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The SEC & Nebulous, Devcon 5, Fairwin Ponzi scheme
October 02  |  3 min read

Don’t Look Back in Anger

BeQuant Analytics, a daily cryptocurrency market analysis contributor

Markets are broadly lower in early European trade, as momentum behind the recovery takes a breather, while the Golden Week holiday in China will also likely depress trading volumes over the period. Just a day after Block.One’s $24 million settlement with the SEC for the EOS maker’s $4.1 billion securities sale, Boston-based Nebulous, makers of the Sia network for decentralized data storage, announced that it has settled with the SEC over an unregistered security offering and conversion scheme. Albeit on a much smaller scale, the company announced the settlement without admitting fault. It will pay a disgorgement of $120,000, prejudgment interest of $24,602 and a civil money penalty of $80,000. At the time of the 2014 token sale, Nebulous raised approximately $120,000.

As a guide, Devcon 5 is due to take place Oct 8 – Oct 11 (Devcon is an annual gathering held by the Ethereum Foundation) and apart from focusing on the planned transition to Proof of Stake (PoS) from Proof of Work (PoW), the discussions will certainly touch on Fairwin.

Fairwin, a gambling platform, has been running one of the biggest contracts on the entire Ethereum network. In the last 30 days, the platform has spent more than 51% of all gas, the fuel that powers Ethereum, according to ETH Gas Station. That’s almost double the funds spent by the stablecoin network Tether, which has used 28% of gas supplies. As pointed out by decrypt, according to analysis by Ethereum developer Philippe Castonguay, Fairwin received a total of 687,598 ETH, or around $125,000,000. But as of Monday this week, all the funds have been drained from the contract.

It is unclear how much of an effect this has had on the underlying price of Ethereum and it is all too easy to look at the charts in retrospect and assign the blame. Bakkt had been widely linked to the sell off due to the apparent lack of volume but it is also worth remembering that last week saw iFinex, the parent company of stablecoin issuer Tether and cryptocurrency exchange Bitfinex, “win” an appeal against the New York State Attorney General (NYAG).

The appellate division of the state’s Supreme Court granted iFinex’s request to stay a previous court order requiring the company to turn over documents to the Attorney General’s office. This announcement, which has been paraded as a win by the group, should be taken with a huge grain of salt because iFinex has until November 4 to “perfect its appeal” according to a court document, or else the company may be required to further comply with the investigation. If the case is allowed to proceed, actual arguments won’t likely begin until 2020.

Thank you for reading,

The BeQuant’s Analytics team