Above: Ripple co-founder & chairman Chris Larsen speaks on stage at LendIt Fintech last month
Ripple’s digital token XRP is a security, a class action lawsuit filed in the Superior Court of California contends. The 32-page complaint brought by XRP investor Ryan Coffey, says the defendants, who include Ripple CEO Brad Garlinghouse, engaged in the sale of unregistered securities, highlighting that they earned over $342.8 million through XRP sales in the last year alone, securities that were created out of thin air.
“Defendants have since earned massive profits by quietly selling off this XRP to the general public, in what is essentially a never-ending initial coin offering (“ICO”). Like the better known initial public offering (“IPO”), in an ICO, digital assets are sold to consumers in exchange for legal tender or cryptocurrencies (most often Bitcoin and Ethereum). These tokens generally give the purchaser various rights on the blockchain network and resemble the shares of a company sold to investors in an IPO. Unfortunately, these ICOs have become a magnet for unscrupulous practices and fraud.”
The complaint alleges that Ripple executives have engaged in pumping schemes meant to increase the price of XRP through attempted bribes, rumors they’ve started, and hype on social media.
The attorney representing the lead plaintiff, James Taylor-Copeland, is no stranger to cryptocurrency. His twitter username is @TCryptoLaw and he runs the website cryptolaw.net.
At LendIt Fintech last month, Ripple co-founder & chairman Chris Larsen said that the company was anti-ICO. “I think it’s a bad thing to get involved with from the founder’s perspective,” he said on stage during an interview with Jo Ann Barefoot, “because, you know, if you’re a founder and you can raise money many ways today, do you really want to do something where you’re going to have the SEC, you know, kind of threat hanging over your head for 10 years with strict liability? You just don’t want that. You know, that’s a problem.”
HBO Talk Show host John Oliver showed restraint while taking down cryptocurrencies Sunday night. Although he criticized alleged ponzi schemes like Bitconnect and poked fun at the absurdity of EOS’s valuation, his overall message was to approach the technology with caution.
Bitconnect was an easy target now that the company has shut down and a judge has issued an order for their assets to be frozen.
Oliver appeared to be talking to the masses who could fall victim to an otherwise obvious scam simply due to their own fear of missing out.
The murky world of Initial Coin Offerings (ICOs) was hit with alarming news during a cryptocurrency-related Senate committee hearing on Tuesday. That’s because SEC Chairman Jay Clayton said,“I believe every ICO I’ve seen is a security, You can call it a coin but if it functions as a security, it is a security. Those who engage in semantic gymnastics or elaborate re-structuring exercises in an effort to avoid having a coin be a security are squarely in the crosshairs of our enforcement provision.”
An ICO is a blockchain-based corporate event which is similar to an initial public offering. Rather than purchasing shares, as is the case in an IPO, investors in an ICO receive digital tokens instead of shares.
On the positive side, J. Christopher Giancarlo, the chairman of the CFTC who testified alongside the SEC chair, said “As we saw with the development of the Internet, we cannot put the technology genie back in the bottle. Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response.”
It’s like Bitcoin but with more anonymity. It’s also known as Zcash
Touted as an alternative to BitCoin, Zcash is another decentralized and open source cryptocurrency and its major sell is encrypted anonymity and privacy.
The currency was first proposed in an academic paper in 2014 by researchers from Johns Hopkins University, Massachusetts Institute of Technology, UC Berkeley, Tel Aviv University and Technion and is now in alpha-testing phase, to be officially launched in July.
The currency uses technology called ‘zero-knowledge proofs’ in cryptography which allows one party to authenticate a transaction or validate a statement by another party without giving away any information about themselves, reports Fast Company.
It aims to take the philosophy of bitcoin and extend it to become more anonymous. “Zerocash extends the protocol and software underlying Bitcoin by adding new, privacy-preserving payments,” the company blog noted.
Operationally, the currency runs on an open source system. The total money supply is capped at 21 million, similar to BitCoin but when it comes to redistribution, 10 percent of the total amount will go to the founders, investors, employees and advisors where the agreed to give 1% of the total number to the non-profit Zcash Foundation to maintain and develop protocols and software.
Its investors include Pantera Capital, Digital Currency Group and Fenbushi Capital among BitCoin and cryptocurrency investors and angel investors like Naval Ravikant of AngelList and Bitcoin angel investor Roger Ver.