquidation, with assets worth approximately $863 million unaccounted for.

“There were no proper accounting records and Bitcoin was transferred in and out,” FSCA executive Brandon Topham told Bloomberg. “Thus no definitive answer currently exists as to how much Bitcoin was actually invested but is in the region of 23,000 plus.”

Due to fraudsters taking advantage of the panic and uncertainty brought about by the ongoing pandemic, law enforcement agencies around the world reported a rise in financial scams in 2020. Scams such as these are likely to continue throughout 2021.

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Institutions Ripple

The End Of Ripple? More Exchanges Delisting XRP — Price Falls %10 More

Following the SEC’s lawsuit against Ripple, more exchanges are delisting XRP from their trading list.

XRP — the second most preferred currency by Australians after Bitcoin – has plunged another 10 % after the U.S.-based exchange, Coinbase, decided to delist XRP from its platform following the lawsuit.

The exchange announced that the customer’s XRP wallets will remain intact, without removing the institutional custody — but will suspend the trading pair on January 19, 2021.

OkCoin And BC2C Delisting XRP

Other recent exchanges that decided to remove XRP from their trading list were Chinese-based OkCoin and B2C2 USA.

OkCoin announced today the suspension of XRP trading with tighter rules. Users who borrowed XRP/USD margins are required to return the funds till Jan 3, 2021, or face automatic liquidations in case of any delay.

Another exchanges delisting XRP are:

  • OSL
  • CrossTower
  • Beaxy
  • Bitstamp
  • Galaxy Digital
  • Jump Trading

Grayscale XRP Trust Closed

Not only exchanges are turning away from XRP as the trust firm Grayscale closed the XRP Trust private placement.

Source: Grayscale

Likewise, a user from Twitter posted a message that appears to be an employee from Grayscale, stating that the company is ending all XRP subscriptions.

Many people in social media argue that it may be a matter of time before other exchanges join the movement by delisting XRP from their platforms.

It should come as no surprise that XRP fell 10% following the announcement of Coinbase, now trading at 0.25 $. The price has fallen -43 % since the SEC filed a lawsuit against two Ripple executives: Brad Garlinghouse and Chris Larsen, for making profits with XRP as an “unregistered license”.