Tag: cryptocurrency gvernmental issue

SEC Charges Ripple With Selling $1.3 Billion In Unregistered Securities, XRP Loses $2 Billion In Market Value

The Securities and Exchange Commission has charged cryptocurrency pioneer Ripple Labs, the firm that owns a majority of the world’s third-largest cryptocurrency, for allegedly raising $1.3 billion in an offering of unregistered “digital asset securities”–a huge sign U.S. regulators could ramp up oversight of the cryptocurrency space as the market surges to new highs.

According to the SEC’s complaint, Ripple, its cofounder Christian Larsen and CEO Bradley Garlinghouse raised capital to finance the firm’s business through an unregistered public offering of XRP tokens beginning in 2013.

The complaint, filed in Manhattan’s federal district court, also alleges that Larsen and Garlinghouse carried out personal unregistered sales of XRP totaling roughly $600 million.

As of 3 p.m. EST, the value of the XRP token had plunged roughly 12% over the last 24 hours, according to crypto data firm CoinMarketCap, wiping out more than $2 billion from the cryptocurrency’s market cap.

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“It’s not just Grinch-worthy, it’s shocking,” Garlinghouse told Fortune when he warned of the impending lawsuit on Monday evening, later tweeting that Ripple, a San Francisco-based firm last valued at $10 billion in 2019, “is ready to fight” the suit. “It’s an attack on the entire crypto industry and American innovation.”

The SEC has largely cracked down on crowdfunded token sales, commonly referred to as initial coin offerings, but XRP is easily the largest cryptocurrency targeted by the SEC as a security; officials in 2018 declared ether and bitcoin were currencies and not securities because of their decentralized nature.

Crucial Quote

“We allege that Ripple, Larsen and Garlinghouse failed to register their ongoing offer and sale of billions of XRP to retail investors, which deprived potential purchasers of adequate disclosures about XRP and Ripple’s business and other important long-standing protections that are fundamental to our robust public market system,” said Stephanie Avakian, director of the SEC’s enforcement division on Tuesday.

Big Number

$653 billion. That’s the current market value of all the cryptocurrencies across the world, more than tripling this year alone, according to CoinMarketCap. At its peak in January 2018, the market was valued at more than $800 billion. XRP’s current market cap of $21.6 billion is bested only by ether ($71 billion) and bitcoin ($435 billion).

Key Background

Heightened regulatory scrutiny from nations such as South Korea triggered a near-85% crash in cryptocurrency prices in 2018, but the United States has been slow to issue broad-based regulation. Among the most vocal U.S. regulatory agencies when it comes to cryptocurrency, the SEC spent months drafting guidance it released in April 2019 about when and how cryptocurrencies may be classified as securities, but it’s been relatively quiet on the front ever since.

The suit against Ripple, however, could mean that’s set to change as the cryptocurrency market soars toward new highs during the pandemic. “There is more and more interest from a wide spectrum of people, both inside the crypto space as well as inside the traditional financial institutions who are asking us for guidance,” an SEC Commissioner told CoinDesk in October. “I think we’re going to be forced to confront that more and more in the coming years.”

What To Watch For

Competition–from the government. Though it has not committed to the idea, the Federal Reserve is exploring the possibility of debuting its own central bank digital currency, Goldman Sachs said in a Sunday note. Officials have warmed up to the idea of a central bank token “largely out of concern that wide adoption of alternative digital currencies could endanger financial stability, U.S. financial intermediaries and the Fed’s ability to influence financial conditions,” Goldman analysts led by Jan Hatzius said.

Tangent

During the pandemic many investors have flocked to cryptocurrency–and namely bitcoin–as a hedge against longer-term inflation concerns, which have escalated in the face of increased government spending for coronavirus relief measures. In a report released Monday, digital asset management firm CoinShares said cumulative investments into cryptocurrency funds have totaled about $5 billion so far this year, eclipsing the approximately $1.4 billion plowed into the space through the end of last year.

Chief Critic

“Other major branches of the U.S. government, including the Justice Department and the Treasury Department’s FinCen, have already determined that XRP is a currency,” Ripple Counsel Michael Kellogg said in a statement to Forbes, arguing that the currency designation means XRP transactions fall outside the scope of federal securities laws. “This is not the first time the SEC has tried to go beyond its statutory authority. The courts have corrected it before and will do so again,” he added.

Further Reading

Ripple says it will be sued by the SEC, in what the company calls a parting shot at the crypto industry (Fortune)

Ripple’s Trillion-Dollar Man (Forbes)

As Bitcoin Surges 15%, Here’s What Wall Street’s Saying About The Cryptocurrency’s Meteoric Resurgence (Forbes)

U.S. Government Voids Public Comments On Newly Proposed Crypto Wallet Rule (Forbes) Follow me on Twitter. Send me a secure tip.

Jonathan Ponciano

 Jonathan Ponciano

I’m a reporter at Forbes focusing on markets and finance. I graduated from the University of North Carolina at Chapel Hill, where I double-majored in business journalism and economics while working for UNC’s Kenan-Flagler Business School as a marketing and communications assistant. Before Forbes, I spent a summer reporting on the L.A. private sector for Los Angeles Business Journal and wrote about publicly traded North Carolina companies for NC Business News Wire. Reach out at jponciano@forbes.com.

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CNBC Television

Ripple CEO Brad Garlinghouse addresses the Securities and Exchange Commission’s lawsuit over the XRP cryptocurrency.

“The Securities and Exchange Commission announced today that it has filed an action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they raised over $1.3 billion through an unregistered, ongoing digital asset securities offering.” SEC NEWS: https://www.sec.gov/news/press-releas… BITCOIN AND ALTCOIN LEVERAGE PLATFORMS: 💲 Phemex https://phemex.com/web/user/register?… 💲 Bybit https://www.bybit.com/app/register?re… 💲 Binance https://www.binance.com/en/futures/re… 💲 PrimeXBT https://u.primexbt.com/sunnydecree BUY BITCOIN AND ALTCOINS HERE: 🏦 Coinbase https://www.coinbase.com/join/5939812… 🏦 Kraken https://r.kraken.com/sunnydecree 🏦 Binance https://www.binance.com/en/register?r… MY CHART TOOLS: 📊 TradingView https://tradingview.go2cloud.org/aff_… MY HARDWARE WALLETS: 🔑 Ledger https://www.ledgerwallet.com/r/f7c4 🔑 Trezor https://shop.trezor.io/product/trezor… STORE YOUR PRIVATE KEYS SAFELY: 🔒 https://cryptosteel.com/product/crypt… FOLLOW ME: 📷 https://twitter.com/sunnydecree 📷 https://www.instagram.com/sunnydecree… 📷 https://discord.gg/Psrt8Yn 📷 https://www.youtube.com/sunnydecreede#Bitcoin#XRP#Ripple

Alibaba, Tencent, Five Others To Receive First Chinese Government Cryptocurrency

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China’s central bank will launch a state-backed cryptocurrency and issue it to seven institutions in the coming months, according to a former employee of one of the institutions who is now an independent researcher. Paul Schulte, who worked as global head of financial strategy for China Construction Bank until 2012, says the largest bank in the world, the Industrial and Commercial Bank of China, the second largest bank in the world, his former employer, the Bank of China, the Agricultural Bank of China; two of China’s largest financial technology companies, Alibaba and Tencent; and Union Pay, an association of Chinese banks, will receive the cryptocurrency.

A separate source, who’s involved in the development of the cryptocurrency, dubbed DC/EP (Digital Currency/Electronic Payments), confirmed that the seven institutions would be receiving the new asset when it launches, adding that an eighth institution could also be among the first tier of recipients. The source declined to provide the name of the additional company. Speaking under terms of anonymity, the source, who previously worked for the Chinese government, confirmed that the technology behind the cryptocurrency has been ready since last year and that the cryptocurrency could launch as soon as November 11, China’s busiest shopping day, known as Singles Day.

At the time of launch, the recipient institutions will then be responsible for dispersing the cryptocurrency to 1.3 billion Chinese citizens and others doing business in the renminbi, China’s fiat currency, according to the source. The source added that the central bank hopes the currency will eventually be made available to spenders in the United States and elsewhere through relationships with correspondent banks in the West. “That’s the plan, but that won’t happen right away,” the source said.

The plan to use a diverse set of China’s trusted intuitions to disperse the cryptocurrency is reminiscent of a number of other ideas currently percolating around the world. For instance, Facebook’s planned libra cryptocurrency will be backed by a basket of currencies issued by central banks with support from companies like Mastercard and Uber in the United States, Vodaphone in England and Mercado Pago in Argentina. And last week, Bank of England governor Mark Carney floated the idea of a new currency backed by a number of central banks to replace the U.S. dollar as the global reserve currency.

What sets China’s DC/EP apart from libra and Carney’s “synthetic hegemonic currency” (SHC), according to Shulte, is that while libra is little more than early-stage computer code and the SHC doesn’t appear to have gone much further than Carney’s mind, the Chinese cryptocurrency is ready to launch. “China is barreling forward on reforms and rolling out the cryptocurrency,” says Schulte, who now runs an eponymous bank research firm. “It will be the first central bank to do so.”

At the time of publication, neither the People’s Bank of China nor any of the seven institutions mentioned by Schulte had responded to Forbes requests to confirm or deny his claim. However, the two-tiered strategy, where the central bank creates the currency and others distribute it, aligns with previously unreported statements made by Mu Changchun, deputy director of the Paying Division of the People’s Bank of China (PBOC) and the new head of China’s cryptocurrency research lab. In a speech on August 10 at the China Finance 40 Forum, since revised and posted on the PBOC’s WeChat channel, Mu described the central bank’s “two-tiered” system, wherein the bank would create the cryptocurrency and a small group of trusted commercial businesses would “pay the central bank 100% in full” to be allowed to distribute it.

In addition to preventing regional banks and other organizations from being disintermediated, Mu said the two-tiered system is designed to “curb” public demand for other cryptographic assets, consolidate China’s national currency sovereignty, ensure that the central bank maintains control over monetary policy affecting the currency, increase the likelihood of people using the currency, distribute the risk of having all the authority directly in the hands of the central bank and encourage competition between the organizations that receive the cryptocurrency.

“This dual delivery system is suitable for our national conditions,” said Mu. “It can not only use existing resources to mobilize the enthusiasm of commercial banks but also smoothly improve the acceptance of the digital currency.”

The composition of the organizations Schulte says will receive the DC/EP also aligns with Mu’s comments. Later in his speech, Mu added that only after the technical specifications for the DC/EP were completed in 2018 did the central bank realize the similarity between its design and that of libra, the cryptocurrency being developed by Facebook and about 30 other early-stage partners.

One key difference, according to Mu, is that while libra is being designed to handle 1,000 transactions per second, the DC/EP was designed to handle 300,000 transactions per second. For context, Mu added that during last year’s Singles Day the peak volume of all transactions in China was 92,771 transactions per second, dwarfing what the other platforms could support, but well within the DC/EP specifications. “At present, we belong to a state of horse racing,” Mu said according to the translation.

How Blockchain Went From Bitcoin To Big Business| 37:20

The DC/EP can achieve this kind of volume only because it is not a “pure blockchain architecture,” according to Mu, and therefore it doesn’t need to wait for groups of transactions to settle in a block. Like other permissioned blockchains that not anyone can use, the DC/EP is centrally managed, in this case by the central bank, meaning the digital currency remains a liability of the bank and the debtor/creditor relationship is unchanged, according to Mu. Also, instead of using an algorithm to limit supply, like bitcoin, Mu says the PBoC itself will control supply. Crucially, Mu says, the DC/EP is being designed to replace the physical notes and coins in circulation, not the renminbi sitting in bank accounts in a digital form.

“The central bank’s digital currency can be circulated as easily as cash,” said Mu. “Which is conducive to the circulation and internationalization of the renminbi.”

Whether anyone outside China would actually use a digital renminbi for transactions in their own country is unclear. As the Bank of England governor’s comments about replacing the U.S. dollar indicate, much of the world is tired of having their financial stability tied to the United States’ monetary system. But China may not be the best alternative. Earlier this month, as part of the escalating trade war between the United States and China, U.S. President Trump accused China of being a “currency manipulator.” After China’s renminbi fell to its lowest in 11 years, hitting 6.9225 renminbi per dollar on August 5, according to a Financial Times report, it has recovered significantly, trading at 7.15 renminbi per dollar today. While China has denied the charge and called the U.S. “protectionist” in a press statement, the perception of manipulation could be harmful to broader adoption of a digital currency linked to the renminbi.

In December 2017, another country accused of devaluing its currency, Venezuela, revealed plans for its own cryptocurrency, backed by oil and called the petro. After much hullabaloo, the currency somewhat officially launched in 2018, but it isn’t available on most international exchanges because of a U.S. embargo and has been almost impossible to accurately value. Another obstacle to adoption could be uncertainty about the benefits of a technology that’s intended to replace fiat currency but is still under centralized control. While it’s obvious that any central bank wishing to more closely observe how citizens are using a cryptocurrency would prefer a transparent ledger like the bitcoin blockchain, which makes transactions easily traceable, most of the benefits to users of current blockchains, such as instant settlement and digital transactions without the need of a middleman, could be undermined by central control.

One person who’s not concerned about the obstacles to adoption of China’s cryptocurrency is Charles Liu, chairman of HAO International, a private equity firm investing over $700 million in Chinese growth companies. After largely focusing on solar, organic fertilizer, and wastewater treatment technologies since 2012, Liu says he is an angel investor in “the first blockchain company to be able to sign an official contract with the People’s Bank” of China.

Liu declined to reveal the name of the firm or its technology but lent support to Mu’s comments about the potential benefits to businesses using China’s cryptocurrency. In addition to being a more efficient way to track money laundering, bribery and other transactions, Liu says, the cryptocurrency will give banks increased confidence in the creditworthiness of borrowers, let merchants receive payments instantly and lower transaction fees. While Liu says that banks in the United States have been resistant to such improvements that eat away at their bottom line, he adds that China doesn’t have that problem, because the government owns the banks.

“What will facilitate commercial transactions and enhance efficiency, the central government decides and they go ahead and do it,” says Liu, adding that “China’s strategic plan is to integrate more closely with the rest of the world. Cryptocurrency is just one of the means to have a more internationalized renminbi. It’s all strategic. It’s all long term.”

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Michael del Castillo

I report on how blockchain and cryptocurrencies are being adopted by enterprises and the broader business community. My coverage includes the use of cryptocurrencies such as Bitcoin, Ethereum and Ripple, and extends to non-cryptocurrency applications of blockchain in finance, supply chain management, digital identity and a number of other use cases. Previously, I was a staff reporter at blockchain news site, CoinDesk, where I covered the increasing willingness of enterprises to explore how blockchain could make their work more efficient and in some cases, unnecessary. I have been covering blockchain since 2011, been published in the New Yorker, and been nationally syndicated by American City Business Journals. My work has been published in Blockchain in Financial Markets and Beyond by Risk Books and I am regularly cited in industry research reports. Since 2009 I’ve run Literary Manhattan, a 501 (c) (3) non-profit organization dedicated to showing Manhattan’s rich literary heritage.

Source: https://www.forbes.com

China’s central bank is reportedly on the verge of launching a national digital currency. Investigative Journalist Ben Swann joins Scottie Nell Hughes to discuss the implications. He argues that at some point every country will have its own digital currency. And that there’s “nothing attractive” about such currencies as they’re no better than traditional government-backed fiat currency. #NVHughes #QuestionMore #RTAmerica Find RT America in your area: http://rt.com/where-to-watch/ Or watch us online: http://rt.com/on-air/rt-america-air/ Like us on Facebook http://www.facebook.com/RTAmerica Follow us on Twitter http://twitter.com/RT_America

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News & Politics

1,000,000,000 XRP: Ripple Unlocks $442 Million in Crypto From Escrow

Ripple has unlocked 1 billion XRP from escrow, worth about $442 million at time of publishing.

The San Francisco startup will sell a portion of the funds to crypto exchanges and institutional participants and return the rest to escrow at the end of the month.

Source: Bithomp

Ripple, which owns more than half of the total supply of XRP, does not reveal the buyers. However, crypto whale watchers are constantly monitoring XRP movements from Ripple’s over-the-counter (OTC) wallets to unknown wallets, which indicate sales of XRP.

Ripple typically sells a fraction of the total amount unlocked each month and releases an overview of the dollar amount of XRP sold each quarter.

According to the company’s last report, Ripple sold $169.42 million worth of XRP in January, February and March.

Source: Ripple

Since 2016, Ripple has sold a total of $890 million in XRP – 34.4% to crypto exchanges and 65.6% to institutions, reports The Block.

Ripple’s sale of XRP recently triggered a lively debate on Reddit on whether it has an impact on the price of the leading digital asset.

Source: Pivot – Blockchain Community

Overstock to Retain Retail Arm, Support Blockchain and Crypto Ventures

The CEO of retail giant Overstock.com, Patrick Byrne, noted the potential profitability of the firm’s retail arm in its Q4 2018 earnings conference call on March 18. Byrne’s statements indicate that Overstock may not be divesting from its retail wing as soon as was previously indicated. Last year, Byrne reportedly told The Wall Street Journal that Overstock would sell off its retail wing sometime in early 2019. During the section of the conference call devoted to retail, Byrne said that “this is going to be a year of explosive growth,” and that the retail wing would “spit out cash…..

Source: Overstock to Retain Retail Arm, Support Blockchain and Crypto Ventures

Pay with Crypto, Payment Card to Be Launched by Banking Platform

A banking startup is about to launch a debit card which crypto enthusiasts will be able to use to pay for goods with crypto. the banking startup 2gether promises that its new prepaid Visa card will allow the firm’s customers to use either fiat currency or seven crypto coins to pay for things: BTC, XRP, EOS, XLM and a few others. The card helps people by changing digital assets into fiat (EUR) and will be accepted in almost 20 EU countries. Businesses can take advantage of the service to pay employee salaries and income taxes. Other commercial or corporate expenses can be covered as well with digital coins converted and sent to fiat-based accounts. Aave Pay has been announced as both a web-based and a mobile application. While the online platform is live at the moment, there is little information on how to download, install and use the mobile app and its features…….

Source: Pay with Crypto, Payment Card to Be Launched by Banking Platform

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