Market Watch | Bitcoin | $14,058 | 7 day: +6.7% | | Ethereum | $403 | 7 day: +4.4% | | All crypto | $405b | 7 day: +3.3% | | Bitcoin dominance | 64.3% | 7 day: +2% | Prices as of 5 p.m. EST
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The U.S. has seized $24m worth of cryptocurrencies, assisting Brazil in a major internet fraud investigation. - "Operation Egypto" was a cryptocurrency scam in Brazil that collected over $200m between August 2017 and May 2019.
- The Brazilian seizure order was filed in the U.S. District Court for the District of Columbia.
- The scammers ran an unlicensed financial institution without the Brazilian government's authorization.
- The scammers promised investors a 15% return on their capital, according to local news publication Correio Do Povo.
U.S. Dept. of Justice 
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Ripple (XRP) is paying more money to MoneyGram (NASDAQ: MGI) and Japan's $500b finance giant, SBI (8473.T). Ripple paid $9.3m to MoneyGram in Q3. - We have covered Ripple's other XRP incentivization payments here and here.
- We briefed readers on Ripple's lawsuits here.
- The Financial Times reported that Ripple has been struggling to find meaningful uses for its token, XRP.
- Today's feature is a multi-part story, which continues below...
The Block Crypto
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Paying SBI: - On Sept. 30, a professional e-sports team called "SBI E-Sports" entered into a contract with SBI VC Trade Co., Ltd whereby SBI e-sports players will receive an annual salary in XRP tokens.
- The contract signing promoted XRP and the XRP cryptocurrency wallet, Cool X Wallet.
- See our coverage of the full arrangement here.
- In October, Ripple announced that it would invest an undisclosed amount into SBI Holdings' MoneyTap.
- The Venmo-like app, launched two years ago in Japan, uses RippleNet to enable users to send/receive money via phone numbers or QR-codes.
- Although SBI does not report monthly active user (MAU) metrics, 13 Japanese banks joined the MoneyTap project.
- Last year, Japan's fifth-largest bank, Resona, exited the remittance service for unknown reasons.
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Paying MoneyGram: - In 2018, international remittance giant MoneyGram confirmed that it would use Ripple's XRP token for international settlement and test Ripple's xRapid service.
- Texas-based MoneyGram was the first major remittance company to pilot XRP.
- Details soon emerged regarding the financial arrangement. Ripple actually invested a total of $50m into MoneyGram in exchange for MoneyGram's commitment to use XRP.
- Ripple paid a $30m installment in June 2019.
- On Nov. 25 that year, Ripple paid another $20m, gaining more equity in MoneyGram.
- Ripple continues to pay MoneyGram millions of dollars each financial quarter in "incentivization" and "development" fees.
The payments to MoneyGram: - A regulatory filing to the SEC revealed that MoneyGram received about $11.3m within two quarters: $2.4m in Q3 2019, and $8.9m in Q4 2019.
- This year, Ripple reportedly paid MoneyGram $16.6m in Q1 and around $15.1m in Q2 in development fees.
- Ripple paid $9.3m to MoneyGram in Q3.
- In total, Ripple has paid $102.3m to MoneyGram to date.
- MoneyGram reportedly does not hold any XRP for investment purposes.
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Chris Larsen: - Ripple co-founder Chris Larsen's personal liquidations of XRP have made him a billionaire.
- In early 2018, Larsen's net worth exceeded $12b.
- Forbes now estimates Larsen's net worth at $2.7b.
- Larsen and Ripple's current CEO Bradley Garlinghouse have been defending themselves against harmed XRP investors who allege that Ripple's initial coin offering (ICO) was an unregistered securities offering.
- Bloomberg has called Ripple's ICO of XRP "never ending" due to Ripple's continuous liquidations into the open market.
- As harmed victims have revealed more details about Larsen's behavior in legal filings, Larsen has become a vocal critic of the U.S., calling the country "hostile" and threatening to relocate Ripple's headquarters overseas.
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Lawsuits: - According to one legal complaint, Garlinghouse falsely promoted XRP and lied about the amount of XRP in his possession when he said he was "very, very, very long XRP." In reality, defendants allege, he was liquidating hundreds of millions of dollars of XRP at the time.
- Led by Bradley Sostack, many harmed investors of Ripple's XRP token ICO filed a consolidated lawsuit in May 2018 against Ripple and Garlinghouse.
- The same year, Vladi Zakinov, another Ripple ICO investor, led a class-action lawsuit in the District Court for the Northern District of California. Ripple's lawyers argued that the plaintiffs delayed their filing too long.
- Sostack filed an opposition to the defendant's motion to dismiss. Judge Phyllis J. Hamilton consolidated Sostack's class action with the "Bitcoin Manipulation Abatement LLC" case filed in the U.S. District Court for the Northern District of California.
- Plaintiffs allege that Larsen and Garlinghouse conducted an unregistered securities offering of XRP and misrepresented XRP's structure in order to scam purchasers.
- In August, a payment platform called New Payments Platform Australia (NPPA), owned by 13 Australian Banks, including the Reserve Bank of Australia, alleged that Ripple Labs copied its brand by launching a "PayID" service bearing extreme resemblance to NPPA's PayID, launched in 2018.
- NPPA sought an injunction in a U.S. federal court to restrict Ripple from using the PayID brand in Australia, to protect Australian businesses and consumers from scams and losses.
- A board member of Ripple, Ken Kurson, was recently arrested on charges of cyberstalking, according to a New York Times report dated Oct. 23.
- Kurson is the creator of a crypto news website called Modern Consensus.
- Ripple insists that its XRP token is controlled by a separate entity. Ripple claims that it does not control the XRP float, prices, or movements ⏤ despite holding 6% of the 6.2 billion XRP tokens.
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Major investors: - In 2016, Ripple's investors included a Who's Who list of Silicon Valley titans: Google Ventures, Andreessen Horowitz, IDG Capital Partners, and Yahoo co-founder Jerry Yang's AME Cloud Ventures.
- The privately funded company has closed five funding rounds to date, raising $200m in December 2019 alone. That Series C funding included Tetragon, Japan's SBI Holdings, and Route 66 Ventures.
- On June 22, 2016, seven major financial institutions joined Ripple's blockchain network: Santander, UBS, UniCredit Group, ReiseBank, CIBC, National Bank of Abu Dhabi, and ATB Financial.
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Integrations: - Armed with billions of dollars gained from its XRP liquidations, Ripple has onboarded dozens of RippleNet institutional users: Pakistan-based Faysal Bank, U.S.-based PNC Bank, Bangladesh-based bKash, Qatar-based National Bank, and Vietnam-based TPBank.
- Ripple partnered with Finastra on Oct. 9, 2019, enabling Finastra's banking customers to utilize Ripple's cross-border payment services and transact with RippleNet partners.
- Ripple partnered with remittance provider Intermex by International Money Express Inc. (NASDAQ:IMXI) for faster cross-border payments between the U.S. and Mexico.
- During Q2, 2020, Ripple's XRP completed an integration with Sygnum Bank.
- A division of CTFC-registered SeedCX, Zero Hash, included XRP (as well as EOS) into its settlement platform on June 18, 2020. Zero Hash is a registered Money Service Business with FinCEN.
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 Defunct cryptocurrency exchange Mt. Gox More allegations emerge regarding the conduct of Mt. Gox CEO Mark Karpeles in 2014. The descriptions by plaintiffs of Karpeles' behavior is instructive for all cryptocurrency exchange users. - Mt. Gox was a Japanese cryptocurrency exchange that once processed over 70% of all bitcoin transactions. It went bankrupt in 2014 with over 850,000 missing bitcoin (worth over $11b today).
- The ongoing lawsuit is Greene v. Karpeles, case number 1:14-cv-01437 in the U.S. District Court for the Northern District of Illinois. These excerpts come from Document #509, filed on Oct. 30, 2020.
Victims allege fraud by Karpeles: - "Mark Karpeles knowingly misrepresented Mt. Gox in material ways. First, despite Karpeles's common representations that the Exchange kept a full reserve of customer bitcoins and cash, Karpeles knew—but kept secret from all Class members and other Mt. Gox users—that it was never true that Mt. Gox held all assets deposited by its customers."
- "Karpeles directed and participated in the drafting and dissemination of a Terms of Use, which every Mt. Gox user was required to read and agree to, that represented, among other things, Mt. Gox held all assets deposited by its members and that all trades were consummated with other users using real assets."
- "From the very beginning of Karpeles' tenure as CEO, Mt. Gox lacked the assets to satisfy its users' deposits as a result of a series of undisclosed hacks and other data-security events leading to the loss of bitcoin from the Exchange. Karpeles kept these security events a secret whenever possible because he understood that disclosing them would lead to the collapse of Mt. Gox."
- "Karpeles routinely used an automated trading bot to acquire users' bitcoins and cash using fake assets created by his own manipulation of the internal Mt. Gox database. This activity, which affected all Mt. Gox users, not only hid Mt. Gox's ongoing solvency issues, created the false impression that there was a high demand for bitcoins on the Exchange."
Law360
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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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