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21/10/2019   Bitfinex Attempts to Recover $880 Million in New Court Filing

IFinex, the parent company of major cryptocurrency exchange Bitfinex filed a discovery application to regain access to $880 million in funds. Discovery is a law allowing each party to obtain evidence from the other party or parties through the law of civil procedure before the actual trial.

According to the application and supporting declaration by Bitfinex chief financial officer Giancarlo Devasini uploaded by industry news outlet The Block on Oct. 20, the firm filed the document in the Southern California district court on Oct. 18.

The request is related to the purportedly inaccessible funds kept in bank accounts in Poland, Portugal, the United Kingdom and the United States.

In Devasini’s declaration, it is explained that Ravid Yosef, a man involved with the exchange’s former payment processor Crypto Capital, provided him documents revealing that the firm did not simply keep the fund of Bitfinex’s clients.

Instead, Crypto Capital transferred the funds between multiple banks in Europe and the U.S. Therefore, Devasini claims that iFinex needs to be able to trace the funds of its customers to establish the exchange’s claim to ownership. Devasini:

"In order to demonstrate iFinex’s ownership of, and entitlement to, the various funds held in Poland, Portugal, and the United Kingdom, iFinex must be able to trace the funds deposited by its customers through the fund transfers between and among the various banking accounts operated by Crypto Capital."

IFinex also seeks access to information concerning the ownership and use of the accounts, and communications between the banks, the account holders and their representatives.

An attempt to recover funds

In its filing, Bitfinex requests a subpoena to take a deposition from Vice President of TCA Investment Bancorp and Trust Company, Rondell Clyde Monroe, to produce documents.

According to the exchange, its former Crypto Capital used at least one account at TCA to enable fiat operations. If the application is approved, it will enable Bitfinex to gain access to documents related to ownership and account usage information by Crypto Capital. This should establish a link between the exchange and the funds held in the accounts.

Bitfinex reportedly states that the filing is part of the firm’s efforts to recover the funds that have been inaccessible since at least December 2018 after pressure from law enforcement agencies. The exchange says it will pursue legal action to regain access to the given funds in all the relevant countries.

17/10/2019   Telegram Looks to Cut Deal With TON Blockchain Investors After SEC Order

Telegram has notified investors that the TON blockchain project will be launched later than planned, pushing the deadline from Oct. 30 to April 30, 2020.
In an email to investors reviewed by CoinDesk, Telegram cited its recent run-in with the Securities and Exchange Commission (SEC), which obtained a restraining order prohibiting the messenger app company from launching TON and issuing gram tokens. The agency deemed grams to be unregistered securities.
The email, which was sent recently to investors in the second of Telegram’s two $850 million fundraising round from early 2018, says:

"We had intended to launch the TON network in late October. However, the recent SEC lawsuit has made that timing unachievable. We disagree with the SEC’s legal position and intend to vigorously defend the lawsuit. We are proposing to extend the deadline date in order to provide additional time to resolve the SEC’s lawsuit and work with other governmental authorities in advance of the launch of the TON network."

The additional time will be an advantage for companies working on applications for the TON network, Telegram said.
The deadline can be extended with the consent of investors holding a majority of the tokens bought in the round, the email says.
The two groups of investors, those who bought tokens in February 2018 and those who did so in March 2018, will need to approve the extension separately, and it’s possible that one group agrees to postpone while the other refuses:

"In these circumstances, we propose to make certain limited amendments to the terms of the purchase agreements that remain in place to reflect the fact that fewer Grams will be issued and in circulation on the Network Launch Date."

Investors in the second round must sign a form approving the extension before Oct. 23. If the majority chooses not to sign, these investors can get back “approximately 77 percent” of their money.
The first-round investors received “a separate communication” from Telegram, the letter says.
If the deadline is extended, Telegram plans to spend another $80 million before April 30.

"We look forward to receiving your support to ensure we can proceed with our vision for TON," the letter concludes.

On Oct. 11, the SEC obtained an emergency restraining order to halt the launch of TON. Soon after the company notified investors it might postpone the planned end-of-October launch to resolve the situation.
A court hearing in the case is scheduled on Oct. 24 in New York.

14/10/2019   Telegram Could Postpone Crypto Issuance After US Halts Token Sale

Telegram could delay the original plan of issuing its own cryptocurrency on the Telegram Open Network by Oct. 31 after the U.S. Securities and Exchange Commission (SEC) ordered it to halt the allegedly “unlawful” token sale in the country.

According to a report from Bloomberg on Monday, Telegram sent a note to investors saying it is considering ways to resolve the temporary restraining order from the SEC , including the possibility of postponing the issuance after the Oct. 31 deadline.

The SEC said on Friday last week that it filed for and obtained an emergency action and restraining order halting Telegram from selling or distributing its gram tokens in the U.S.

The agency said Telegram sold 2.9 billion gram tokens worldwide, with more than 1 billion to U.S. investors allegedly without registering the offering with the securities regulator.

CoinDesk reported previously that Telegram targeted to launch the network’s mainnet before Oct. 31 and the technology development was still on track to meet the deadline earlier this month.

Telegram said in the latest note to its investors that it has been having discussions with the SEC for more than a year regarding the TON project. “We were surprised and disappointed that the SEC chose to file the lawsuit under these circumstances,” the letter added.

10/10/2019   US SEC Rejects Bitwise Bitcoin ETF Proposal

The United States Securities and Exchange Commission (SEC) has rejected a proposal to list a Bitcoin (BTC) exchange-traded fund (ETF).

In an announcement on Oct. 9, the Commission stated that the ETF filing from Bitwise Asset Management and NYSE Arca did not meet the necessary requirements.

Specifically, regulators stated that the applicants did not meet the necessary requirements regarding possible market manipulation and illicit activities. The SEC wrote:

"Rather, theCommission is disapproving this proposed rule change because, as discussed below, NYSE Arcahas not met its burden under the Exchange Act and the Commission’s Rules of Practice todemonstrate that its proposal is consistent with the requirements of Exchange Act Section6(b)(5), and, in particular, the requirement that the rules of a national securities exchange be'designed to prevent fraudulent and manipulative acts and practices.'"

Bitcoin ETF "closer than ever?"

Today's decision by the SEC seems to fly in the face of recent comments from Matt Hougan, managing director and global head of research at Bitwise, who on CNBC on Oct. 7 said, “We’re closer than we’ve ever been before to getting a Bitcoin ETF approved.”

Hougan had been optimistic about the firm's chances to land approval for a physically-held Bitcoin ETF. He noted the significant growth that has transpired in the crypto space in recent years, stating:

“Two years ago, there were no regulated, insured custodians in the Bitcoin market. Today, ... there are big names like Fidelity and CoinBase [with] hundreds of millions of dollars of insurance from firms like Lloyd’s of London.”

The rejection of Bitwise's proposal follows a circuitous series of delays and requests for comment from the SEC. In August, the regulator postponed its decision on the proposal — together with two other crypto ETF applications — until Oct. 13.

Bitwise initially filed its application for a rule change to U.S. securities laws in January.

07/10/2019   Hong Kong’s SFC Releases Regulations for Crypto Fund Managers

Hong Kong's securities regulator, the Securities and Futures Commission (SFC), has officially released regulations for crypto fund managers. The SFC published the regulatory circular on its website on Oct. 4.

In the 37-page document titled “Proforma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets,” the SFC provided terms and conditions for corporations managing portfolios that invest in virtual assets.

Organization and management structure

According to the document, virtual asset fund managers in Hong Kong should always maintain liquid capital of a minimum of 3 million Hong Kong dollars ($383,000) and its variable required liquid capital.

The SFC advised managers to have sufficient human and technical resources for the proper performance of duties as well as to adopt risk management and compliance policies, as well as policies for Anti-Money Laundering and Combating the Financing of Terrorism.

Independent custodian

In order to ensure the safety of fund assets, the SFC also requires crypto fund managers to appoint a functionally independent custodian. The regulator emphasized that a virtual asset fund manager should ensure its fund assets are segregated from its own assets, as well as assets of other clients, unless fund assets are held in an omnibus client account.

If a manager receives fiat currency on behalf of the fund, one or more segregated bank accounts should be set up for holding clients’ money, the SFC stated. Bank accounts should be established and maintained with an authorized financial institution in Hong Kong or a bank in a jurisdiction agreed to by the SFC, the document notes.

Additionally, the virtual asset fund manager should evaluate the features of diverse custodial arrangement, including hardware and software infrastructure, security controls over key generation, storage, management and transaction as well as the process of handling blockchain forks, the agency stated.

As reported, Hong Kong has established itself as one of the most progressive jurisdictions for cryptocurrencies and blockchain, as the country is one of the leading countries according to the number of registered digital currency exchanges. Earlier this year, the SFC issued guidance on security token offerings, intending to bring more clarity about the legal and regulatory requirements for the market.

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