18.01.2021

Santander Issues $20 Million End-To-End Blockchain Bond on Ethereum

In a Sept. 12 news release, the bank revealed that it had issued a $20 million bond directly onto the Ethereum (ETH) blockchain, where it will remain until the end of its one-year maturity.

Major Spanish bank Banco Santander has issued what it claims is the first end-to-end blockchain bond.

Faster, cheaper and simpler than legacy systems

Santander has claimed that its use of blockchain technology for end-to-end bond issuance represents a first step towards a potential secondary market for mainstream security tokens.

As the news release outlines, Santander issued the $20 million bond – which carries a quarterly coupon of 1,98 – while one of the Santander Group’s units purchased the bond at market price.

Santander Securities Services operated as tokenization agents and custodian of the cryptographic keys used for the issuance, with Santander Corporate and Investment Banking (CIB) acting as a dealer.

The transaction was conducted on the public Ethereum blockchain, with Santander securely tokenizing the bond in a permissioned manner. Both the cash used to complete the investment and the quarterly tokens were tokenized, with the bank noting that the high degree of automation involved dramatically reduced the number of intermediaries required for the process.

Noting that the blockchain bond transaction was faster, more efficient and simpler than legacy systems, Santander CIB says it will now engage with its clients to move the initiative from the project stage through to development.

The blockchain bond initiative continues the work begun by Santander’s blockchain lab in 2016, with additional support from London-based fintech Nivaura – backed by Santander InnoVentures – and legal advice from global law firm Allen & Overy.

Global developments

Last month, Cointelegraph reported that Santander now plans to expand its implementation of Ripple’s xCurrent payments technology to a number of Latin American countries. The bank had first introduced the technology in Spain, Brazil, Poland and the United Kingdom back in April 2018.

Also last month, the World Bank revealed it had raised an additional ~$33 million for its Kangaroo bond due August 2020 using blockchain technology.

The World Bank likewise claimed a first in stating that the initiative represented the first bond that has been created, allocated, transferred and managed through its life cycle using distributed ledger technology.

SEC Requests Freeze on Assets in Connection With Alleged $15M ICO Fraud

The United States Securities and Exchange Commission (SEC) has filed a complaint against a New York-based man and two of his companies. The SEC alleges that these entities conducted a fraudulent and unregistered ICO from late 2017 to 2018, and is requesting that a U.S. District Court issue an emergency freeze on the defendants’ related assets.

Hindenburg Research shared the SEC’s filing for a jury trial in a post on Aug. 12. According to the document, the commission is formally filing a complaint against Reginald Middleton, the New York company Veritaseum Inc. and the Delaware-based company Veritaseum LLC.

Prayer for relief, escrow

The SEC says that the defendants raised approximately $14.8 million in an ICO from late 2017 to early 2018 and alleges that material misrepresentations and omissions were made to investors.

Further, the SEC believes there are around $8 million in investor proceeds remaining from this ICO and are requesting an immediate prayer for relief in order to freeze the defendants’ assets.

The commission is also requesting that the District Court provide an order to prevent the defendants from interfering with the SEC’s access to relevant documentation – for example, by destroying it – allow it take expedited discovery and escrow digital assets via a third party, among other requests.

As per the filing, the companies sold tokens called VERI, which were apparently issued on the Ethereum blockchain and pegged to Ether (ETH) at a 30:1 ratio. The defendants reportedly presented VERI as a utility token, saying that it could be redeemed for benefits such as consulting and advisory services and purportedly unlimited access to research.

SEC in the courtroom

As previously reported by Cointelegraph, the SEC has been involved in an ongoing legal battle with Kik Interactive over its Kin token offering. Most recently, Kik’s lawyers have blasted the commission for purportedly presenting a weak and misleading case, which Kik suggests it is doing because it simply does not have good evidence to back its allegations. In Kik’s most recent filing, the lawyers write:

“Indeed, apparently recognizing the weakness of its claim, the Commission has rejected its higher governmental duty to first and foremost seek justice, and has instead employed a strategy to twist the facts, creating a highly selective and misleading depiction of the record as set forth below.”

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