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block.one Agrees to $24M Settlement with SEC

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block.one Agrees to $24M Settlement with SEC

Settlement

A long battle between block.one and the SEC has finally found a resolution. The case, which saw the SEC accuse block.one of illegally distributing digital securities, saw a final settlement of $24 million, and a ‘Neither Admit nor Deny’ stance.

Charged

These charges date back to an ICO surrounding an ERC-20 based token that raised $4.1 billion. Unfortunately, at the time, block.one neglected to register the event with the SEC. By failing to do so, the event represented the distribution of unregistered securities, which is obviously not allowed.

ERC-20 Migration and Waivers

The tokens sold during this event have been migrated to a different blockchain, meaning they are no longer in circulation. With this being the case, along with the on-going efforts of block.one to remain complaint with regulations, the SEC has granted them a waiver, moving forward.

Block.one indicates that this waiver will exempt the company from ongoing scrutiny in their operations – which is typical for companies that reach similar settlements; meaning most must endure a sort of ‘parole’, post settlement, ensuring continued compliance.

Commentary

In response to the settlement, both, the SEC and block.one took the time to share their thoughts. The following is what each had to say on the matter.

Steven Peikin, Co-director at the SECs Division of Enforcement, stated,

“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering…The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.” 

block.one stated,

“We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continues to develop more clarity around compliance frameworks for digital assets…Blockchain’s ability to better align organizations with their consumers, increase the transparency of critical database infrastructure, and better distribute value and wealth throughout society remains our company’s focus, and we will continue to fight for the development of our industry to achieve as much alignment around policy and best practices as possible.”

Block.One

Headquartered in Grand Cayman, Cayman Islands, Block.One is a software publisher which was founded in 2016. They, notably, are the developers of the popular EOS cryptocurrency.

CEO, Brendan Blumer, currently oversees company operations.

In Other News

Various companies have recognized the need for greater clarity, regarding what constitutes a security, with regards to blockchain. This has resulted in the formation of the Crypto Ratings Council. This is a grouping of companies which have developed a framework, meant to assess the likelihood that an asset will be deemed a security by the SEC. With companies such as block.one, Kik, Ripple, and others enduring the wrath of the SEC, this framework is a welcome addition to the sector, moving forward.

‘Crypto Ratings Council’ Formed by Industry Stalwarts

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Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

Regulation

SEC Charges Opporty for 2018 ICO

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SEC Charges Opporty for 2018 ICO

This week, the Securities and Exchange Commission (SEC) continued its ICO crackdown. This time, the firm levied charges against project Opporty Founder and Brooklyn-resident Sergii Grybniak. The firm alleges that Grybniak broke the law when his firm raised approximately $600,000 during its 2018 ICO.

News of the charges first broke via Jan. 21 press release. In the release, the SEC reveals the charges laid against Grybniak in detail. Importantly, the primary charge is participating in the unregistered sale of securities. Additionally, the SEC claims that Grybniak made false statements in order to encourage more investor participation.

These statements include a myriad of exaggerated and completely fake claims. In one instance, Opporty claimed that its 2018 ICO was “100% SEC-compliant.” Unfortunately, this claim proved to be the tip of the iceberg. Apparently, Opporty also claimed to have thousands of “verified providers” who were ready to work with the platform.

Opporty via Homepage

Opporty via Homepage

This claim became so overblown that in one piece of marketing material, Opporty suggested it had a business database that included around 17 million participants. In actuality, the firm had no partnerships. Unfortunately, these claims served one main purpose, to push more investment capital into the ICO.

Major Software Firm

As if the shower of lies put forth weren’t enough, Opporty also made some very specific partnership claims that proved to be bunk as well. According to the SEC, the firm lied about a partnership with a major software company. This lie was to help ease investor doubt about the ability of developers to deliver on their hefty platform promises.

SEC Steps In – Opporty

It doesn’t take much research to see why Opporty ended up in the SEC’s crosshairs. Now, the SEC seeks injunctions against all future digital offerings by the company. On top of the cease-and-desist, regulators require Opporty to return all the funds the company raised during its 2018 ICO. Also, the firm is to face a variety of civil penalties for its actions.

Opporty

Opporty executives sold the concept to investors as a blockchain-based ecosystem for small businesses. The platform was to provide these small-to-medium sized companies with access to advanced blockchain systems. For example, businesses could list their services and lock in their clients via smart contracts.

United States Investors

Aside from the obvious scamming that took place, Opporty made another key error in its strategy. You see, unlike many similar ICOs, the offering did not explicitly exclude U.S. investors from participating. The 2018 ICO included investments from around 200 US citizens. In this way, the firm invited the SEC to monitor its actions throughout its entire crowdfunding campaign.

An Oppurty Lost

Given the long list of violations this firm now faces, it’s easy to imagine a scenario in which Opporty decides to close its doors. Already, numerous SEC-charged firms have taken similar measures prior to refunding clients’ funds. For now, Opporty has a long legal battle and hefty fines to deal with. You can expect to hear more from this case as the SEC pursues its charges against Grybniak.

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Disguises, Fake Identities, and an Illegal ICO – The SEC Looks to Lay Charges

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ico

Charges Laid

The SEC is hard at work ousting, and holding accountable, those in the world of blockchain that have breached securities laws.  Most recently, the SEC has turned their attention to an ICO hosted by a pair of companies operated by a duo of devious individuals.

The Companies
  • CG Blockchain Inc.
  • BCT Inc.

This pairing of companies was marketed as developing technology to disrupt hedge funds, and the way they operate.

The Ring Leaders
  • Boaz Manor (alias ‘Shaun Macdonald)
  • Edith Pardo (alias ‘Edith Mehler’)

In all endeavours, it is believed that Boaz Manor was at the helm, with Edith Pardo acting as a ‘front-woman’, deflecting attention from Manor’s past.

The Details

In this particular case, the pair of companies, and the aforementioned individuals, are accused of facilitating/hosting a ‘fraudulent and unregistered offering of digital asset securities’.

$30 million worth of these securities were sold to investors, under the guise of a utility token ‘BCT’.  Beyond simply selling illegal securities, those responsible flat out lied to their investors on a variety of fronts.

  • Fake Identities
  • Fake chain of command
  • Product state of development
  • Product Adoption
  • Investments by founders

The list goes on.  Simply put, they were not who they said they were, and the companies did not have a developed product gaining traction within the industry.

Fake Identity

This next bit is not an everyday occurrence – rather, it was something you would see in a movie.  Knowing full well that their activities were in violation of various securities based laws, Manor and Edith Pardo felt it prudent to hide their identities.

In order to do this, and distance themselves from their past activities (more on that, later), the pair went to great lengths.  The SEC states,

“During the scheme, Manor employed a number of deceptive devices related to his fake identity and to the concealment of his background and role.”

Some of the tactics used to conceal their identities included dying hair, growing beards, attaining fake identification under the alias ‘Shaun MacDonald’, etc.

Shady Past

There are few reasons to justify hiding one’s identity in the manner that Manor did – either you’ve done something bad, or are doing something bad.  In this particular case, Manor is guilty of both.

We’ve discussed the illegalities associated with his actions in the aforementioned ICO, however Manor has a history of such activity.  Dating back to 2005 in Canada, Manor was found to be running a fraudulent hedge fund, valued at nearly $750 million.

When light was shed upon his operation, Manor proceeded to flee the great white north, becoming a fugitive in the process.  After eventually returning, and completing a prison sentence of 1 year, Manor went on his way, staying out of the limelight until now.

Commentary

Due to the great lengths gone to by the pair to partake in the aforementioned illegal activities, in addition to the sum of money raised, the SEC is taking a strong stance.  The following is an excerpt from their court filing.

“Unless Defendants are restrained and enjoined, they will again engage in the acts, practices, transactions, and courses of business set forth in this Complaint or in acts, practices, transactions, and courses of business of similar type and object.”

SEC

The Securities and Exchange Commission is a United Stated based regulatory body, tasked with creating, an enforcing, regulation surrounding securities.  The goal of which is to foster and maintain a fair, transparent, and efficient market for all participants.

Chairman, Jay Clayton, currently oversees company operations.

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EMURGO Starts New Blockchain Task Force in Uzbekistan

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Uzbekistani Officials work with EMURGO Partnerships

This week, the blockchain arm of Cardano, EMURGO announced the creation of a special task force to assist the Uzbekistani government with security token integration. The newly developed team’s tasks will include researching, developing, and instituting new security token solutions into the market. Additionally, the team will guide Uzbeki officials on the creation of a regulatory framework to support a shift towards digital assets within the country’s financial sector.

News of the new taskforce first emerged via Cardano’s official blog. In the post, the company announced the creation of its new “strategic blockchain task force.” The post took a moment to describe the overall goals of the group. These goals include the development of a legal framework for STOs and security token trading. As such, the team will need to complete its market research in order to determine the best pathway towards providing solutions for the security token market locally.

EMURGO Partnerships

Given the remarkable size and importance of the task at hand, it’s no surprise to learn that EMURGO made important strategic partnerships. To date, the firm works with the government of Uzbekistan’s National Agency of Project Management (NAPM), Infinity Blockchain Holdings and the KOBEA group.

KOBEA – Blockchain Education

Notably, the Korean-based blockchain firm, KOBEA will assist EMURGO in the development of an educational structure. The new blockchain-based courses will be available at universities and community centers in the very near future. This structure is necessary to further the local markets’ access to blockchain professionals.

Ken Kodama - EMURGO Founder

Ken Kodama – EMURGO Founder

Discussing the importance of the partnerships, the CEO of the EMURGO Group, Ken Kodama took a moment to express the “great honor” his firm feels after receiving the official go-ahead with the project. He also explained why Uzbekistan is one of the best places for blockchain development to occur. Notably, he touched on the government’s willingness to push the adoption of new technology. He even stated that “Uzbekistan is more willing than ever to adopt innovation.

Cardano Blockchain

For its part, EMURGO will provide advisory services to the Uzbek government. Additionally, the firm will look into how to best integrate Cardano’s third generation blockchain into infrastructure projects. Blockchain infrastructure projects are on the rise. Despite the unprecedented growth within the sector over the last year, many analysts still see a lack of infrastructure as the main choke point towards full-scale blockchain adoption.

EMURGO and KOBEA

Interestingly, both EMURGO and KOBEA will provide additional insight into the digital asset banking markets. This data, coupled with a new educational initiative across all major Uzbek universities, should provide the country with a treasure trove of highly-trained professionals.

EMURGO

Cardano continues to impress with its 4th generation blockchain’s capabilities. Now, it appears that the firm has caught the attention of more than just your typical crypto investors. Given the sheer magnitude of its latest project, you can expect to see Cardano remain dominant in the crypto space for years to come.

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