Coin News

Corporate customers tangled up in the aftermath of Mt. Gox’s historic hack can finally file for reparations.

The now-defunct Japanese bitcoin exchange opened up its claim filing system to corporate users this Wednesday, September 12, 2018. Previously, the system was open only to non-corporate individuals as of August 23, 2018, but with today’s announcement, any entity that lost funds to the exchange can now file for rehabilitation claims.

Creditors have until October 22, 2018, to file for rehabilitation, after which point they will be disenfranchised.

Established by Stellar co-founder Jed McCaleb but later acquired by Mark Karpelès, Mt. Gox collapsed in February of 2014 after an alleged hack. In the ensuing fallout, the exchange, which hosted the vast majority of the world’s cryptocurrency trading, was rendered illiquid, as malicious actors absconded with some 850,000 BTC, worth roughly $450 million at the time. The hack was the most devastating in industry history until Coincheck, another Japanese exchange, lost a staggering $530 million in January of 2018.

Given its magnitude, the aftermath of Mt. Gox’s collapse has hung on to the space’s community like an albatross. Even this year, community members theorized that market slumps were caused by Mt. Gox’s legal trustee, Tokyo-based attorney Nobuaki Kobayashi, selling bitcoin from the exchange’s estate to reimburse creditors. Kobayashi, who has overseen the civil rehabilitation process and who authored today’s statement, has since ended the sell-offs, offering creditors restitution in bitcoin and bitcoin cash under an updated rehabilitation plan, instead.

Originally filing for bankruptcy in 2014, the exchange’s case was stayed after a Tokyo District Court approved a petition to have it begin the civil rehabilitation process in June of 2018. In opening corporations to the claims filing process, the exchange is one step closer to putting its debts to rest after courts first permitted Mt. Gox users to file bankruptcy claims in April of 2015.

On the latest episode of The Bitcoin Game, host Rob Mitchell explains the recent trip he took to the World Economic Forum. Based in Davos, Switzerland, this international conference featured a wide number of economic experts and panelists within the international financial industry.

Sitting on one such panel titled “The Crypto Asset Bubble,” Jennifer Zhu Scott, a founding partner at Radian, later came on this week’s episode of The Bitcoin Game to discuss the trajectory of the future cryptocurrency industry worldwide, as well as her opinions on the space in her home country of China.

Becoming interested in cryptocurrency at a very early stage, Scott purchase bitcoins less from a fervent belief that it would gain value than from a desire to hold a piece of the history of decentralized technology.

As an early adopter who hails from Western China, Scott explains that she became personally invested in cryptocurrency for the fact that it is an untouchable way to store value. In particular, this is important to Scott because her family experienced the brunt of what can happen to people fully reliant on centralized monetary systems — her family lost much of their wealth and property after the Nationalists’ 1949 defeat in the Chinese Civil War and the rise of Mao Zedong.

Bringing up some of the conversations previously addressed at the World Economic Forum, Scott went on to discuss the desire for small, wealthier nations like Switzerland and Oman to become crypto-friendly hubs and the Chinese government’s motivations to crack down on decentralized platforms.

Additionally, Scott and Mitchell cover a number of other topics, including tidbits like her involvement in the hit show Silicon Valley as a consultant for cryptocurrency-related episodes. For the entire episode and others from The Bitcoin Game, visit the Let’s Talk Bitcoin Network.

Does a decades-old securities law apply to an initial coin offering (ICO)? In a case that represents the first time securities laws have been applied to cryptocurrencies, a district judge says it may.

On September 11, 2018, in a district courthouse in Brooklyn, New York, Judge Raymond Dearie ruled that two ICOs were securities, based on established laws that govern the financial instruments. His decision does not imply that all ICOs are securities, but that simply calling a token a “currency” does not preclude it from being classified as a security.  

Turning back a few pages, in October 2017, businessman Maksim Zaslavskiy was accused of misleading investors in two separate ICOs. He raised about $300,000 in a cryptocurrency called REcoin, which he claimed was backed by real estate, and a cryptocurrency called Diamond, which he claimed was backed by diamonds. In truth, no real estate nor diamonds backed either of the coins, and Zaslavskiy was charged in a criminal complaint with conspiracy and two counts of securities fraud — charges that carry up to five years in jail and a fine.

Zaslavskiy moved to have the charges dismissed. He argued that his ICOs were not securities, but “the exchange of one currency for another,” and that securities laws are too “unconstitutionally vague” to be applied to his case. 

Cornell law professor Robert Hockett calls the insistence that the laws are vague a “Hail Mary.” “It is a fallback argument,” he told Bitcoin Magazine. “At first the defendant says the law is clear in that it clearly does not apply, but then he effectively says, ‘I have no way of knowing what I can do because the law is unclear.’”

Judge Dearie found the laws clear enough. He pointed out that laws are meant to be interpreted flexibly. He then went on to determine that the two ICOs in question were “investment contracts” by applying the Securities Exchange Act of 1934, one of the most important pieces of legislation governing securities, and the Howey Test, a checklist regulators use to determine if an asset is a security.

Specifically, the Howey Test determines that a transaction represents an investment contract if "a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party." According to case documents, Judge Dearie found that REcoin and Diamond investors “undoubtedly expected to receive profits in their investments.”

In his arguments, Judge Dearie also referenced the DAO Report, an investigative report issued by the U.S. Securities and Exchange Commission (SEC) in July 2017 claiming that tokens sold on an Ethereum-based investment fund were securities, and public statements made by SEC Chairman Jay Clayton on cryptocurrencies and ICOs in December 2017. At that time, Clayton noted that “simply calling something a ‘currency’ or a currency-based product does not mean that it is not a security.”

“Combined with statements the SEC chairman made previously, yesterday’s decision lends further credence to what many of us believe, which is that offered coins will count as investment contracts and hence securities,” said Hockett. “The SEC has made noises that ICOs were securities, but up until now, there has been no official legal ruling declaring they were.”

The case still has to go to trial and, ultimately, it will be up to a jury to decide whether the ICO in question was a security. Still, Hockett said: “I really doubt an appellate court will overturn the district court’s ruling.”  

ICOs have been a major source of controversy in the crypto space. So far, about $20 billion has been raised in ICOs, most of that in the last two years. In a talk at MIT in April 2018, Gary Gensler, former chairman of the Commodity and Futures Trading Commission (CFTC), another regulatory body that has weighed in on ICOs, noted “significant noncompliance” with securities laws in the cryptocurrency space. “Many initial coin offerings, probably well over a thousand, many crypto exchanges, probably 100 to 200, are basically operating outside of U.S. law,” he said.

Crypto, charity and cycling. It’s an unlikely triad, but two fitness enthusiasts-turned-crypto philanthropists believe that, taken in combination, the three can drive positive change.

Taking a cross-country cycling trip around the U.S., Tour de Crypto riders Jason Berlin and Jovel Velasquez want to raise $1 million in cryptocurrencies and USD for the Houston Area Women’s Center (HAWC), a non-profit organization with the mandate to “[end] domestic and sexual violence for all.” Through its advocacy, counselling, education, shelters and support services, HAWC works to help survivors build safe and healthy lives.

If Berlin and Velasquez meet their goal, the money will be enough to fund half a year of services to HAWC’s 120-bed secure shelter. To ensure transparency, donors can verify that the wallet addresses listed on Tour de Crypto’s website and HAWC’s own are the same, and “100% of the donations will go directly to HAWC via wallets maintained and controlled by HAWC,” Tour de Crypto’s donation page states.

The tour will kick off on Friday, September 14, 2018, in the Hamptons, New York, ending on Friday, November 9, 2018, in Huntington Beach, California, and the entire trip will also be recorded with videographers and an audio crew along the way. Along the route, Berlin and Velasquez will be stopping in Houston to visit the headquarters of HAWC.

At the time of publication, the project is accepting donations in bitcoin, ether, litecoin, monero, digibyte, reddcoin, electra, paccoin and phore. The Electra community was the first to sign up, according to Blake Rizzo, head of charity affairs for Tour de Crypto. At last count, he said that over 7 million electra (~$4,340) had been donated to HAWC.

Speaking to Bitcoin Magazine, Rizzo explained that he was approached by Berlin with the idea of the tour. Rizzo said that Berlin came up with the concept, a play on the Tour de France, as a way to do something that raises awareness for cryptocurrency donations to charity.

“He also had a personal goal to ride a bike across the United States, so he decided to combine the two,” Rizzo added.

With a background in law as a commercial litigation attorney, Berlin originally approached Rizzo to draft documents for the tour. However, the more Rizzo got involved, the more opportunity he saw, so he took on a more active role to help increase awareness of the riders’ mission and how they hope to accomplish it.

When Berlin began speaking to Rizzo about potential charities, Rizzo immediately suggested HAWC, which has a four-star rating on Charity Navigator. It wasn’t long before Berlin decided to make the sexual assault survivor center the main focus on the first tour, which is expected to be the first of many.

“The goal is to do this every year and not only have a charity that is the main focus, but also ask other communities and coins to get involved and do one of two things,” said Rizzo. “They can have me set up HAWC with their particular wallet so their community can donate or [they can] go out and get another charitable organization accept their coin, so we can add them to the list and promote different charities along the way.”

In a way, the first tour will be a trial run to see how crypto communities can come together to benefit charitable organizations.

Beyond raising money for HAWC, the tour will be a challenge for its two riders. According to Rizzo, Berlin and Velasquez are not your typical Lycra-clad cyclists, but that’s not to say they haven’t put the work in prior to the start of the trip. During the interview, Rizzo told me that the pair had just completed a 130-mile training trip, and the two are riding each day to condition themselves and prep their legs for the roughly 3,000 mile journey.

When they’re not riding, Berlin is talking to various exchanges and coin operators who are interested in getting involved on the tour, either as sponsors or participating coins. So far, Ronnie Moas, founder of Standpoint Research and World Crypto Con, is a leading sponsor. World Crypto Con’s website states that it will donate 5 percent of all ticket sales to HAWC.

Moas was quick to join the effort. When raising awareness for Tour de Crypto, Rizzo came across a tweet from Moas regarding World Crypto Con, so he reached out to talk to him about the tour’s charitable mission.

“Within minutes he responded,” added Rizzo. “He had checked out our Twitter page and our mission and basically said ‘I’m in, call me or send me your number,’ and just like that I was on the phone with him for an hour and a half going through everything. He agreed right there to be our lead sponsor.”

Bitcoin bull Moas is a familiar face within the crypto space, well known for his own forays into crypto philanthropy. One of his projects, the five-star rated charity Food for the Poor, has raised more than $400,000 to date. Between his experience and the advisory role he can play for the tour, Rizzo believes he makes a prime addition to the Tour de Crypto team.

Speaking to Bitcoin Magazine, Moas said that, when he heard about the cause, it struck a nerve with him because he had thought about walking from New York to California to raise money for charity a few years ago.

“I have visited more than 70 countries around the world and nearly 40 of the 50 states in this country, so I have seen a lot of people living in horrible conditions during my travels around,” he said. “I was moved by this, and it has almost become an obsession of mine to help people that will never live one day of their lives the way you and I live every day of our lives.”

During the charity ride, the riders will aim to cover around 100 miles a day, in addition to working on videos to upload to their social media. Even though the first charity ride will take place in a matter of days, Rizzo explained that they are already looking forward to additional tours. They’ve already had interested parties reach out asking if they will do another event overseas.

“We really want to make this an annual event and even incorporate cycle races, so we are certainly open to all options and possibilities,” said Rizzo.

At the moment, though, the tour’s main goal is to continue spreading the word on crypto’s place at the charitable table.

“If a lot of people find out about what Jason and Jovel are doing, they may be able to move the needle,” added Moas.

Crypto, charity and cycling. It’s an unlikely triad, but two fitness enthusiasts-turned-crypto philanthropists believe that, taken in combination, the three can drive positive change.

Taking a cross-country cycling trip around the U.S., Tour de Crypto riders Jason Berlin and Jovel Velasquez want to raise $1 million in cryptocurrencies and USD for the Houston Area Women’s Center (HAWC), a non-profit organization with the mandate to “[end] domestic and sexual violence for all.” Through its advocacy, counselling, education, shelters and support services, HAWC works to help survivors build safe and healthy lives.

If Berlin and Velasquez meet their goal, the money will be enough to fund half a year of services to HAWC’s 120-bed secure shelter. To ensure transparency, donors can verify that the wallet addresses listed on Tour de Crypto’s website and HAWC’s own are the same, and “100% of the donations will go directly to HAWC via wallets maintained and controlled by HAWC,” Tour de Crypto’s donation page states.

The tour will kick off on Friday, September 14, 2018, in the Hamptons, New York, ending on Friday, November 9, 2018, in Huntington Beach, California, and the entire trip will also be recorded with videographers and an audio crew along the way. Along the route, Berlin and Velasquez will be stopping in Houston to visit the headquarters of HAWC.

At the time of publication, the project is accepting donations in bitcoin, ether, litecoin, monero, digibyte, reddcoin, electra, paccoin and phore. The Electra community was the first to sign up, according to Blake Rizzo, head of charity affairs for Tour de Crypto. At last count, he said that over 7 million electra (~$4,340) had been donated to HAWC.

Speaking to Bitcoin Magazine, Rizzo explained that he was approached by Berlin with the idea of the tour. Rizzo said that Berlin came up with the concept, a play on the Tour de France, as a way to do something that raises awareness for cryptocurrency donations to charity.

“He also had a personal goal to ride a bike across the United States, so he decided to combine the two,” Rizzo added.

With a background in law as a commercial litigation attorney, Berlin originally approached Rizzo to draft documents for the tour. However, the more Rizzo got involved, the more opportunity he saw, so he took on a more active role to help increase awareness of the riders’ mission and how they hope to accomplish it.

When Berlin began speaking to Rizzo about potential charities, Rizzo immediately suggested HAWC, which has a four-star rating on Charity Navigator. It wasn’t long before Berlin decided to make the sexual assault survivor center the main focus on the first tour, which is expected to be the first of many.

“The goal is to do this every year and not only have a charity that is the main focus, but also ask other communities and coins to get involved and do one of two things,” said Rizzo. “They can have me set up HAWC with their particular wallet so their community can donate or [they can] go out and get another charitable organization accept their coin, so we can add them to the list and promote different charities along the way.”

In a way, the first tour will be a trial run to see how crypto communities can come together to benefit charitable organizations.

Beyond raising money for HAWC, the tour will be a challenge for its two riders. According to Rizzo, Berlin and Velasquez are not your typical Lycra-clad cyclists, but that’s not to say they haven’t put the work in prior to the start of the trip. During the interview, Rizzo told me that the pair had just completed a 130-mile training trip, and the two are riding each day to condition themselves and prep their legs for the roughly 3,000 mile journey.

When they’re not riding, Berlin is talking to various exchanges and coin operators who are interested in getting involved on the tour, either as sponsors or participating coins. So far, Ronnie Moas, founder of Standpoint Research and World Crypto Con, is a leading sponsor. World Crypto Con’s website states that it will donate 5 percent of all ticket sales to HAWC.

Moas was quick to join the effort. When raising awareness for Tour de Crypto, Rizzo came across a tweet from Moas regarding World Crypto Con, so he reached out to talk to him about the tour’s charitable mission.

“Within minutes he responded,” added Rizzo. “He had checked out our Twitter page and our mission and basically said ‘I’m in, call me or send me your number,’ and just like that I was on the phone with him for an hour and a half going through everything. He agreed right there to be our lead sponsor.”

Bitcoin bull Moas is a familiar face within the crypto space, well known for his own forays into crypto philanthropy. One of his projects, the five-star rated charity Food for the Poor, has raised more than $400,000 to date. Between his experience and the advisory role he can play for the tour, Rizzo believes he makes a prime addition to the Tour de Crypto team.

Speaking to Bitcoin Magazine, Moas said that, when he heard about the cause, it struck a nerve with him because he had thought about walking from New York to California to raise money for charity a few years ago.

“I have visited more than 70 countries around the world and nearly 40 of the 50 states in this country, so I have seen a lot of people living in horrible conditions during my travels around,” he said. “I was moved by this, and it has almost become an obsession of mine to help people that will never live one day of their lives the way you and I live every day of our lives.”

During the charity ride, the riders will aim to cover around 100 miles a day, in addition to working on videos to upload to their social media. Even though the first charity ride will take place in a matter of days, Rizzo explained that they are already looking forward to additional tours. They’ve already had interested parties reach out asking if they will do another event overseas.

“We really want to make this an annual event and even incorporate cycle races, so we are certainly open to all options and possibilities,” said Rizzo.

At the moment, though, the tour’s main goal is to continue spreading the word on crypto’s place at the charitable table.

“If a lot of people find out about what Jason and Jovel are doing, they may be able to move the needle,” added Moas.

Today, September 12, 2018, OKCoin announced that the company will be offering token-to-token only trading in twenty states across the U.S. This announcement of its expansion in U.S. markets comes shortly after OKCoin/OKEx founder Star Xu was questioned and released by Chinese police in connection with an alleged digital currency fraud. OKEx is the second largest global exchange by volume, according to CoinMarketCap, (though that volume has been called into question) and now OKCoin is hoping that its own volume will increase with low fees in a market-maker favored pricing model.

OKEx was launched in 2014 to target peer-to-peer trading of hundreds of cryptocurrency pairs. The digital asset exchange was to supplant the 2013 version of OKCoin, which enabled Chinese Yuan to BTC payments. However, the past 18 months of regulatory changes amongst major economies have left OKEx unable to cater to investors and speculators in many countries, including the United States. OKCoin international was relaunched only in April of this year and had previously only operated in California as a fiat-to-token trading platform earlier this summer, so this token-to-token platform should enable a U.S. service to OKCoin previously denied to OKEx.

Given its currently limited pool of tradeable cryptocurrencies (BTC, LTC, ETC, ETH, and BCH), it may be hard to differentiate OKCoin from U.S. mainstays. However, this limited pool may be why OKCoin has been able to secure Money Transmittal Licenses (MTLs) from twenty states in the first place.

In its press release on the expansion, OKCoin states, “We have worked closely with regulators and researched regulations in every state to ensure that we are complying with Federal and State convertible virtual currency rules.” According to the same release OKCoin is in the process of applying for MTLs in the remaining states for both token-to-token and fiat-to-token trading.

This could prove to be a challenge in certain states, such as Vermont, New York and Washington. However, notable wins include Massachusetts where state licensing and enforcement on those selling cryptocurrency is notoriously stringent, and Secretary of the Commonwealth William Galvin has been vocally anti-bitcoin. OKCoin CEO Tim Buyn stressed the importance of working within the U.S. regulatory frameworks to “break down the barriers preventing a truly global digital asset market.”

The new states include Alaska, Arizona, Colorado, Idaho, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, Tennessee, Texas, Utah and Wisconsin.

Today, September 12, 2018, OKCoin announced that the company will be offering token-to-token only trading in twenty states across the U.S. This announcement of its expansion in U.S. markets comes shortly after OKCoin/OKEx founder Star Xu was questioned and released by Chinese police in connection with an alleged digital currency fraud. OKEx is the second largest global exchange by volume, according to CoinMarketCap, (though that volume has been called into question) and now OKCoin is hoping that its own volume will increase with low fees in a market-maker favored pricing model.

OKEx was launched in 2014 to target peer-to-peer trading of hundreds of cryptocurrency pairs. The digital asset exchange was to supplant the 2013 version of OKCoin, which enabled Chinese Yuan to BTC payments. However, the past 18 months of regulatory changes amongst major economies have left OKEx unable to cater to investors and speculators in many countries, including the United States. OKCoin international was relaunched only in April of this year and had previously only operated in California as a fiat-to-token trading platform earlier this summer, so this token-to-token platform should enable a U.S. service to OKCoin previously denied to OKEx.

Given its currently limited pool of tradeable cryptocurrencies (BTC, LTC, ETC, ETH, and BCH), it may be hard to differentiate OKCoin from U.S. mainstays. However, this limited pool may be why OKCoin has been able to secure Money Transmittal Licenses (MTLs) from twenty states in the first place.

In its press release on the expansion, OKCoin states, “We have worked closely with regulators and researched regulations in every state to ensure that we are complying with Federal and State convertible virtual currency rules.” According to the same release OKCoin is in the process of applying for MTLs in the remaining states for both token-to-token and fiat-to-token trading.

This could prove to be a challenge in certain states, such as Vermont, New York and Washington. However, notable wins include Massachusetts where state licensing and enforcement on those selling cryptocurrency is notoriously stringent, and Secretary of the Commonwealth William Galvin has been vocally anti-bitcoin. OKCoin CEO Tim Buyn stressed the importance of working within the U.S. regulatory frameworks to “break down the barriers preventing a truly global digital asset market.”

The new states include Alaska, Arizona, Colorado, Idaho, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, Tennessee, Texas, Utah and Wisconsin.