SEC Files Subpoena Enforcement Against Alleged ‘Pump-and-Dump’ ICO Scheme

The U.S. SEC has filed a subpoena enforcement action against the perpetrators of an alleged “pump-and-dump” scheme involving claims of a $100 million ICO.

The U.S. securities agency has filed a subpoena enforcement action against the perpetrators of an alleged “pump-and-dump” scheme involving claims of a $100 million Initial Coin Offering (ICO), according to an Oct. 9 filing.

The Securities and Exchange Commission (SEC) states it filed the subpoena application Oct. 5 at the U.S. District Court for the Central District of California against the “Saint James Holding and Investment Company Trust and its sole trustee, Jeffre Jame.”  The filing came following the agency’s action to suspend trading in a penny-stock firm dubbed “Cherubim Interests, Inc.” this February.

According to yesterday’s statement, the SEC believes that Cherubim issued false public statements, claiming that the company had “executed a $100,000,000 financing commitment” to launch an ICO for St. James Trust.” The filing continues:

“After Cherubim’s stock price and trading volume increased on this news, certain individuals associated with the company may have ‘dumped’ their overvalued Cherubim stock for significant profits.”

The SEC’s archives contain a memorandum of understanding (MoU) dated Jan. 5 that outlined Cherubim’s alleged ICO financing commitment, describing a so-called Self Sustaining Intentional Communities Coin (SJT) that would generate enough capital “to create self-sustaining intentional communities across the US and across 57 nations.”

The SEC yesterday stated that it had first acted to suspend trading in Cherubim securities after it had reason to doubt the accuracy of the firm’s disclosures. According to the February suspension order, Cherubim is alleged to have issued press releases in January claiming it had acquired “AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology.”

The SEC has also pointed to the firm’s failure to file reports for the fiscal year ending August 2017, as well as a quarterly report last November.

The SEC stated yesterday that despite issuing subpoenas to both St. James Trust and James in June 2018, and having “personally served” the trustee with copies of the subpoenas, and extended deadlines “multiple times,” neither the trust nor the trustee responded to the agency, nor produced the necessary documents. The agency therefore seeks an order from the court compelling both to produce all responsive documents.

The agency emphasizes, however, that it continues its fact-finding investigation in this matter and, “to date, has not concluded that anyone has violated securities laws.”

At the end of September, Cointelegraph reported that the SEC had filed charges against an international securities dealer that was offering Bitcoin-funded security-based swaps, in an alleged violation of federal securities laws.

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SEC Files Subpoena Enforcement Against Alleged ‘Pump-and-Dump’ ICO Scheme

The U.S. SEC has filed a subpoena enforcement action against the perpetrators of an alleged “pump-and-dump” scheme involving claims of a $100 million ICO.

The U.S. securities agency has filed a subpoena enforcement action against the perpetrators of an alleged “pump-and-dump” scheme involving claims of a $100 million Initial Coin Offering (ICO), according to an Oct. 9 filing.

The Securities and Exchange Commission (SEC) states it filed the subpoena application Oct. 5 at the U.S. District Court for the Central District of California against the “Saint James Holding and Investment Company Trust and its sole trustee, Jeffre Jame.”  The filing came following the agency’s action to suspend trading in a penny-stock firm dubbed “Cherubim Interests, Inc.” this February.

According to yesterday’s statement, the SEC believes that Cherubim issued false public statements, claiming that the company had “executed a $100,000,000 financing commitment” to launch an ICO for St. James Trust.” The filing continues:

“After Cherubim’s stock price and trading volume increased on this news, certain individuals associated with the company may have ‘dumped’ their overvalued Cherubim stock for significant profits.”

The SEC’s archives contain a memorandum of understanding (MoU) dated Jan. 5 that outlined Cherubim’s alleged ICO financing commitment, describing a so-called Self Sustaining Intentional Communities Coin (SJT) that would generate enough capital “to create self-sustaining intentional communities across the US and across 57 nations.”

The SEC yesterday stated that it had first acted to suspend trading in Cherubim securities after it had reason to doubt the accuracy of the firm’s disclosures. According to the February suspension order, Cherubim is alleged to have issued press releases in January claiming it had acquired “AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology.”

The SEC has also pointed to the firm’s failure to file reports for the fiscal year ending August 2017, as well as a quarterly report last November.

The SEC stated yesterday that despite issuing subpoenas to both St. James Trust and James in June 2018, and having “personally served” the trustee with copies of the subpoenas, and extended deadlines “multiple times,” neither the trust nor the trustee responded to the agency, nor produced the necessary documents. The agency therefore seeks an order from the court compelling both to produce all responsive documents.

The agency emphasizes, however, that it continues its fact-finding investigation in this matter and, “to date, has not concluded that anyone has violated securities laws.”

At the end of September, Cointelegraph reported that the SEC had filed charges against an international securities dealer that was offering Bitcoin-funded security-based swaps, in an alleged violation of federal securities laws.

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Coinbase Exec Says Japanese Crypto Crackdown a ‘Good’ Thing, Awaits Operating License

As it awaits its Japanese operating license, Coinbase has made positive remarks about the country’s toughened stance towards the crypto industry.

As it awaits its Japanese operating license, an executive from leading U.S. crypto exchange Coinbase has made positive remarks about the country’s toughened stance towards the crypto industry.

In an interview with financial newspaper Nikkei Asian Review published Oct. 10, Coinbase chief policy officer Mike Lempres said that talks for obtaining the license are “going well” with the country’s top financial watchdog, adding that the regulator’s focus on security is “good for us.”

As previously reported, Japan’s Financial Services Authority (FSA), has intensified its scrutiny of crypto exchanges in the wake of January’s industry-record-breaking $532 million hack of domestic crypto exchange Coincheck.

The regulator has just recently announced plans to apply yet more rigorous oversight of applications from exchanges hoping to receive an official license: some 160 are reported to currently be awaiting a decision.

Lempres is today quoted as saying that “the Japanese government is more focused on security,” in the crypto space, yet he added that it is “good for us.” The CPO emphasized that the exchange is firmly set on getting the regulator’s green light, noting:

“We are… committed to getting it done. It will certainly be in 2019.”

Nonetheless, Lempres pointed to a key question still to be resolved in its application, namely whether the FSA will require Coinbase’s system to be operated in Japan. Lempres said that such a condition would significantly raise security risks, stating:

“We have everything built to protect our storage… in the U.S. We won’t do anything to even raise possibility of a hack. It would be hard for us to duplicate what we do in the U.S. today in Japan and other countries.”

Lempres noted that the exchange currently has “dozens” of U.S.-based employees dedicated to security.

As previously reported, Coinbase first revealed its plans to enter the Japanese crypto market in June, stating at the time it hoped to receive a license “within a year.”

While a license has been mandatory for all crypto exchanges operating within the country since the amendment of Japan’s Payment Services Act in April 2017, the FSA has continued to ratchet up requirements for applicants.

Earlier this month, the regulator revealed it would fortify the process of risk screening for exchanges, stating it had increased “the number of questions asked when screening applications to about 400 items, up fourfold.”

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Singapore: Regulator Plans to Smooth Over Banking Ties With Crypto Businesses

Ravi Menon has said he “would not blame” banks for not serving crypto clients, but an “understanding” could be reached.

The head of Singapore’s financial regulator and de facto central bank said he wants to “bring together” banks and crypto businesses after complaints about banking support, Bloomberg reports Wednesday, Oct. 10.

Speaking in an interview, Monetary Authority of Singapore (MAS) managing director Ravi Menon appeared to consider the creation of a balanced regulatory environment for incoming crypto entities.

“What we are trying to do is to bring the banks and cryptocurrency fintech startups together to see if there is some understanding they can reach,” he told the publication, adding:

“The nature of this business is a bit different, so banks may need to employ other ways in which they can establish bona fide. I hope we can bring minds together on this so that we can get over this hurdle.”

Singapore has made a name for itself in recent years as a broadly welcoming jurisdiction regarding disruptive fintech, with Menon publicly showing support for the promise of both cryptocurrency and blockchain technology.

At the same time, he remains prudent about the emerging sector, noting to Bloomberg that from a bank’s perspective, he still “would not blame” executives for continuing to refuse to service crypto clients.

“Some of these activities are indeed quite opaque,” he added.

Last year, reports emerged of extant cryptocurrency entities in Singapore suddenly having their bank accounts closed by local lenders.

Nevertheless, Singapore’s position continues to differ markedly from official stance in countries such as India, where a blanket ban on banks dealing with crypto businesses continues.

After a raft of complaints, the country’s supreme court is now soon due to deliver a verdict on the ban’s legal legitimacy.

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Swiss Financial Watchdog Issues Country’s First Crypto Asset Management License

The Swiss Financial Market Supervisory Authority (FINMA) has issued the country’s first cryptocurrency asset management license to a crypto investment fund.

The Swiss Financial Market Supervisory Authority (FINMA) has issued the country’s first cryptocurrency asset management license to a crypto investment fund, Swiss-centered media outlet Swissinfo reports today, Oct. 9.

The recipient is Crypto Fund, a subsidiary founded in 2017 by Zug-based Crypto Finance AG. The fund has reportedly until now only been able to distribute offshore-based cryptocurrency funds under FINMA rules. The new license, however, will permit the firm to legally offer a wide spectrum of collective investment products that track Bitcoin (BTC) and other crypto assets, including domestic funds.

The license also allows the firm to provide investment consultancy services for institutional clients — essentially affording it the same freedom as that given to traditional Swiss asset managers, as the article notes.

According to Swissinfo, there is a crush of rival crypto funds “queuing up” to get approval for a gamut of crypto-related products and services, which include applications for a license to offer full banking services for cryptocurrency operators in the country.

Cointelegraph has recently reported on a Swiss blockchain startup that won approval to operate in the local financial market under the Financial Services Standards Association (VQF), which is authorized by FINMA to oversee anti-money laundering (AML) compliance. The firm in question is also reportedly seeking a banking license to enable it to offer securities investments in future.

As previously reported, Zug known in the crypto industry by the moniker, “Crypto Valley,” given the high concentration of blockchain– and crypto-related projects active in the town.

This summer, local companies partnered with the Zug government to trial a blockchain-based municipal voting system.

Switzerland more broadly is markedly proactive when it comes to regulating the new crypto space. In February of this year, FINMA published detailed guidelines on ICOs, according to which many projects — specifically utility and asset tokens — are to be regulated under securities laws, whereas payment tokens fall under the Swiss Anti-Money-Laundering (AML) Act.

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‘Huge Cash Flows’: Lithuania Voices Concern Over ICO, Crypto Trading

Lithuanian regulators are focusing on ICOs and cryptocurrency trading in new investigations and potential policy reforms.

Lithuanian authorities held a seminar examining the “threats and potential benefits” of Initial Coin Offerings (ICO) to the country’s economy, a press release reported Wednesday, October 3, amid an ongoing investigation into cryptocurrency trading habits.

The Financial Crime Investigation Service (FCIS) organized the meeting, which included representatives from government ministries, the central bank, and the General Prosecutor. According to the press release, the gathering revealed that Lithuanian processes “huge” turnover from crypto to fiat.

Antonio Mikulsk, head of the FCIS, said:

“Virtual currency has huge cash flows, but (there are) worries about converting them into dollars and euros as quickly as possible, (and) leaving virtual currencies as quickly as possible.”

Lithuania had pledged to create a formalized regulatory environment for cryptocurrency and related products, noting the benefits that come from adopting a hands-on approach to the industry.

Now, authorities are noting that a high ICO turnover volume — €500 million (about $576 million) over the past eighteen months — calls for tougher anti-fraud mechanisms.

“According to ICO figures, Lithuania is one of the world leaders and shows the highest, 305 percent, growth from all over the world,” FCIS deputy director Mindaugas Petrauskas added, quoting data from local consultancy firm Versli Lietuva.

The FCIS is simultaneously examining banks’ role in processing high-volume crypto-to-fiat transactions resulting from exchanges, noting that any single transaction over €80,000 (about $92,200) must be investigated, Lithuanian news outlet Delfi reported October 5.

Various regional banks are involved in the investigation, including SEB Bank, Swedbank, and Danske Bank. The sum total of crypto exchange transactions from 2017 to 2018 stood at €661 million (around $762 million) at the time the data became public, Delfi notes.

“Such a sum already causes a certain suspicion,” Petrauskas said about the €80,000 threshold, which involves around 500 individuals and 100 business entities.

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US: CFTC Chair Notes Crypto Cases in Record Year of Enforcement Actions

At a recent event in Minneapolis, CFTC chairman Christopher Giancarlo noted increased enforcement actions last year, partly due to fraudulent crypto cases

Christopher Giancarlo, the chairman of U.S. Commodity Futures Trading Commission (СFTC), said in an Oct. 2 speech that enforcement actions and fines increased significantly in the last fiscal year.

Giancarlo presented at the Economic Club of Minnesota, stating that the enforcement of the recent fiscal year, which ended September 30, was “among the most vigorous in the history of the CFTC.”

The CFTC filed 83 enforcement actions in the last fiscal year, representing a 25 percent increase from the last three years of the previous administration. The CFTC levied as much as $900 million in penalties this fiscal year.

The watchdog has also reached settlements from $30 million to $90 million that are reportedly connected with interest-rate benchmark manipulation with banks such as JPMorgan Chase & Co., Deutsche Bank, and Bank of America, among others. Giancarlo noted cryptocurrencies among the commission’s enforcement actions over the course of the last year:

“We have not been shy to take these cases to trial, winning significant trial victories in this area over the past year—including a precedent setting victory in a trial involving Bitcoin (BTC) fraud.”

The chairman also noted inter-agency collaboration in bringing charges against Marshall Islands-based international securities dealer 1 pool Ltd., and its project 1broker.com:

“We brought the action charging the portion of the activity involving derivatives, the SEC charged the portion relating to equities, and DOJ and the FBI secured an order seizing the platform’s website and shutting it down.”

Earlier this year, an undercover Federal Bureau of Investigation (FBI) agent purchased security-based swaps on 1broker’s platform from the U.S. without complying with requirements set by federal securities laws. The CFTC and the Securities and Exchange Commission (SEC), subsequently filed complaints against the firm.

In August, the commission permanently barred the operator and promoter of the CabbageTech Corp., who had previously been charged with “fraud and misappropriation in connection with purchases and trading of Bitcoin and Litecoin (LTC).” Although the operator, Patrick McDonnell, insisted that the CFTC did not have the authority to regulate his commercial operations, the judge took the CFTC’s side.

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US SEC Sets November 5 Deadline for Reviewing Nine Bitcoin ETF Applications

The U.S. SEC has outlined its review period for considering proposed rule changes related to various Bitcoin ETFs.

Disclaimer: Cointelegraph previously reported that the SEC gave Oct. 26 as the deadline for review. Cointelegraph has since updated this article to reflect the SEC’s date change.

The U.S. Securities and Exchange Commission (SEC) has outlined a time frame for reviewing proposed rule changes related to a series of applications to list and trade various Bitcoin (BTC) exchange-traded funds (ETFs).

The review period affects nine separate ETFs that have been proposed by three different applicants, according to documents filed by the SEC yesterday, Oct. 4.

The new amendments affect a pair of BTC ETFs that had been submitted by ProShares in conjunction with the New York Stock Exchange (NYSE) ETF exchange NYSE Arca. The other affected applications are the five further proposed ETFs from Direxion, also for listing on NYSE Arca – and two proposals from GraniteShares, for listing on CBOE.

The SEC has solicited  “any party or other person” to file a statement in support or rejection of the proposed BTC ETFs by Nov. 5.

The regulator has outlined that its prior orders disapproving proposed rule changes for all three applicants’ proposals will remain in effect pending the Commission’s review.

In a separate notice, the SEC has filed amendments to specific changes and clarifications that had been put forward by GraniteShares regarding its proposed models of operation.

As reported in late August, the SEC had chosen to review its decision to reject the nine ETF proposals, just a day after it disapproved them. The regulator had found that the products did not comply with the requirements by the “Exchange Act Section 6(b)(5), in particular the requirement that a national securities exchange’s rules be designed to prevent fraudulent and manipulative acts and practices.”

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Chilean MPs Present Blockchain Adoption Resolution to Parliament

Chilean MPs urge country’s parliament to adopt blockchain for public needs and conduct studies on its advantages.

Two Chilean deputies have presented a resolution on blockchain adoption to the lower house of the country’s parliament (Camara de Diputados) on Thursday, October 4, local news website Fortin Mapocho reported.

The proposed blockchain resolution project was first registered in late August. In the project proposal, the two presenting members of parliament (MPs) Miguel Angel Calisto and Giorgio Jackson, along with eight other MPs, appeal to the Chilean president Sebastian Pinera, urging him to implement blockchain in all public areas of the country. The document also offers to carry out studies on the advantages of blockchain-based security and energy solutions.

Introducing the resolution to parliament, Jackson cited a recent report from the Chilean Economic Prosecution office, which stated that the maintenance of notaries had become too expensive for the government. Jackson argued that storing said data in a decentralised system would significantly help reduce those costs.

MP Calisto also stressed that blockchain technology could guarantee the accuracy of all information kept.

Earlier in May the president of the Chilean Central Bank stated that he was considering introducing cryptocurrency regulation in the country. He argued increased regulation could help the state to “monitor risks,” notably of terrorist financing and money laundering.

Neighbouring South American countries are also testing blockchain for public administration. In July, Argentina announced the creation of a federal blockchain system back, while earlier this year, the Brazilian government stated it was planning move its popular public petitions onto the Ethereum blockchain.

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CFTC Chairman: Two-Thirds of Fiat Currency ‘Not Worth Paper It’s Written On’

printing money

The head of the US regulator Commodity Futures Trading Commission (CFTC) sees Bitcoin or other cryptocurrencies helping consumers escape fiat currency in the majority of the world by 2028. Giancarlo: Cryptocurrencies ‘Here To Stay’ As part of comments to CNBC about cryptocurrency regulation in the US, chairman J. Christopher Giancarlo described “two thirds” of fiat currencies currently in circulation as “not worth the polymer or the paper they’re printed on.” “I personally think cryptocurrencies are

The post CFTC Chairman: Two-Thirds of Fiat Currency ‘Not Worth Paper It’s Written On’ appeared first on Bitcoinist.com.

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