Several Asian countries, including Singapore, South Korea and Japan, swiftly responded to the token boom of 2017 with regulatory proposals and enforcement. As such, crypto companies in these regions must follow strict anti-money laundering (AML) and know-your-customer (KYC) procedures.
CoolBitX CEO Michael Ou argued in a 2019 column that many countries in the region now have a more mature crypto industry than North America’s.
Asian companies are accelerating the crypto industry’s push to make exchanges work more like traditional banks.
The crypto wallet and security startup CoolBitX raised $16.7 million in a round led by Japanese financial group SBI Holdings, with participation from the National Development Fund of Taiwan, Korean crypto exchange BitSonic and Japanese financial firm Monex. In 2020, the startup’s focus is on new products and features that comply with new rules from the Financial Action Task Force (FATF) that require businesses to collect and pass information about customers when transferring funds between firms.
“We believed it was necessary to be ahead of the regulatory curve and have a solution in place in anticipation of stricter AML regulations from the South Korean government”, said BitSonic CEO Jinwook Shin. “In the coming months, the South Korean government is expected to pass regulations that will change the country’s cryptocurrency landscape and this investment in CoolBitX allows us to be on top of these regulations.”
Underscoring that same point about professional exchange guidelines, Monex Group CEO Oki Matsumoto said in a press statement that as a cryptocurrency exchange owner, he sees “huge potential in CoolBitX” to promote the “proper adoption of virtual assets” in a fair yet robust industry.
“We continue to closely monitor regulatory developments around the world in order to roll out each product or service to as broad a market as possible”, said CoolBitX international manager Elsa Madrolle, an alum of derivatives exchange CME Group. “Our plans are ultimately to expand globally.”
Madrolle added that she expects cryptocurrency exchanges to soon have experiences that “resemble how people transfer money electronically using a digital bank.” Shin added that his exchange is working with CoolBitX to “demonstrate our commitment to compliance and willingness to work hand-in-hand with the government.”
If Asian markets offer a harbinger of industry norms, then future fiat on-ramps and cryptocurrency custody products will fall in line with digital banking norms. Madrolle said it’s too soon to know how such regulations will impact the startup’s hardware wallet, but she doesn’t expect future features to hinder or inconvenience retail users.
“FATF-compliant regulation should help draw attention to cryptocurrency as a valid asset class and create more comfort for bigger institutions to consider investing”, she said.
Court Orders Purported Crypto Company Longfin to Pay $6.7M Penalty
The United States District Court for the Southern District of New York has ordered purported cryptocurrency company Longfin to pay a total of $6,755,848 million in penalties.
Falsely obtained qualification for Regulation A+ offering
On Sept. 30, the Securities and Exchange Commission (SEC) announced that a New York federal court entered a default ruling against the fintech company for “fraudulent public offering and falsifying revenue from sham commodities transactions.”
According to the SEC, Longfin and its CEO Venkata S. Meenavalli falsely obtained qualification for a Regulation A+ offering by claiming that the blockchain-powered firm was operating within the U.S. However, all of the company’s operations, assets and management were in fact outside of the country.
The SEC had filed its complaint in the federal district court, saying that Longfin fabricated close to 90% of its revenue and sold over 400,000 shares of Longfin to insiders and affiliates, and “misrepresented the number of qualifying shareholders and shares sold in the offering to meet Nasdaq listing requirements.”
The SEC has an ongoing action against Meenavalli, as does the U.S. Attorney’s Office for the District of New Jersey in a related criminal action.
SEC reaches a $24 million settlement with Block.one
The SEC made an additional announcement on Sept. 30, as it reached a settlement with Block.one to pay $24 million in penalties for conducting an unregistered initial coin offering (ICO).
The SEC claimed that Block.one raised the equivalent of billions of dollars but failed to register its ICO as a securities offering in agreement with the U.S. federal securities laws and that the EOS parent firm did not qualify for or seek an exemption from the registration requirements.