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November 2008

Facebook’s Digital Coin Libra Faces Extreme Criticism



Libra, Facebook’s cryptocurrency to be launched as a payment service provider, requires close examination. According to a senior official at Britain’s financial watchdog, this new coin project requires deep scrutiny as it raises questions both on social and legal grounds. Facebook unveiled its Libra digital coin last month as a platform that will let one buy things or send money to people with nearly zero fees.

Regulators Have Doubts About Libra

One would pseudonymously buy or cash out their Libra online or at local exchange points like grocery stores. However, soon after its announcement, Libra raised concerns over its potential impact on privacy from lawmakers and regulators around the world.

According to Christopher Woolard, executive director of strategy and competition at the Financial Conduct Authority, Libra’s “size and scale will pose questions for society and government more generally about what is acceptable and desirable in this space. Historically, this may have been a sector that has lived by the mantra of ‘move fast and break things,’ but the issues raised here require deep thought and detail.”

>> Blockchain Supply Market to Grow to $9 Billion: Allied Markey Research

Deep Thought and Detail Needed

Since the time of its pronouncement, Libra has faced extreme skepticism and is likely to face severe regulatory scrutiny as well. Scheduled to launch by the end of June 2020, Libra is not only Facebook’s entry into one of the least regulated areas of finance, but will also eventually cede control to an independent consortium of over 100 companies, with players like MasterCard, Visa, Uber, and Spotify already having tentatively signed on. However, the fate of Libra depends much on the response of the domestic and international financial regulators and monetary authorities.

According to the news, the FCA has already met Facebook to discuss the project at large, but there are still several questions that require answers as to the workings of Libra. A detailed report on how this cryptocurrency would operate is quintessential for Libra’s blooming. Crucial decisions on such projects lie with lawmakers and the Bank for International Settlements (BIS), an umbrella group for central banks. Politicians need to quickly coordinate regulatory responses to new risks as Facebook and other tech firms move into finance, the BIS said last month.

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INX Plans to Raise $130 Million USD From Milestone IPO



INX ltd, a crypto exchange startup, has announced plans to raise up to $130 million USD through an Initial Public Offering (IPO).

INX has developed a regulated platform for cryptocurrency trading and an alternative trading system for security tokens, which it hopes will become a one-stop-shop crypto services platform. The move to raise money through an IPO is quite unusual by market standards, as generally crypto startups tend to raise capital via Initial Coin Offerings (ICO). On Monday, the company filed a draft prospectus with the US Securities and Exchanges Commission to sell 130 million of its tokens, which are based on Ethereum’s ERC-20-standard.

INX’s Three Key Services

INX’s platform aims to establish three key services. The first of these is INX Crypto, which intends to be a licensed money transmitter. Second is INX Services, which will be registered as a broker-dealer and an alternative trading system (ATS). Lastly, the company plans on setting up INX Solutions, a financial services business.

More Transparency

This announcement is somewhat of a milestone, as previously token sales had been for the most part unregistered. However, the rising number of fraud cases in the crypto market as of late has led to increased SEC prosecutions, and so INX’s move aims to bring more transparency to its crypto operations.

“When fully operational, we expect to offer professional traders and institutional investors trading platforms with established practices common in other regulated financial services markets, such as customary trading, clearing, and settlement procedures, regulatory compliance, capital and liquidity reserves and operational transparency,” the firm said.

>> Crypto Adoption has Yet to Hit the Masses: Vitalik Buterin Explains Why

While purchasing these tokens will not give investors equity in the firm, it does entitle them to a share in the profits as well as placing investors ahead of shareholders when it comes to repayment in the event of liquidation. “It is the Company’s intention that the INX Token holders’ claim for breach of contract will be senior to the rights of the holders of the ordinary shares of the Company in liquidation,” said the draft prospectus.

The Company will not complete the sale of INX tokens until it has raised gross offering proceeds of $5 million within one year.

Featured image: DepositPhotos © sumners

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Tether and Bitfinex Unopposed to Lawsuit Consolidation



Three plaintiffs who have been involved in three separate lawsuits against Tether and its sister company Bitfinex have moved to consolidate their cases into one class-action suit.

Court filings by David Leibowitz et al., Eric Young et al., and Bryan Faubus et al., accuse Tether and Bitfinex of creating “the largest bubble in human history” after they allegedly manipulated the crypto market out of up to US$1.4 trillion. All three cases were brought against the companies off the back of longstanding claims that Tether essentially printed billions of dollars worth of digital tokens in order to inflate prices and convince investors that the demand for cryptocurrency was considerably greater than in actuality.

All three cases have now been refiled as one in the US District Court for the Southern District of New York. While Tether and Bitfinex both refute the claims made against them, they have shown no objection to the consolidation of the cases, with Tether even writing in a statement that it “looks forward” to disproving the “fanciful accusations.” The move to consolidate the cases provides further clarity to the decision of Eric Young to withdraw his case and refile it with the addition of David Crystal as a plaintiff.

A fourth suit was also filed against Tether and Bitfinex last week, which is expected to be consolidated with the three already preexisting cases.

“Tether will continue to defend the digital token ecosystem and the many contributions of the cryptocurrency community, and will not now or in the future pay any amount to settle plaintiffs’ claims,” read the company’s statement. “Tether and its affiliates have never used Tether tokens or issuances to manipulate the cryptocurrency market or token pricing.”

>> Zipmex Exchange Gets Crypto Trading License from Thai Regulators

While Tether has always advertised that its coin is backed 1:1 with the US dollar, that position has been called into question recently. When under investigation by the Department of Justice in February, it changed its position to say that its backing may include other assets from time to time. This position was cast into further doubt when a lawyer representing Tether said that its coin was only 74% backed by cash or cash equivalents.

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Litecoin (LTC) is the Top Altcoin Performer in 2019



Cryptocurrencies have bounced back after imploding in early 2019. While all the major digital currencies have bottomed out from one-year lows, Litecoin (LTC) has emerged as a top performer as it continues to elicit strong interest.

Cryptocurrency Renascence

A 360% plus rally from one-year lows underscores the love that Litecoin continues to receive in the market. Elsewhere on the market, Bitcoin (BTC), the largest cryptocurrency, has rallied by 135%, while Ethereum (ETH), the second biggest crypto, is up by close to 100%. With a market cap of more than $8 billion, Litecoin is currently ranked as the fourth largest digital asset.

Wider acceptance, especially from institutional investors as well as mainstream institutions, continues to strengthen investor sentiments about cryptocurrencies. The cryptocurrency renascence is likely to continue as more products designed to give investors broader exposure to digital assets hit the market.

E-trade Financial Corp is in the process of creating a platform for trading cryptocurrencies. AT&T Inc has made it possible for people to pay their bills using digital tokens.  Facebook is also believed to be in the process of launching its own digital token.

While Litecoin transactions are down by nearly 80% from their peak in early 2018, they have once again started edging higher in line with the spike in price. However, high levels of volatility in transaction fees continue to derail the use of LTC in transactions.

>> Bitcoin (BTC) Moves Up Again, Hits New High Above $9,300

LTC Halving

Litecoin’s strong performance is likely to continue ahead of the much-awaited halving process. The halving process will result in the number of coins miners are awarded being reduced by half. Once the halving process is complete, miners will receive 12.5 LTC for every block created, down from 25.

By cutting the number of coins that miners get per block, Litecoin hopes to reduce supply into the market, something that should continue to prop the crypto price. Halving is not anything new and, in fact, happens every four years.

The last time Litecoin halved its reward price, the underlying price rallied 60% in three months. Litecoin is not the only cryptocurrency that has turned to halving to prop its price. Flagship cryptocurrency Bitcoin is poised to undergo a similar process in May of next year.

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