'What Are the Main Barriers, Regulatory or Otherwise' (Regulatory Digest, Dec 21 — 27)

Thailand plans to relax laws on ICOs, Bermuda issues a draft regulation, CONSOB halts Avacrypto, USA introduces the Token Taxonomy Act, CFTC questions about Ethereum, a report on Belgium, UAE, the EAEU, and Abkhazia, UAE plans to finalize regulations in 2019, Israel enlists the help of locals, South Korea regulators indict three Upbit employees, FCA is set to receive new duties

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Thai Cryptocurrency Exchange Determined to Stay Open After SEC Orders Shutdown

The Thai Ministry of Finance has rejected the last cryptocurrency exchange application it had been reviewing. The exchange, which has been ordered to close down business and return customer funds, is determined to stay operational. “Shutting down is not an option for us,” its chief strategy officer reportedly said. Also read: Indian Supreme Court Moves Crypto Hearing, Community Calls for Positive Regulations Coin Asset Exchange Rejected The Thai Securities and Exchange Commission (SEC) announced on Monday the outcome of the latest cryptocurrency exchange application it had been reviewing. The country’s Ministry of Finance, under the recommendation of the SEC board, decided to reject the application of Coin Asset Co. Ltd. to operate a crypto exchange. The company has been allowed to operate in Thailand while its application was being reviewed. However, the SEC has notified the company of its rejection and ordered it to cease operations by Jan. 21. The regulator told the exchange’s CEO, Sivanus Yamdee, that the minimum processing time is four months should the exchange reapply for a license, the Bangkok Post reported on Wednesday. Yamdee said his company will meet with the SEC on Friday to discuss continuing crypto operations. The news outlet further quoted him as saying: We are seeking a way to keep our digital asset exchange operating as the business cycle is moving towards a peak … We are unable to endure such as long processing time. The business cycle is on the rise and there are costs for conducting daily business. It is not easy to maintain customer loyalty. With about 10,000 customers, the exchange’s 24-hour trading volume is approximately 91 million baht (~$2.87 million) at the time of this writing. In August last year, the exchange unveiled its own line of cryptocurrency automated teller machines (ATMs). It also lists Jfin coin, the country’s first initial coin offering launched by a subsidiary of a company listed on the Stock Exchange of Thailand, Jay Mart Plc. Coin Asset’s new chief strategy officer, Arnon Saksri, was quoted by the Bangkok Post as saying: Ultimately, we want to be regulated … It will improve investor confidence and the legitimacy of our cryptocurrency businesses, but the SEC has to find the right way to do it … Shutting down is not an option for us. The Thai Ministry of Finance issued licenses to four cryptocurrency businesses on Jan. 8, three of which are exchanges and one is a broker-dealer. Reason for Denial According to the statement by the Thai SEC, the finance ministry cited “a major change to the company’s management … [which] affected the readiness of the company’s important work systems” as the reason for rejecting Coin Asset’s application. The commission detailed that “three out of four directors responsible for the [exchange’s] important work systems resigned.” The ministry elaborated: The company failed to meet the standards on work systems. For example, the systems for custody of client assets and know your customer (KYC) were inconsistent with the standards accepted by the [Thai] Anti-Money Laundering Office. The exchange maintains that its security system is safe, noting that it complies with ISO/IEC 27001:2013 international standard, Prachachat Turakij publication reported on Tuesday. Coin Asset added that its KYC process is linked to Thai banks, with comprehensive anti-money laundering measures. The finance ministry has allowed the company to keep operating until Jan. 21 “to ensure proper proceeding of related matters including notification to the clients regarding asset refunds or asset transfers to other digital asset operators according to the clients’ order,” the SEC emphasized. “Regarding clients’ assets under custody, the company is requested to transfer or return the assets according to the clients’ order and report the results of the matter to the SEC.” Following the commission’s announcement, Coin Asset informed its customers that they can continue to trade until Jan. 21 and have until Feb. 14 to withdraw funds. Do you think the Thai SEC will let Coin Asset remain open? Let us know in the comments section below. Images courtesy of Shutterstock and the Thai SEC. Need to calculate your bitcoin holdings? Check our tools section. The post Thai Cryptocurrency Exchange Determined to Stay Open After SEC Orders Shutdown appeared first on Bitcoin News.
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Ukrainian nationals charged with hacking SEC docs in $4.1 million scam

The Department of Justice has charged two Ukrainian nationals for hacking into the Security and Exchange Commission’s (SEC) computer system to steal confidential corporate information and sell it to the highest bidder or to make trades. Artem Radchenko and Oleksandr Ieremenko were charged in the United States Court District of New Jersey with securities fraud conspiracy, wire fraud conspiracy, computer fraud conspiracy, wire fraud, and computer fraud. These illegal endeavors are part of an earlier scheme that saw Ieremenko and others charged with allegedly illegally obtaining corporate press releases prior to their general release and using the information to make trades, the DOJ said in a statement. Ieremenko remains at large in the Ukraine. The operation ran from about May 3, 2016 until October 20, 2016. Overall, the conspiracy is believed to have earned the defendants a total of $4.1 million. The latest charges stem from Ieremenko and Radchenko’s hacking of the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. EDGAR is used by corporations to hold non-public confidential information, conduct test filings, performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the SEC. The others named in the civil suit associated with this case are: David Kwon, Sungjin Cho, Igor Sabodakha, Victoria Vorochek, Andrey Sarafanov, Ivan Olefir, Capyield Systems, Ltd. (owned by Olefir) and Spirit Trade Ltd., according to court documents. These people and entities were part of a network of securities traders located in the United States, Ukraine, and Russia, who received the hacked material nonpublic information, directly or indirectly, from Ieremenko, a court filing stated. The DOJ claims that the duo allegedly hacked into EDGAR and stole thousands of files, including annual and quarterly earnings reports containing confidential, non-public and general financial information. The court filing stated the trader defendants then monetized the information by purchasing or selling short the relevant securities and profiting from the market reaction once the information was disseminated to the public. The trader defendants then, directly or indirectly, kicked back a portion of the resulting trading profits to Ieremenko. “The defendants allegedly orchestrated sophisticated computer intrusions to steal non-public information from the SEC, compromising the integrity of the market and depriving honest investors of a level playing field,” said Assistant Attorney General Brian Benczkowski. In a statement the DOJ detailed a few of the incidents. In one case a test filing for a company was uploaded to EDGAR at 3:32 p.m. on May 19, 2016. Within six minutes the defendants allegedly stole the test filing, sent a copy to a server in Lithuania and then between 3:42 p.m. and 3:59 p.m. a co-conspirator bought $2.4 million shares of the company. The test filing as then officially released a few minutes after 4 p.m. releasing the news, the firm’s second quarter financial report, which stated it expected to deliver record earnings. The stock rose on the news and the conspirator then sold the stock making $270,000. To obtain access to EDGAR Ieremenko hacked his way passed EDGAR’s login, then misrepresented himself as an authorized EDGAR filer and accessed the non-public filings. He acquired this level of access through a phishing campaign where he posed as an SEC security person and emailed other SEC personnel and convinced them to open malicious documents that downloaded malware into the SEC system. The wire fraud conspiracy and substantive wire fraud counts with which the defendants are charged carry a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss from the offense. The securities fraud conspiracy, computer fraud conspiracy, and substantive computer fraud counts with which the defendants are charged carry a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense.  The post Ukrainian nationals charged with hacking SEC docs in $4.1 million scam appeared first on SC Media.
SC Media

Winklevoss Twins Believe the SEC is Waiting for More Market Surveillance and Protections

According to Cameron and Tyler Winklevoss, the popular twins in the cryptocurrency world and founders of the Gemini exchange, the U.S. Securities and Exchange Commission is searching for more market surveillance and protections. During an interview with Fortune Ledger, they talked about the SEC and the different concerns it has about the crypto market. Furthermore, they talked about the Bitcoin ETF and cryptocurrencies. Back in July 2018, the SEC rejected the approval of a proposed rule change that was made by the Winklevoss brothers. According to the regulatory agency of the United States, there were some issues related to market manipulation and the lack of market surveillance. In this way, the SEC rejected two different Bitcoin ETF proposals made by the twins. Nevertheless, SEC’s commissioner Hester Peirce, which is a supporter of virtual currencies, commented negatively about the decision taken by the regulatory agency. She mentioned that the proposed rule change had all the pre-requisites for the approval of this specific rule change. After this, Gemini decided to partner with Nasdaq and have their market surveillance services at the exchange. Although in February the SEC has to take a final decision regarding the ETF proposal presented by VanEck and SolidX, Cameron believes that is hard to predict when the approval will happen. He mentioned that they have been working for six years to have a Bitcoin ETF approved and that they will continue working in the future for it to happen. Cameron commented about it: “We understand the commission’s concerns. We’ve heard them loud and clear and they are basically calling for more market surveillance and protections in the marketplace to avoid, prevent against manipulative behaviour and stuff like that. So, Gemini has built a market surveillance team.” Additionally, he went on saying that their crypto exchange is working on the Virtual Commodity Association, a self-regulatory organization in the United States related to the crypto world. The intention is to have similar standards in the industry and build integrity in the market. Cameron explained that they understand the decision taken by the SEC since these will be the first products related to cryptocurrencies. It is very important for companies to work in order to help this process and be compliant with all the requirements needed. The Winklevoss brothers have also a different perspective regarding regulations in the cryptocurrency world. They believe that with regulations it is possible to open new accounts and start new companies in the space. In general, the BitLicense given by regulators in New York seems to be very difficult to be acquired. There are several enthusiasts and crypto experts that have criticized this decision to impose these regulations in the space. However, Cameron and Tyler Winklevoss believe that regulation has been a big win for New York State. Additionally, they’ve mentioned that Gemini is trying to take the best protection measures and bring them into the crypto industry.
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