Attorneys for a company called Bitcoin Manipulation Abatement LLC have filed a lawsuit in a U.S. federal district court alleging Ripple misled investors and sold XRP as unregistered security in violation of federal law. According to court documents filed May 1, the mysterious entity with little online presence accused Ripple and its Chief Executive Officer (CEO) Brad Garlinghouse of raising more than a billion dollars through the sale and marketing of XRP as an unregistered security.
…in order to drive demand for and thereby increase profits from the sale of XRP, Defendants have made a litany of false and misleading statements regarding XRP in violation of California’s securities laws, and false advertising and unfair competition laws.”
Bitcoin Manipulation Abatement LLC seeks to “recover damages” and “obtain other relief” related to the alleged violations. The same firm also filed a $150 million lawsuit against crypto derivatives exchange FTX in November 2019 which was subsequently dismissed one month later. High profile members of the crypto community like Binance CEO Changpeng Zhao expressed his thoughts on the lawsuit claims, calling them “very far fetched”.
The firm has faced its fair share of legal action, whether short-lived or not, over its XRP token, currently the third most valuable by market cap. A class-action lawsuit brought in May 2018 — and currently moving forward — by attorneys for XRP investor Bradley Sostack has similar allegations of deceiving investors and violating securities laws. While Sostack does seek damages and compensation for legal costs, one of his stated goals was the recognition of XRP as a security. However, an amendment filed on March 25 suggested he was hedging his bets on the possibility the court may not acknowledge it as such. The U.S. Securities and Exchange Commission (SEC) has not yet taken a position on the matter.
Philippine SEC Warns Public About Cryptocurrency Schemes
The Securities and Exchange Commission (SEC) of the Philippines has warned the public against individuals and groups engaged in unauthorized crypto investments and trading, according to an announcement on July 1. The Philippine SEC warned those who were involved in crypto schemes could face a fine or 21 years of imprisonment or both. It explained that:
“A maximum fine of P5 million or imprisonment of 21 years or both await those who act as salesmen, brokers, dealers or agents of entities engaged in unauthorized investment schemes[…] The Bayanihan to Heal As One Act, also punishes those participating in cyber incidents that make use or take advantage of the current crisis arising from the COVID-19 outbreak to prey on the public through scams, phishing, fraudulent emails, or other similar acts.”
The Philippine authorities also listed three unauthorized crypto Ponzi schemes, one of which uses a protocol based on Ethreum blockchain: Forsage, RCashOnline and The Saint John of Jerusalem Knights of Malta Foundation of the Philippines, Inc. According to the Philippine SEC, both Forsage and RCashOnline lack the necessary licenses to operate. Hence, they are not allowed to take investments from the public or issue investment contracts and other forms of securities. Forsage, the Philippine SEC said, is a crowdfunding platform based on the Ethreum blockchain and active income is generated depending on the number of referrals and membership fees someone gathers. Since it provides smart contracts, the Philippine SEC noted Forsage then provides an investment contract that has to be approved by the regulator. Forsage is also not in the list of virtual currency exchanges registered with the Philippine central bank. Saint John of Jerusalem Knights of Malta Foundation, although it was registered with the SEC, it didn’t comply with its reportorial requirements and was revoked over 17 years ago.
All three warning projects have one thing in common: they are Ponzi schemes by nature. According to the statement, other than lacking the necessary licenses, Forsage’s compensation plan resembles a Ponzi scheme, where investors are paid using the contribution of new investors. RCashOnline relies heavily on recruiting members in exchange for high monetary rewards rather than on selling products. The SEC warned that if a company’s registration has been revoked, such as Saint John of Jerusalem Knights of Malta Foundation, other than for the purpose of liquidation, any other activities are illegal.
Ripple Exec Warns About The Future Of Blockchain In The USA
In a recent interview with Wall Street Journal reporter Paul Vigna, Ripple’s co-founder and executive chairman Chris Larsen said that the United States has been “slow to the game” in terms of experimenting, implementing and regulating the blockchain and cryptocurrency industry. Larsen said that the U.S. must change its viewpoint toward blockchain and cryptocurrency, as the industry is already past the 2017 and 2018 hype.
The war against initial coin offering scams is won, he said, and now regulators must address the industry so that they can compete with China’s blockchain and cryptocurrency progress. According to Larsen, U.S. regulators have so far only helped China get ahead by “officially giving clarity to the two protocols effectively controlled by Chinese miners: Bitcoin and Ethereum.” If regulators fail to provide more clarity on blockchain, cryptocurrencies, and the supporting technologies that will power the next-generation global financial system, the U.S. could face a potential catastrophe, Larsen warned.
China is quite visibly ahead of the U.S. when it comes to adopting and investing in blockchain and digital currency. As the two countries head into a technology cold war, China having control over the global financial system can prove devastating for the financial power held by the U.S. today, said Larsen. He further warned that in such a case, China may curb America’s power to make defense payments to its allies or block American banks and companies with a low “Chinese social credit score” and control the settlement time for their payments. Even if there was a small chance that China could do that, the U.S. must keep a check on it and ensure that they are involved in this sphere to provide strong competition to the country, Larsen concluded.
New Tipbot Uses Cryptocurrency As An Incentive For People To Answer Questions
A new kind of cryptocurrency tipbot allows users to pay others to answer their questions on social media, providing a new tool to pool data in the ecosystem. Liser Lee of CCTip said that the system can help drive engagement or generate expert commentary. It lets users create a Twitter poll and automatically pay anyone who shares it with cryptocurrency, helping a poll gain more exposure and answers.
The company is also considering a system that pays the poll respondents instead. Other than Twitter, CCTip will also work on Telegram, Discord, WeChat, and on Reddit as well. It supports 200 different crypto assets, including Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), Tron (TRX), and many Ethereum-based tokens. Tron founder Justin Sun publicly thanked the firm when it added support for TRX in early April. Lee explained said that using a cryptocurrency-powered system is more effective when interacting with crypto enthusiasts compared to traditional systems. She pointed out that crypto community members may be simply happy to see their favorite crypto asset being used in the real world:
“If you pay BCH to a BCH enthusiast, he’s happy to see that BCH being used.”
Furthermore, the firm also launched the CCTip Ask feature last week, enabling users to ask any Twitter user a question. Lee showcased the system on May 18 by asking Bitcoin ABC lead developer Amaury Sechet if he believes Bitcoin Cash’s value can exceed the value of Bitcoin. Sechet was paid 0.5 BCH (about $114 as of press time) to answer the question he was asked on Twitter through the system. Lee commented:
“[CCTip Ask is] an effective way to get your question answered by a celebrity. If you raise a good question, answering the question is a good way to show your opinions. And it will attract more users’ attention.”
Cryptocurrencies enable anyone to instantly send payment to anyone else without having to share sensitive information with each other. This feature makes crypto assets the perfect fit for social media tipping, as many users on those platforms prefer to remain pseudonymous or otherwise protect their privacy. Because of this synergy, there’s lots of development in the crypto tipping space.
It was recently reported, that blockchain firm Aeternity recently launched its own social media monetization tool, which supports tipping in the form of Aeternity’s native coin, AE. The ever-changing landscape of cryptocurrency regulation still often threatens companies operating in the space, including tipbot services. In mid-May, XRP TipBot, a service enabling users to transfer XRP to each other via comments on Twitter, Reddit, and Discord, managed to save itself from having to shut its operations due to new regulations by partnering with digital payment platform Uphold.