SEC Filing for 2019 Highlights Crypto-Related Cases

The United States Securities and Exchange Commission revealed that it has restricted securities trading of 271 providers and some digital assets in 2019. The SEC published its annual filing for 2019 on the 6th of November, noting that the amount of restrictions this year is just a little less than that of 2018 which was at 280.

Multiple Cases of Illicit Activities
The filing cites a case of a Nevada firm that falsely declared that it was in partnership with SEC-certified keeper for its cryptocurrency transactions and that it offered SEC-recognized tokens.

In another case, the SEC temporarily barred trading activities in Bitcoin Generation, a cryptocurrency exchange, based on suspicions over the precision and sufficiency of the information provided by the firm.

The SEC further procured 31 court orders to freeze assets over different wrongdoings in 2019, an increase from 26 last year. According to the filing, the agency fought against some digital asset providers for fraudulent acts and infringement of the rules proffered by the agency.

Still, in 2019, the agency filed its first charges for the illicit advertisement of cryptocurrency assets against two renowned celebrities; music creator DJ Khaled and world-class boxer Floyd Mayweather. However, the fining details were undisclosed.

The agency carried out a similar prosecution on an ICO grading website, ICO Rating, for not announcing that projects had provided funding for coverage. The agency finalized the matter by fining the website $269 million for infringing anti-touting requirements.

The SEC announced that they amassed more than $4 billion in penalties and fines in 2019 on 862 actions, declaring that close to $1.2 billion was reimbursed to affected investors.

The SEC Vs Veritaseum
According to a news article, the Chief Executive Officer of Veritaseum LLC and Veritaseum Inc., Reggie Middleton, was requested to pay $8.4 million in disgorgement by a court ruling. The reimbursement represents a portion of illicitly accrued profits and prejudgment interest of $500,000.

The case against Veritaseum was filed in August by the SEC claiming that the establishments carried out fraudulent and unlisted ICO from 2017 through 2018.

Fresh Bitcoin ETF Application by Former Gold Fund Manager

Kryptoin Investment Advisors, an asset managing corporation in Delaware has submitted a proposal to roll out a Bitcoin Exchange Traded Fund (ETF) with the Securities and Exchange Commission.

The Bitcoin ETF
In the documentation released by the SEC, it was pointed out that the fresh Bitcoin ETF Trust by Kryptoin will be sold on the New York Stock Exchange Arca. Based on the application, the ETF is structured to allow for exposure to Bitcoin at an amount identical to the real amount of the digital currency. Customers can trade Bitcoin at a lower value than that of the Trust’s systems.

The corporation intends to acquire Bitcoin and price the shares of the Trust following the Chicago Mercantile Exchange Bitcoin Reference Rate. The security is going to be kept with an anonymous third-party certified keeper. This keeper will be legislated following the Investment Advisers Act of 1940.

The documentation by the SEC detailed that the Trust must be invested in Bitcoin to make sure that the amount of the Trust’s shares is mirroring the real Bitcoin market. Although the Trust is not permitted to trade Bitcoin directly instead, they can attain it from shares termed “baskets”. The documentation also stated that if the Trust wants to exchange or redeem its shares, it would have to do so in agreements of 100,000 shares (baskets) at the net asset value (NAV) of the Trust. Redemption and buying of Shares are limited to Authorised Purchasers alone. These Purchasers can do so by providing Bitcoin to the Trust to swap for shares at any time they buy shares.

More On Kryptoin
One of the most important facts about Kryptoin is its leader. It is headed by Jason Toussaint who is a previous Managing Director of the World Gold Council and an ex Asset Manager of SPDR Gold Shares, which is one of the biggest Gold ETFs on the planet.

Interestingly, the quest to roll out an approved Bitcoin ETF has become a heated contest. Sometime this month, it was discovered that Wilshire Phoenix Fund revised its Bitcoin ETF which was recorded with the SEC. Still in this month, NYSE Arca in collaboration with Bitwise, an asset management firm, affirmed their intent to reapply their proposal for a Bitcoin ETF after their previous application got thrown out by SEC.

U.S Security and Exchange Commission Disapproves Bitwise’s ETF Proposal

The United States Securities and Exchange Commission has turned down Bitwise’s proposal to launch a Bitcoin ETF. The SEC announced on the 9th of October that the ETF proposal from Bitwise did not meet essential regulations regarding probable market manipulations and unlawful activities.

The regulatory authority stated in a report that the company did not meet the set rule under the Exchange Act and the Commission’s Rules of Practice to prove that its proposal is in line with the regulations of Exchange Act section6(b)(5), and, specifically, that the proposal failed to meet the prerequisite that a national securities exchange be built in a manner that it deters defrauding and manipulative activities ad actions.

SEC Disproves Hougan’s Assurances
The disapproval from the SEC seems to be an aberration to the recent statements made by the Managing Director and Global Head of Research of Bitwise, Matt Hougan.

Hougan who was on CNBC on the 7th of October said that Bitwise was closer to getting a Bitcoin ETF approved now than ever before. Hogan had been confident about the possibility of the company getting its ETF product approved, using the growths that have been occurring in the cryptocurrency space over recent years as a pointer.

Other Let Downs By the SEC
Bitwise is not the only company seeking approval to launch an ETF product from the SEC. In January Bitwise alongside VanEck, SolidX and CBoE BZX all filled their proposals to the commission.

The disapproval by the SEC was preceded by a series of delays by the authorities. The most recent delay was in August when the commission postponed its verdict regarding the proposals from Bitwise along with VanEck, SolidX, and CBoE BZX, until the 13th of October. However, VanEck took down its product last month following poor reviews and adoption.

Bitwise has however assured the SEC that they are willing to reevaluate the issues raised by the regulatory body on market manipulation and fraudulent activities.