Market Watch | Bitcoin | $10,592 | 7 day: -0.4% | | Ethereum | $352 | 7 day: +1.7% | | All crypto | $340b | 7 day: +1.4% | | Bitcoin dominance | 57.6% | 7 day: -1.2% | Prices as of 4 p.m. EDT
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 August blog post by Arthur Hayes, now a charged criminal at large The CFTC charges Arthur Hayes and others at BitMEX with illegally operating a derivatives trading platform and violating anti-money laundering (AML) regulations. We have been following Hayes' curious behavior and BitMEX's problems for months at Inside Cryptocurrency. BitMEX claims to process over $1.7b in daily derivatives transactions. - The CFTC has filed its civil enforcement action in the U.S. District Court for the Southern District of New York, charging five entities and three individuals from BitMEX with operating an unregistered trading platform and violating multiple CFTC regulations.
- Among those charged are company owners Arthur Hayes, Ben Delo, and Samuel Reed, as well as "a maze of corporate entities" including HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited (BitMEX).
- Hayes remains at large.
- The CFTC alleges that BitMEX has earned at least $1b in fees while conducting "significant aspects of its business" from U.S. residents.
- A related criminal action by the U.S. Attorney for the District of New York indicts Hayes and three others on federal charges of violating the Bank Secrecy Act.
- HDR Global Trading Limited, a defendant and the parent company of BitMEX, has vowed to fight the charges.
Commodity Futures Trading Commission 
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 https://www.courtlistener.com/recap/gov.uscourts.nysd.516941/gov.uscourts.nysd.516941.88.0_2.pdf A judge rules that Kik's (KIN) $100m initial coin offering (ICO) violated securities law and grants the SEC's motion for summary judgment. - In the Southern District of New York, Judge Alvin Hellerstein ruled that Kik messenger's token sale in 2017 satisfied the prongs of the Howey Test (a Supreme Court framework used for determining a securities sale).
- Kik (KIN) violated U.S. securities law by selling and offering securities without registering them with the SEC nor requesting an exemption.
- Canada-based Kik offered coins under the symbol KIN in 2017, aiming to raise approximately $100m through private and public sales, per a court statement.
- In 2019, the SEC sued Kik for conducting an unregistered security offering
- In the 19-page ruling, Judge Hellerstein notified the associated parties to jointly submit by Oct. 20 a proposed judgment for disgorgement, injunctive, and monetary relief.
U.S. District Court, Southern District of New York
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 Salt Lending (SALT) Salt Lending (SALT) settles a cease-and-desist order with the SEC, receives a court order to register its token as securities and allow investors who participated in its $47m worth ICO to seek refunds. The value of SALT tokens more than doubled in value on the news, as the formerly speculative tokens now have court-ordered redemption value. - The Sept. 30 court order between Salt Blockchain Inc, better known as Salt Lending, and the SEC details the proposed settlement.
- Salt Blockchain, Inc, is a privately-held Delaware corporation. It has settled accusations of violating section 5(a) and 5(c) of the Securities Act by offering and selling SALT tokens, without registering them with the SEC or qualifying for an exemption from registration.
- SALT raised approximately $47m during its ICO from U.S.-based investors, and then offered loans secured by blockchain assets on a limited basis to the public in early 2018.
- The crypto-backed loan provider published a statement saying that it will distribute a Claim Form to purchasers in accordance with the SEC Settlement soon.
SEC
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 Speech by FinCEN Director Kenneth Blanco FinCEN Director Kenneth Blanco warns banks to consider their crypto-related risk exposure. - The Director of the Financial Crimes Enforcement Network (FinCEN) discussed FinCEN's work in the virtual currency industry during a virtual event on Sept. 29.
- Blanco mentioned that exchanges are not the only crypto companies with risk; banks must carefully weigh their crypto risks.
- Blanco said that banks need to establish baseline controls such as policies and procedures to verify customers' identities, perform anti-money laundering controls, and limit their exposure to peer-to-peer virtual currency transactions.
FinCEN
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Dfinity (symbol: ICP) reiterates that it will launch publicly before year-end. The pre-launch, blockchain-based, cloud computing project is valued at $9.5b. It also described a new algorithmic governance system this week. - Dfinity, backed by Andreessen Horowitz and Polychain Capital, launched its governance system and token economics, which it cheekingly calls its Network Nervous System (NNS), during a virtual event on Sept. 30. NNS will act as a "brain" to control Dfinity's "internet computer."
- In August 2018, Dfinity raised CHF102m (Swiss Francs equivalent to USD$111m at present), during a presale funding round led by Andreessen, Polychain, and other investors.
- Dfinity's NNS launch serves as the final milestone by Dfinity's "Sodium Network" prior to its mainnet launch, and precedes the network public release that is expected later this year.
- Dominic Williams, Founderof the Dfinity Foundation, said during the event that "NNS now means that the Internet Computer is feature complete."
TechCrunch
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A sports subsidiary of Japan's $600b giant SBI Holdings (8473.T), SBI-esports, announced that it will use Ripple's XRP token for some salary payments to e-sport players, as part of a "sponsorship deal" with its venture capital fund, SBI VC Trade Co., Ltd. - There are less than a few hundred players who would receive such payments, which could quickly be converted into fiat for a few dollars in transaction fees.
- Ripple has a long history of incentivizing the use of XRP through complicated deal structures for marketing purposes.
- It famously has paid over $81m to incentivize the use of XRP at MoneyGram.
- Funded by years of XRP token sales, Ripple's Xpring initiative provided nearly $100m alongside blockchain platform Forte to boost the adoption of blockchain technology in Japan's gaming industry.
- SBI is also receiving incentives to use Ripple's settlement platform called MoneyTap.
- In June, SBI announced plans for launching a crypto asset fund with an allocation to XRP.
- Various XRP lawsuits are ongoing.
- Class action plaintiffs allege that Garlinghouse personally liquidated at least $100m of XRP during 2017.
- The Financial Times has reported that Ripple is struggling to find compelling uses for XRP.
The Daily Chain
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Quick Hits: - Mike Novogratz's Galaxy Digital becomes a minority shareholder in the DeFi-focused asset management firm, ParaFi Capital, according to a press release published on Sept. 30. ParaFi's portfolio includes UniSwap (UNI), Compound (COMP), and Synthetix (SNX).
- NuCypher schedules its Ethereum mainnet launch for Oct. 15 and completes the distribution of its native token, NU, to over 2,000 node operators who have staked approximately $125m worth of Ether into its so-called NuCypher WarLock.
- Core Ethereum Developers, including Danny Ryan, launched their so-called Spadina testnet as a dress rehearsal for Ethereum 2.0 Genesis. Prysmatic Labs, one of the clients of Ethereum 2.0, identified and mitigated operational issues within the Spadina network. Ryan and other developers are expecting to release another testnet called Zinken in the coming weeks. Ethereum still hopes to launch 2.0 before year-end.
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 |  | Written and curated by wide-eyed bitcoin watcher since $1, Aaron Wise. Streaming headline junkie, Associated Press fanboy, eye-strained news terminal watcher, 2017 founder of Cryptocurrency Newsfeed. Temporarily based in Florida while awaiting the construction of cryptopia. |  | | Editor | Edited by Eduardo Garcia in New York. Eduardo is writing an illustrated book about climate change that will be published by Ten Speed Press, an imprint of Penguin Random House. Bylines in The New York Times, The Guardian, Slate, Scientific American, and others. In one of his previous lives, Eduardo worked as a Reuters correspondent in Latin America for nearly a decade. | |
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