SEC rejects another bitcoin ETF, settles with Steven Seagal over crypto charges
As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
SEC REJECTS ANOTHER BITCOIN ETF: The U.S. Securities and Exchange Commission denied the latest proposal for a bitcoin exchange-traded fund, according to a Wednesday order posted on its site. The rejected application was from Wilshire Phoenix and NYSE Arca Inc. to list a fund that aimed to mix bitcoin and short-term treasuries. “The Commission concludes that NYSE Arca has not established that the relevant Bitcoin market possesses a resistance to manipulation that is unique beyond that of traditional security or commodity markets such that it is inherently resistant to manipulation,” the regulator said.
SEC SETTLES WITH STEVEN SEAGAL OVER CRYPTO CHARGES: The Securities and Exchange Commission announced Thursday that it has settled charges against actor Steven Seagal for failing to disclose payments he received for promoting an investment in an initial coin offering conducted by Bitcoiin2Gen.The SEC's order found that Seagal failed to disclose he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promotions, which included posts on his public social media accounts encouraging the public not to "miss out" on Bitcoiin2Gen's ICO and a press release titled "Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen." The SEC's order found that Seagal violated the anti-touting provisions of the federal securities laws. Without admitting or denying the SEC's findings, Seagal agreed to pay $157,000 in disgorgement, which represents his actual promotional payments, plus prejudgment interest, and a $157,000 penalty. In addition, Seagal agreed not to promote any securities, digital or otherwise, for three years.
BANK OF CANADA PREPARES FOR POTENTIAL CRYPTOCURRENCY: The Bank of Canada has no current plans to issue a central bank cryptocurrency at this time, but is readying to create capacity to so if Canada’s payment ecosystem shifts, Reuters’ Kelsey Johnson reported Tuesday, citing Deputy Governor Tim Lane. Lane said the bank had decided there was “not a compelling case” for the issuance of a digital currency at this time but outlined two scenarios that may warrant deliberation on such a move. “The first is where the use of physical cash is reduced or eliminated altogether,” he said. “The second is where private cryptocurrencies make serious inroads.”
SHOPIFY JOINS LIBRA ASSOCIATION: Shopify (SHOP) announced last Friday that it would join the Libra Association, which was started by Facebook (FB), with a post on its corporate site. The company said, "As online commerce becomes increasingly borderless, it's easy to forget that payments and the value exchange of goods are not a solved problem everywhere. Much of the world's financial infrastructure was not built to handle the scale and needs of internet commerce. Our mission is to make commerce better for everyone and to do that, we spend a lot of our time thinking about how to make commerce better in parts of the world where money and banking could be far better. That's why we decided to become a member of the Libra Association.”
DPW TERMINATES AGREEMENT TO BUY BROKER-DEALERS: DPW Holdings (DPW) announced Friday that it had terminated its agreement to purchase two broker-dealers. The company announced on January 2, that subsidiary DPW Financial Group had entered into an agreement to acquire the broker-dealers, consisting of Glendale Securities and its correspondent clearing broker dealer. On January 8, the company announced the firms had held a telephonic meeting with FINRA and were informed that the proposed transaction would not be approved in its then contemplated form. As a result, the Firms had withdrawn their respective applications seeking FINRA's approval. The company reviewed the information it was provided by GSI and, after evaluating its options with respect to the agreement, decided to terminate the agreement and not pursue the acquisition of the Firms. Additionally on Tuesday, the company announced it had entered a settlement agreement in a derivative action. Under the terms of the settlement agreement, the company's Board of Directors will implement certain changes to the company's bylaws, committee charters, corporate governance policies, and the composition of the Board, including the resignation of a current director and the appointment of two new independent directors. In addition, the parties have agreed upon a payment of attorneys' fees in the amount of $600,000 payable by the company's Director & Officer liability insurance. The settlement agreement contains no admission of wrongdoing.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), DPW Holdings, Kodak (KODK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and Social Reality (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin dropped roughly 11.4% this week to $8,644 in U.S. dollars, according to TradeBlock.