facebook

Infamous political consulting group Cambridge Analytica had planned to hold an initial coin offering (ICO) before it became tangled up in Facebook’s data sharing scandal.

According to Reuters, the British data analytics firm had quietly approached an ICO advisory service with preliminary questions about holding a token sale, through which it hoped to gain $30 million.

The report states that it is unclear whether the company plans to follow through with the ICO, but a spokesperson did confirm that Cambridge Analytica — in a humorous twist — is developing a blockchain-based platform to help individuals “reclaim their data from corporate entities.”

“Prior to the Facebook controversy, we were developing a suite of technologies to help individuals reclaim their personal data from corporate entities and to have full transparency and control over how their personal data are used,” a Cambridge Analytica spokesman told the publication. “We were exploring multiple options for people to manage and monetise their personal data, including blockchain technology.”

That’s more than a little ironic. The data analytics firm, which was hired by US President Donald Trump’s 2016 election campaign, reportedly gained access to the personal data of as many as 87 million Facebook users as a result of improper data sharing practices on the part of the social media giant.

A New York Times report divers further into the nature of Cambridge Analytica’s foray into the cryptocurrency space, where it used its “psychographic profiles” of consumers to conduct targeted advertising campaigns for ICOs and other blockchain companies.

Investors who attended one Cambridge Analytica pitch deck said that the company also floated paying Mexican voters cryptocurrencies in exchange for filling out surveys, data from which would then be sold to Mexican political candidates and used to create ad campaigns.

Notably, Brittany Kaiser, who led Cambridge Analytica’s ICO-focused work, left the company in February and has been extremely critical of it in the two months since her exit.

Featured Image from Pixabay

Dubai is a land of booming opportunities for blockchain technology. Freedium, an organization building its presence at the Dubai Multi Commodities Center (DMCC), declared the launch of the first commodities backed digital stable currency, following the U.S. Dollar. In view of the blockchain technology, the organization has plans to be operational by the last quarter of 2018.

As per Freedium, the organization picked Dubai as an operational base because of its robust administration and administrative systems. The organization’s founder Keba Keinde clarifies that numerous countries experience the ill effects of constrained access to banking services, foreign trade shortage, and unpredictable monetary forms and that the new stable resource is intended to give them access to legitimate financing systems. Given the significance of commodities for rising and developing countries, Freedium upheld its digital currency, the Freedium coin, with commodities.

“Emerging and developing countries have a population of 6 billion people, represent 60% of global GDP and generated 80% of global GDP growth since 2008. Mobile and smartphones have allowed these countries to get connected with the rest of the world and access the global information superhighway. Now, the blockchain technology can enable emerging and developing countries to efficiently transact with other nations and access global financial markets, therefore, we set out to create a financially inclusive ecosystem that would enable people from emerging and developing countries to access financing and banking services to send, receive and store money in a stable and fully backed digital currency and trade in a seamless and efficient way using smart, KYC/AML compliant contracts” said Keba Keinde, Founder and Chairman of Freedium.

Freedium picked Dubai as an operational base since it is the main center point for rising and developing economies. Notwithstanding its robust administration, lawful and administrative system, Dubai furnishes a chance to cooperate with a portion of the world’s driving organizations supporting worldwide exchange, for example, DMCC, Dubai Port, JAFZA and Emirates. Dubai is likewise at the front line of innovation and a solid promoter of the blockchain technology.

About Freedium

Freedium was established by Keba Keinde, Chairman and CEO of Millennium Finance Corporation (MFC) and Aqil Ahmed, Partner and Board Member at MFC. Headquartered in Switzerland with an operational base in Dubai, UAE, Freedium is committed to cultivating money related incorporation and releasing the capability of rising and developing economies beginning with the dispatch of the principal commodities supported, stable computerized cash utilizing blockchain technology.

hong kong

Hong Kong securities regulators are ramping up the rhetoric on initial coin offerings (ICOs).

Speaking last week at an investment industry event, Julia Leung, deputy chief executive officer of Hong Kong’s Securities and Futures Commission (SFC) warned that many ICOs violate securities laws.

“While we acknowledge that innovative technologies such as blockchain have the potential to improve efficiency and financial inclusion, that does not entitle anyone to conduct fundraising from the public in violation of securities law,” she said, adding that most ordinary investors are not equipped to evaluate these investments.

That in itself was not out of the ordinary. Most countries loop this nascent fundraising model under current their current securities frameworks and expect startups issuing security tokens to operate accordingly.

However, Leung then went a step further, stating that many ICOs are dubious while others are outright frauds.

“Further complicating matters, many of these fundraisings are dubious, if not downright frauds,” she said. “The issuers escape the scrutiny of the police or securities regulators because of their cross-border nature and the way the crypto assets are structured to fall outside any regulator’s perimeter.”

This is not the first time the SFC has sounded the warning bell on ICOs, and it has matched those words with action on several occasions.

Last month, the SFC shut down the ICO for cryptocurrency startup Black Cell Technology, alleging that it had engaged in “unlicensed regulatory activity” and was not registered with the government.

Previously, the SFC had sent letters to seven cryptocurrency exchanges warning them to delist tokens the agency considers to be securities.

Recently, three Hong Kong-based exchanges — Binance, OKEx, and Bitfinex — have announced plans to move their operations overseas, to Malta in the first two cases and Switzerland in the third.

While they did not explicitly cite Hong Kong’s regulatory environment as a reason for the move, all have lauded the cryptocurrency-friendly climates in their new locations. Switzerland’s canton of Zug has been nicknamed “Crypto Valley” for the large number of cryptocurrency startups and ICOs that have relocated there, while Malta is seeking to establish itself as Europe’s “Blockchain Island.”

Featured Image from Pixabay

mobile game

Kik Messenger, Kin, the developer of initial coin offering (ICO) token Kin, has inked a major partnership with video game development giant Unity Technologies that will make it easier for developers to integrate Kin tokens into their mobile games.

The Kin Foundation and Unity on Thursday unveiled a partnership that will see the two entities coordinate to release a software development kit (SDK) that will allow developers to easily connect to the Kin Rewards Engine (KRE) and monetize their apps using the Kin cryptocurrency.

“Developers benefit when they can monetize digital experiences and quickly expand transactions across global markets,” said Hubert Larenaudie, President APAC at Unity Technologies. “We are continuously looking for top companies in the space who understand consumer experiences and believe that the combination of Kik’s experience and user base, along with Kin, provides many opportunities for developers.”

Kik — one of the first established companies to hold an ICO — raised $98 million last year to develop Kin, which will run in parallel on the Stellar and Ethereum blockchains and be portable between the two networks.

This partnership will go a long way toward helping Kik build out its envisioned Kin ecosystem, as Unity is one of the biggest names in the mobile game development business. The company’s eponymous game development engine serves as the basis for more than one-third of the top 1,000 free mobile games, and games powered by Unity have been downloaded by more than six billion devices.

In addition to monetizing their games with Kin, developers who produce quality games will have the ability to receive daily payouts from the KRE, which rewards app creators for contributing to the cryptocurrency’s global economy.

“Our initial partners need to work hand-in-hand with us to create the tools and services that will serve as the foundation of the Kin Ecosystem,” said Dany Fishel, executive vice president of partnerships at Kin. “With Unity, we get a partner committed to democratizing development, solving hard problems and enabling success, which aligns perfectly with our goal of creating a thriving ecosystem that maximizes the value of Kin for developers.”

Featured Image from Pixabay

A SAFT is an investment contract (security) offered by blockchain developers to accredited investors. The tokens that are ultimately delivered to the investors, though, should be fully-functional, and therefore not securities under U.S. law. The SAFT imitates the Y Combinator Simple Agreement for Future Equity, or “SAFE,” which has been widely used to finance early-stage companies for years.

What’s the problem?

The ICO model is an increasingly popular mechanism to raise startup funds from all over the world. Without clear regulations, token issuers and investors have operated under a cloud of legal uncertainty. Did these public sales result in unregistered securities? Why does that matter?

Issuing unregistered securities is a violation of Section 5 of the Securities Act of 1933. Beyond significant monetary penalties, issuers could face a maximum of five years of federal prison.

At a U.S. Senate hearing in February, Securities and Exchange Commission chairman Jay Clayton stated, “I believe every ICO I’ve seen is a security.” As technology continues to outpace regulations, the industry is in desperate need of a standard, compliant transactional framework to finance token networks.

The SAFT: A Potential Solution

The reasoning behind the SAFT framework is the fact that there is no bright line determining which types of tokens are securities and which are not.

Security tokens may serve as a substitute for traditional securities such as corporate stocks. On the other hand, utility tokens are designed to function like a Chuck-E-Cheese token, providing utility to purchase a service on its native network.

The SAFT framework initiates a way to help utility token issuers finance a distributed network without breaking financial regulations; specifically securities laws. Although utility tokens aren’t designed to be securities, they might end up being considered securities at the time of issuance by the U.S. Securities and Exchange Commission (SEC) when sold to the public.

 

How does a SAFT Work?

  1. Developers of a token-based decentralized network enter a written agreement (SAFT) with accredited investors. The document calls for investors to fund the development of the network in exchange for discounted tokens at a future date. The company developing the network registers with the SEC and does not issue tokens.
  2. The developers use investor funds to develop the network. Investors do not receive tokens at this point.
  3. Once the network is functional, tokens are issued and delivered to investors. At this stage, tokens can be sold to the public directly or through exchanges.

At a high-level, you can think of a SAFT as a deferred ICO. Rather than issuing tokens for cash simultaneously, developers create a contract (SAFT) and raise money to develop a functional platform before creating tokens.

At this time, utility tokens are genuinely functional, supporting the argument that they are not actual securities. This argument is essential as no court, regulator, or taxing authority has yet interpreted the SAFT framework.

Benefits

  • The framework can work within existing laws, one that doesn’t assume legislative change to accommodate the technology.
  • SAFTs can reduce risks for institutional investors, and public investors can still access tokens, albeit at a later date.
  • Potentially mitigates the mass exodus of crypto developers to foreign jurisdictions.

Limitations

  • The SAFT framework is not very useful to non-utility tokens that are themselves securities when sold to the public
  •  It won’t aid utility tokens where purchasers rely on efforts of the seller to increase the price after the token is already in circulation. Examples include buybacks and promises to develop functionality after the token sale.
  • The framework currently focuses on U.S. federal law and potentially deemed illegal in other jurisdictions.
  • Excludes public investors from participating in the early stages of a presale.

A Move in the Right Direction

The SAFT framework is an initial step towards an emerging standard for how blockchain network developers can responsibly innovate. It provides one approach to balancing the risk and reward among stakeholders and benefits from adhering to existing laws.

The SAFT project is a community attempt at self-regulation and has a long way to go before becoming an industry standard. That said, there is an open call for participation, and you are encouraged to join the project.

More Information

https://saftproject.com

https://www.cooley.com/news/insight/2017/2017-10-24-saft-project-whitepaper

https://cardozo.yu.edu/sites/default/files/Cardozo%20Blockchain%20Project%20-%20Not%20So%20Fast%20-%20SAFT%20Response_final.pdf