Buy coffee with Bitcoin, monitor ships with blockchain, fight financial crimes and ICO litigation


New solutions seek to bring cryptocurrencies closer to the mainstream

Last week, a leading global trading operator, clearing houses, data and listing services announced that it has partnered with a multinational technology company, one of the largest and best known coffeehouse chains and an important global management consulting firm to launch a new cryptocurrency platform. The new platform will develop open technologies to allow consumers and institutions to buy, sell, store and spend cryptocurrencies more easily. The ecosystem created by the new platform is expected to include federally regulated markets and merchant and consumer applications. Subject to the review and approval of the Commodity Commodity Commodity Commission in the United States, the new platform plans to launch a one-day bitcoin futures contract in November, which will be physically delivered, meaning that owners will receive bitcoin and not cash at the end of the contract. The chain of coffee shops, as a leading retailer, will leverage the platform to offer consumers the opportunity to convert cryptocurrencies into US dollars to pay for coffee and other products in the stores.

In related news, a global investment banking, securities and The investment management company has recently announced that it is considering the opportunity to offer custody services for the encrypted funds to provide protection to customers from the risk of loss in case of computer attack. In addition, Coinbase recently launched a plug-in for an e-commerce platform that will allow multiple merchants to accept cryptocurrency as a form of payment.

In international news, while Thai banks are still not involved in cryptocurrency activities, on 1 August the Bank of Thailand published a regulatory announcement allowing bank branches to issue digital tokens, provide encryption services, manage activities cryptographic and invest in cryptocurrencies, subject to certain rules.

Blockchain developments for consignments, food, pharmaceuticals and diamonds

This week, an important global technology company and the world's largest shipping company, announced TradeLens, a shipping solution enabled for blockchain and "joint collaboration" between the two companies. Based on Hyperledger, the system has recorded over 150 million shipping events worldwide. The companies say that TradeLens will allow shippers to cut intermediaries from the supply chain, saving up to 40% of shipping costs. With 92 companies already registered (representing approximately 20% of the global supply chain market share), TradeLens expects to have a commercially available platform by the end of the year.

In developments related to food supply chain solutions, Wyoming farmers are working on a blockchain solution to trace the origin of their beef, with the hope that consumers will pay a premium for meat with verified origins. In addition, Nestlé recently announced that it is testing whether fruit and vegetables used in childhood products can be traced using blockchain technology to improve the recalls.

In Austria, a startup named Grapevine World recently announced a pilot blockchain to track health data for a clinical trial of the pharmaceutical company Forbes 100. The pilot project will be hosted on a large cloud network, taking advantage of current interoperability standards for health care and using Hyperledger Fabric. In China, ZhongAn Technology, a subsidiary of the insurance company, has announced a new blockchain network to provide guarantees on the origin and quality of diamonds using existing industry certification standards. Reportedly, the network has already loaded data on 760,000 diamonds.

Cryptocurrency Scams and Enforcement Actions perpetuate uncertainty

Cryptography schemes continue to proliferate, with security researchers who have recently discovered a huge wave of attacks specifically targeting MikroTik routers without patches spread monogenic malware on all Web pages that a user can visit using the vulnerable router. Campaigns have compromised more than 210,000 routers in total, with 183,700 only in Brazil. Trend Micro, a Tokyo-based security company, has discovered a dark web on-demand malware business at a price of $ 25,000, allowing users to exploit ATM bitcoins vulnerabilities to steal bitcoin equivalents up to 6,750 in dollars, euros or pounds. 19659003] The Wall Street Journal recently published the results of a study that determined that the so-called "pump and dump" groups generated more than $ 825 million in commercial activities in the last six months artificially increasing the price of certain cryptocurrencies to sell them profitably. And researchers who study the Twitter bots have discovered a significant number of bots used to entice users to distribute small amounts of cryptocurrencies based on false promises of a larger payment in the same currency. The research team identified a botnet made up of over 15,000 bots that operated on a structure where some robots fake legitimate cryptocurrency accounts and other bots "like" fraudulently generated tweets.

A recent article Bloomberg states that the SEC has begun to look into brokers dealing with cryptocurrencies, looking for information on the fees generated by trading, financing and the initial supply of coins. According to another report, FinCEN intends to pursue exchanges of foreign cryptographies operating in the United States that do not comply with anti-money laundering regulations. An additional report published this week discussed strategies on how cryptocurrency exchanges can avoid regulatory oversight by implementing the right policies and procedures, designated compliance roles, board oversight and other measures. On 1 August, a bitcoin trader was forced to give up 81 bitcoins and was sentenced to 41 months in prison for money laundering.

Analysis: Tezos Securities Class Action survives the dismissal movement

At the beginning of this week, the federal court in the collective action proceeding on the consolidated titles of Tezos has faced numerous thorny jurisdictional problems prevalent in many initial coin offerings (ICO) made in 2017 and before. Over the past year, the SEC and the applicants in collective actions have lodged complaints against parties allegedly involved in ICOs, mainly where there are allegations of fraud, with the primary claims based on the sale of unrecorded securities. In many of these cases, ICOs were executed in foreign jurisdictions or by defendants or foreign entities. So the interesting question that arises is this: under what circumstances these actors can appropriately transport foreign defendants into US courts to defend themselves? Several national courts are now grappling with this issue, and the first decision that essentially concerns these issues has come down with a reliable analysis that depends heavily on facts and accusations in memory.

In the putative class action involving Tezos' ICO in July 2017, which the defendants had defined as fundraisers for the Swiss Tezos Foundation, about $ 232 million was raised by the Foundation, with a part earmarked for a team of husband and wife of California, the Breitmans and their company, Dynamic Ledger Solutions (DLS). The couple's home was the headquarters of the DLS. Other defendants included the well-known venture capitalist Timothy Draper and his companies, which in May 2017 made a minority investment in DLS, and Bitcoin Suisse, a foreign company specializing in the cryptofinancial sector, which provided brokerage services for the ICO as conversion of US dollars into Bitcoin and Ethereum, transfer of cryptography to Tezos and creation of digital portfolios.

The defendants moved to reject the consolidated complaint, which alleged violations of Sections 12 and 15 of the Securities Exchange Act of 1934, for several reasons, including the lack of personal jurisdiction, forum non conveniens, which were not a seller "statutory" or that there was the inappropriate extraterritorial application of the courts used for the claims of the exchange. Only the defendants Draper and Bitcoin Suisse were successful with their redundancy proposals.

Judge Richard Seeborg had little trouble finding the Breitmans (US citizens residing in Northern California) and DLS and the Foundation (both effectively controlled by the Breitmans) deliberately directed their activities for supply and satisfied procedural procedural requirements. Equally easy was the dismissal of the defendants Draper, as neither Draper nor its entities have solicited the purchase of tokens, as required to be a "statutory" seller. There were no allegations of face-to-face contacts between buyer and seller for the responsibility of attaching.

Separately, the Foundation, organized in Switzerland, as the sole "seller" of the token, claimed that it was an extra-territorial application of the United States Supreme Court Decision Morrison because the sale took place in Alderney, a remote British outpost, and therefore was not an "internal transaction" for which the US courts would have to take jurisdiction. The Foundation also maintained that there was a forum selection clause, which made the US courts forum non conveniens. However, the Court found that, despite a significant law applying these provisions, since it was based on a "browsewrap" agreement, it would not be applied, without prejudice to the subsequent demonstration of the current knowledge of the provision by 39; actor.

It seems certain that the allegations would have influenced any court that would decide these kinds of problems. Here, the plaintiffs argued that the Foundation did little or nothing about the marketing of ICO anywhere else than in the United States, the Breitmans were US and a significant part of the 30,000 ICO employees were US citizens. It will be interesting to follow the development of jurisprudence as more foreign defendants are sued in US courts for foreign ICOs and contest the dispute both for reasons of personal competence and subject.

In King Tezos Securities Litigation, 17-cv-06779 (ND Cal.) (J. Seeborg).

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