Brave’s BAT Pre-Sale ICO May Have Comprised the Sale of Unregistered Securities

A discussion pertaining to the legality of ICOs is overdue. With a flood of new projects entering the markets recently, developers are seemingly printing money out of thin air in the form of cryptographic tokens on a weekly basis, which are then passed onto greedy investors seeking to find the next big crypto. With ICOs raising almost half a billion USD in the last 2 years, it is unsurprising to see the SEC taking an interest in the current ICO landscape.

A recent article posted on Medium has sought to argue that Brave’s BAT pre-sale ICO and others like it may comprise the sale of unregistered securities, and are thus illegal.

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Also Read:

SEC may be Looking for Ways to Regulate the Cryptocurrency ICO Market

Legality of Basic Attention Token and Other ICOs Called Into Question

$150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO – CoinDesk

An initial coin offering (ICO) for a blockchain project called Bancor has set a new industry record, raising approximately $153m in ether, the native currency on the ethereum blockchain, as part of a crowdsale that concluded today.

Data shows a smart contract connected to the sale had collected more than 390,000 ether by the time it ended at 18:00 UTC, an amount worth $152.3m at current prices. As such, the figure is higher than even the funding raised by The DAO, the notorious failed fundraising project that made headlines last year when it lost the millions of the $152m in investor funds it raised in a similar sale.

Overall, 79,323,978 Bancor network tokens (BNTs) were created as part of the ICO, with the top token holders now possessing 83.96% of the tokens, or 66,601,702 BNT. Fifty percent of the total tokens, or 39,661,989 BNT, were sold to the public, while the remaining 50% were allocated for future use.

The ICO attracted 10,885 buyers, according to available data, with more than 15,000 transactions sent to the address for purchases during the sale. One buyer went so far as to purchase 6.9m BNT, or roughly $27m, in the sale.

Launched in 2017, Bancor, overseen by the Bprotocol Foundation, has been pitched as a platform designed to make it easier for users to launch their own blockchain tokens.

Of the remaining funds, a blog post by the company states token capital will be directed toward partnerships, community grants, public bounties and project advisors.

Issues with the sale

As with past sales of this kind, the ICO was accompanied by reports that the ethereum network faced significant transaction loads, resulting in delays for buyers.

However, the project itself was adversely affected by long wait times on ethereum.

According to the Bancor website, an initial funding target was set at 250,000 ether, though this figure was not hard-coded into the smart contract deployed. As a result, a transaction sent on the ethereum blockchain in an effort to change the contract and limit the crowdsale in length did not work as desired.

Due to network disruption and delays holding up this transaction, the company said the crowdsale ended up continuing longer than initially desired. Overall, it lasted an two additional hours as a result of the delay.

Posts on social media further suggest that at least some users saw transaction issues during the sale. One thread on Reddit drew complaints about transactions being dropped as long as 35 minutes after they were sent to the ICO address.

Some participants who spoke to CoinDesk also said that they had experienced delays in transacting, including one who had issues moving their ethers off an exchange for the purposes of participating in the ICO.

One exchange operator went so far as to argue that the ICO had increased transaction congestion, colorfully remarking that larger ether buyers were disrupting the sale.

Source: $150 Million: Tim Draper-Backed Bancor Completes Largest-Ever ICO – CoinDesk

Rivetz.com offers built-in Hardware Security

rivetz_logo_wordmark_horiz_750Rivetz.com is a company that I have been following very closely for several years now.

Rivetz believes that online services are significantly enhanced when a device can be trusted to be what it says it is and to execute instructions exactly as asked. Building upon a decade of industry investment in trusted computing, Rivetz is offering a platform that delivers on this goal.

A service provider generally has confidence in its servers. They are under administrative control and usually protected physically. However, nearly all services are delivered to users through devices the service provider knows very little about and over which it rarely exerts any control.

Rivetz changes this. Through the use of Trusted Execution technology we are able to provide a service provider with an oasis of trust in the unknown world of consumer devices. Basic capabilities such as “sign this”, or “decrypt this” are executed outside the murky world of the main OS. Keys can be generated and applied without ever being exposed in memory and can be attested to through a chain of endorsements traced back to the device manufacturer.

When you can trust a device not to lie or leak secrets, you can form a much more reliable and simpler relationship with the device. It makes life easier and safer for the user and service provider alike.

What Can I Do with Rivetz?

Rivetz is all about trust in devices. We believe that a reliable relationship with a device can make for a much safer, easier and stronger relationship with an end user.

To achieve this, first and foremost you need to know with confidence that a device is the same device it was before. You also need to be sure that a device won’t leak its secrets when asked to do something sensitive, like a decryption or signing.

Our device code runs in the Trusted Execution Environment (TEE) available in many modern devices. The TEE is a hardware environment that runs small applets outside the main OS. This protects sensitive code and data from malware or snooping with purpose-built hardware governed by an ecosystem of endorsements, beginning with the device manufacturer.

Rivetz enrolls a device and equips it with a service provider’s keys. Our API’s enable secure execution of a number of sensitive device-side transactions, including:

  • Get a reliable and anonymous device id – On request, Rivetz will generate a signing key for a device. The public key is hashed into a string that can be used to identify and communicate with a device. The private key remains locked in the hardware and can only be applied on behalf of the SP that requested the ID.
  • Get a device to sign something – The private key of the device identity can be used to sign things proving that this device was involved. The signing ceremony is executed in secure hardware such that the key is never exposed to normal processing environment of the device.
  • Get a device to encrypt something – An encryption key can be generated on request and applied to any blob of data. Encryption/Decryption is triggered locally and takes place within the secure execution environment so as to protect the key.
  • Create a Bitcoin account – The device can be asked to generate a new Bitcoin account using the RNG built into the Trusted Execution Environment.
  • Sign a Bitcoin transaction – The device can apply it’s private Bitcoin account key to sign a transaction and then return it to the service provider
  • Secure Confirmation – (coming soon) Newer TEE environments support trusted display and input in addition to trusted execution. Trusted display enables a simple confirmation message, such as “confirm transaction amount”, to be presented to an end user.
  • Join Devices to share and backup identities – Most users have a couple of devices. Rivetz allows those devices to be bound into a ring so they can interchangeably present themselves to a service provider on behalf of the user.

Rivetz is a toolbox for riveting the online world to the hardware we use to get online. By providing this basic set of features we hope services across the web from wallets to content apps can provide a simpler and safer experience.

How does it work?

A Service Provider calls Rivetz to create hardware keys in a device. Different types of keys are available depending on the purpose, such as for crypto-coins or data encryption.

Riveted keys are governed by simple usage rules established during creation. For example, a key may require that usage requests are signed by the Service Provider that created the key, or that the user confirms access through the Trusted User Interface.

A Rivet will only respond to an instruction from a Service Provider that has been “paired” with the device. Rivetz.net conducts the pairing ceremony as it is able to confirm the integrity and identity of both device and service provider. When a device is paired it acquires the public key of the service provider, while the service provider gets a uniquely generated identity and public key for the device.

While Rivetz supports local calls, ideally all instructions are signed by the Service Provider. This protects a device key from being applied by a rogue application. The _Rivetz Library is used by all components to prepare and sign device instructions and interpret instruction results.

Trusted Execution Environment

There is a class of apps that benefit greatly from strong assurance of their origin and opaque separation from the execution of other apps. This is known as a Trusted Execution Environment or TEE.

Unlike an app running on the primary OS and memory stack, an app running in a TEE has access to cryptographic primitives that can be exercised without snooping by the OS. On certain platforms, it also has direct access to user input and display to ensure a private interaction with the operator of the device.

While the technology has been pursued for well over a decade, it is only recently that devices with support for a TEE have become available. Intel began delivery of commercial solutions in 2011 and Trustonic, an ARM joint venture, launched in 2013.

Deploying an applet into a TEE is akin to delivering a dedicated hardware device. Execution and data are cryptographically isolated from any other function of the host.

Rivetz and the TEE

While most applications of Trusted Execution technology have been concerned with enterprise security or DRM, Rivetz instead provides an applet that is focused on the needs of common web services. Crypto currencies such as Bitcoin have highlighted the need for consumer key security.

As Bitcoin’s Price Rises Security Shouldn’t Be Taken for Granted – Bitcoin News

bitcoinsecurityRecently there have been numerous reports of people losing their bitcoins to hackers and malware as bitcoin’s price continues to grow in value. It is safe to assume that organizations and individuals trying to steal people’s bitcoin reserves will persistently increase because the decentralized cryptocurrency becomes more valuable to thieves.

Also read: Rising Network Fees Are Causing Changes Within the Bitcoin Economy

‘Faster and More Lucrative Than Robbing a Suburban Bank’

As Bitcoin's Price Rises Security Shouldn't Be Taken for GrantedAt the time of writing one bitcoin is worth roughly $2900 as it has become a treasured digital asset. While bitcoin’s value has increased the number of people losing money to malware attacks and hackers cracking bitcoin accounts usually follows the price rise in unison. Just recently Cody Brown, founder of the virtual reality community Roomscale.org, lost $8000 worth of bitcoin held on Coinbase.

Brown’s attack vector was through Verizon where the hacker easily took over his cell phone number with a some “simple billing information.” After his phone was compromised the attacker swiped his Coinbase funds in less than fifteen minutes. Brown does detail that he did not use two-factor authentication with his email account, but feels that it shouldn’t be so easy to access Verizon information. He also believes that he may have been targeted after tweeting about bitcoin a week prior.

Source: As Bitcoin’s Price Rises Security Shouldn’t Be Taken for Granted – Bitcoin News

How Ethereum became the platform of choice for ICO’d digital assets

For most of the history of blockchain-based currencies and assets, the story has been all about Bitcoin. At a market capitalization of around $40 billion, it remains the most valuable cryptocurrency.

But with the rise of a new ‘chain on the — ahem — block, namely Ethereum, and new ways to fund the development of new crypto-platforms with ICOs, the narrative is shifting somewhat to the entire cryptographic asset class.

Today, let’s take a more in-depth look at some of the historical trends in the digital currency space, paying close attention to Ethereum and its role as the platform of choice for new cryptographic assets.

The number of new digital assets is on the rise

In roughly the past 12 months, the number of cryptocurrencies listed on CoinMarketCap.com, a main reference site for digital asset developers and speculators alike, has increased significantly.

Below is a chart compiled from the count of cryptocurrencies listed on historic snapshots of the site’s main table starting with the first snapshot on April 28, 2013 (featuring a whopping seven cryptocurrencies) and the most recent snapshot from June 4, 2017.

Source: How Ethereum became the platform of choice for ICO’d digital assets

Blockchain, Crypto ICO Funding Gains Popularity Amongst Investors

Initial Coin Offering (ICO) funding, a means of raising funds from the crowd for a new cryptocurrency or blockchain venture, grew quickly throughout 2016 and Q1’17, while traditional venture funding to blockchain companies fell progressively over the same period.

28% of total early-stage blockchain funding came from ICOs over the past four quarters, a figure that’s continuing to grow, according to CB Insights. In Q1’17, 37% of all blockchain funding came through ICOs.

ICO activity significantly picked up in 2016 with US$78 million being raised by cryptocurrency and blockchain startups that year (excluding Q2’16’s US$150 million failed ICO by The DAO). Notable ICOs in 2016 include ICONOMI (US$10 million), SingularDTV (US$7.5 million) and Waves (US$15.5 million).

ICOs VC Funding 2016 2017

Source: Blockchain, Crypto ICO Funding Gains Popularity Amongst Investors

Faith in Bitcoin Remains Despite Block Size Debacle – Bitcoin News

Among the hullabaloo and escalating fear about a potential hard fork, the price of bitcoin swelled to $1212 on April 10, according to Bitcoin.com’s price index. People still have faith in digital gold. 

Also read: Mexico’s New Bill Could Be a Game Changer for Bitcoin

Nonetheless, this seems like an unprecedented rise in price. The community is still immersed in the tumultuous challenge of finding a solution to the block size dilemma. Some would think the resultant FUD would have caused investors to dump their holdings, inspiring a downward trend in price.

Faith in Bitcoin Remains Despite Block Size Debacle
The price of Bitcoin, a week ago.

The reverse is true, though: there has been healthy bitcoin trading on the market at the onset of April. A Crypto-Time article pointed out that the growth of Bitcoin this month coincided with marked “profits” in the Bitcoin space, which garnered attention of more speculators and investors.

This would make sense from a nontechnical perspective. Some investors may not understand all intricacies of Bitcoin. They might take risks without having full mechanical acumen of the cryptocurrency.

Everyone still trading, still hoarding; Bitcoin ATM’s

With that said, market actors with knowledge of Bitcoin are still trading, keeping, or hoarding the currency. If they would have thrown in the towel, the price would have started a downward spiral. This means that people still have faith the block size problem can be resolved without incident.

In addition, the price hike also comes on the heels of the downward trend spurred by SEC refusal to list a bitcoin exchange-traded fund, meaning that market actors aren’t concerned about political action either.

There is also other good news in the Bitcoin space. Even though the scaling debacle has caused some people to shake in their boots, there is more evidence that faith remains in Bitcoin.

On March 2, Razor-Forex.com penned an article that suggested Bitcoin ATM installations are still on the rise, and that coinatmradar.com reported that 53 new ATM machines were installed in a variety of different countries in March. However, Razor-Forex added:

Source: Faith in Bitcoin Remains Despite Block Size Debacle – Bitcoin News

Lots of Data in Cambridge University’s First ‘Global Cryptocurrency Benchmarking Study’ – Bitcoin News

Selwyn_College_Old_Court_Panorama_from_North-West_cornerSponsored by Visa, the research is conducted by Cambridge University Judge Business School’s Centre for Alternative Finance. Even though there are over 300 academic articles published on Bitcoin and other cryptocurrencies over the past few years, the report claims that they “tend to take a narrow focus.” This study is the center’s “inaugural research focused on alternative payment systems and digital assets,” the report reads. “It is the first study of its kind to holistically examine the burgeoning global cryptocurrency industry and its key constituents, which include exchanges, wallets, payments and mining.”

The research is based on non-public data from 114 cryptocurrency organizations and individual miners in 38 countries globally. Four surveys were conducted online, from September 2016 to January 2017. Report authors, Dr. Garrick Hileman and Michael Rauchs, wrote:

We estimate that our benchmarking study captured more than 75% of the four cryptocurrency industry sectors covered in this report.

Below are just some highlights of the report’s findings.

Source: Lots of Data in Cambridge University’s First ‘Global Cryptocurrency Benchmarking Study’ – Bitcoin News

The Digital Currency Council

The DCC is here to support the development of best-in-class professional practices in the digital currency economy through training, certification, as well as connectivity with peers and prospective clients. Our members are leading professionals from a variety of fields, including Finance, Attorneys, and Accountants. At the DCC we are committed to providing independent, objective, clear, practical, efficient and impactful education on the rapidly emerging digital currency economy, including Bitcoin and the Blockchain. Trainings are designed to help professionals meet and exceed the high standards set by the DCC Certification Exam, as well as to advance the knowledge that will drive the students’ careers. The DCC Certification is administered by the DCC Director of Curriculum in consultation with the DCC Curriculum Committee and with the input of experts across the globe. To become DCC Certfied, candidates must pass a rigorous 100-question exam. Exams are reviewed and results provided within one month of each examination. To maintain certification, individuals must participate in pre-approved continuing education programs to demonstrate their commitment to maintaining a high standard of competency in the continuously evolving digital currency economy.

Ripple Streamlines International Banking Transfers.

I’ve been getting an increased amount of clients wishing to pay for my services in Bitcoin which I do accept however converting the Bitcoin into USD’s then transferring the funds from my Bitcoin exchange to my US checking accounts has been a major, and I mean major pain in the ass. I’ve been accused of money laundering, had funds frozen and what should be 1 day bank wires taking weeks to process. Not my client’s problem since I agreed to accept Bitcoin. None of my subcontractors that I use to complete the work for the clients will accept them so I’m stuck in the middle with all this Bitcoin I can’t touch. Well I found this company today which, if true to their promise, will mak my life much easier.

More information here