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SEC Files Suit Against LBRY; Firm Says ‘Future of Crypto At Risk’

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Yet another cryptocurrency-focussed fundraising activity see to have irked the Securities and Exchange Commission of the United States.

In the latest development, the country’s federal government agency has filed a lawsuit against the decentralized content publishing platform, LBRY Inc., wherein it accused the company of conducting an unregistered securities offering in the form of its token.

The complaint has charged LBRY with violating the registration provisions of Sections 5[a] and 5[c] of the Securities Act of 1933. The agency has also sought “permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties”.

According to the complaint, the digital content marketplace allegedly sold digital asset securities called “LBRY Credits” to several investors, including investors based in the US.

The regulatory watchdogs also alleged that LBRY did not file a registration statement for the offering and that the offering failed to satisfy any exemption from registration. The official document read,

“The complaint further alleges that by failing to file a registration statement, LBRY denied prospective investors the information required for such an offering to the public.”

Moreover, LBRY allegedly received over $11 million in not just USD but also in cryptocurrency such as Bitcoin, and services from buyers who participated in its offering.

However, the complaint noted that it has accused LBRY of failing to register their tokens as securities and not a fraud. Hence, if the New Hampshire-based crypto startup agrees to pay the settlement charges with the regulatory agency, the agreement would require, the LBRY to compensate the investors, pause the offering and pay back all fees it had already raked in.

Reaction To SEC Suing LBRY

LBRY had shrugged off the allegation in its latest tweet,

“HELP US SAVE CRYPTO. The future of crypto in the US is at risk. The SEC is suing us and saying LBC is security – it’s not! Essentially, they brought the case against us because we’re the biggest. If we lose, the entire industry in the US at risk. All crypto is at risk.”

Several notable individuals in the cryptocurrency industry have criticized the latest move. Attorney Jeremy Hogan also tweeted,

“Ripple wasn’t the first and won’t be the last. The whole industry is at risk.”

Many of them even compared the claims with regards to the lawsuit brought about for the blockchain company Ripple by the agency in last December. Lawyer Jesse Hynes stated that the claims against LBRY “are far less egregious than the claims against Ripple”.

Crypto Firm OSL Receives In-Principle License Approval From Hong Kong’s watchdogs

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The Asian-based cryptocurrency firm, OSL Digital Securities, won the Hong Kong market regulator’s in-principle decision to issue an exchange platform license to operate its crypto-related business in the region.

With this crucial development, the Fidelity-backed BC group is now one step closer to operating as a regulated provider for brokerage and automated trading services, including security tokens. After the latest move, OSL asserted that it would continue to work under the SFC’s regime in a bid to secure a full-provider license in Hong Kong.

Commenting on the authorization, BC Group CEO Hugh Madden stated,

“Securing approval-in-principle for a virtual asset trading platform license in Hong Kong, inclusive of security tokens, underscores our commitment to comprehensively addressing the demands of institutional investors”

In response to growing anti-money-laundering [AML] and know-your-customer [KYC] concerns, Hong Kong’s Securities and Futures Commission expanded its regulatory oversight for cryptocurrency exchange treating them as traditional securities brokerages and allowed these platforms to opt into regulation under its new rules.

Essentially, the “in-principle” decision is the first step of the full authorization process in which the applicant platform is required to satisfy one or more requirements set by the Securities and Futures Commission [SFC] in order to obtain a license.

SFC had unveiled its new set of rules for the cryptocurrency exchanges in November last year. It details how the Platforms must address custody and compliance, in particular with regard to the KYC and AML rules. The published documents also state that exchanges can only offer products to “professional investors.” In addition, they will also be required to file a monthly report to the Commission.

The 61-paged document stated,

“The adoption of the new regulatory framework will enable the SFC to formulate its future
regulatory strategy for virtual assets through close supervisory interactions with an
evolving and dynamic industry.”

The exchanges will need the regulator’s approval for offering new products. Besides, SFC does not consider direct peer-to-peer platforms for licensing. Interestingly, OSL was the first and the only platform to apply for the license.

tZERO Discloses Plans for 2020, Expects To Release Third Security Tokens

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  • tZERO’s CEO Noursalehi recaps the financial year 2019.
  • Noursalehi discloses the plans for 2020.
  • Three new security tokens are about to be released on the digital platform in 2020.

January 30, 2020 – tZERO, the global leader in the Blockchain technology innovations for the capital market, sent a letter to all its investors today. CEO of tZERO, Saum Noursalehi, summarized the business performance over the past year 2019 and with that, the plans of 2020.

tZERO Set to Release Three Security Tokens

The letter released focused on various elements including the progress of 2019, the activities that were done in 2019, tZERO’s upcoming broker-dealer plan, planning of new digital security tokens, and how tZERO will raise new funds in 2020.

Moreover, the CEO also stated that tZERO has raised a fund of $5 million from GSR Capital in May 2019, citing the target to raise further $400 million. tZERO is now missing the capital funding by 98.7% with this lone deal done in 2019.

According to Noursalehi, they are committed to continuing their business growth and are positive in regards to approaching the milestones with the business model they are up with.

Additionally, they might approach external sources for capital investment in late 2020 or at the start of 2021. This plan will stay active if it will enhance their business to reach the business goals and the stakeholders are benefited.

Reportedly, tZERO was aiming to launch 5 digital security tokens in 2019 but was able to launch only 2 of them. However, legal matters and regulatory concerns reportedly lead to a delay in the process. Consequently, the firm intends to launch the remaining 3 digital security tokens in 2020, according to the CEO of tZERO, Saum Noursalehi.

Following the letter released to all the investors, tZERO was focussing on a few other important aspects w.r.t. Company’s vision in 2019. In includes, engaging human and financial capital in acquiring the regulatory approvals (As per him, it is still on-going), developing a robust trading/digital security platform for a secures and easy trade, and building a focused leadership team. He happily cited that tZERO now has a leadership team that can enhance the company’s business inlining with the company’s vision.

With this, tZERO is about to launch the third digital security token “in the coming weeks”. Moreover, tZERO has signed agreements with five new broker-dealers among the 100s of broker-dealers they discussed in 2019. Also, they are in discussion with several other broker-dealers, stated Noursalehi.