Today the Securities and Exchange Commission got a federal court order halting the altcoin ICO of AriseBank.
The ICO raised around $600 million in two months and planned to create the world’s first “decentralized bank” via a cryptocurrency, AriseCoin. AriseBank claimed it would offer consumer-facing products and services, including a cryptocurrency trading algorithm.
The crux of the order is that AriseCoin, in the SEC’s view, is a security and needs to either be registered or fit into an exemption.
Fraud Red Flags
There is the standard Howey framework for analyzing whether something is a security. However, in a lot of cases, the key isn’t so much whether an investment cleanly fits into the Howey framework.
I’ve been wondering about volatility of Bitcoin lately. In particular, I've been curious about the frequency of Bitcoin dips. I parsed through historical daily closing price data and mapped out the frequency of various sized dips ranging from 2013 through 2017.
Bitcoin (and all crypto) got a nice mid-January bloodbath, shedding around $8,000 (nearly 50%) over a few days.
A few crypto pundits arguing the cause is futures market muckery; the first Bitcoin futures expired January 17.
BTC had been trading in the mid-to-high $10,000s in the weeks leading up to that expiration, but dropped during the few days right before it. The first expiring BTC futures contract was set for $10,900, so any owner of that first round of futures had an interest in seeing BTC tank from its $17k highs.
The crypto markets right now are quite pure, due to their relative young age and light regulation. Pure in the sense that institutional actors like banks aren’t calling the shots. That, however, doesn’t mean these markets aren’t susceptible to manipulation.
The upside of this pure market state means banks aren’t using their weight to move the market to their will (yet).
The downside is . . . other actors may be.
“The present is the past rolled up for action, and the past is the present unrolled for understanding.” – Will & Ariel Durant
As per homo sapiens' availability biases, a course of events seems unlikely if we haven't experienced and can’t easily imagine them.
While studying history is fraught with risks (e.g. narrative fallacy), doing so may give us better ability to gauge whether a trend will take root.
The creation of an international private currency seems improbable, right? It's never happened before, right?
Decisive victory: Jamie Dimon regrets calling Bitcoin a fraud.
What are the odds JP Morgan bought a bunch of Bitcoin before he said so...
Want to buy ALTCOINS and get in on CRYPTO?
Some comments, given several friends in the past week have asked me about them:
1. The crypto bubble will not happen in the major coins. It will happen in the alts.
2. Don't buy "because" something has and is going up. Your impulses and FOMO will ruin you. Generally good life advice.
Iranians are having a moment.
What happens to a country when its government and banking industry become so self-serving that public trust drops to the point you have legitimate reasons to fear a Depression-style run on the bank?
And what do you do if the President tells the country he doesn’t have control over the state’s budget, which is already rife with corruption?
"Buy the dip, take the ride," that's what.
The Securities and Exchange Commission’s (SEC) Cyber Unit recently sent a cease and desist letter and released an Order related to an ICO that required the issuer, Munchee Inc, to refund investors for their token investments. Munchee was intended to be a “Yelp Meets Instagram” that offered tokens in relation to restaurant reviews.
The cease and desist letter from the SEC gives us more guidance on how the SEC is thinking about ICOs.