- SEC announced that the sale might have violated U.S. security law.
- Livingston does not plan on suing SEC, yet he seeks clear guidance from it.
Kik’s CEO reported that the company had spent $5 million after its engagement with the U.S. Securities and Exchange Commission (SEC). The regulator claims that it was an unregistered securities sale.
Founded by a Canadian entrepreneur Ted Livingston in 2010, Kik is a messaging app that garnered $98 million in an initial coin offering (ICO) at the end of 2017. Later, SEC announced that the sale may have violated U.S. security law and that SEC staff would suggest bringing an enforcement action against the company. Livingston reported on Thursday that his firm and the regulator have been in talks since late 2017. He said:
“We’ve spent a lot of money on this, over $5 million. We’ve spent a lot of time on this, we’ve spent the last 18 months traveling to Washington.”
SEC had filed a formal letter known as the Wells notice in November 2018 to which Kik replied that the company highlighted a clause in existing law that says currencies are not securities. Livingston said:
“In the last month alone, over a million people earned kin from 40 different apps, from 40 different companies. Over a quarter million people used kin, making it the most-used cryptocurrency in the world, and they’re not even willing to say that’s not a security.”
Livingston said he does want to work with the SEC, however, he said, “We want to find a win-win with you, we understand the tough position you’re in, but at the same time innovation needs to move forward.”
Regulatory uncertainty may be holding back the U.S. cryptocurrency industry.
Block.one’s CEO asserts Voice to be a mix of centralized and decentralized features
The controversy surrounding whether EOS network being decentralized has garnered huge attention in the past and continues even today. As the community continues to battle EOS’s innate nature between centralized and decentralized network, the firm behind it, Block.one’s latest product and the social media app Voice will be a mixture of both decentralization and centralization.
In the latest edition of CNBC Crypto Trader, Brendan Blumer, CEO of Block.one, the official developer for EOS cryptocurrency, revealed that the latest rollout has both the aspects. Talking about whether Voice is a decentralized entity and the revenues generated will be distributed across the community, the CEO said,
“We are absolutely decentralizing the economy of attention. If you think, that’s exactly what social media platforms are, they basically sell attention. So we are decentralizing the control over that component.”
Blumer further noted,
“When it gets into content moderation, and these sorts of things we are starting with centralized moderation, just to make sure that we can make it a compliant platform with multiple different types of jurisdictions.”
The CEO also said that in a longer term, Block.one will focus on a road to go towards decentralizing content moderation.
He also cited that blockchain is an excellent vehicle to disrupt the existing social media platform. It brings not only transparency and accountability to the table, but also leverages blockchain-based identity.
The latest blockchain-powered Voice roll-out on the EOS network, according to the CEO, aims to clean-up the behavior and autonomously recognize the values and distribute tokens which will allow people to be beneficiaries of the platform as opposed to just the company.
Kik CEO: The SEC “continues to divide and conquer the whole industry”
Ted Livingston, CEO of Canada-based messaging app Kik, has recently provided some more details regarding the ongoing case with the US Securities and Exchange Commission (SEC) during an interview with CNBC Crypto Trader.
Livingston begins by explaining the first time Kik heard from the SEC, stating it began three days after the competition of their token sale, held around 18 months ago. He says their interaction began as “friendly,” with the commission wanting to know more about what they were doing.
Then there were subpoenas and then testimony and finally they issued us a Wells notice in November last year. We issued them our Wells response. We took both those things public in January and then finally we said ‘enough is enough, let’s go public, let’s go to court’.”
NeuNer then asked if they thought the SEC would actually sue them. Livingston stated that they “weren’t sure” but they did know that the crypto industry needs more clarity and that’s exactly what they would receive whether the SEC sued or not.
“We said to the SEC ‘you’ve let us know you think there’s an infraction here, we’re gonna tell the world that. So one way or the other you’re gonna give us clarity. Either you choose to go ahead and we can fight this out in court or you back down’ and that in and of itself will be guidance.”
Livingston was then asked about the decision to fight the SEC. He says that while the commission originally had good intentions, “but what we’ve come to discover is they continue to divide and conquer the whole industry and everyone is in this state of fear of what the would SEC think,” adding that its hindering their ability to “compete on a global stage.”
Embattled CEO of $3.8B Crypto Ponzi Scheme OneCoin Pleads Not Guilty
By CCN: Konstantin Ignatov, the CEO of the multi-billion-dollar “crypto” Ponzi scheme OneCoin, has pleaded not guilty to wire fraud. According to court documents, Ignatov entered the plea during a May 28 preliminary hearing via conference call.
As CCN reported, Ignatov — a Bulgarian national — and his sister Ruja Ignatova were charged with wire fraud, securities fraud, and money laundering related to their sham cryptocurrency, OneCoin.
The U.S. Department of Justice indicted the Ignatovs for scamming investors through a multi-national Ponzi scheme that made false promises of “guaranteed” profits.
GRIFTING BROTHER-SISTER CON ARTISTS
Shockingly, the brother-sister grifters never launched an actual cryptocurrency. Instead, they used a proprietary SQL database to log transactions within the “OneCoin network.”
The FBI arrested Konstantin Ignatov on March 6 at the Los Angeles International Airport as he was attempting to flee to his native Bulgaria. That same day, Konstantin posted a smug Facebook photo from the Hollywood Hills. It’s unclear if the selfie was posted before or after his arrest.
Ironically, the con artist who allegedly stole billions of dollars from unwitting investors had the audacity to whine that someone had stolen his phone and suitcase.
Konstantin Ignatov, the CEO of the crypto Ponzi scheme OneCoin, is accused of securities fraud, wire fraud, and money laundering. | Source: Twitter
ONECOIN REVENUES TOPPED $3.8 BILLION
OneCoin, which is based in Sofia, Bulgaria, was co-founded in 2014 by Ruja Ignatova and her younger brother Konstantin Ignatov.
Ruja served as CEO until she abruptly went into hiding in October 2017. Shortly afterward, Konstantin took over as CEO.
OneCoin was a typical Ponzi scheme. It operated as a multi-level network through which members received commissions for recruiting others to purchase bogus cryptocurrencies.
ONECOIN PRETENDED TO BE A CRYPTO COMPANY
According to the Department of Justice, OneCoin generated a stunning $3.8 billion in sales between 2014 and 2016. During that time, the Ignatov siblings robbed scores of gullible investors out of billions of dollars.
“These defendants created a multi-billion-dollar cryptocurrency company based completely on lies and deceit. They promised big returns and minimal risk. But, as alleged, this business was a pyramid scheme based on smoke and mirrors.”
Basically, OneCoin pretended to be a crypto company to take advantage of the hype the nascent industry had started to generate in 2014. In reality, it had very little to do with actual cryptocurrencies.
“This is an old scam with a virtual twist. The cryptocurrency OneCoin was established for the sole purpose of defrauding investors. Ignatov and Ignatova allegedly convinced victims to invest in OneCoin based on complete lies about the virtual currency.”
| Source: DOJ.gov
SWINDLERS TARNISH CRYPTO INDUSTRY BY HIJACKING THE NAME
Moreover, the Justice Department pointed out that unlike authentic cryptocurrencies, OneCoin had no value, and there were no records of transaction histories involving the bogus currency.
“It offered investors no method of tracing their money, and it could not be used to purchase anything. In fact, the only ones who stood to benefit from its existence were its founders and co-conspirators.”
While it might be easy to dismiss the OneCoin debacle as yet another crypto scam, the fact is, con artists have increasingly started to hijack cryptocurrencies to operate criminal activities. Often, many of these “cryptocurrency” companies have nothing to do with crypto.
MANY ‘CRYPTO’ SCAMS HAVE NOTHING TO DO WITH CRYPTO
Once recent example is Longfin Corp., a bogus Nasdaq-listed fintech company that pivoted to “crypto” during the bitcoin bull market. The transition caused the company’s stock to spike 2,600% amid the bitcoin boom.
In reality, the company had nothing to do with crypto, as CCN reported. According to the indictment:
“Longfin did not engage in any revenue-producing cryptocurrency transactions, and did not use ‘blockchain’ to empower any solutions at all.”
However, Longfin and OneCoin are being spotlighted by the media as “proof” that the entire virtual currency industry is teeming with scam artists. To be sure, there are con artists in the ecosystem — just like there are in other industries.
FLASHBACK: WELLS FARGO SYSTEMATICALLY SCAMMED ITS OWN CUSTOMERS FOR 15 YEARS
Case in point: In December 2018, Wells Fargo — the third-largest U.S. bank with $1.6 trillion in assets —agreed to pay a $575 million fine after admitting that it systematically scammed its own customers for 15 years.
Pursuant to a federal investigation, Wells Fargo admitted that its employees opened more than 3.5 million sham, unauthorized bank and credit card accounts in customers’ names between 2002 and 2017.
The bank then illegally charged its clients for various financial services products they never signed up for. Wells Fargo has racked up more than $2 billion in fines since its fake-accounts scandal was revealed in 2016.
Could a crypto company get away with scamming its own customers for 15 years? Not a chance.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.
Samantha Chang is a financial editor who writes about cryptocurrencies and business at CCN and about politics at BizPac Review. She is a law school graduate and an alum of the University of Pennsylvania who enjoys finance, flowers, and fitness. Email her at [email protected] or follow her on Twitter at Samantha_Chang.