Track market-moving stories before they get noisy

Crypto market is still dominated by green, with only few exceptions

SEC Charges ICO Rating Website for Misleading Promotions of Crypto

Your favorite altcoin may be up 100% year-to-date, but make no mistake, Bitcoin is currently the alpha of the cryptocurrency pack.

Related Reading: Bears in Charge as Bitcoin Price at Risk of November 2018 Style Dump Since Bitcoin dominance hit some 32% in early-2018, altcoins have underperformed. Dramatically. In fact, dominance for the leading cryptocurrency now sits at 69% and is showing no signs of stopping its growth.

According to a recent analysis by one leading trader, Willy Woo, the carnage seen in altcoin markets may soon end — or at least may take a breather. Bag holders rejoice!

Altcoins May Soon Bottom Against Bitcoin While Bitcoin is a mere 50% lower than its all-time high of $20,000, a majority of altcoins are far from achieving that milestone. Per data from Messari’s OnChainFX, XRP, Ethereum, Bitcoin Cash, and Litecoin are among the leading altcoins that are still more than 80% down from their all-time high. This bifurcation, as aforementioned, has resulted in a surge in Bitcoin dominance.

Woo, however, believes that altcoins may soon finally find some support against Bitcoin. He posted the below image on Twitter, which shows that the altcoin capitalization-to-Bitcoin capitalization ratio and the altcoin market volume-to-Bitcoin market volume indicators are currently “heading into a region of support.”

Indeed, as the Bitcoin-centric Adaptive Capital partner chart depicts, the two aforementioned indicators are currently poised to encounter two key lines of historical support. Should history repeat itself, altcoins should bounce in the coming months, potentially to kick off what crypto traders call an “altseason”.

Related Reading: Ethereum Price Has Best Risk-Reward Ratio Ever: Crypto Venture Capitalist Woo isn’t the only analyst currently charting for altcoins to finally start baring their fangs.

Per previous reports from NewsBTC, Bitcoin dominance is nearing the apex of a rising/ascending wedge, which, is a technical pattern marked by tightening ranges and a decrease in momentum. With an ascending wedge being seen as a bearish chart structure, BTC dominance may soon collapse and an altseason may come to fruition.

That’s not all, a Telegram technical indicator group recently posted that the weekly Bitcoin dominance chart on TradingView flashed a sell nine for the TD Sequential indicator. This strongly implies a strong trend reversal for altcoins against BTC, which has the potential to last for a number of weeks.

Or Not… Despite the signals that altcoins may finally have some room to run, not everyone is convinced. In fact, 70% of more than two-thirds of nearly 4,900 respondents to a Twitter poll believe that the altcoin carnage isn’t complete. The remaining 30% think that this subset of the crypto asset class has finally bottomed.

Pure fundamentals suggest that Bitcoin may continue to steal all the limelight from altcoins.

Just look to the U.S. Securities and Exchange Commission’s recent attacks against high-profile crypto projects, like Kik’s KIN and Veritaseum, which have both been sued by the financial regulator over recent months.

Also, institutions foraying into this industry have focused nearly solely on Bitcoin. Just look to Bakkt, which will be finally coming to market this fall with its first product — physically-deliverable Bitcoin futures.

Featured Image from Shutterstock

Over the past few months, Bitcoin has dominated the investment scene. Year to date, the cryptocurrency has gained some 200%, which comes as traditional assets have bled out in anticipation of a recession and due to rising macroeconomic risk.

But one not-talked-about fact is that not only is Bitcoin outperforming traditional assets but altcoins too.

CoinMarketCap data shows that Bitcoin dominance — the percentage of the cryptocurrency market’s capitalization that is BTC — has risen to 70%, which is a level not seen in over two years. Even this 70% reading, however, may be understated.

Bitcoin Really is The Crypto King Blockchain analytics firm Arcane Crypto recently released a report, accentuating that the traditional Bitcoin dominance statistic is somewhat invalid. They wrote:

“Using the price and market valuation as signal of strength is of course a weak proxy. Price is far from everything and many projects might be hugely successful without the token capturing a large market capitalization.”

They thus argued that a better way to measure a cryptocurrency’s dominance is by weighting the market capitalization of all cryptocurrencies against their trading volume, which they claimed is a measure of market liquidity.

In doing this, their research found that “Bitcoin’s market dominance is pushed well above 90%. This is true whether we use the volumes as recorded on CoinMarketCap, excluding stable coins, which are representations of other assets rather than “true” cryptocurrencies, [or Bitwise’s “Real Ten” exchanges].”

Their research has been indirectly corroborated by a comment from a prominent crypto fund manager.

Speaking on the “Citizen Bitcoin” podcast recently, Murad Mahmudov, a former Goldman Sachs banker, explained that Bitcoin, by many measures, is the only liquid cryptocurrency on the market. He even explained that if you were to place a $1 million sell order of any top 15 cryptocurrency save for Bitcoin, you could crash the market.

Why is Bitcoin Outperforming? As reported by Blockonomi previously, Binance’s research division believes that much of this underperformance stems from a “flight to quality” from low-quality altcoins to the market leader.

You see, the countless altcoins that were propped up in 2017 and early-2018 have failed to deliver. Even bigger names in the cryptocurrency space have underperformed investors’ expectations.

That’s not all. The investors that are foraying into this industry are focusing their sights on Bitcoin. Just look to the media coverage of the cryptocurrency space. Notice how they don’t mention Ethereum, Litecoin, or Bitcoin Cash, but just Bitcoin.

This tacit “maximalism” has been reflected in institutional investors making sorties into this space. There’s a reason why Bakkt, the New York Stock Exchange-backed crypto startup, is starting with Bitcoin futures, not Ethereum futures or an altcoin basket ETF.

And to top it all off, regulators have taken a heavy stance against altcoins, especially those issued via a token sale or generation event. The U.S. Securities and Exchange Commission (SEC) has recently begun to wage war against ICOs, bringing lawsuits against Veritaseum and Kik’s KIN, for instance.

These cases have resulted in massive sell-offs for these tokens and have likely only added to the anti-altcoin sentiment currently brewing in the market.

With Bitcoin and Ethereum being the only two digital assets really signed off on by the SEC, traders are likely focusing their investment in these areas to avoid potential regulatory risks.

Do Altcoins Have Any Hope? This may leave you wondering if Bitcoin will continue to dominate.

According to a number of cryptocurrency venture capitalists and investors, Bitcoin’s strength against altcoins — well at least Ethereum — may soon end. Placeholder’s Chris Burniske recently wrote that Ethereum is currently like Bitcoin in 2014 in 2015, which is when the cryptocurrency exhibited “the best risk/reward period for investors”.

His tweet implied that Ethereum’s fundamental momentum and price are bifurcating, but that should history repeat, ETH’s value could soon surge.

1/ $ETH is enduring its 1st mainstream bear market, just as $BTC did in 2014/15.

In retrospect, 2014/15 was the best risk/reward period for investors to get BTC exposure.

— Chris Burniske (@cburniske) August 20, 2019

Nick Chong

I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact [email protected]

The U.S. Securities and Exchange Commission (SEC) seems to be waging a war against the crypto ecosystems. Over the past few months, the American financial regulator has continued to take action against industry firms that it deems in violation of securities laws.

On Thursday, the SEC revealed that it had settled a massive $10 million case with an unregistered cryptocurrency platform.

Crypto Firm Charged Millions For “Defrauding Investors” Announced in a press release published on Thursday, the SEC has settled charges with Bitqyck, a Dallas-based cryptocurrency exchange, and its founders for offering security-like cryptocurrencies and making false statements about its product.

The SEC’s complaint claims that Bitqyck and two founders Bruce Bise and Sam Mendez created and distributed Bitqy and BitqyM without the proper licenses. These sales of the two digital assets affected 13,000 investors and raised more than $13 million.

It was also proposed that platforms affiliated with the cryptocurrencies were operating in bad faith. QyckDeals was purportedly misrepresented as a global marketplace, offering certain products that were not bonafide.

One product QyckDeals sold was “smart contract” ensured fractional shares of Bitqyck. David Peavler, the Director of the SEC’s Fort Worth Office, called these “shares” “very alluring, [as] investors believe they are getting in on the ground floor and will own part of the operations.” Other parts of Bitqyck’s business was also alleged to be fraudulent, including promised “interest payouts” to BitqyM investors and touted a supposed “cryptocurrency mining facility.” Peavler stated in a press comment:

“We allege that the defendants took advantage of investors’ appetite for these investments and fraudulently raised millions of dollars by lying about their business.”

To settle, “Bitqyck, Bise and Mendez consented to final judgments agreeing to all the injunctive relief”. The company itself paid pay disgorgement, prejudgment interest and a civil penalty of $8,375,617. And the founders paid around $850,000 apiece, paying back a majority, if not all of the ill-gotten gains obtained from the operation of Bitqyck.

One of Many Cases As hinted at earlier, this is one of many recent cases the SEC has taken up against members of the cryptocurrency industry.

Earlier this month, the SEC charged ICO Rating, a Russian entity that was focused on research, reviewing, and rating initial coin offerings, for failing to disclose that some reviews were pay-for-play. The firm purportedly agreed to pay just under $270,000 to settle charges. It was also indicated that the SEC believes ICO Rating “produced research reports and ratings of blockchain-based digital assets”, including “tokens” or “coins” that were clearly securities.

A few weeks earlier, an emergency case was filed against Veritaseum, once a popular cryptocurrency project, to stop its founder and the company itself from spending the proceedings of its ICO. Similar to the case against Bitqyck, the SEC purported that Veritaseum made serious misrepresentations about its product.

The governmental agency may not be stopping any time soon, though. In a Bloomberg interview published just the other day, Chairman Jay Clayton asserted that he won’t change securities laws to accommodate cryptocurrencies. While Clayton stated that he isn’t anti-innovation, he thinks the SEC giving this industry some leeway isn’t rational.

The SEC’s commissioners are expected to rule on three Bitcoin exchange-traded fund (ETF) proposals in the coming three months. Despite all the aforementioned cases, pundits are hopeful that the SEC will finally approve a product to give institutional investors a way to invest in the industry.

Nick Chong

I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact [email protected]

On Monday evening, as many in the American crypto community were calling it a day, the U.S. Securities and Exchange Commission (SEC) made a jaw-dropping announcement.

Revealed in a press release published at around 7:00 pm EST, the American financial regulator revealed that it had “settled charges” against the creator of the EOS blockchain. Block.one, for “conducting an unregistered initial coin offering”.

This marks one of the biggest — if not the biggest — crypto-related enforcement actions from the SEC to date.

SEC Issues $24 Million Over EOS ICO According to the press release published on Monday evening, Block.one has settled charges with the SEC “by paying a $24 million civil penalty.”

The blockchain giant, which operates in Blacksburg, Virginia, and Hong Kong, “consented to the order without admitting or denying its findings”, the SEC wrote.

For those unaware, the tension between the SEC and Block.one stems from the latter entity’s year-long sale of EOS tokens that raised some $4.1 billion — a record by a long shot for an ICO.

The SEC remarked in the release that “Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements”.

Steven Peikin, Co-Director of the SEC’s Division of Enforcement, argued that Block.One did not provide participants in the sale “the information they were entitled to as participants in a securities offering”.

He added that it is the SEC’s mission to clamp down on firms that deprived investors of material “they need to make investment decisions.”

While $24 million is obviously not a small sum of money, the sum of the settlement paid shocked crypto pundits. Nic Carter, a co-founder of Coinmetrics, noted that Block.one paid 60 basis points (0.6%) of the billions it raised in the sale — effectively nothing in the grand scheme of things.

Others echoed Carter’s concerns, drawing attention to what they claim is just a slap on the wrist, not an all-out enforcement event. Block.one, for instance, spent $30 million on a domain name earlier this year, making $24 million seem much like pocket change.

Despite these concerns over the severity (or lack thereof) of the settlement, it seems that with the $24 million fine, the case is done and dusted.

My mind is absolutely blown by this block one news.

The SEC looked into all the gory details and decided to settle for 60 bips of what b1 raised. WTF

— nic ???? carter (@nic__carter) September 30, 2019

Block.one “Excited” to Resolve Matters To the point and very blunt, the SEC release left much to be desired for, specifically in regards to a response from Block.one itself and the details of the settlement.

As such, the blockchain development firm came out with its own statements in a press release dated October 1st, 2019. In it, Block.one revealed that the settlement “relates specifically to the ERC-20 token sold on the Ethereum blockchain” during the ICO, not the new token that exists on EOS’s own chain.

It was also revealed that with this settlement, the SEC has granted Block.one “an important waiver” so that it will “not be subject to certain ongoing restrictions that would usually apply with settlements of this type”, cementing the idea that the settlement has resolved any current dispute between Block.one and the SEC.

Block.one concluded in the press statement:

“We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continues to develop more clarity around compliance frameworks for digital assets.”

More to Come… While Block.one’s case is “one and done”, it may be that the SEC isn’t done with big names in crypto just yet.

Over the past few months, the American agency has been on an absolute killing spree against the crypto space, charging firms left and right for seeming wrongdoing. Earlier this year, it went after another high-profile case, bashing Canadian social media company Kik’s $100 million dollar ICO; just a few months back, it aimed to prevent the company behind once-massive altcoin Veritaseum from spending ICO proceedings.

The fact that the SEC went after Block.one, which ran the largest ICO ever, and other top companies in the cryptocurrency sector may be a sign of impending enforcement.

Nick Chong

I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact [email protected]

SEC Enters Settlement Talks With Alleged Fraudulent Firm Veritaseum

Veritaseum Files a Document with SEC Seeking More Time to Respond to the Levied Charges

NY Court Orders Veritaseum to Pay Back $8 Million From Illegal ICO

Reggie Middleton, the CEO of blockchain company Veritaseum, yesterday agreed to return over $8 million raised in Veritaseum’s ICO to investors, and pay a further $1 million to the state as part of a settlement with the SEC, according to court documents produced by the New York Eastern District Court. 

The settlement with the SEC also “permanently bars” Middleton and Veritaseum from offering digital securities. 

The SEC argued that the sale of digital securities was illegal, and that those who bought Veritaseum’s token, VERI, were “victims of Defendants’ fraud.” Middleton neither accepted or denied the allegations, instead agreeing to consent to the fines.

The settlement is the conclusion of SEC’s claim, filed back in August, that Veritaseum illegally raised $14.8 million in an unregistered securities offering.

Per U.S. federal laws, an offering of securities must be registered with the U.S. Securities and Exchange Commission. The SEC has taken the position, both through public statements and enforcement actions, that tokens sold through ICOs (like Veritaseum’s VERI) qualify as “investment contracts” and, therefore, securities.

The settlement is reminiscent of the SEC’s settlement with Block.one last month. Block.one raised billions in an ICO, which the SEC judged was illegal. But Block.one, like Veritaseum, neither accepted nor denied the charges, and instead agreed to settle for a fine of $24 million. 

The court case has tanked the price of VERI. In the past 30 days, VERI hit highs of $23.82. Now, VERI is worth $16.30.

Daily Debrief NewsletterStart every day with the top news stories right now, plus original features, a podcast, videos and more.

Ripple failed to dismiss the lawsuit alleging XRP tokens are unregistered securities. The action could “upend and threaten to destroy the established XRP market,” said the motion.

Ripple Fights Lawsuit Over XRP In early August 2019, a complaint was filed against Ripple arguing that its XRP tokens are unregistered securities under U.S. law. The filing represented an update to a lawsuit filed against the San Francisco-based startup in May 2018.

The complaint argues that Ripple violated California’s securities laws and engaged in false advertising and unfair competition. Ripple allegedly blurred differences between its enterprise solutions and XRP to further drive demand. The startup even paid exchanges to list the token.

Additionally, Ripple reportedly limited the supply of XRP to drive price appreciation and made false statements, claiming that the digital asset is not a security.

Advertisement

While the plaintiff demanded XRP to be recognized as a security and compensation for incurred losses, Ripple filed a motion to dismiss the lawsuit in September 2019, claiming the case was not brought forward in a timely manner.

Now, a court document filed on February 26 reveals that Judge Phyllis Hamilton of the Court of the Northern District of California dismissed Ripple’s claims that the plaintiff failed to act in a timely manner.

That said, Hamilton also recognized that the company did not violate California state law. As a result, claims of false advertising were dismissed as well as claims of personal liability against Ripple’s CEO Brad Garlinghouse.

XRP Could Be Deemed a Security Since the case remains open and the plaintiff can amend the complaint, Ripple believes that moving forward with it could “destroy the established XRP market.”

“Were Plaintiff allowed to belatedly challenge the classification of XRP, it would not only threaten to eliminate XRP’s utility as a currency, but it would upend and threaten to destroy the established XRP market more broadly […] potentially wiping out the value held by the alleged thousands of individual XRP holders around the world,” read the motion to dismiss.

Ripple fears that XRP would experience something similar to what happened to other cryptocurrencies after the SEC sought enforcement action.

In early June 2019, for instance, the SEC sued Kik for conducting an illegal $100 million initial coin offering. The Commission sought a permanent injunction, disgorgement plus interest, and a penalty. Following the charges, the price of KIN collapsed nearly 90%.

A similar market reaction occurred to Veritaseum after the SEC filed a complaint against its CEO Reginald Middleton for conducting an unregistered ICO. VERI token plummeted nearly 60% after the enforcement action.

Even though the legality of XRP remains uncertain, it seems to stands out as a potential security under U.S. regulations, according to the Crypto Rating Council. The organization maintains that XRP was initially sold without clear utility and was marketed with “securities-like language.” Within CRC’s assessment, the token has many “characteristics strongly consistent with treatment as a security.”

Many industry leaders believe that the SEC would have taken action by now if it thought XRP was a security. However, fintech lawyer Jake Chervinsky maintains that the regulatory agency’s enforcement “moves slowly under the best of circumstances” and may be on hold until the lawsuit “wraps up.”

Disclosure: This article was edited by Ali Martinez. For more information on how we create and review content, see our Editorial Policy.