U.S. Justice Department Launches Criminal Probe into Crypto Price Manipulation
May 24, 2018 – According to a Bloomberg report, the Justice Department has allegedly launched an investigation on Bitcoin/cryptocurrency price manipulation. Bloomberg reports that the investigation is focussed on “illegal practices that can influence prices”, such as “flooding the market with fake orders to trick other investors into buying or selling”. The investigation follows on the heels of China’s recent ban and block on foreign cryptocurrency trading and initial coin offerings, as reported by the state-funded website ThePaper.cn.
“Operation Cryptosweep”: International Crackdown on Suspicious Crypto Investment Products
May 22, 2018, Canadian securities regulators, including B.C. and Ontario, reveal their participation in an international crackdown on suspicious crypto investment products. “Operation Cryptosweep”, coordinated by the North American Securities Administrators Association, involved 40 state and provincial regulators and resulted in at least 12 cease and desist letters sent by the BCSC alone. The coordinated series of investigations began in April 2018, with a critical component of the operation being to raise public awareness of the risks associated with ICOs and cryptocurrency-related investment products.
Doug Muir, Director of Enforcement at the BCSC warned: “Fraudsters are always looking for new ways to attract victims and many are taking advantage of the popularity of cryptocurrencies to perpetrate their schemes”. In a statement, Muir added that while not every Initial Coin Offering or crypto-asset related investment is a fraud, “the BCSC encourages investors to exercise caution and do their research before making an ICO or cryptocurrency related investment”.
Recently, the Vancouver Sun reached out to EKB Partner Kelly Samuels about what this means for crypto-markets in BC.
Japan’s Largest Bank Plans to Switch to Blockchain Payments by 2020
May 21, 2018, Japan’s largest bank, Mitsubishi UFJ Financial Group, Inc., announced plans to launch a “hyper-scale” blockchain payments network by fiscal year 2019. The bank intends for the network to handle as many as 10 million transactions per second (“tps”). For comparison, Visa claims it can handle 24,000 tps.
Ontario Securities Commission Warns of Unregistered Companies Encouraging Crypto Investments
May 18, 2018, The Ontario Securities Commission (the “OSC”) published an Investor Alert warning investors of unregistered firms that are encouraging investors to trade or invest in cryptocurrencies. The alert warns that certain firms named in the alert appear to be involved in schemes targeting investors when they are not registered to solicit, or provide advice on, securities investments. Some of the named firms are claiming they can provide investors with high returns, which the OSC notes is often an indication of investment fraud. The OSC is encouraging anyone who has invested in, or had dealings with the named business, to contact the OSC Inquiries and Contact Centre.
This follows at the heels of an Investor Alert issued by the OSC last month warning of online exchange platform BCC Exchange, operated by BitConnect, which despite not being registered in Ontario to solicit investments, offers multiple investment opportunities through its websites.
B.C. Securities Commission Counsels “Extreme Caution” On Investments in Cryptocurrency Offerings
May 17, 2018, The British Columbia Securities Commission (the “BCSC”) issued an Investor Alert urging British Columbia residents to “exercise extreme caution when considering whether to invest in a cryptocurrency offering”. The BCSC noted that “[w]hile some companies follow through on their business plan or idea, others do not”, and some companies issue coins or tokens solely for speculative trading in the secondary market, “which is an inherently risky activity for investors”. To protect investors in B.C., the BCSC maintains an Investment Caution List, which identifies unregistered activity and unqualified securities promoted in B.C.
Amazon Web Services Partners with Blockchain Startup
May 15, 2018, Amazon’s cloud computing arm, Amazon Web Services (“AWS”) announced partnership with blockchain startup Kaleido to offer a simplified blockchain platform for its clients. The aim is to allow clients to “focus on their scenario” without having “to become PhDs in cryptography”. Joseph Lubin, co-founder of Ethereum blockchain, calls it a “heavy duty” move by AWS to get into blockchain.