Bitcoin Daily: SEC Demands Telegram’s ICO Allocations; Coinbase CEO Expects To See 1B Blockchain Users By Decade’s End

Venkata S. Meenavalli, CEO of the cryptocurrency firm Longfin, has agreed to settle with the Securities and Exchange Commission (SEC) and pay $400,000 in disgorgement and penalties, the SEC announced on Friday (Jan. 3).

The SEC charged that Longfin and Meenavalli falsified more than 90 percent of Longfin’s reported revenue for 2017 and made up other details in the company’s IPO paperwork, the SEC said in public filings.

Meenavalli agreed to settle the case without admitting or denying the charges. The SEC is setting up a Fair Fund to distribute money received to harmed investors.

“The SEC staff’s quick actions exposed the full scope of Meenavalli’s fraud and resulted in additional monetary and prophylactic relief to prevent him from defrauding U.S. investors in the future,” said Anita B. Bandy, associate director of the division of enforcement.

Regulators are moving forward with a criminal case against Meenavalii.

The SEC asked a New York federal judge on Thursday (Jan.2) to force the encrypted instant messaging app Telegram to turn over financials and explain how it spent $1.7 billion from its 2018 initial coin offering (ICO), Coindesk reported.

The SEC is alleging that the funding Telegram raised selling Gram tokens constituted an unregistered securities sale.

The SEC’s initial complaint in October alleges that Telegram and its wholly-owned subsidiary TON began raising capital in January 2018 to finance the companies’ business, including the development of its own blockchain, the “Telegram Open Network” or “TON Blockchain,” as well as the mobile messaging application Telegram Messenger.

“Plaintiff respectfully moves to compel Defendants to answer questions and provide documents regarding the amounts, sources, and use of funds raised from investors in connection with the unregistered sale of securities at issue in this case,” the court filing by the plaintiff stated.

The fate of cryptocurrency in the next decade was pondered by Brian Armstrong, CEO and co-founder of Coinbase, in his Medium blog on Friday (Jan. 3).

One big change he sees in the 2020s is a rise in users, from around 50 million now to above 1 billion. He also said that in the coming decade there will just be one blockchain, but it will be private and scalable.

“By the end of the decade, most tech startups will have a crypto component, just like most tech startups use the internet and machine learning today,” he said in the post.

Upcoming startups in the crypto space will drive the utility phase — “people using crypto for non-trading purposes,” he said.

The other areas for adoption will be emerging markets with unstable financial systems and startups with valuable products. There will also be significant government involvement and possibly central bank digital currencies.

Israel saw a 32 percent jump in 2019 blockchain and crypto-related companies, Cointelegraph reported, citing an Israeli Bitcoin Association (IBA) study.

The so-called Depression  — or crypto winter — experienced by the crypto market from November 2018 to February 2019 saw the total market value plunge over $100 billion. Controlled roughly 70 percent by bitcoin, values went from $220 billion to a low of $100 billion, the IBA report said.

There were 150 active cryptocurrency-type firms in 2019 compared to 113 in 2018. The majority of new companies are startups operating three years or fewer, but about a third established in 2017 and 2018 are still in operation.

Some 44 percent of crypto and blockchain firms operating in Israel were self-funded in 2019. Investors funded 42 percent of firms, while 7 percent of such companies reportedly operate using independent income.