Connect with us

Regulation

SEC Files Charges Against ex-Senator David Schmidt – Meta 1 Coin

mm

Published

 on

Meta 1 Coin - David Shmidt

This week, the Securities and Exchange Commission (SEC) continued its ICO crackdown campaign. This time regulators announced charges against former Republican Washington state senator David Schmidt and two other individuals for their roles in the 2018 Meta 1 Coin scam. The fraudulent ICO left investors out of millions. Now the SEC seeks retribution for those who lost.

The SEC filed its complaint in the Western District of Texas on March 16. Regulators also named two other people, Robert Dunlap and Nicole Bowdler in the scam. All individuals face charges for violating antifraud and securities regulations.

Discussing the charges, David Peavler, the SEC’s regional director at the Fort Worth Regional Office stated that these individuals went out of their way to fraud US investors. The regulator went as far as to state they made “audacious claims about the Meta 1 Coin.” He explained that the team said anything to promote the event that left thousands with losses. Lastly, Peavler took a moment to remind investors that they should always act skeptically towards promoters who claim that their investment can’t lose value, or that investors will receive huge returns for minimal participation.

False Statements

The 2018 Meta 1 Coin ICO appeared to be a great opportunity for investors at first. Unfortunately, the developers behind the Meta 1 project had other plans. The group made numerous false and misleading statements. For example, the group promised investors returns of nearly 225,000 percent. On top of this outlandish claim, developers told investors the project was risk-free and would never lose value.

David Shmidt - Meta 1 Coin

David Shmidt – Meta 1 Coin

If all of these promises weren’t enough to get you to participate, Meta 1 had other strategies to employ. For example, Meta 1 promoters claimed an art collection valued at $1 billion backed the tokens. Also, the SEC pointed to instances when the group claimed deposits valued at $2 billion backed the tokens. Supposedly, a reputable accounting firm regularly audited these funds. Obviously, none of this was true.

Meta 1 Coins ICO

The Meta ICO raised just over $4.3 million from around 150 investors from across the globe. Unfortunately for Meta 1, many of these investors were from the US. As you would expect, complaints began to roll into the SEC last year after Meta 1 failed to distribute coins to investors.

SEC investigators revealed that Meta 1 spent the funds in question on personal items. Specifically, the proceeds were funneled to a Chicago-based fund, Pramana Capital. Additionally, an individual named Peter Shamoun received some of the ill-gotten funds. Regulators described how the fraudsters spent the funds on their lavish lifestyles. In one instance, in particular, one of the individuals purchased a $215,000 Ferrari.

Now the SEC is seeking civil penalties and permanent injunctions against Schmidt and the other two defendants. As part of the punishment, the SEC wants Meta 1 to cease-and-desist operations. Additionally, the company must refund all ICO investors. This refund includes any funds sent to Pramana Capital and Shamoun.

DYOR

This story is another case of uninformed investors caught in the blockchain hype. Hopefully, the SEC is able to reunite these investors with their lost funds. For now, Shmidt and his companions face an uphill battle against the SEC in the coming months.

Spread the love

David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com

Regulation

Multiple Canadian Securities Regulators Warn Against Halifax & Associates

mm

Published

on

halifax

Halifax & Associates – A Repeat Offender

A pair of Canadian regulatory bodies have now issued warnings to investors, regarding foreign companies selling illegal securities within the nation.

The first instance occurred in late March, when the Manitoba Securities Commission (MSC), brought the issue to light.  In their statement at the time, the MSC named Denmark based, Halifax & Associates, as defrauding Canadian investors.

Fast forward a mere two weeks, and the Nova Scotia Securities Commission (NSSC), has had to contend with the same issues.  Again, this prompted the regulatory body to issue warnings to prospective investors, as Halifax & Associates is not registered to offer securities within the province.

Money Lost

While the total number of investors – and the sums of money lost – is unknown, we do know that this is not an isolated occurrence.

The MSC specifically notes that a rural resident of the province was bilked out of more than $8000, while the NSSC notes that multiple investors were taken advantage of.

Proceed with Caution

Unfortunately, despite continued adoption among legitimate companies and investors, there continue to be select bad actors which utilize cryptocurrencies, such as Bitcoin.

In these particular scenarios, investors were advised to fund trading accounts with Bitcoin.  From here, Halifax & Associates would provide them with access to services subject to securities laws – something that the company is not registered to offer in the provinces.

The MSC provides the following points for investors to adhere, and proceed with cation.

  • promises of high returns with low risk,
  • pressure to invest quickly / limited time offers
  • secret or sans-serif”>‘insider’ information / exclusive offers
  • offers from complete strangers
  • unregistered salespeople and companies
  • inconsistent details / avoiding questions / no paper trail

Commentary

In their statement warning investors, Stephanie Atkinson, Acting Director of Enforcement at the NSSC, had the following to say.

“The internet can be a dangerous place to shop for investments…Always take the time to check registration and understand the risks and costs associated with your investments. Further, never give out personal information without verification of the legitimacy of operations. This is particularly important where the entity or individual is unknown. Becoming an informed investor is your best protection from falling victim to scams.”

In Other News

There will always be those that try and circumvent regulations.  We cannot paint the blockchain sector with a broad brush however, as there are many which adhere to rules and regulations.

In Canada, there are various regulatory bodies which do their best to provide safety to investors, while facilitating start-ups through exemptions.  With avenues existing which allow for potential exemptions, there is no valid reason to be offering unregistered securities.

For instance, a promising Canadian company has recently been awarded an exemption status, as they look to develop and grow.  The following article touches on an example of this.

DigiMax Designated ‘Exempt Market Dealer’ by OSC

Spread the love
Continue Reading

Regulation

Central Bank of South Korea to Host 22mth Pilot for Potential CBDC

mm

Published

on

south korea

Accelerating

To date, various nations have not only noted the potential need for a CBDC in the future, but have actually embarked on pilot programs to develop them.  The most recent nation to accelerate this process, delving in to a pilot program, is South Korea.

In this recent announcement by The Bank of Korea (also the nation’s central bank), they begin by stating, ‘The need for the introduction of the central bank digital currency (CBDC) by the Bank of Korea will increase.’  It is this recognition that has clearly prompted them to look at the logistics surrounding the creation, dispersion, and usage of such a CBDC.

What Will it Look Like?

While the BOK states that they are looking into the feasibility of utilizing blockchain to underpin a CBDC, usage of this technology is not a given.

Furthermore, the pilot program is expected to look at more than simply the technical requirements behind such a feat.  This extended look includes possible legal hurdles, expected cooperation between other central banks, custody solutions, and more.

The pilot program is said to be structured as a 22 month process, with the following breakdown.

  • Defining CBDC design and functionality
    • 5 months
  • Technological requirements
    • 5 months
  • Business process analysis through external consultation
    • 4 months
  • CBDC construction and testing in controlled environment
    • 12 months

The BOK, notably, refers to Sweden and their CBDC, the e-Krona, with regards to the structuring of their pilot program.

CBDC

The acronym ‘CBDC’, refers to a ‘Central Bank Digital Currency’.  These currencies are digital representations of previously established FIAT – meaning government issued currency.

While their structuring may vary, most believe that CBDCs will be structured as blockchain based tokens; Primarily due to the technologies ability to encode fungibility, while providing easy and cost efficient value transfer.

While digital, because CBDCs are issued by government regulated entities, they would be subject to the same, or very similar, regulations and scrutiny as traditional paper currencies.

Similar Approach

If this approach being taken by The Bank of Korea sounds familiar, perhaps that it because The Bank of Canada has recently announced similar intentions.

The Bank of Canada Could Issue a Digital Currency in the Future

While there is no firm timetable for the launch of a potential digital dollar, development is in the works.  As the adage goes, ‘an ounce of prevention is worth a pound of cure’.  Clearly, this is a stance adopted by each of these central banks, as they look to be prepared for the eventual need of a CBDC.  When the time comes, and a cure is needed for ailing paper currencies, preventative measures will be ready on the sidelines.

The Bank of Korea (BOK)

The Bank of Korea acts as the central bank for South Korea.  Operations are situated in the capital, Seoul.

In operation since 1950, The Bank of Korea is currently spearheaded by Governor, Lee Ju-yeol

In Other News

Recently, we took a brief look at a few ways that COVID-19 is affecting blockchain based endeavours, to date.  One of these revolves around issues which plague paper currency, and the need to go digital.  Make sure to read the following article to learn more about the perks brought forth by CBDCs.

The COVID-19 Effect

Spread the love
Continue Reading

Regulation

Japanese Government Introduces New STO Regulations

mm

Published

on

Japanese Regulators Amend STO Regulations

Japanese regulators officially launched their STO market via amendments to the country’s current securities regulations this week. The new crypto exchange-specific amendments add clarity to the market and introduce a number of important customer protections. As such, analysts predict that the Japanese crypto sector is about to experience rapid expansion.

According to new reports, the amendments will go into effect on May 1. Importantly the changes directly alter the Payment Services Act and the Financial Instruments and Exchange Act. The amendments introduced a variety of new measures ranging from new banking regulations and cold wallet requirements, all the way to, new legal terminology.

Storage Upgrades – STO Regulations

Specifically, the new amendments put new requirements on exchanges. For one, all exchanges must now keep in cold storage an amount equal or greater than the number of users’ funds held online. This regulation ensures that exchanges rely on cold storage whenever possible. Along the same line of thought, exchanges are no longer allowed to keep users’ funds and their funds together. Importantly, this regulation extends across both crypto and fiat reserves.

Financial Services Act via Wikipedia - STO Regulations

Financial Services Act via Wikipedia – STO Regulations

ICO and STO Amendments

Another important amendment added to the regulations is the legal definitions of initial coin offerings (ICOs) and security token offerings (STOs). For years, blockchain firms struggled to get regulators to clarify the exact differences in terms of regulations. Now, regulators have a clear cut understanding of what type of fundraising campaign is underway, and how to classify it.

Fighting Fake News – STO Regulations

Interestingly, the new amendments go after all forms of market manipulation. There are now stricter fines and punishments in place for spreading rumors or making false statements. This is an important addition as market manipulation is a real concern internationally. Japanese officials hope they can curb these nefarious actors and weed out bad sources of information.

As part of the new enforcement policies, the new regulations place cryptocurrency asset derivatives transactions under the FSA’s jurisdiction.  Additionally, there are some terminology changes. Moving forward, cryptoassets and not “cryptocurrencies” is the terminology regulators agreed on.

Importantly, a group of Japan’s top securities firms has been patiently waiting for these regulations to become official. The group includes Monex Group, Rakuten, and one of the largest financial institutions in the country, SBI. In March, the group publicly revealed plans to create a regulated security token exchange.

COVID-19 Delays

The group’s wish could have come sooner if the world wasn’t in the middle of the COVID-19 pandemic.  Unfortunately, the virus has wreaked havoc on the markets and caused multiple delays for regulators. Notably, Japan was even forced to postpone the 2020 Olympics.

Japan STO Market is Here

Despite the dreary state of the international markets, Japan seeks to be the blockchain capital of the region. This determination, coupled with regulators forward-looking stance, is sure to give the country an advantage over the competition. For now, you can expect to see progress as the Japanese STO market is officially active.

Spread the love
Continue Reading