Advertisements

ICO-Funded Decentralized Crypto Exchange Caught Plagiarizing Whitepaper

Some on Bitcointalk have concluded that decentralized crypto exchange Localcoin is a scam because they’ve conclusively found that their whitepaper was plagiarized. This hasn’t stopped projects in the past. In a post last month, user ICOEthics raised the alarm and published his findings.

EVERYONE POINTS THE FINGER AT EACH OTHER

A Localcoin representative responded that the company had outsourced their whitepaper. The intent was to explain the derivation of the plagiarism, but it opened a new can of worms. The contractor says that the original whitepaper materials were furnished to them by Localcoin – meaning that Localcoin did the plagiarism.

In a follow-up post, the Localcoin representative posted screenshots of his latest conversation with the apparent author of the whitepaper.

An allegation emerges that Localcoin owes some marketers around $15-17,000.

CCN attempted to contact the apparent whitepaper author, Dexter, but while he read our request for comment, he chose not to respond.

Localcoin's apparent whitepaper author didn't feel like commenting.

Localcoin’s apparent whitepaper author didn’t feel like commenting. Source: Telegram

The questions raised throughout the thread go much deeper than simple plagiarism though. We have to wonder why this project is worth anything if the majority of it is outsourced. Localcoin is an apparent fork of Bitshares and a reboot of a previous attempt at Localcoin.

We’re going to leave out judgement on who was plagiarizing who, or what the real story is here. We reach the same conclusion as one poster on the topic:

“So, we do point the finger to the plagiarized whitepaper owners. We opened this thread so you can discuss and provide evidence to your public and investors and try to convince them that it is not “your fault” and you are “not responsible” for that plagiarized whitepaper. If you wrote or someone else wrote the whitepaper for you, in the end, your company/project is the only one responsible for everything.”

REAL DECENTRALIZED EXCHANGES ARE NEEDED MORE THAN EVER

What’s really at issue with the Localcoin fiasco is the desperate need for reliable decentralized exchanges, and the fact that it is apparently not going to be one. There is some speculation, based on the following screen capture, that the entire project may actually be just one guy.

It's possible that the project is just one person who outsourced everything.

Is Localcoin really operated by just one guy, Fluke Hawkins, who outsourced everything? Source: Bitcointalk

The Binance hack demonstrates more than ever that decentralized exchanges are a necessary evolution, even if some very smart people feel that it won’t be enough. Decentralized exchanges at least take the stupid out of it. For hacks of similar size to happen, numerous participants will have to be doing it wrong.

But decentralized exchanges will need to be easy. They will need to be secure at the user level, and operated on secure devices.

The Localcoin solution might almost be there. It offers much more than just trading. Here’s what the application looks like:

The ambitious project could have changed the way people trade. If only it could be trusted.

The ambitious project could have changed the way people trade. If only it could be trusted. Source: Localcoin App

YOU COULD HAVE BEEN A LEGEND, BUT YOU BECAME A FAILURE

Unfortunately, as you can see, the order books are largely empty. Interest in the project has declined and increasingly, chatter around it falls strictly into two categories: discussion about the nature of the promoters, and the promoters themselves.

The Localcoin token plays some kind of role in token launches on the Localcoin platform.

A bad seed doesn’t grow good fruit. If you can’t trust that the code, the ideas expressed in the whitepaper, and so on, are original, is there anything about the project you can trust?

The timing couldn’t be worse for an upstart decentralized exchange. The industry desperately wants a serious competitor to the centralized monsters.

Source: ICO-Funded Decentralized Crypto Exchange Caught Plagiarizing Whitepaper

Advertisements

SEC Issues First ‘No Action’ Letter To A Cryptocurrency Business

SEC SZCZEPANIK

Valerie Szczepanik, senior advisor for digital assets and innovation at the U.S. Securities and Exchange Commission.Andrew Harrer/2018 Bloomberg Finance LP

The U.S. Securities and Exchange Commission has issued its first ever letter assuring investors in a startup using crypto-tokens similar to bitcoin to raise capital that it will not take an enforcement action against the company, and in a separate document explained the rationale behind the decision for future companies.

The company that received the precedent-setting letter, called a No Action Letter, was TurnKey Jets, a startup that offers an all-inclusive private jet service including the plane, crew, and pilot. Interestingly, the company’s website has no mention of a crypto-token, which appears to play a role in the actual reservation of the services.

In addition to the much anticipated No Action letter the SEC’s FinHub, established in October 2018 to address issues related to cryptocurrency and other financial innovations, published a lengthy, highly anticipated document explaining its rationale for evaluating such requests.

“It’s not binding on the rest the commission,” says Bill Hinman, the SEC’s director of the division of corporation finance. “But it gives market participants a good idea of how the SEC staff will look at the issue and deal with it.”

The No Action Letter includes six key points related to TurnKey Jets. Notably, the company has promised not use any funds from token sales to develop its platform, network and applications, each of which will be fully developed and operational when the tokens are sold. Also, the tokens will be immediately usable to purchase air charter services when they are sold.

“At the time their digital assets are sold the seller is going to have a fully operational network,” says Valerie A. Szczepanik, the SEC’s senior advisor for digital assets and innovation, who, working with Finman, helped craft the overall digital assets framework. Read the entire letter here.

The conditions, which were presented by TurnKey and are not part of any official request by the SEC, appear tailored to accusations widely made in the media and elsewhere online against issuers of first-generation initial coin offerings (ICOs), when millions of dollars could be raised with little more than a white paper.

In the official 13-page document also released today, called “Framework for ‘Investment Contract’ Analysis of Digital Assets,” the SEC lays out a detailed explanation of how the existing Howey Test used to determine what is a security is being applied to digital assets issued on a blockchain. The vast majority of the document details how the SEC views what is considered a reasonable expectation that profits will be derived from the efforts of others, a crucial factor of the test.

The most interesting section begins on page 9, with 12 characteristics that if present, mean the token offering is less likely to pass the Howey test. The first two are crucial. “The distributed ledger network and digital asset are fully developed and operational,” and “holders of the digital asset are immediately able to use it for its intended functionality on the network, particularly where there are built-in incentives to encourage such use.”

While the SEC has fined numerous individuals in the cryptocurrency space as examples of what not to do, today’s news marks the clearest guidance yet about what to do. “Decentralization is important,” says Hinman. “But it’s not the only factor.”

The chief legal advisor of the SEC’s FinHub, Jonathan Ingram, who signed the actual No Action letter, says entrepreneurs thinking of issuing a token can contact the regulator via its FinHub website. “We are open for business,” says Ingram. “And we want people to engage with us.”

I report on how blockchain and cryptocurrencies are being adopted by enterprises and the broader business community. My coverage includes the use of cryptocurrencies suc…

 

 

Source: SEC Issues First ‘No Action’ Letter To A Cryptocurrency Business

%d bloggers like this:
Skip to toolbar