Cryptocurrencies, ICO and blockchain, a week in review

Bitcoin CME Futures and reliable source of data:

According to article, CME uses two different criteria to determine whether a bitcoin exchange is eligible as a source for bitcoin pricing data.

First, the bitcoin exchange has to publish a price consistently or it will not be a reliable source of data.

Second, the bitcoin exchange also needs to have trading fees and cannot be a zero trading fee platform. This is important because platforms with no trading fees are susceptible to trading bots that can create fake volume.

What can we learn from CME’s criteria?

Cryptocurrency exchange with no trading fees, should alert you. Remember, if it seems too good to be true, it probably is.

We should also be concern, since fake volume may contribute and support the volatile prices the cryptocurrency market is currently seeing.

SEC and CFTC Chairman Statements on Cryptocurrencies and ICOs:

According to the sec statement, please bear in mind the following:

A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.

If you choose to invest in these products, please ask questions and demand clear answers.

Please also recognize that these markets span national borders and that significant trading may occur on systems and platforms outside the United States. Your invested funds may quickly travel overseas without your knowledge. As a result, risks can be amplified, including the risk that market regulators, such as the SEC, may not be able to effectively pursue bad actors or recover funds.

According to the sec statement, by and large, the structures of initial coin offerings that the sec have seen promoted involve the offer and sale of securities and directly implicate the securities registration requirements and other investor protection provisions of the federal securities laws. Generally speaking, these laws provide that investors deserve to know what they are investing in and the relevant risks involved.

According to the CFTC statement, virtual currencies are unlike any commodity that the CFTC has dealt with in the past. In addition, market participants should take note that the relatively nascent underlying cash markets and exchanges for bitcoin remain largely unregulated markets over which the CFTC has limited statutory authority. Investors should be aware of the potentially high level of volatility and risk in these markets.

Company Halts ICO After SEC Raises Registration Concerns:

According to the press release, a California-based company selling digital tokens to investors to raise capital for its blockchain-based food review service halted its initial coin offering (ICO) after being contacted by the Securities and Exchange Commission, and agreed to an order in which the Commission found that its conduct constituted unregistered securities offers and sales.



Cryptocurrencies world outstanding issues

The mania about cryptocurrencies, ICO, blockchain and so on is getting bigger every day. The average investors are trying to join in, and price levels are touching a new peak.

However, some issues are still pending, and investors need to ask themselves if it’s worth the risk. Please find below few examples gathered form stories published recently:

According to, Bittrex exchange clients, cannot withdrawal their funds. If exchange clients cannot get their money back, there is lack of trust between the tparties.

Another article suggested that Bitfinex exchange suffered from flash crashes and DDoS attacks. Technical problems made trading difficult, and left traders unable to react and manage their positions properly. The article also suggested that, Bitfinex’s business ties and conflict of interest are remain unclear.

Straitstimes reported that Quoine (a cryptocurrency exchange) is being sued n Singapore due to unfulfilled trades.

The bitcoin price is still very volatile (volatile means that you may loss part or all of your invested funds), and once the regulated exchanges in the U.S. will start offer their Bitcoin future contract, the volatility problem may get bigger.

Coinbase issued a statement saying that “we wanted to remind customers that access to Coinbase services may become degraded or unavailable during times of significant volatility or volume. This could result in the inability to buy or sell for periods of time“.

The study “The ICO Gold Rush: It’s a Scam, It’s a Bubble, It’s a Super Challenge for Regulators” suggest that, ICOs provide a new and innovative structure for raising funds to support new and innovative ideas and ventures. However, many ICOs are offered on the basis of utterly inadequate disclosure of information, and the decision to invest in them often cannot be the outcome of a rational calculus.

The above issues are a reminder to all of us. The cryptocurrencies world carries risk and opportunities, you must be educated investor in order to enter this market. You should never invest what you cannot afford to lose.


The fear of missing out, make money advertisements and ICO or digital currencies scams

If you Google the word “Bitconnect”, your search results may include paid ads sponsored by “make money” advertisers. “Hexabot”, “Investellect”, “”, “Chain Group” and “Make Money with Bitconnect” are nothing but a scam. In some cases, from the fear of missing out, investors may risk their savings to those schemes, therefore, we want to emphasis that it is a mistake, and those ads are fraud.

We believe that “Bitconnect”, “BitConnect Coin” is nothing but a scam, and Google should consider removing those ads in order to protect Google’s users. Moreover, we believe Google should file a report against those entities to the law enforcement, since they are acting illegally. We believe that Google is a moral organization, and they always act in the best interest of their clients.

The story is not about Google, the story is about us. We must not let the fear of missing out to control us. We must do better.

Just today SEC obtained an emergency asset freeze to halt a fast-moving Initial Coin Offering (ICO) fraud that raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month. The defendants claimed that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days (please find attached a link for the full press release).

ICOs, cryptocurrencies, mining and blockchain are making investors irrational. You need to be extra cautious, if it is connected to ICOs, cryptocurrencies, mining and blockchain, just because it’s out there doesn’t mean it’s good and profitable investment. Remember, if it is too good to be true, it probably is.

Please note, that some ICOs, cryptocurrencies, mining and blockchain may be risky investments, you should consult with independent financial adviser, before making an investment.

You should only use register financial adviser, if things goes wrong, he/she may have professional liability insurance, and you may be able to get back your money.



The cryptocurrencies world is volatile

A cryptocurrency is a digital asset. Bitcoin, Ethereum, Litecoin, Monero, Ripple, Zcash and other digital asset are cryptocurrencies.

Since cryptocurrencies are are volatile, you can lose your invested funds in a split second.

Bitcoin Futures Products are becoming a mainstream. Recently, the Chicago Mercantile Exchange Inc. (CME) and the CBOE Futures Exchange (CFE) began discussions with the CFTC about listing new bitcoin futures products. The launch of the bitcoin futures contract will provide investors with an opportunity to trade bitcoin exposure in a regulated market.

In order to offer bitcoin futures products CME, CFE and others may need to increased their margin levels. Since Bitcoin is volatile, market makers entities may need to increased their own funds, and to make sure the bitcoin futures products can be settled.

If you want to enter the bitcoin world, and buy bitcoin, there are many guides out there, coindesk is a good place to start your research (please find attached a link).

Remember, the bitcoin’s wallets (which are like a bank that stored your bitcoin) are not regulated, therefore, when your cryptocurrency is in a “cold storage” (cold storage in the context of bitcoin refers to keeping a reserve of bitcoins offline), and you protect your own private keys, the wallet’s security or safe status is not your concern (you will have other security issues to worry about (is your computer safe? how to protect it? etc.)).

Moreover, bitcoin exchanges are mostly not regulated, please find attached a list of exchanges (press here). Coinbase, Gemini and itBit are an example for regulated exchanges, but digital and virtual currencies are not issued or backed by the U.S. government, or related in any way to U.S. currency, and have fewer regulatory protections. Moreover, please make sure the exchange is regulated by trustworthy jurisdiction (not all regulators are alike).

Conclusion, the cryptocurrencies world has unique challenges, it is volatile, not fully regulated, hard to protect, assets prices may differ between exchanges, your financial adviser may not be able to assist you on cryptocurrencies matters, its open for potential market manipulation, market dislocations due to flash rallies, crashes, trading outages etc. If you are a novice, never invest money you cannot afford to lose.




Investment research is not investment advice

Some investors are mixing between investment research and investment advice, but they are not alike. Please make sure you understand the difference between the two.

Websites such as and so forth are providing investment research (we have no idea how good or bad they are, and if the service they provide is a good bargain). We know that using their services is your own responsibility, and you should consult with independent financial advisers with respect to any investment in the securities mentioned.

The investment research services mentioned are not regulated like your independent financial advisers (please make sure he or she are register), and they may be less cautious with their marketing materials and statements.

If you will not bear responsibility for your own actions, no one else will. Again, please make sure to consult with independent financial advisers with respect to any investment.

It is advisable to use register financial adviser, if things goes wrong, he/she may have professional liability insurance, and you may be able to get back your money.

Please find attached an enforcement action related to this category (press here). According to the press release, The Defendants told clients and prospective clients, falsely, that trading in the Room was conducted by a “professional trader” and that all the trading was conducted “live” with real money at risk. The Order also finds that Defendants told clients and prospective clients that trading in the Room generated substantial profits — profits that, if annualized, amounted to a return of more than 400%. In reality, according to the Order, all of these statements were false because there never were any futures contracts traded in the Room and all supposed trading was in fact simulated. The Order further finds that the Defendants provided supposed past performance information to clients and prospective clients but failed prominently to display in immediate proximity to this performance information prescribed disclosures relating to the inherent limitations of such simulated or hypothetical performance information. The Defendants failed to register as required.

Please remember that If it Sounds Too Good to Be True, it Probably Is – CFTC case study

According to the Court Orders (please find attached), the Court finds that the Defendants engaged in a systematic pattern of materially false statements and omissions in connection with the marketing of (SoT) trading strategies and systems.

Specifically, the Court finds that Defendants: 1) touted the profitability of SoT’s trading strategies and systems and claimed hundreds of thousands of trading profits earned every year when, in fact, none of Defendants’ accounts has ever been profitable; 2) falsely represented to customers and prospective customers that the Defendant was a successful professional trader with years of experience and numerous awards when, in fact, the Defendant has little experience, has never been professionally recognized, and has never been a profitable trader; and 3) purported to make profitable trades in live accounts in real time in SoT’s “Live Trade Room” when, in fact, none of the trades called or profits claimed to have been made in the “Live Trade Room” can be found in any of Defendants’ accounts. Additionally, the Court found that Defendants failed to prominently display in their various solicitation materials certain disclosure statements required under CFTC Regulations concerning simulated or hypothetical trading results and client testimonials.

It is advisable to use register financial adviser, if things goes wrong, he/she may have professional liability insurance, and you may be able to get back your money.

In case, it is not clear how much money the victims will get back (if any), since the wrongdoers may not have sufficient funds or assets.


The UK Insolvency Service shut down binary options service company

Some binary options websites were using UK’s companies in order to process credit card transactions and bank transfers.

According to the latest publication (please find attached), Metro Options Limited who provided services to was shut down by the UK’s Insolvency Service.

The website and Metro Options Limited, by its sales representatives, offered the opportunity to conduct binary options trading. The website made various investment return claims, none of which were founded, including:

  • profits of £400 per £500 trade were achievable
  • Metro Options Limited would match customer deposits and that a bonus scheme existed
  • trading insurances of between 50% and 100% would be provided
  • Metro Options Limited had more than 600 retail clients
  • Metro Options Limited was awaiting a licence renewal from the Cyprus Securities and Exchange Commission
  • Metro Options Limited operated a one-off refund policy for losses incurred in a 90 day period

Those customers who contacted the police, via Action Fraud, complained that they were unable to obtain any refunds of deposits or supposed investment returns, and that the company effectively ceased to communicate with them after requests for refunds or investment returns were made. Those parties reported losses of £350,000.

Metro Options Limited also falsely claimed to have had an established trading presence at its Canary Wharf registered office, at 5 Harbour Exchange Square, London, E14 9GE. In fact the company had never had any registered office presence at that location.

Metro Options Limited director, Mr. Miklos Attila, could not be traced by the investigators.

Conclusion, it is advisable not to invest via unregulated entities or regulated entities from unfamiliar jurisdiction (UK, US, Australia, Germany, France etc = familiar jurisdictions). However, if you decide otherwise, in order to avoid sad-ending, you should preform some Know Your Broker checks. You should, at least and not limited, ask the sale representative to send you his/her passport copy and utility bill in English, and/or, get a signed letter from the Company’s director + the Company documents (you should know who are the company’s owners and directors) + the director and owners passport copies + utility bills in English. The letter should state that the director and the owners will be held accountable if misleading information will be provided.

Coingather unregulated Cryptocurrency exchange is offline

If you decide to enter the Cryptocurrency world, please make sure to use regulated Cryptocurrency exchange. Please make sure the exchange is regulated by trustworthy jurisdiction (not all regulators are alike).

According to the attached Reddit’s forum, Coingather has been inaccessible.

If you cannot check the exchange regulation status by yourself, than please ask your financial adviser.  He or She should know if an exchange is regulated or not. Moreover, don’t forget to ask where the exchange is regulated, as mentioned above, not all regulators are alike.


Marketing calls without your prior consent

If you receive a marketing call without your prior consent, and you want to compliant about it, please save the number.

For the US, you may submit your complaint at the FTC website. They will manage for you problems with unwanted telemarketing, text, or spam, identity theft, etc.

In the UK, you may submit your complaint to the Information Commissioners Office. They can make sure that the callers will be punished, and they will assist you with Internet search results, use of cookies, privacy complaints etc.

In Australia, you need to visit OAIC website, in order to resolved your complaint.


A cryptocurrency risk case study

According to the story, at, the owner of prompted users to submit their private keys or recovery seeds as a means to generate bitcoin gold wallets. Shortly after users did so, however, the cryptocurrency holdings in their wallets were sent to different addresses.

At least $30,000 in ethereum, $72,000 in litecoin, $107,000 in bitcoin gold and more than $3 million in bitcoin were confiscated.

If Bitcoin Gold team will not be able assist the victims, most probably investors will not recover their funds.