SEC Penalizes EtherDelta Founder for Failing to Register Crypto Exchange

On November 8, 2018, the SEC announced the conclusion of an investigation into the digital token trading platform EtherDelta. According to the financial authority, EtherDelta failed to register as a national securities exchange despite offering the buying and selling of security-like assets on a secondary market.

Disgorged, Penalized, and Prejudgement Interest

Founder Zachary Coburn neither affirmed nor denied the claims and has settled for a $75,000 penalty, $300,000 disgorgement, and $13,000 in prejudgment interest. Coburn’s cooperation in the matter was taken into consideration before the penalties were given. The SEC identified EtherDelta’s unregistered exchange of securities as the principal offense.

The platform has reportedly relayed over 3.6 million orders since the platform’s inception in July 2016 and December 2017. The majority of these exchanges included the buying and selling of ERC20 tokens, which underpin the makeup of the majority of tokens used in initial coin offerings (ICOs). Other tokens, such as DAO tokens and what the SEC considers digital securities, were also traded on the platform.

Between the date of the notice and the launch of EtherDelta, the SEC also released their DAO Report on July 25, 2017, which formalized their approach in cracking down on the crypto sector. The report set a precedent for how the SEC would identify digital asset securities. The relevant section reads:

“The investigation raised questions regarding the application of the U.S. federal securities laws to the offer and sale of DAO Tokens, including the threshold question whether DAO Tokens are securities. Based on the investigation, and under the facts presented, the Commission has determined that DAO Tokens are securities under the Securities Act of 1933 (‘Securities Act’) and the Securities Exchange Act of 1934 (‘Exchange Act’).”

Thus, in facilitating the trade of securities, an exchange must also register with the SEC before they can begin operating. Coburn was, however, found liable for failing to register EtherDelta despite the precedent set in July 2017 in the DAO Report. The proceeding concluded the following:

“From July 12, 2016 to December 15, 2017 (the ‘Relevant Period’), more than 3.6 million buy and sell orders in ERC20 tokens that included securities as defined by Section 3(a)(10) of the Exchange Act were traded on EtherDelta, of which approximately 92% (3.3 million) were traded during the period following the DAO Report.”

Same Framework, New Asset

The case of EtherDelta is yet another in a string of similar cases that form the SEC’s growing awareness of the cryptocurrency sector. The DAO report, fitting tokens within the framework of a security, and registering with the correct authorities means guidelines are emerging as to best regulatory practice.

While the American authority has yet to announce a clear set of rules, a quick glance through similar cases reveals a growing trend of securities violations. These actions also send bullish signals to the rising popularity of security token offerings (STOs) in lieu of traditional ICOs. The former evades most regulatory capture in which small businesses, firms, and exchange platforms are safe from penalties or, in some cases, even jail time.

Trezor Model T Finally Expands to Host Hot New Altcoins

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Cardano (ADA) Price Analysis – November 8

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Cardano (ADA) Price Analysis – November 8

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Cardano, ADAUSD, CryptoCompare chartCardano Chart By Trading View

ADAUSD Medium-term Trend: Bearish

Resistance levels: $0.080, $0.090, $0.100

Support levels: $0.075, $0.070, $0.065  

The price of Cardano was in a bearish trend yesterday. The crypto’s price fell because it tested the resistance level at $0.080. On October 29, the price of ADA fell to its previous low at $0.068, then it commenced a bullish movement to the high of $ 0.082. On November 7, the crypto’s price was resisted and it pulled back.

The crypto’s price is likely to fall on the $0.075 and $0.070 price levels. If the bears fail to break the $0.075 price level, the ADA price is likely to resume its uptrend because the price is above the 12-day EMA and  the 26-day EMA. However, if the bears break the $0.075 price level, it will find support at either $0.070 or $0.068.

Meanwhile, the ADA price is above the 12-day EMA  and the 26-day EMA indicating that the price is likely to rise. However, the Stochastic is below 80 indicating a sell signal.

ADAUSD Short-term Trend: Bearish       

Cardano, ADAUSD, CryptoCompare chartCardano Chart By Trading View
   

On the 4-hour chart, the ADA price is in a bearish trend .The digital currency fell to the low of $0.76 and it is making a bullish movement to the upward. The Relative Strength Index period 14 is level 54 which indicates that the price is nearing the bullish trend zone.

 

 

The views and opinions expressed here do not reflect that of CryptoGlobe.com and do not constitute financial advice. Always do your own research.

Bitmain to Deploy 90,000 Antminer S9 ASICs Ahead of Bitcoin Cash Hard Fork

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Bitmain to Deploy 90,000 Antminer S9 ASICs Ahead of Bitcoin Cash Hard Fork

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Cryptocurrency mining hardware manufacturer Bitmain is reportedly getting ready to deploy 90,00 Antminer S9 ASICs in the Xinjiang region of China ahead of the November 15 hard fork on the bitcoin cash (BCH) blockchain.

The crypto mining giant’s goal, according to local news outlet DeepChain, is to get ready for a potential hashrate-related war between the two versions of bitcoin cash that come out of the fork, in order to prevent potential attacks. Each Antminer S9 has an estimated mining power of  14 TH/s.

Yu Hao, a mining farm operator in China’s far-western region of Xinjiang, told the news outlet Bitmain has been contacting mining farms in the region since October, and convinced his to deploy some machines. Per Hao, it was asking every farm to “host over 5,000 machines,” an amount only a few can accommodate.

Bitmain is reported to have over 1 million BCH in its wallets, which makes it a major holder with a lot to lose in the upcoming contentious hard fork. An unnamed source at the firm stated:

Half of its marketing staff have gone to Xinjiang to talk with local mining operators about deploying equipment.

In the Inner Mongolia and Xinjiang regions cryptocurrency miners are abundant, as coal is sufficient to supply their mining equipment with enough energy to keep on running.

BCH’s Upcoming Hard Fork

While the Bitcoin Cash blockchain has regular maintenance hard forks, the upcoming November 15 one threatens to split the network in two as some of the cryptocurrency’s proponents support Bitcoin ABC, the development team that originally forked the Bitcoin blockchain, while others support Bitcoin SV, the team backed by self-proclaimed Satoshi Nakamoto Craig Wright.

Both teams have different visions of what upgrades should be implemented on the Bitcoin Cash network, but their proposals aren’t compatible. The ABC development team has so far gained support from prominent mining pools, including AntPool, ViaBTC, Bitcoin.com, BTC.top, and others. These account for roughly 40% of BCH’s total hashrate.

The SV version, however, is supported by nChain and CoinGeek, which has the largest BCH mining pool by hashrate. BMG and SBI also support the development team on this side. As CryptoGlobe covered, BCH recently surged after Binance and Coinbase revealed they would support the hard fork and give users access to the airdropped tokens at a 1:1 ratio.

The potential to receive airdropped tokens has seen various users buy BCH. So much so that the cryptocurrency’s price surged from about $425 to nearly $650 in only a few days, before correcting to $595 at press time.

Poloniex, a cryptocurrency exchange owned by Circle, announced trading support ahead of the hard fork, allowing customers to trade Bitcoin Cash ABC (BCHABC) tokens, as well as Bitcoin Cash SV (BCHSV) tokens.

Crypto Exchange Gate.io Suspends StatCounter Service after Reports of Hackers Hijacking Bitcoin Transactions

Cryptocurrency exchange Gate.io has removed StatCounter, one of the most popular web analytics tools, from its website following reports of a security breach, the company announced in a blog post on November 7, 2018.

A Supply Chain Attack on Cryptocurrency Exchange

Cryptocurrency hackers have reportedly attacked one of the internet’s most used traffic analytics services, StatCounter, to steal bitcoin from users of cryptocurrency exchange Gate.io.

According to a blog post on Gate.io, the company decided to stop using StatCounter for traffic stats after getting a notice about suspicious behavior in StatCounter’s traffic stats service.

Matthieu Faou, the ESET malware researcher who discovered the hack, said that this malicious code hijacks any Bitcoin transactions made through the web interface of the Gate.io cryptocurrency exchange. “We contacted [StatCounter] but they haven’t replied yet,” Faou told ZDNet in an email.

“The JavaScript file at www.statcounter[.]com/counter/counter.js is still compromised.”

Faou said the malicious code was first added to this StatCounter script on November 3, and that none of the companies that currently load the company’s tracking script have anything to fear. The malicious code inserted into StatCounter’s site-tracking script only targets the users of cryptocurrency exchange Gate.io.

Statcounter Web Analytics Script Set to Steal Bitcoins

According to a PublicWWW search, there are over 688,000 websites that currently appear to load the company’s tracking script. However, ESET’s research pointed out that the malicious code in question looks at the page’s current URL and won’t activate unless the page link contains the “myaccount/withdraw/BTC” path.

The URL targeted by the malicious code was quickly identified as belonging to the Gate.io exchange, which is currently ranked 39th in CoinMarketCap‘s rankings.

Gate.io Rankings

(Source: ESET)

The URL targeted by the malicious code is part of a user’s account dashboard and opens to a page on which users make Bitcoin withdrawals and transfers. Faou says the malicious code was built to replace any Bitcoin address users enter on the page with one controlled by the attacker.

“A different Bitcoin address is used for each victim. We were not able to find the attackers’ main Bitcoin address. Thus, we were not able to pivot on the blockchain transactions and find related attacks,” Faou told ZDNet, suggesting it’s still impossible to determine the amount of bitcoin the group might have stolen.

In the conclusion to his report, Faou said that the recent security breach again demonstrates the fact that external JavaScript code is under the control of a third party and can be modified at any time without notice. Both ESET and Gate.io have urged their users to ensure their two-factor authentication is activated and that they have enabled a two-step login for their Gate.io accounts.

Korean Lawyers Urge Government to Draw Up Blockchain Rules

The body governing South Korean lawyers has called on the government to hasten the introduction of blockchain regulations.

According to a report from Reuters on Thursday, the Korean Bar Association said the government should “quickly” develop blockchain laws in the country to help develop the tech industry and protect investors.

Kim Hyun, president of the Korean Bar Association, was quoted as saying:

“We urge the government to break away from negative perceptions and hesitation, and draw up bills to help develop the blockchain industry and prevent side effects involving cryptocurrencies.”

The government, however, will reportedly take a decision only after studying the technology thoroughly. It is currently examining the situation, alongside financial regulators in the country, according to the Reuters report.

In July, the Financial Services Commission (FSC), the country’s financial watchdog, set up a new department dedicated primarily to cryptocurrencies and blockchain. Dubbed the Financial Innovation Bureau, it was created to focus on developing policy-making initiatives for the industry.

Also in July, a senior executive at the FSC called on the government to pass a bill regulating domestic cryptocurrency exchanges with urgency in order to counter lax security in the industry.

At the same time, members of a number of Korean political parties were reportedly expected to submit a number of bills focused on regulating cryptocurrencies, initial coin offerings and blockchain. So far, though, there has been no action on the part of the government.

The lack of clear rules is also causing domestic crypto exchanges to increasingly set up in outside jurisdictions, according to The Korea Times in a report today.

The news comes after a group of judges, lawmakers and industry experts formed a new group this summer called the Blockchain Law Society, aimed to discuss legal issues surrounding blockchain technology.

South Korea flag image via Shutterstock

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Altcoins Drop After Week of Gains, Bitcoin Stable Near $6,500

After a week of massive gains for multiple altcoins, the market surge has now cooled off and many are trading down over 2%. Just as the market surge was led primarily by Ripple (XRP) and Bitcoin Cash (BCH), they have also been the worst affected by today’s drop.

At the time of writing, Bitcoin is trading just below $6,500 at its current price of $6,460. Although it fell slightly (just over 1%) from yesterday’s levels, it is still firmly in the middle of its long-established trading range between $6,200 and $6,700.

Investors should note that BTC’s proven level of support is in the $6,200 region, as its price has bounced multiple times when bears push it into the bottom of its trading range. Its resistance point that bulls must break decisively in order for further highs to be discussed is likely in the $6,700 region, as that is where BTC has historically been rejected while trading in the aforementioned range.

Altcoins Trading Down After Weeks of Bullish Volatility

During Bitcoin’s long period of sideways trading, altcoins have seen some decent levels of volatility, mainly being led by XRP and BCH.

Over the past week, these two cryptocurrencies have been the best performers, trading up 11% and 40% respectively from their weekly lows. Despite having a good week, they have also been today’s worst performers, with XRP trading down nearly 6% on the day, and BCH trading down 4.5% in 24 hours.

XRP’s recent price rise has likely been the result of a new round of swirling Coinbase listing rumors, which, although largely baseless, typically arise during periods of high buying activity.

Bitcoin Cash’s meteoric rise has been the result of its upcoming hard fork event, which is scheduled to occur on November 15th. This event will reward BCH holders with free tokens, which is the main factor behind its massive price rise.

Recently, cryptocurrency exchange Poloniex announced that they would be adding support for pre-fork trading ahead of the Bitcoin Cash hard fork.

In an announcement, the exchange explained that:

“Starting today, Poloniex is offering customers the option to trade two tokens at the center of the debate about the pending Bitcoin Cash (BCH) hard fork: Bitcoin Cash ABC (BCHABC) and Bitcoin Cash SV (BCHSV).”

They further noted that this is the first time they have ever added support for pre-fork trading, and that the new feature is being implemented in an effort to stay innovative.

Related Reading: Binance Announces Support of Upcoming Bitcoin Cash Hard Fork

Analyst Explains That Multiple Altcoins Have Reversed Downtrends 

Despite seeing a pullback today, one prominent analyst explained that many altcoins have actually reversed their downtrends that have been in place since earlier this year.

“After pullbacks to the lower end of narrow trading ranges last week, a growing number of ALTs [altcoins] bounced back to reverse downtrends that have been in place since the April-May highs and in some cases since the beginning of 2018,” Robert Sluymer, a technical strategist at Fundstrat Global Advisors, explained while speaking to MarketWatch.

Over the next few days, it will become increasingly clear whether or not the recent volatility was simply a temporary movement, or if it signals a larger end-of-year trend.

Featured image from Shutterstock.