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SEC Charges PlexCorps over Fraudulent ICO

 2 min read / 

The Story

The US financial regulator has changed cryptocurrency company PlexCorps and its owners with defrauding investors during the company’s initial coin offering (ICO). Charges were filed against the company for marketing and selling PlexCoin, their cryptocurrency, as an asset that would net a return of 1354% within 29 days.

Why It’s Important

ICOs have been accused of providing investors with valueless tokens and offering meaningless value propositions. The novel fundraising tool offers investors digital tokens in exchange for funds used to develop their proposed software. PlexCoin’s website, while rather flashy, is vague about what it hopes to construct; something the SEC has picked up on.



This is the first time the SEC’s Cyber Unit has filed charges since its creation in September. However, earlier this year two companies, who also raised funds through an ICO, were charged with fraud for selling tokens supposedly backed by real estate and diamond investments. The move signals a government commitment to dealing with fraudulent ICOs.

What to Look Out for

The first ICO was held in July 2013, but the trend really took off in early 2017. Almost $2.3bn has been raised in this way. The worry is that many ICOs provide investors with little real value.

Fiverr, the global online marketplace for tasks has several users willing to write “professional blockchain ICO white papers”, from as little as a £74.52. Those looking to invest in an ICO should tread carefully.

Fiverr ICOs


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South Korea Bitcoin Regulation on The Horizon

 1 min read / 

South Korea Bitcoin

The Story

South Korea’s government held an emergency meeting to discuss the impact of cryptocurrency speculation last Wednesday. Banning minors from investing and introducing capital gains tax on cryptocurrency were suggested as means of protecting citizens, reports say.

The meeting was a response to talk of cryptocurrencies being in an asset bubble and the impact investing is having on younger generations. New measures to tackle this problem could be announced by the end of the week, according to Reuters.

Why It’s Important

South Korean exchange Bithumb – the worlds busiest – has hit it off with students. The ease of opening an account and the option to invest small amounts has caught the attention of many young people.

This group’s obsession with the digital assets prompted the emergency meeting. President Moon recently expressed his fear of students joining the trend and becoming obsessed with the rapid price changes of cryptocurrency prices. He labelled this a “serious pathological phenomenon.”

“Some even abandoned their studies and part-time jobs as they believed they could make much more money by investing in bitcoin,” said Reuter Correspondent Dahee Kim. The trend appears to be causing social problems in the country.

The country banned initial coin offerings back in September.

Keep reading |  1 min read


Indian Tax Authorities Swoop in on Bitcoin Exchanges

 2 min read / 

Bitcoin India Exchanges

Indian tax officials are investigating transactions at Bitcoin Exchanges across the country on suspicion of alleged tax evasion, official sources have said.

The Income Tax department is conducting surveys in cities such as Mumbai, Delhi, Bengaluru, Hyderabad and Gurgaon. The aim of the survey is to gather evidence to establish the identity of investors and traders, their transactions and the bank accounts used.

The Indian tax authority is not the only one to be looking into cryptocurrencies. The famous US tax authority, the Internal Revenue Service (IRS), has recently asked Coinbase for information on users who had more than $20,000 in annual transactions between 2013 and 2015. This is because they realised that the number of tax returns claiming gains from virtual currencies didn’t coincide with the increasing popularity of them.

Bitcoin’s value has surged more than 17-fold since January, mostly driven by high demand. However, virtual currencies do not have a legal status in India and are not regulated. The Reserve Bank of India (RBI) has recently cautioned citizens about buying or transacting them.

India Bitcoin Exchanges

In a statement on 5 December, it warned people of the “potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with such virtual currencies”. Earlier on this year, the RBI also clarified that it had not given authorisation to any company or entity to deal with virtual currencies.

Keep reading |  2 min read


SALT – A Technology Bringing New Opportunities?

 3 min read / 


One goes to a bank, asks to take out a loan, but is denied – Bitcoin is not accepted as collateral. Given its price fluctuations, it seems natural that a bank declines such a request. Then comes SALT (Secure Automated Lending Technology) – the “first asset-backed lending platform to give blockchain asset holders access to liquidity without them having to sell their tokens”. Where the banks are not willing to get their hands dirty, cryptocurrencies seek to find an opportunity; lenders and borrowers are brought together with blockchain assets. Yet could this platform shake the foundations of a stable economy?

How SALT Works

A SALT coin is purchased for $25, which grants the user one-year access to a loan of up to $10,000. The more SALT coins one has, the larger the loan capacity. An amount of cryptocurrency is given as collateral, where the user pays periodic instalments for the loan. This framework creates a base demand for the coin, which can be defined as the underlying driver for its price.

The Catch?

This sounds very convenient for the blockchain asset holder, yet there is one catch: if the value of the crypto falls below the margin requirement, the borrower receives a margin call, and if not fulfilled, the asset is liquidated to cover the remaining part of the loan. If a payment is missed, a portion of the collateral is liquidated.

Everything appears to be in order. Yet when one considers that many investing in cryptocurrencies devote their entire savings – where they would also be inclined to leverage their position – SALT paints a scary picture.

No Credit Checks

Another attribute – or perhaps shortcoming – of SALT is that it requires no credit checks. So anyone can take out a loan; SALT has the collateral, where the lender can liquidate to cover its unpaid loan. The problem affecting society does not arise from a structural weakness of such a system, but from the borrower’s final state.

Stories of Past Misery

As it was observed in recent crises such as the housing market bubble, society fails to learn from its mistakes when it comes to leveraging and investing. This risk of a bubble is exacerbated when combined with a boom in credit.
As former Federal Reserve Chairman Alan Greenspan stated:

“All of us knew there was a bubble. But a bubble in and of itself doesn’t give you a crisis… It’s turning out to be bubbles with leverage”.

Informed Investors?

The Great Recession happened at the hands of the informed investors. Even though the financially innovative products used at the time were vague, they were created and traded by those informed investors, where the credit ratings of those products were given by well-respected organizations.

Today, when we gaze at the cryptocurrency peninsula, they are either lagging behind, declaring their lack of interest or outright calling everyone to avoid them. Wounds still fresh from the crisis, the average citizen is inclined to ignore their statements, if not completely stand against them. All of these factors brew the pot for a bubble enforced with leverage.

A Scary Tale

Although the market capitalization of all cryptocurrencies is a mere drop in the sea of investible assets, as the penetration of cryptocurrencies deepens, so will the risks along with it. As of now, no one knows how far the price of bitcoin or any other cryptocurrency can rise. But as long as they do, people will be attracted to the idea of depositing bitcoins for a loan to enable them to buy more, and to cover the loan along the way. As for when the bubble bursts, this is a tale with a well-known end.

Keep reading |  3 min read