Bitcoin has been on quite the rollercoaster since its all-time high peak in December of 2017. The drop, which accelerated throughout January and culminated in reaching a low of $5,900 before bouncing back up to ~$8,000 for much of the remainder of February. Just as February came to a close, bitcoin started to fight back, reaching key resistance levels at $11,750 only to be rejected. This week, steam started to pick back up and a retest of this key area was yet again rejected, except this time, it rocketed downward in a crash that has spooked much of the cryptocurrency community and has held any indication of a new bull run to a screeching halt.

In late January until the big February crash, there was an endless supply of negative press related to cryptocurrencies, including government bans, Korean exchanges being delisted from CoinMarketCap, and more. However, since the CFTC and SEC commission where the US committees announced a “do no harm approach” to cryptocurrencies. The sentiment seemed to change immediately, which prompted Bitcoin’s end of February climb into March.

Today, though, was a perfect storm of bad news and FUD (fear, uncertainty, and doubt) that was a likely cause of Bitcoin dropping nearly $1,000 in value in a little more than an hour.

Crypto: The SEC Won’t Let me Be

The U.S Securities and Exchange Commission (SEC) released a public statement today, calling cryptocurrency exchanges “potentially unlawful online platforms for trading digital assets.” In the statement, the SEC calls out the fact that many cryptocurrency assets meet the definition of “securities,” and because they do, exchanges must register with the SEC.

Most cryptocurrency exchanges such as GDAX aren’t registered with the SEC and instead operate using money transmission licenses. To be fully compliant with SEC guidelines, exchanges will have to register and then be put under close scrutiny under SEC inspections and other requirements. Those that do not register with the SEC, could be sued or shut down. Or both.

What this means for exchanges is yet to be seen, but changes are coming and speculators were clearly unsettled by the news.

 

Binance API Issues Cause Market Issues

If the SEC asserting their control over exchanges wasn’t enough, there was also fear over a Binance hack that caused widespread selling of funds – selling that wasn’t initiated by users. Many of Binance’s customers took to Twitter and other communities to inquire about why all of their altcoin holdings were sold and converted to Bitcoin. One Reddit user wrote:

WTF is happening! Binance just sold all my alts at market rate and I have got just the Bitcoin now. Is it because of account getting hacked or binance bot issue? Have raised a ticket 715903 for this. Edit: Binance has started reversing transactions now. I see Bitcoin back on my account.

Users panicked believing Binance was hacked.. Binance CEO Changpeng Zhao explained the selling as “irregularities in trading activity” and Binance has since reversed all the unauthorized trades.

 

Mt. Gox Crashes Bitcoin Again (and Again)

A little over five years ago, the most prominent bitcoin exchange at the time, Mt. Gox, halted all bitcoin withdrawals, and then suspended trading. It was later revealed that Mt. Gox was hacked, resulting in millions of dollars in bitcoin being stolen from its customers and their own reserves. Fast-forward to today – it has been revealed after a Mt. Gox creditor meeting earlier in the day, that a trustee who holds Mt. Gox’s recovered bitcoins has been selling them off at market rate since September, and may have been responsible for selling large amounts of bitcoin – enough to effect market price – that prompted some of the biggest drops in bitcoin’s price in 2018.

While creditors are mostly paid off due to this trustee selling off the bitcoins at an average of $10,000 each (meanwhile claims stemming from Mt. Gox only equate to the fiat equivalent of $400 per bitcoin), but over 165K bitcoins still remain in this trustee’s possession, prompting fears of additional selloffs that will increase bitcoin’s volatility. and drive prices down further.

Reddit users are already speculating the likelihood of the Mt. Gox trustee being responsible for the market crash in February, in addition to the drop from the all-time high, among more drops following in January. Thanks to the blockchain, there is some validity to the claims, with addresses tied to the Mt. Gox accounts moving significant amounts of bitcoins on December 22, January 17 and 31, with the largest dump of 18K BTC being on February 5 – which coincides with the market crash.

 

Where Do We Go From Here?

In summary, today’s drop concludes that the bears are still in control, and that market sentiment around cryptocurrency is at a recent low, despite cryptocurrency being such a trendy buzzword, it was just added to the Merriam-Webster Dictionary. Where the market goes next is anyone’s guess, but unfortunately the SEC’s tightening grasp on exchanges, potential for exchange hacks, and the remaining 166K BTC in this trustee’s control aren’t going anywhere… yet.

 

Bitcoin

Australian citizens searching for a way to purchase bitcoin and ethereum can now do so by simply visiting any one of the 1,200 newsagents across the country.

According to a report from the Australian Financial Review, all investors need is a crypto wallet, $50, a phone number, and an email address. As a result, the process makes it easy for people who wish to get involved, but only want to invest a small amount.

Prior to this, people who wanted to purchase bitcoin first had to go through the process of buying a barcode with the amount of bitcoin they wanted from bitcoin.com.au. Upon receiving the barcode they would then have to take it to a newsagent to get the currency. Despite this long-winded approach, the past 12 months saw over 40,000 transactions being processed through this method.

Speaking to AFN, Domenic Zizza, owner of the NewsXpress newsagent in Oxenford, Queensland, explained that this will help newsagents, which have seen a decline in newspaper and magazine sales in the last three years.

[The take-up] has been fairly substantial to say the least. In some instances it’s been a bit of a frenzy…people’s aspirations are high and this has provided an opportunity for punters to have a go, but at a small scale, he said.

A partnership between Bitcoin Australia and iOS-based payments system Blueshyft has enabled the sale of the two digital currencies at the newsagents. Even though Rupert Hackett, CEO of Bitcoin Australia, said the move was helping to ‘democratize’ the inclusion process, there was still a long way to go before cryptocurrencies would be accepted for goods and services.

He added:

Estimates indicated 2-3 per cent of a country’s population owns digital currency, so we’re still at the early stage of the technology, but eventually we envision a world where you can buy or sell anything with cryptocurrency.

Notably, regardless of this innovative measure that the newsagents are embracing, not everyone is as keen, particularly given their links to criminal activities.

As a result,  authorities are turning their attention on how to regulate them.

The U.S. Securities and Exchange Commission (SEC) has started to crack down on initial coin offerings (ICOs) following months of warnings. Yesterday, it was reported that the agency had issued dozens of subpoenas to companies and advisers linked with the booming ICO industry.

Whereas, a prominent German MEP has called for Europe to ‘lead the way‘ with regulating the industry.

Featured image from Shutterstock.

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Following months of warnings, the US Securities and Exchange Commission (SEC) has begun to crack down on initial coin offerings (ICOs) that violate federal securities laws.

Citing people familiar with the matter, the Wall Street Journal reported Wednesday that the SEC issued subpoenas to dozens of companies and advisers associated with the burgeoning ICO industry.

According to the publication, the subpoenas demanded information related to the structure of ICOs and their corresponding presales, which have collectively raised billions of dollars to bootstrap blockchain-related projects. The largest of these to date, the Telegram ICO, is expected to surpass $2 billion in the presale alone.

The SEC had made clear in past statements that this crackdown was coming. Last summer, the agency ruled that the infamous DAO tokens should have been subject to federal securities laws, confirming the SEC’s authority to police the ICO markets for tokens that should be registered with the agency.

Most ICO issuers market their coins as “utility tokens,” arguing that they are not subject to securities requirements if they are built to serve as a sort of “coupon” for a product or service.

However, SEC Chairman Jay Clayton stated on multiple occasions that virtually every ICO he had seen constituted a securities offering, even though no ICO operator has registered its token sale with the agency.

“There should be no misunderstanding about the law,” Clayton said in prepared remarks at a recent US Senate hearing. “When investors are offered and sold securities – which to date ICOs have largely been – they are entitled to the benefits of state and federal securities laws and sellers and other market participants must follow these laws.”

Notably, the SEC is reportedly investigating ICO operator’s use of simple agreements for future tokens (SAFTs), documents which many token sales have adopted in a bid to exempt themselves from ordinary securities registration requirements.

Last week, Bloomberg reported that at least 12 companies had already put the brakes on launching their ICOs after receiving inquiries from the SEC’s cyber enforcement unit.

It is unclear how far the SEC intends to carry the probe, but it will likely make startups think twice before they issue tokens — or at least devote more time and resources to legal compliance.

Featured Image from Pexels

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The US Securities and Exchange Commission (SEC) has thrown cold water on exchange-traded fund (ETF) providers jockeying to list the first bitcoin ETF.

Thought to be a game-changer for cryptocurrency adoption, bitcoin ETFs would provide investors with the ability to obtain exposure to the flagship cryptocurrency through a conventionally-wrapped investment product.

Fund providers have sought SEC approval for cryptocurrency-derived ETFs for years, but the SEC has been reluctant to lend its approval to these products, which would likely be popular among retail investors.

The rush to list a bitcoin ETF intensified following the launch of the first bitcoin futures contracts, as the general consensus among analysts was that the SEC would quickly approve a fund that invested exclusively in futures contracts, which currently trade on two regulated US exchanges.

However, several recent developments indicate that this may not be the case.

Most recently, the SEC sent two investment industry trade groups a lengthy letter outlining a number of “significant investor protection issues” that fund sponsors must answer before the agency will consider approving a bitcoin ETF.

“We believe…that there are a number of significant investor protection issues that need to be examined before sponsors begin offering these funds to retail investors,” Dalia Blass, director of investment management at the SEC, wrote in the letter, which was dated Jan. 18.

Blass said that the SEC was chiefly concerned about the liquidity of the futures markets, as well as how to assign a fair market value to what would be intensely-volatile products. However, she also touched on a variety of other topics, including market manipulation, custodial issues, and arbitrage.

“[T]he innovative nature of cryptocurrencies and related products, as well as their expected use and utility in our financial markets, means that they are, in many ways, unlike the types of investments that registered funds currently hold in substantial amounts. In light of these considerations, we have, at this time, significant outstanding questions concerning how funds holding substantial amounts of cryptocurrencies and related products would satisfy” federal securities laws, Blass said.

Earlier this month, the SEC reportedly asked fund providers to voluntarily withdraw their bitcoin ETF applications, citing some of the concerns outlined in the letter above.

Notably, the agency also pressured the first blockchain-focused funds to remove the word “blockchain” from their names, although these ETFs — which primarily invest in companies experimenting with blockchain technology — were allowed to begin trading this week after complying with this request.

Featured Image from SEC/Flickr

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Today, the US Securities and Exchange Commission issued a press release regarding the IPO of PlexCoin stating that it had obtained an emergency asset freeze with the intention of stopping the ICO (Initial Coin Offering, see below) ‘scam’ that had gained traction extremely quickly. PlexCoin, the currency in question had raised $15 million in a month from a large number of investors. The SEC filed a complaint in a New York federal court stating that Dominic Lacroix, their partner Sabrina Paradis-Royer, and PlexCorps had sold PlexCoin over the internet to a large number of investors, claiming that it would provide a 1354% profit in less than a month. All three have been charged with violating anti-fraud provisions, while Dominic Lacroix and PlexCorps have also been charged with violating the registration provision in US federal securities law. The SEC has stated it also wishes to file permanent injunctions and discouragement with interest against all three, and that it wishes to ban both Dominic and Sabrina from offering digital securities in the future, and Dominic from holding an officer or director position in a public company.

PlexCoin is the first ICO scam punished by SEC, but not the first ICO scam

These are the first charges filed by the SEC’s new cyber unit, and the chief of the unit, Robert Cohen stated: “This first Cyber Unit case hits all of the characteristics of a full-fledged cyber scam and is exactly the kind of misconduct the unit will be pursuing”. Other ICO scams in the past include Langpie.

What is an initial coin offering?

Initial Coin Offerings are cryptocurrencies where you can purchase some currency before the coin launches. It is typically used as a form of crowdfunding for cryptocurrencies to get off their feet, for example, ethereum used an ICO in 2014 before its launch in July 2015. ICOs are also used as a scam, as it does not require much other than a website and some false promises – So long as you can get exposure and you make the right promises, there is quite a bit of (illegal) profit to be made