The selling pressure that ensued as the CME Bitcoin futures re-opened for trade in reaction to the developments surrounding Telegram was short-lived and in the early European session, the market is broadly higher. As it was reported on Friday, the US SEC is suing two offshore entities, Telegram and its wholly-owned subsidiary, TON Issuer, for holding an unregistered token sale. According to the complaint filed in the federal district court in Manhattan, Telegram sold approximately 2.9 billion Gram tokens to 171 buyers, for a total of $1.7 billion. Around a quarter of that sum, $424.5 million, allegedly belonged to 31 purchasers based in the US. Timing is particularly important here as the company was due to release its tokens by the end of this month. Clearly then, the SEC is stepping up its ante and the next key date to keep an eye on is November 4, which is when iFinex has to present its appeal against the NYAG, or else the company may be required to continue to comply with the investigation. If the case by NYAG is allowed to proceed, actual arguments will probably not begin until 2020.
The Telegram ICO carried many expectations in terms of future adoption of blockchain technology and digital assets. Telegram stated that they are continuing to assess the best ways to resolve the situation in the interests of relevant parties, including but not limited to evaluating whether to delay the launch date. After deeming Telegram’s ICO illegal, the SEC also filed a temporary restraining order, setting a court hearing in New York for Oct. 24.
Elsewhere, a draft report from the G7 outlined the various risks associated with digital currencies. It also said that, even if the member firms of the governing Libra Association addressed regulatory concerns, it may not get approval from the necessary regulators. The report stated that “the G7 believe that no stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks are adequately addressed. Addressing such risks is not necessarily a guarantee of regulatory approval for a stablecoin arrangement.”
Finally, Josh Swihart, VP of marketing and business development at the Electric Coin Company (ECC), claims that the Zcash community will develop a wrapped ZEC token that can be used on the Ethereum blockchain over the next six months. The privacy coin may one day become a conduit for private, automated loans and financial products. As a reminder, Ethereum’s raft of upgrades includes Ethereum Improvement Proposals (EIPs) that address the following issues: aligning the costs of opcodes with their computational costs and improving denial-of-service attack resilience. Making layer 2 solutions based on SNARKs and STARKs more cost-effective, enabling Ethereum and Zcash to interoperate (atomic swaps) and allowing contracts to introduce more creative functions.
Thank you for reading,
The BeQuant’s Analytics team