Tag: US SEC

US SEC Hiring Attorneys for Crypto Assets and Cyber Unit

by Blockchain News

Regulators in the United States have been ramping up their efforts to regulate the crypto space, and the latest move from the U.S Securities and Exchange Commission (SEC) is no exception. The SEC has announced that it is seeking to hire general attorneys for its Crypto Assets and Cyber Unit in the Division of Enforcement. This unit is responsible for enforcing laws and regulations governing the use of crypto assets and cyber issues.

The job posting, which is available on the official government website, states that the successful candidates will be responsible for conducting “complex, fast-moving investigations” involving crypto asset securities and cyber issues. They will also be required to draft subpoenas or document requests, question witnesses through interviews, evaluate evidence and more.

This announcement comes shortly after the SEC’s chairman, Gary Gensler, asked for nearly $2.4 billion in funding to help the agency chase down crypto “misconduct” on March 29. This move highlights the regulatory pressure that the crypto community has been facing in the United States over the last year.

The crackdown on the crypto industry by US regulators has been ongoing, with local regulators planning to introduce new taxes directed towards the industry. Some industry insiders are concerned that these and other regulations could “choke” the industry and prevent much-needed innovation.

The Beaxy cryptocurrency exchange recently shut down after the SEC filed multiple charges against the company’s founder. Japan-based decentralized autonomous organization (DAO) Sushi is also facing a subpoena from the SEC. These actions demonstrate the SEC’s commitment to enforcing regulations governing the use of crypto assets.

However, not everyone in positions of regulatory authority is on board with the SEC’s approach. Congressman Tom Emmer has called Gensler a “bad faith regulator” and questioned his methods of industry oversight. Emmer’s comments highlight the ongoing debate about the appropriate level of regulation for the crypto industry.

In conclusion, the SEC’s move to hire general attorneys for its Crypto Assets and Cyber Unit in the Division of Enforcement is a clear sign that the agency is taking the regulation of the crypto industry seriously. This move follows a string of regulatory actions against crypto companies, and the ongoing debate about the appropriate level of regulation is likely to continue. The future of the crypto industry in the United States remains uncertain, but it is clear that regulators are not backing down from their efforts to enforce the law.

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US SEC Issues Summons to Influencers Promoting HEX, PulseChain, PulseX

by Blockchain News

According to a media report released on Sunday, the U.S. Securities and Exchange Commission (SEC) has reportedly issued a subpoena to influencers who were found promoting crypto coins, such as HEX, PulseChain, and PulseX.

Over the weekend, Swedish researcher Eric Wall shared an official letter from the SEC dated November 1, which was addressed to the influencers. The letter said the influencers might possess documents and data relevant to an ongoing investigation conducted by the SEC staff.

The regulator accompanied the letter with a subpoena that was issued as part of the investigation, which demanded the influencers in question produce the required documents by November 15.

In recent years, the world has seen the rise of crypto influencers – individuals who use their social media platforms to promote cryptocurrencies and blockchain-based projects.

There is no doubt that crypto influencers have the potential to reach a vast audience and bring much-needed attention to the industry. However, many have recently been promoting dubious crypto projects and pump-and-dump schemes.

Recently, social media mogul Kim Kardashian has been involved in what the class action case considered a pump-and-dump scheme.

Last month, Kim Kardashian was charged $1.26 million by the SEC for failing to disclose that she was paid £250,0000 to promote EthereumMax cryptocurrency on her Instagram page.

SEC Chairman Gary Gensler said the case was a “reminder” that celebrity endorsement did not necessarily make a product worth investing in.

In August, Ben Armstrong, a prominent crypto influencer on his YouTube channel popularly known as BitBoy Crypto, narrated how he partnered with a cryptocurrency project that ended up being a scam.  

The problem is that most influencers are not financial experts and may not fully understand the risks involved in investing in cryptocurrency. Furthermore, influencers are paid to promote particular projects, which means that they may not be impartial.

Working with reputable brands with a good track record and transparency about their fees may help mitigate some of the risks associated with crypto investment.

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US SEC Issues Summons to Influencers Promoting HEX, PulseChain, PulseX

by Blockchain News

According to a media report released on Sunday, the U.S. Securities and Exchange Commission (SEC) has reportedly issued a subpoena to influencers who were found promoting crypto coins, such as HEX, PulseChain, and PulseX.

Over the weekend, Swedish researcher Eric Wall shared an official letter from the SEC dated November 1, which was addressed to the influencers. The letter said the influencers might possess documents and data relevant to an ongoing investigation conducted by the SEC staff.

The regulator accompanied the letter with a subpoena that was issued as part of the investigation, which demanded the influencers in question produce the required documents by November 15.

In recent years, the world has seen the rise of crypto influencers – individuals who use their social media platforms to promote cryptocurrencies and blockchain-based projects.

There is no doubt that crypto influencers have the potential to reach a vast audience and bring much-needed attention to the industry. However, many have recently been promoting dubious crypto projects and pump-and-dump schemes.

Recently, social media mogul Kim Kardashian has been involved in what the class action case considered a pump-and-dump scheme.

Last month, Kim Kardashian was charged $1.26 million by the SEC for failing to disclose that she was paid £250,0000 to promote EthereumMax cryptocurrency on her Instagram page.

SEC Chairman Gary Gensler said the case was a “reminder” that celebrity endorsement did not necessarily make a product worth investing in.

In August, Ben Armstrong, a prominent crypto influencer on his YouTube channel popularly known as BitBoy Crypto, narrated how he partnered with a cryptocurrency project that ended up being a scam.  

The problem is that most influencers are not financial experts and may not fully understand the risks involved in investing in cryptocurrency. Furthermore, influencers are paid to promote particular projects, which means that they may not be impartial.

Working with reputable brands with a good track record and transparency about their fees may help mitigate some of the risks associated with crypto investment.

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Kraken Has No Plan to Delist Tokens Labeled as Securities by the SEC – Incoming CEO

by Blockchain News

The incoming CEO of Kraken cryptocurrency exchange, Dave Ripley, announced on Thursday the exchange has no plans to delist tokens the U.S. Securities and Exchange Commission (SEC) has labeled as securities or to register with the agency as a market intermediary.

In July, the SEC started scrutinizing Coinbase for listing several tokens on its platform the regulator identified as securities. As a result, crypto exchanges like Binance delisted some of the tokens that the watchdog recognized as a security in the recent Coinbase insider trading case.

But Ripley has said Kraken has no plans to remove those tokens from its exchange. The executive said Kraken sees no reason to register with the SEC as an exchange because his firm does not offer securities, despite calls from SEC chairman Gary Gensler for crypto platforms to register.

“There are not any tokens out there that are securities that we’re interested in listing. There could be some new token out there that becomes interesting and also happens to simultaneously be a security [and] in that case, we would potentially be interested in that path,” Ripley said.

Despite giant players in the crypto market like Celsius Network and Voyager Digital filing for bankruptcy, and others like Coinbase announcing layoffs, Ripley said Kraken is looking for opportunities for M&A in the current market environment. He said the exchange is open to even considering companies that are going through a bankruptcy process.

He, however, said Kraken would consider acquisitions that boost its product and tech portfolio, particularly as the exchange looks to widen its offerings with an upcoming platform for non-fungible tokens (NFTs) and banking services for institutional clients.

Why Kraken Rebrands as Libertarian?

Kraken has been a champion of libertarian values associated with cryptocurrency. And it seems the new CEO is keen to stay in that course as part of the company’s culture.

In March, Kraken refused to shut down Russian accounts unless regulators order it to do so. During that time, Kraken’s outgoing CEO Jesse Powell said the exchange was within legal sanctions requirements and was working with law enforcement to ensure banned accounts do not unfairly affect innocent Russians. Amid rising financial sanctions against Russia, Kraken refused to freeze of accounts for Russian users.

This week on Wednesday, Kraken announced that its often-controversial CEO Jesse Powell would step down and that Ripley, Kraken’s Chief Operating Officer, will assume the CEO role after the company hires a new COO.

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US SEC To Open New Office Dedicated to Crypto-Related Filings

by Blockchain News

The US Securities and Exchange Commission (SEC) has announced plans to establish two new offices to address the influx of filings from cryptocurrency issuers in the country.

Under the Division of Corporation Finance’s Disclosure Review Program (DRP), the SEC on Friday said the new offices will offer specialized support to the seven offices currently in charge of reviewing issuer filings.

The agency said while the Office of Crypto Assets will focus on dealing with crypto assets, the Office of Industrial Applications and Services will review filings associated with industrial applications.

Renee Jones, the Director of US SEC’s the Division of Corporation Finance, commented on the development: “The creation of these new offices will enable the DRP to enhance its focus in the areas of crypto assets, financial institutions, life sciences, and industrial applications and services and facilitate our ability to meet our mission.”

The SEC said the Office of Crypto Assets will take charge of DRP’s effort to review crypto filings, enabling the department to refocus its resources to address the unique and rising filing review issues related to cryptocurrencies.

On the other hand, the watchdog said the Office of Industrial Applications and Services will take over the task of reviewing non-pharma, non-biotech, and non-medicinal products from the Office of Life Sciences.

Efforts to Regulate Crypto

As the SEC is looking at regulating cryptocurrency, the major question appears to be whether it is a security or a commodity.

If cryptocurrency is a security, then crypto firms issuing them must comply with SEC rules for registration and reporting. Failure to do so can lead to significant penalties, such as the SEC fine worth $100 million imposed on crypto lender BlockFi in February.

However, many in the industry believe that cryptocurrencies act more like commodities than securities and would prefer them to be treated as such, subject to the Commodity Futures Trading Commission’s rules.

The Lummis-Gillibrand bill, introduced in June, is not the first time the federal government has tried to classify cryptocurrency.

The bill proposed digital assets be classified as commodities like wheat or oil and empower the Commodity Futures Trading Commission to rein in the nascent industry.

As reported by Blockchain.News, MicroStrategy Inc., on Friday, issued a prospect filing with the SEC showing intentions to sell $500 million worth of class A stock and possibly use the proceeds to purchase more Bitcoin.

The SEC has been leading the charge for more regulatory oversight of crypto products and platforms that may be engaging in the sale and offering of securities.

In July, the SEC issued its first insider-trading case against Coinbase in which it formally declared nine digital tokens as securities in its ongoing practice of defining its crypto oversight through enforcement actions.

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9 Cryptos Named as Securities by SEC amid Coinbase Insider Trading Charges

by Blockchain News

The US Securities and Exchange Commission (SEC) on Thursday listed nine cryptocurrencies that it considers as securities. The regulator named the nine crypto assets in its first insider-trading case, where it said the nine digital tokens are “securities”.

On Thursday, the SEC, through coordination with the U.S. Department of Justice (DOJ), arrested and charged former Coinbase product manager Ishan Wahi, his brother Nikhil Wahi, and a friend Sameer Ramani on allegations of insider trading and wire fraud.

SEC filed a complaint alleging that the former Coinbase employee engaged in insider trading by giving his brother and friend tips on which tokens the exchange planned to list shortly. According to the complaint, Wahi had advanced knowledge of which crypto assets were about to be listed on the Coinbase platform. He, therefore, shared such information with his brother and friend so they could purchase the coins ahead of the listings. The complaints disclosed that Nikhil Wahi and Ramani made over $1.1 million on trades with nonpublic information.

Along that case, the SEC also explicitly mentioned nine crypto assets listed as securities. The assets are:

·     Amp (AMP)

·     Rally (RLY)

·     DerivaDAO (DDX)

·     XYO (XYO)

·     Rari Governance Token (RGT)

·     LCX (LCX)

·     Power Ledger (POWR)

·     DFX Finance (DFX), a

·     and Kromatika (KROM).

The agency named all the tokens in connection with the alleged insider trading.

In the past, the SEC had identified cryptocurrencies as securities in enforcement actions or settlements with the provider.

But Thursday’s complaint is the first time the agency identified several crypto coins as securities and the exchange listing the so-called securities.

As a result, Coinbase and other intermediaries may be in trouble for legal liabilities. While the SEC has gone after the rogue Coinbase employee, it has also asked a federal judge to consider whether the nine crypto assets are tied to allegations of unregistered securities.

If the court accepts SEC’s promise, then the SEC will bring enforcement actions against Coinbase for being an unregistered securities broker/exchange, as well as open up legal liabilities for crypto issuers behind the coins and platforms that facilitate the trading of such assets.

Meanwhile, Coinbase has responded to the SEC filing, stating that regulations in the US are not keeping up with the digital world and therefore need fixing.

Coinbase submitted a petition on Thursday to the SEC, stating that the regulator should develop rules that describe “digital asset securities.”

The exchange further said that if the SEC is keen to encourage crypto adoption, it should provide sensible regulation. Without that, the US won’t reap the rewards associated with cryptocurrencies. And the U.S. may not be able to catch up with other jurisdictions, Coinbase stated.

The above case is one of few examples from the SEC that mentioned specific cryptocurrencies as securities but has offered little clarity over several years.

Early last year, the SEC sued Ripple for selling XRP tokens as unregistered securities to investors in the US and worldwide. Thursday’s complaint shows that the regulator views most cryptocurrencies as securities.

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Allison Herren Lee Steps Down as US SEC Commissioner

by Blockchain News

Democrat Allison Herren Lee stepped down from her position as a Commissioner of the US Securities and Exchange Commission (SEC) on Friday after serving the regulator for three years.

In a statement, her fellow commissioners said: “Allison has been a stalwart advocate for strong and stable markets, including by emphasizing the need for market participants to maintain the highest ethical standards. She has been a champion for stronger climate disclosures, whistleblower protections, and individual accountability for violations of the securities laws.”

Lee was nominated by President Trump to fill one of the Democratic seats on the commission in the spring of 2019. She was confirmed in July of that year.

Lee started working at the SEC in 2005, where she served various roles including being a counsel to former Commissioner Kara Stein and a senior counsel in the Division of Enforcement’s Complex Financial Instruments Unit.

Lee also briefly served as acting SEC chairperson under President Biden from January 2021 until Gary Gensler was appointed in April to fill the role on a permanent basis.  

Her departure follows SEC Republican commissioner Elad Roisman, who vacated his seat in January of this year.

In June, Mr. Mark T. Uyeda was appointed by the Biden administration to fill up the Republican seat vacated by former commissioner Elad Roisman. Lee’s departure has given the Biden administration another open seat to fill at the SEC.

The SEC is now left with just four members: Mr. Gensler, Democrat Caroline Crenshaw, Republican Hester Peirce, and Republican Mark T. Uyeda.

The commission normally operates with five members. President Biden will need to nominate another Democrat to fill an open seat vacated by Lee.

Lee has been a vocal proponent of the SEC mandating climate-related disclosures for public companies as well as investment firms, broker-dealers, and investment advisers. She also argued in favor of enhanced disclosures concerning other environmental, social, and governance (ESG) matters and political contributions.

Lee recently supported a proposed rule for enhanced disclosures for private equity and hedge funds. She also recently encouraged the SEC to create a better system to hold securities lawyers accountable for providing bad advice to their public company clients.

In her public remarks, Lee expressed skepticism surrounding the crypto market. In March, she said digital assets mostly defy existing regulations and laws.

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SEC Approves VanEck to Launch the Second Bitcoin Futures ETF in the U.S. Markets

by Blockchain News

A few days after ProShares debuted the first-ever Exchange-Traded Fund linked to Bitcoin futures in the US public markets, VanEck asset management firm announced plans to launch such a product.

According to a post-effective filing with the US Securities and Exchange Commission on Wednesday, October 20, VanEck revealed that it had secured approval from the market regulator to launch its Bitcoin-linked ETF.

The SEC has given VanEck the greenlight to launch its fund after October 23, on a Saturday, and therefore that points to the potential beginning date of Monday, October 25.

VanEck’s Bitcoin futures ETF will only invest in cash-settled Bitcoin futures traded on exchanges registered with the Commodity Futures Trading Commission like the CME Group.

According to SEC’s filing on Wednesday, “the fund is an actively managed exchange-traded fund (’ETF’) that seeks to achieve its investment objective by investing, under normal circumstances, in standardized, cash-settled bitcoin futures contracts (’Bitcoin Futures’) traded on commodity exchanges registered with the Commodity Futures Trading Commission (’CFTC’), such as the Chicago Mercantile Exchange (the ‘CME’). The fund does not invest in bitcoin or other digital assets directly.”

VanEck’s Bitcoin strategy ETF, which will carry the ticker symbol “XBTF”, is set to start trading after October 23 on the Cboe BZX exchange.

VanEck product will give investors exposure to the world’s largest crypto asset by allowing them to trade shares that represent contracts betting at Bitcoin price.

Bitcoin Investing Rises

VanEck is therefore set to give investors another choice of a futures-based product after Tuesday’s launch of the ProShares Bitcoin strategy ETF.

Last week, the US SEC officially permitted the launch of what is regarded as the first-ever Bitcoin futures ETF, which began trading this week, immediately becoming the largest ETF debut in US history.

Shares of ProShares Bitcoin futures ETF started trading on the New York Stock Exchange on Tuesday, October 19, under the ticker symbol “BITO” ProShares, with reports showing that the ETF was purchased $570 million in assets on its launch day. The ProShares Bitcoin ETF was the second-most heavily traded fund, landing turnover of almost $1 billion with more than 24 million shares exchanged, according to Bloomberg data.

The approvals of ProShares and VanEck’s products mark the first time US investors can purchase and trade shares of an ETF directly tied to Bitcoin. The US follows the footsteps of Canada and some other European countries, which have already allowed trading of Bitcoin ETFs and other exchange-traded products.

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Grayscale Files with US SEC to Convert GBTC Into Bitcoin Spot ETF

by Blockchain News

Grayscale Investments LLC, the world’s biggest digital currency asset management firm, has filed with the U.S. Securities and Exchange Commission (SEC) to convert its Grayscale Bitcoin Trust (GBTC) into a physical or spot-based Bitcoin ETF.

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Michael Sonnenshein, the CEO of Grayscale, made such an announcement in an interview on Tuesday, October 19, stating that the company is “100% committed to turning GBTC into an ETF as soon as U.S. regulators allow.”

“We are of the firm belief that because the futures and the spot pricing for Bitcoin are inextricably tied, that we have the willingness to allow or clear the way for a Bitcoin futures ETF in the market, and also clear the way for a spot ETF,” 

The move by Grayscale comes after the SEC approved the launch of a Bitcoin futures ETF to trade, with ProShares Bitcoin Strategy ETF beginning its trading on Tuesday.

Grayscale is aware of the conversion that would help the firm resolve persistent problems it has been facing in the past. Launching a physical Bitcoin ETF would solve the current less liquid option, Bitcoin fund (Grayscale Bitcoin Trust – GBTC).

The trading of a Bitcoin spot ETF would also address the trust’s discount as Grayscale, in many cases, has been selling Bitcoin below the net asset value. The GBTC’s price has traded below its underlying Bitcoin holdings for a prologued period because shares in the product can’t be destroyed in the same way as they are in an ETF.   

Also, Grayscale Bitcoin Trust may lose its relevance as the beginning of Bitcoin futures ETF’s trading threatens to draw assets away from a product that investors have tolerated because of the lack of an alternative.

In the past, Grayscale has frequently talked about its plans to convert its GBTC and its other 14 crypto trusts into ETFs.

As reported by Blockchain.News in July, Sonnenshein stated that he expects all of the fund group’s products to one day become ETFs as soon as regulations allow for such conversions.

Grayscale wants its ETF to be backed by actual units of the cryptocurrency, not just linked to it via derivatives contracts like the futures.

If the SEC approves the application, it could further expand the leading crypto trading as a recognized investable asset.

However, some analysts feel that the chances of Grayscale’s physical Bitcoin ETF getting approved soon is small, given that SEC chairman Gary Gensler has frequently signed his preferences for futures products that provide more protection to investors.

Grayscale looks forward to expanding its product offerings to make digital assets more accessible to both retail and institutional investors.

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US SEC Likely to Delay Bitcoin Futures ETFs Until 2020: CFRA Investment Research Firm

by Blockchain News

Cryptocurrency investors may have to wait longer for an exchange-traded fund that is directly tied to physical cryptocurrency or its futures contracts, according to Todd Rosenbluth, senior director of the ETF and mutual research company CFRS.

Speaking in an interview with CNBC’s ETF Edge on Tuesday, October 12, Rosenbluth disclosed that although a Bitcoin futures product is likely to be approved first by the SEC, the current clouded regulatory climate could cause further delays.

“We think we’re more likely to see a bitcoin futures ETF first,” 

More than 18 firms are still waiting to hear whether their respective filings for Bitcoin-based ETFs will progress to the public markets. 

Rosenbluth explained that the SEC could be waiting for a clearer regulatory environment that would enable all of such crypto EFT products to meet their goals and therefore approve all the products at the same time to avoid dealing with “first-movers” advantage.  

“It’s possible we think it’s likely — that we’re going to see a delay of a Bitcoin futures ETF until 2022 until the regulatory environment is more clear,” Rosenbluth stated.

Meanwhile, Jan van Eck, the CEO of Van Eck Associates, was also part of the CNBC interview and revealed that that the major concern for the SEC is about the potential for discrepancies between Bitcoin and futures prices, the risk of cross-border investment, and the potential for funds to get too large and push the limits on how many contracts they can own.

Van Eck illustrated that when there is a bitcoin rally, futures strategies can underperform by as much as 20% a year. “The SEC wants to have some visibility into the underlying Bitcoin markets,” he said.

Van Eck also suggested that the SEC is still looking to gain more control over cryptocurrency trading, and currently, it is making attempts in several ways. For instance, the regulator recently stopped Coinbase to provide a lending product. Other popular trading platforms like Robinhood have already registered with the SEC and are regulated as broker-dealers.

Achieving such regulatory control could help the Bitcoin futures ETF’s chances, but it is unclear by how much, Van Eck said.

“They clearly have some control over players in the underlying bitcoin markets, so maybe that increases the chances from zero, but I have no idea what they are,” he said.

Investors Betting Big on Crypto 

Bitcoin surged its value 35% in the last two weeks and even reached a high of $57,000 level on Tuesday, October 12, as investors increased their optimism about the SEC’s plans for several bitcoin ETF applications currently under its review.

However, any speculation over a possible delay could adversely affect the prices of the flagship cryptocurrency as analysts had suggested that big investors may be purchasing Bitcoins in anticipation of an ETF approval this month.

Eric Balchunas, Bloomberg senior ETF analyst, is still confident that there is a 75% chance that the SEC could approve an ETF this month.

However, other analysts, just like Ulrik K.Lykke founder of crypto/digital assets hedge fund ARK36, remain sceptical to the foreground of the approval of Bitcoin ETF:

“Historically, the expectations for investment vehicles and instruments of a more institutional grade have often ended up in a “buy the rumour, sell the news” scenario for Bitcoin; a Bitcoin ETF will have a net positive effect on the development of the space but it likely won’t result in an immediate, dramatic rise in institutional adoption of digital assets.”

Earlier this month, the SEC extended deadlines of four Bitcoin exchange-traded funds (ETFs) for 45 days, citing the requirement for additional time to decide whether to accept the 19b-4 applications.

On October 1, the regulator rescheduled approval of four Bitcoin ETFs – Global X Bitcoin Trust, Valkyrie XBTO Bitcoin Futures Fund, WisdomTree Bitcoin Trust and Kryptoin Bitcoin ETF – until November 21, December 8, December 11, and December 24, respectively.

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