SEC and CFTC for hedge fund reporting, SEC sends another cease and desist letter.
The landscape for cryptocurrencies continue to take shape with another effort by the traditional finance world to curb the volatility and uncertainty within the markets. Things like this will actually have more of a positive affect setting the guidelines major investors and companies are waiting for to get that minimal exposure to the asset. ( most allocating around 5%) Hedge funds would be required to report cryptocurrency exposure through a confidential filing under a new joint proposal considered by the Securities and Exchange Commission and the Commodity Futures Trading Commission. The commissions want to learn more about the risks that cryptocurrency poses to the US economy, especially after the market crash this summer.
Under the proposed rule, hedge funds with more than $500 million of net assets would report cryptocurrency exposure using Form PF, a confidential filing created after the 2008 financial crash. The funds would also need to report information about their portfolio concentrations and borrowing arrangements. The SEC considered amendments to Form PF during an open meeting on Wednesday. Federal agencies use reported data to publish statistics about the private funds industry. Will continue to monitor the situation closely over the next couple weeks.
The Securities and Exchange Commission (SEC) has sent a cease and desist letter to Bloom Protocol (BLT), asking it to register its tokens as securities or risk up to $31 million in fines. The SEC issued a cease-and-desist order to the company on Tuesday, accusing it of offering unregistered securities and in the 18-page letter sent on Aug. 9, the SEC accused Bloom of violating the Securities Act by offering its BLT tokens through an initial coin offering (ICO) between Nov. 14, 2017, to Jan. 2, 2018.
The SEC said the crypto startup raised $30.9 million from 7,358 investors worldwide. It continued that the firm had to refund those who bought its BLT token before January 2, 2018 –a failure to do this meant the firm would have to pay all the fines to the SEC. They also noted that Bloom was quick to take remedial actions like agreeing to register BLT as securities, retaining an auditor to start the audit of its entities, and hiring full-time employees to fast-track the auditing and compliance necessary before registration.
Bloom Protocol started in 2017, intending to revolutionize the credit scoring industry using blockchain technology. Also Bloom describes itself as a blockchain-powered solution for credit scoring that aims to reduce the risk of identity theft. It claims its system minimizes fraud prevention and the cost of customer onboarding.
BLT qualifies as unregistered securities as it was not registered with the commission and did not meet the requirements for exemptions from such registration, according to the SEC. Bloom allegedly told prospective investors its limited presale was “oversubscribed” and that it raised a “hard cap of $50m total.” The average investment during the pre-sale was $340,000 and the average during the public sale was $2,000, regulators found, which when calculated don’t add up to the advertised cap.
Bloom is expected to register BLT as a class of securities within 270 days and inform investors about potential claims to recover their money within 60 days. It has been ordered to fulfill all payments to investors within three months of the claim form’s submission deadline. Following the news, BLT, which peaked at $1.51 in May 2018, dropped 36.4% in the last 24 hours. It is now trading at $0.0168. At its peak, BLT’s market capitalization reached nearly $60 million, however that figure is now less than $500,000. That being another telltale sign of the early times present within these markets
