Coin News

Ripple is staring down the barrel of yet another securities lawsuit — its third one this year.

Filed in the Superior Court of the State of California in San Mateo County, the class action alleges that Ripple and its team illegally sold and promoted XRP, Ripple’s currency, as an unregistered security.

The suit’s plaintiff, David Oconer, is demanding that the court classify XRP as a security, while also seeking relief for the “damages, recession” that he incurred from investing in the coin.

“This is a securities class action on behalf of all California purchasers of Ripple tokens (“XRP”), brought against Ripple, XRP II, and the Chief Executive Officer (“CEO”) of the company, Bradley Garlinghouse (“Garlinghouse”), who promoted, sold and solicited the sale of XRP. Defendants raised hundreds of millions of dollars through the unregistered sales of XRP, including selling to retail investors, in violation of the law,” the class action’s complaint reads.

The document argues that Ripple never registered with California’s Commissioner of Corporations for qualification, a mandatory registration for any securities offering in the state. From here, the plaintiff outlines his rationale for XRP’s security classification, namely that Ripple’s sale of XRP in a “never-ending initial coin offering” resembles that of an IPO, with the currency itself acting like a dividend for the ROI its promotion promised to investors.

On top of this, the plaintiff argues that Ripple is highly centralized and that its team has used their control over XRP’s supply and distribution to leverage the asset’s price. Specifically referring to an instance where the Ripple team locked 55 million XRP into an escrow account last December, the suit claims that Garlinghouse and others advertised the lock-up as having price-positive ramifications for the asset.

“The fact that the vast amount of existing XRP resides in the control of defendants further demonstrates the high degree of centralization and control defendants maintain over XRP, as they can determine the supply of XRP, which will, in turn, impact the price of the security,” the court document states.

Retracing Familiar Ground

Investors have been putting Ripple on the hot seat this summer. This securities class action marks the third of the season, as a succession of investor-led lawsuits are becoming a monthly occurrence for the industry’s top third asset by market cap.

The first of these came in May and, like the most recent one, it alleges that Ripple sold and promoted XRP like a security, conducting an endless ICO that allowed its team to reap mass profits. Another suit filed last month reiterates these allegations.

All three lawsuits go to lengths to stress Ripple’s control over XRP’s distribution. According to the class action suit, not only does this manipulate supply and price as a result, but it also conveys that, contrary to other popular currencies like bitcoin and ether, XRP is highly centralized.

This argument carries additional weight in light of U.S. Securities and Exchange Commission (SEC) Director William Hinman’s comments that ether and bitcoin are not securities. Alluding to ether during his speech, Hinman indicated that a coin or token may be sold as a security but, after it has become sufficiently decentralized in governance and management, it may be retroactively declassified as such. Given this analysis, Ripple, whose foundation and founders collectively own more than half the supply of XRP, may fall into the SEC’s classification as a security for its centralized structure.

During his speech, Hinman made no comment regarding XRP.

Ripple is staring down the barrel of yet another securities lawsuit — its third one this year.

Filed in the Superior Court of the State of California in San Mateo County, the class action alleges that Ripple and its team illegally sold and promoted XRP, Ripple’s currency, as an unregistered security.

The suit’s plaintiff, David Oconer, is demanding that the court classify XRP as a security, while also seeking relief for the “damages, recession” that he incurred from investing in the coin.

“This is a securities class action on behalf of all California purchasers of Ripple tokens (“XRP”), brought against Ripple, XRP II, and the Chief Executive Officer (“CEO”) of the company, Bradley Garlinghouse (“Garlinghouse”), who promoted, sold and solicited the sale of XRP. Defendants raised hundreds of millions of dollars through the unregistered sales of XRP, including selling to retail investors, in violation of the law,” the class action’s complaint reads.

The document argues that Ripple never registered with California’s Commissioner of Corporations for qualification, a mandatory registration for any securities offering in the state. From here, the plaintiff outlines his rationale for XRP’s security classification, namely that Ripple’s sale of XRP in a “never-ending initial coin offering” resembles that of an IPO, with the currency itself acting like a dividend for the ROI its promotion promised to investors.

On top of this, the plaintiff argues that Ripple is highly centralized and that its team has used their control over XRP’s supply and distribution to leverage the asset’s price. Specifically referring to an instance where the Ripple team locked 55 million XRP into an escrow account last December, the suit claims that Garlinghouse and others advertised the lock-up as having price-positive ramifications for the asset.

“The fact that the vast amount of existing XRP resides in the control of defendants further demonstrates the high degree of centralization and control defendants maintain over XRP, as they can determine the supply of XRP, which will, in turn, impact the price of the security,” the court document states.

Retracing Familiar Ground

Investors have been putting Ripple on the hot seat this summer. This securities class action marks the third of the season, as a succession of investor-led lawsuits are becoming a monthly occurrence for the industry’s top third asset by market cap.

The first of these came in May and, like the most recent one, it alleges that Ripple sold and promoted XRP like a security, conducting an endless ICO that allowed its team to reap mass profits. Another suit filed last month reiterates these allegations.

All three lawsuits go to lengths to stress Ripple’s control over XRP’s distribution. According to the class action suit, not only does this manipulate supply and price as a result, but it also conveys that, contrary to other popular currencies like bitcoin and ether, XRP is highly centralized.

This argument carries additional weight in light of U.S. Securities and Exchange Commission (SEC) Director William Hinman’s comments that ether and bitcoin are not securities. Alluding to ether during his speech, Hinman indicated that a coin or token may be sold as a security but, after it has become sufficiently decentralized in governance and management, it may be retroactively declassified as such. Given this analysis, Ripple, whose foundation and founders collectively own more than half the supply of XRP, may fall into the SEC’s classification as a security for its centralized structure.

During his speech, Hinman made no comment regarding XRP.

The Maltese Parliament has passed three bills into law that establish a regulatory framework for the country's blockchain sector, Malta Today reports.

Just last week, the Parliament “unanimously voted” to approve these bills in its second reading. The bills include the Malta Digital Innovation Authority Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act.

Silvio Schembri, the Parliamentary Secretary for Financial Services, Digital Economy and Innovation, shared an update on Twitter about the new development, which he believes will make Malta “the first world jurisdiction to provide legal certainty to this space.”

“The 3 Bills that will regulate DLT [distributed ledger technology] have been approved by Parliament and enacted into law,” the tweet reads.

The blockchain bills are designed to make Malta a hotspot for blockchain and cryptocurrency companies. Schembri believes that they will attract new businesses and put investors’ minds to rest.

While celebrating the new milestone in an update shared on Twitter, Maltese Prime Minister Joseph Muscat said that the new laws will make Malta a “global hub for market leaders” in the blockchain industry.

According to Muscat, the new legislation proves that Malta is the first country globally with a “holistic legislative framework” for regulating the blockchain space. Blockchain companies now have the legal tools necessary to operate in a forward-looking, regulated economy, the prime minister added.

With the new blockchain laws, Malta has distinguished itself as among the world's most friendly blockchain jurisdictions and has taken yet another step in becoming the world’s blockchain island.

The Maltese government has been working through different avenues to apply blockchain technology to public service. Earlier this year, it partnered with Omnitude to improve the transport system using DLT. In the past, the government has conducted a feasibility study using blockchain technology to record academic certificates.

Many crypto and blockchain businesses have already set up shop in Malta, as well. The most notable ones include OKEx, Binance and BitPay.

On July 3, 2018, Binance suspended all trading and withdrawal services due to "irregular" Syscoin (SYS) trades carried out "from a number of API users." The exchange has since resumed all activities, according to a blog post.

Questions remain, however, as to the root cause of the problem.

Binance API

While the price of Syscoin had hovered around 0.00004 BTC, an order for 1 SYS in exchange for 96 BTC was placed and completed on Binance. This trade sent the market into overdrive as users assumed that the exchange or the Syscoin protocol had been compromised.

Binance said it was revoking "existing API keys" and asked users to recreate their keys and be more protective. The exchange also informed users that it was rolling back irregular trades and will create a "Secure Asset Fund for Users (SAFU)" which will be funded by 10 percent of all trading fees "to offer protection to our users and their funds in extreme cases."

After performing system upgrades, Binance announced that it had resumed normal operations at 8:00 a.m. UTC on July 4, 2018.

For its part, Syscoin, a bitcoin fork, tweeted an update, insisting that the protocol was not compromised. Notwithstanding the "odd trading behavior" and an "atypical blockchain activity," their developers found nothing wrong with the blockchain.

Syscoin Miners

Syscoin Co-founder Sebastien DiMichele told Bitcoin Magazine about a mandatory upgrade to the Syscoin protocol (3.0.6.0) released 10 days prior. This was due to the buggy nature of the previous protocol. "The superblock implementation had bugs that affected transaction validation," DiMichele said.

DiMichele recounted how the team discovered the irregular trades on July 3. He said his team “noticed large buy walls across a few exchanges and the high increase of Syscoin's value, rising to an all-time high of 96 BTC per Syscoin on Binance (roughly $650,000K per unit), possibly creating for a brief moment, an all-time high for the market cap of all of cryptocurrencies combined.”

However, the price increase wasn’t unique to Binance. DiMichele said they found massive buy walls on “exchanges such as Bittrex as well; however, 96 BTC per Syscoin was only traded on Binance."

While the price of Syscoin surged across crypto exchanges, the company started receiving reports from users who were not able to deposit the purchased coin into their Binance wallets.

DiMichele said he was not sure why Binance had that problem, but he suggested it could be traced to the newer version they released some days ago. "I’m not 100% sure if Binance was still running the previous version or updated to the 3.0.6.0 version of the SYS protocol. We had, however, communicated the update to all exchanges several days before the superblock."

According to the Syscoin team, the Syscoin’s problems seemed to start with Binance. “Community members let us know that Binance wallets did not appear to work and we investigated directly with Binance,” said DiMichele. “A few hours later, they released an API update, a maintenance to their entire exchange (not just the Syscoin wallet) and then reinstated trading/wallets.”

While DiMichele is not sure about the cause of the deposit issues on Binance, he says the spike in the price of the coin to 96 BTC can be traced to higher fees set by the miners. This also affected the confirmation of transactions on the block explorer.

He said the majority of the miners "had a set fee policy that was above the default kb / SYS fee rate of 10,000 satoshi per kb.” This resulted in transactions appearing to be unprocessed, “but in reality, they were just taking much longer." Rumors abounded, and the price surged to an all-time high of $0.98.

The company later found large block output values of 544 million SYS and 1.2 billion SYS appearing on the block explorer. “It was at this stage that we asked exchanges to halt trading while we investigated the situation," he said. Those exchanges have since resumed normal trading.

In a Github post issued at approximately 8:00 p.m. UTC on July 4, Syscoin stated, “Our observations conclude that the later action was extremely aberrant.” The company asserts that Syscoin was not hacked and the Syscoin chain was not attacked — it is “fully operational as per design.”

Bitcoin Magazine reached out to Binance for their explanation of the root cause of the problem but Binance has not yet responded.

In late 2009, Bitcoin founder Satoshi Nakamoto ushered in a groundbreaking approach to money by championing a digital payment system free from third-party intermediaries and governmental control.

While this new worldwide economic system has advanced significantly over a relatively short period of time, it has yet to deliver a user-friendly approach to assist the everyday consumer with day-to-day commerce at retail establishments.

Do cryptocurrencies have practical use as a spending instrument? Will you be able to make purchases at a restaurant, grocery store, retail clothier or any number of brick and mortar storefronts with crypto anytime soon? 

A rapidly growing startup known as Crypterium proves cryptocurrencies can become an everyday method of payments. Joined by former CEO of Visa UK Marc O’Brien, the company is building a mobile app to “pay with crypto anywhere in the world” converting digital tokens into spendable currency, the use of which will be as easy as that of cash.

 Left to right: Austin Kimm, COO, Marc O’Brien, CEO, Pavel Ivanov, CTO 

Want to Pay With Bitcoin? Get the App

O’Brien explains: "Crypterium is partnering with banks to launch virtual cards that will be attached to user's crypto accounts in Crypterium App. Every time the consumer makes a transaction we will execute a trade in fiat and mark their crypto balance for a trade. You can be in a store and all of that's done in a fraction of a second."

Once enabled, users will be able to top-up their mobile phones, or shop around the world with crypto at any spot with a near-field communication (NFC) terminal or QR code scanning capability baked into their payment setup. Purchases can also be made through online stores, and bills can be paid instantly. Moreover, money can be reliably sent across borders in seconds, all for a fraction of a penny.

On top of that, Crypterium has an incentive system. Through this system, up to 30 percent of the transactional income generated by Crypterium will form a monthly loyalty program fund and will be distributed among the most active users.

A Track Record of Payment Advancements

O’Brien calls Crypterium’s promise a “Netscape moment,” in reference to the web browser that sparked an innovative leap forward during the ’90s internet explosion. The aim is to offer a simple tool that requires no learning curve — one that completely mitigates the barriers preventing a crypto-fiat system of global payment. 

Crypterium’s history of building payments processing solutions dates back to 2013 when it became the first company in Eastern Europe to release a mobile payments solution tied to QR code scanning. In 2015, the company facilitated 300 integrations with e-commerce retail services. Two years later, it began work on a direct interbanking debit protocol with the intent of lowering transaction fees.

Asked about the company’s strategic trajectory O’Brien says Crypterium will offer instant payment of customers' crypto and create liquidity for these payments that doesn’t exist today. “We will overcome the timing delay and fees that exist to exit crypto via an exchange into a bank account in fiat currency. And, for consumer commerce, we will immediately bridge the crypto and fiat worlds and start to facilitate crypto as an everyday medium of exchange,” he explains. 

O’Brien notes that the fully fledged version of the app is only accessible with invitation codes. The reason for this, he said, is that Crypterium, in an attempt to create a flawless product, is thoroughly testing everything before providing access to the wider audience. He said that the launch of the full version is planned as soon as the rigorous process is fully complete.

Note: Trading and investing in digital assets is speculative and can be high risk. Based on the shifting business and regulatory environment of such a new industry, this content should not be considered investment or legal advice.

ULedger and Fetch.ai have joined resources to tackle the problems caused by human error in today’s economy. Based in Boise, Idaho, ULedger is an international technology firm with offices in Kosovo, Italy and Austria. The company works to offer security and transparency to digital records and electronic communications, while providing indisputable third-party audit trails of electronic data to ensure transactions and related activities are recorded in real time.

Fetch.ai, based in Cambridge, United Kingdom, allows digital entities representing Internet of Things (IoT) machines to work independent of human control while maintaining transactions and financial records.

Fetch CTO Toby Simpson explained, “This is one of those rare, exciting chances to connect two complimentary pieces of technology in a way that hugely broadens the opportunities for the users of both. Fetch provides a vast digital world for ULedger’s customer data alongside its unparalleled opportunities to build and use collaborative prediction models. Fetch’s users and its networks benefit from a concrete solution to the data oracle problem — an interface between the Fetch world and the real world.”

Fetch’s integration with ULedger will allow its network to utilize real-world data from IoT-based sources in a provable manner. ULedger users will also benefit, as they’ll now have access to their data through the digital Fetch system. Both companies’ combined power could give rise to a transaction system that would allow for millions of transactions per second at virtually no cost to consumers.

Speaking with Bitcoin Magazine, ULedger CEO Josh McIver stated, “IoT has advanced leaps and bounds in the past few years. The use cases range widely. We have seen customers who rely on IoT to manage everything from quality control in manufacturing facilities to optimizing the power grid, augmenting oil and gas field-based intel, and many more use cases. With all of these use cases, it’s imperative to secure the integrity of this data so AI is making decisions on reliable source data.”

The first move of both companies will be to power the Mobility Open Blockchain Initiative (MOBI), which first emerged in Dubai in early May 2018. The organization includes major automakers and tech ventures as members (from BMW to IBM) and has plans to explore further blockchain use in the automotive industry. Studies are already underway regarding ways in which the blockchain can make global transportation safer, less expensive and more accessible.

The Financial Conduct Authority (FCA), responsible for conduct and relevant prudential regulation of financial services firms and financial markets in the U.K., has announced the details of the firms selected to be part of cohort 4 of its regulatory sandbox, according to an FCA post. Of the 29 firms selected, about 40 percent of them are blockchain focused.

The sandbox’s cohort 4 is a regulatory environment where firms can test innovative products, services or business models in a controlled environment with real customers. Businesses can test out their services with the aim of reducing costs of time-to-market while providing support in identifying “appropriate consumer protection safeguards” to be built into the products. This particular regulatory sandbox is a brainchild of Project Innovate, an initiative the FCA created in 2014 "to promote competition in the interest of consumers."

Cohort 4

The FCA said it had selected 29 firms out of the 69 that applied to this most recent cohort’s regulatory sandbox. FCA Executive Director of Strategy and Competition Christopher Woolard spoke about the development which he says is "the largest sandbox cohort to date" as a "record number of applicants" met the eligibility criteria.

Of the 29 firms that have been selected for cohort 4, about a dozen of these companies use distributed ledger technology (DLT) for automating issuance of equity/debt, insurance provision and for the application of APIs; others offer services related to crypto assets.

20|30 is one of the companies accepted into cohort 4. It uses the Ethereum blockchain to help companies raise funds by issuing equity tokens. As part of the sandbox cohort, it will be able to test the issuance of equity tokens to investors using Nivaura's integration with the London Stock Exchange Group (“LSEG”) Turquoise platform. The company seeks to demonstrate a "commercially viable model for tokenizing company equity" and to "establish equity tokens" as a means of raising capital.

“We are delighted to be included in the latest cohort of the FCA’s regulatory sandbox,” said 20|30 founder David Siegel. “This is a significant milestone for the 20|30 team. For the first time, our integration with the Turquoise platform will demonstrate a regulatory-compliant way for institutional investors to purchase equity tokens. We believe this is an important first step to building a new digital foundation for capital markets.”

Also selected by the FCA for sandbox testing, Globacap is a London-based, digital capital raising platform for SMEs and institutional investors which uses DLT to simplify and streamline the issuance process.

It seeks to bridge the gap between SMEs access to global capital while protecting the full rights of investors associated with equity and debt securities.

The company plans to run "an end-to-end capital raising on its own platform," where it will also issue equity "as an ERC-compatible token, in its Digital Security Offering (DSO)." This trial will also "provide proof of concept" for the company's new platform which offers SMEs a broader pool of global capital.

Co-founder of Globacap Myles Milston commented on the possibilities that abound for businesses raising capital in this way. He said, "The Innovate team at the FCA have been pivotal in this milestone, allowing us a quicker route to launch our proof of concept while having regulatory oversight."

Other blockchain companies included in cohort 4 include BlockEx, Capexmove, Etherisc, Fineqia, Fractal, Natwest, TokenMarket, Tokencard, Universal Tokens and World Reserve Trust.