Category Archives: Stories

Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing

TNW Hard Fork | Yessi Bello Perez | Oct 7, 2019

Facebook Libra and EU committee - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backingAs Facebook deals with the loss of PayPal‘s backing for its ‘cryptocurrency‘ Libra, the tech giant must now get ready to answer EU regulators’ questions about the potential risks posed by the project.

The European Commission has requested that Facebook and the Libra Association – the body tasked with supervising the digital currency – answer questions relating to financial stability, money laundering, and data privacy risks.

According to the Financial Times, which saw the commission’s questionnaire last week, this is all part of EU financial commissioner Valdis Dombrovskis’ efforts to asses whether projects such as Libra should be regulated in the EU, if new regulation is required, or whether the ‘cryptocurrency‘ should be allowed to operate at all.

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The news couldn’t come at a worse time for Facebook, which has faced increasing scrutiny and opposition from regulators in recent months.

Just last month, Libra‘s founders were subject to questioning by 26 central bank officials in what was the first encounter between the technology giant and regulators.

Prior to that, in August, Brussels’ antitrust body raised concerns about Libra potentially causing competition restrictions.

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NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Task Force Analyzes Role of Fintech in Accelerating SDGs

IISD | Catherine Benson Wahlén | Oct 1, 2019

SDG and fintech - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backingHighlights

  1. The UN Secretary-General’s Task Force on Digital Financing of the SDGs is tasked with developing a concrete, actionable set of recommendations on how to harness the digital revolution to advance the SDGs.
  2. The report identifies three disruptive possibilities for fintech to shift “the center of gravity of the financial system towards the citizen”.
  3. The Task Force will incorporate reactions and feedback to the interim report and present a final version during the second quarter of 2020

26 September 2019: A task force of the UN Secretary-General issued an interim report that finds the digital revolution in financial technology (“fintech”) presents significant opportunities to accelerate SDG financing, including through providing more control to citizens. The report finds that digitalization is already supporting SDG financing, such as through green and sustainable development bonds, and it shares three ways fintech can shift financial systems towards citizens to advance sustainable development.

See:  Blockchain Technology and the UN: The Sustainable Development Goals

UN Development Programme (UNDP) Executive Director Achim Steiner and the retired CEO of Absa Group Ltd., Maria Ramos, co-chair the UN Secretary-General’s Task Force on Digital Financing of the SDGs, a multi-sector, public-private consortium of 17 global leaders tasked with developing a concrete, actionable set of recommendations on how to harness the digital revolution to advance the SDGs. To prepare its report, the Task Force drew upon commissioned research, ideas from a global Call for Contributions, and a series of “think shops” held in cities around the world.

The report titled, ‘Harnessing Digitalization in Financing the Sustainable Development Goals,’ identifies three ways in which fintech could shift “the center of gravity of the financial system towards the citizen.”

  1. Fintech can increase the quality and user-friendliness of financial information and empower citizens in their financial decisions, from their roles as borrowers and savers to consumers and pension policyholders.
  2. Fintech helps reduce financial intermediation that does not add value for consumers.
  3. Fintech offers an opportunity for collective action among citizens in their financial lives, ranging from platforms like crowd-funding to shareholder action.

The report also highlights the need for robust governance innovations to ensure digitalization supports the alignment of finance and money with citizens’ interests and sustainable development.

See:  Fintech is Driving Financial Inclusion

The report also outlines the risks in using digital financing to advance the SDGs, such as by deepening the digital divide by leaving behind people who lack the necessary infrastructure to join the digital revolution, thus reinforcing existing patterns of exclusion and discrimination. Additional challenges include data privacy and risks of increased money laundering, fraud and illicit financial flows (IFFs). To minimize these risks, the report that regulatory capacity must keep pace with the speed of the digital revolution.

The Task Force presented the report on 26 September 2019, on the sidelines of the UN General Assembly’s (UNGA) high-level week. Steiner highlighted the potential of digitalization to advance SDG financing through citizen choices, saying the “demand is there, among citizens all over the world, to direct financing flows towards green and other sustainability-related targets.” He said the digital revolution presents more realistic opportunities to direct financing flows towards sustainability-related targets at a meaningful scale.

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Download the 60pg PDF:  Harnessing Digitization in Financing  of SDGs -> Now


NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Silicon Valley VCs Are Planning to Get Bankers Out of the IPO Business

Fortune | Sonali Basak and Bloomberg | Oct 1, 2019

benchmark capital holdings - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backingPowerful figures are gathering 2,500 miles from Wall Street to redesign one of its oldest and most lucrative businesses -- but few from the industry will have a seat at the table.

Venture capitalists and executives from hundreds of private companies will meet in Silicon Valley on Tuesday to discuss whether the financial industry’s system for initial public offerings is still working after a year in which many of the biggest deals flopped. Attendees plan to discuss alternative strategies including direct listings, which replace financial underwriters with cutting-edge computer code.

“I’m not anti-banker, I’m pro-algorithm,” Bill Gurley, a general partner at venture capital titan Benchmark who is one of the meeting’s organizers, said in a phone interview. He said investment bankers are largely uninvited.

For months, he and others including Sequoia Capital’s Mike Moritz have been pitching the benefits of direct listings, in which computers shift privately held shares to public markets without banks buying giant blocks of stock and parceling them out to clients at a single price the night beforehand. Humans, Gurley said, have been systematically “mispricing” IPOs for decades. Fewer banks are typically involved in a direct listing, advising startups and helping to drum up investor interest.

See:  The Solution To The Fintech IPO Shortage

Gurley points to research by Jay Ritter, a professor at the University of Florida who studies how stocks perform after market debuts to judge whether top banks such as Goldman Sachs Group Inc. and Morgan Stanley are optimally pricing shares on behalf of budding ventures. His calculations show startups are often significantly underpriced.

To be sure, investors expect IPOs to feature first-day “pops” in price that reward the risk they take supporting a market debut. Yet while companies going public sometimes appreciate the positive press and the demand that such rallies create for future offerings, some entrepreneurs have lamented the money left on the table that could’ve gone into operations instead of speculators’ pockets.

While the biggest IPO advisers won’t be making their pitch, the Silicon Valley summit doesn’t totally exclude finance.

Doug Baird, a longtime banker at Citigroup Inc., and William Blair & Co.’s Carl Chiou are speaking on a panel titled “A Voice of Reason,” according to an agenda seen by Bloomberg. It’s sandwiched between presentations by Gurley and Ritter that are critical of the current IPO model.

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NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Mark Carney’s Trojan Unicorn — Are Central Banks Considering Stealth Nationalization in Sovereign Digital Currencies?

Naked Capitalism | Clive | Oct 1, 2019

digital currencies and sovereignty - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backingWhether or not the purported explanation that the plot and characters of Wizard of Oz being an allegory for the Federal Reserve and the Gold Standard is correct, for anyone in finance the notion that central banks operate on a basis of smoke and mirrors certainly rings true. It’s not only that it’s all smoke and mirrors with the central banks. It’s that behind the smoke and mirrors, there’s just more smoke and mirrors. Usually, clues surface when central banks start opining on something that is so fundamentally a bad idea that it really ought to be left to shuffle off into a dark corner and die a quiet, unmourned, death. Something like sovereign digital currencies, for example.

The FT has been trying (more on this later) to work out what central bank governors, like the Bank of England’s Mark Carney, meant when he came down from Mount Parnassus, to tell us all how central banks and governments will increasingly be required to consider the move to a digital reserve currency in a “multi polar world”.

Carney was, here, entirely correct in principle. The US manages the US dollar primarily for the US’ interests. Certainly in terms of interest rates, the US Federal Reserve takes the needs of the US economy — as it perceives them — as the basis for how it operates monetary policy and who can use the US dollar, for what purposes. Reading between Carney’s lines, you can also intuit a political frustration that, on more than one occasion, the US will also operate the US dollar in pursuit of US geopolitical policy objectives. Even at some economic cost — and not just to the rest of the world, but potentially to the US itself, too. Carney didn’t mention in his speech about another problem, which is how central banks end up having to step in to support the commercial banks in times of financial stress — the FT spotted this angle, we’ll return to this more fully below.

See:  China’s digital fiat currency is ‘nearly ready’ for launch: PBOC official

But firstly – and most importantly – whether a sovereign digital currency ever gets implemented is ultimately going to be a political choice. It is a political – not something that is subject to any economic or technical constraints or influences – decision, if The Powers That Be did decide to introduce a sovereign digital currency. We would have to ask ourselves why it was they made that choice to solve the problems they are confronted with, rather than an equally valid (and considerably simpler) alternative, which was nationalisation of the existing system.

Apart from hard-line free-market ideology, there is another, more subtle, impediment to any ideas about the implicit nationalisation of the payment system through a government-backed digital currency, which the banks could only access through an interface the central banks would have to provide to the currency’s (presumable) distributed ledger. Note that this is a key element of the digital sovereign currency idea – and why a digital sovereign currency would be defacto nationalisation of the payment system.

Today, it is the commercial banks which control their individual ledgers which when taken in aggregate form what is in effect a single distributed ledger. They – and add-on’s like the credit card schemes and interlopers such as PayPal – then create bespoke competing and overlapping interfaces. A digital sovereign currency could only have one distributed ledger (which the central bank would maintain) and one interface to it (which again, the central bank would specify and control).

But given that this would entail the central banks and governments taking a far more hands-on role in the provision of what are currently operated solely on a strictly private-sector commercial basis, like money transmission services – a role they are determinedly eschewing — how will the cakeism inherent in what is being mooted be resolved? If central banks — and, by proxy, governments – want to be in control, they’ll need to be willing to to shoulder responsibilities of operating, monitoring and controlling any digital sovereign currency. Responsibilities which they can presently and often conveniently shirk through a “because markets” shrug of the shoulder.

See:  Canada’s Central Bank Issues White Paper on Government-Backed Digital Currency

If the system were to be in effect nationalised by migration to a digital sovereign currency, then governments would provide – in response to public, or consumer, demand — the services which societies needed. This would be on a utility basis — there’d be no drive for marketing and adding special bells and whistles onto what would be a generic, core, product of sending money from person (or business) A to person (or business) B. But much of the complexity in the current payments ecosystem is artificial, driven by needless product differentiation. Bank accounts which will clear checks for value on paying-in (rather than having to wait for them to pass to the issuer bank and get a confirmation that the check wasn’t bad). “Instant” transmission of funds whereby there’s no time-lag between, say, using your Debit card in a store and the store getting your money into its account. Some of this was driven by a call, legitimate at the time, to avoid banks being able to profit on the funds held up while payments were being cleared.

But that was only a true statement in the days of high positive returns on cash (or positive liquidity). Now holding cash – having a positive balance in funds awaiting release through clearing — can be a cost to the banks.

We can forgive, then, the Financial Times for doing its part in keeping a flame burning under the meagre gruel being cooked up by purveyors of digital currencies, such as Facebook’s Libra, because the central banks have not stopped muttering on about it for months. The FT does its best in their article to puzzle out why central banks are even entertaining the possibility of implementing a digital currency. To be fair, if you read the piece closely, you can see that it expands on a key difference between something like, say, Libra – which is entirely a private sector owned and operated system – and a sovereign digital currency which would be, notionally, run in the public interest by governments.

I think the FT’s writer stumbled across the truth of the matter, but didn’t realise it. Certainly, they could have simply printed their last paragraph and be done with it. It’s the only thing that tells us what’s going on here, in the entire article. Because the FT stopped at that point – just where it was getting interesting — rather than using that as their introduction, we’ll need to pick up that baton from there and explain what’s really afoot.

See:  Eastern Caribbean Central Bank to Issue World’s First Blockchain-Based Digital Currency

To understand what’s piqued central banks’ interest in digital currencies, we need to remind ourselves about a feature of the banking system which is hidden in plain sight. If, as a suggestion, you decide to make a donation to the Naked Capitalism fundraiser and you, wisely, don’t want to risk putting cash in the mail, you can use the PayPal option or post a check. These are money transmission, or remittance, products. They move money from the sender of the funds to the recipient of them.

But what happens in the – highly likely – event that several different financial institutions are involved in the flow-of-funds chain? To return to the fundraiser donation example, unless you and Yves have the same bank, there’s your bank (the one which maintains your account) and Yves bank (where her account is held). And that’s just the most straightforward of scenarios. If I send a donation, there’s my bank in London (HSBC in my case), HSBC’s office overseas (in NY), a currency conversion from £ to $ (potentially done via HSBC’s NY branch and the NY Fed, should HSBC need to access a fresh supply of dollars for the dollar clearing) then finally Yves’ bank as she doesn’t have a bank account with HSBC.

In normal circumstances, none of this is a problem. The central bank which looks after UK banks (the Bank of England) is happy to provide HSBC in London with whatever GBP (£) liquidity it needs to send the money to its NY branch, the NY Fed is happy to let HSBC’s NY branch have whatever USD ($) liquidity it needs to convert the GBPs to USDs and then the regional fed which supervises Yves bank is happy to let Yves have her money knowing that it can get it back from HSBC in NY.

But in times of financial stress, especially systemic ones like those which occurred in the Global Financial Crisis (GFC) 10 years ago? It was in those circumstances where the (unwitting) generosity of the central banks to support all that nice “provision of industry and payment services” came back to bite them on the bum. By making all those $’s and £’s (and other currencies, like ¥ from the Bank of Japan, or € from the European Central Bank) available on demand (subject to the proffering of high quality collateral, or what was supposed to be high quality), the central banks prop up the whole show. This is known in the industry as intraday liquidity.

See:  Banks’ Revenue Growth at Risk Due to Unprecedented Competitive Pressure Resulting from Digital Disruption, Accenture Study Finds

To say that the central banks are vexed by this shotgun marriage between public funds and private capital is an understatement. Since the GFC — so we are talking a decade or more now — central banks have been ruminating over how to extricate themselves from this role — while at the same time save the money transmission system from complete collapse in times of upheaval.

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NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Bakkt’s Bitcoin Futures Already Open to Retail Investors, COO Says

Coindesk | Nikhilesh De | Sep 24, 2019

Bakkt bitcoin futures opens - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backingWell, that was a bit anticlimactic.

After two years of work and more than a year of hype and regulatory delays, the Bakkt bitcoin futures market had a lackluster first day of trading.

When the session closed at 22:00 UTC Monday, only two daily futures contracts and 71 monthly futures contracts had traded on the new platform, built by New York Stock Exchange parent company Intercontinental Exchange. The first daily contract didn’t even trade until 18 hours after the launch.

See:  When the Tide Goes Out: Big Questions for Crypto in 2019

Still, Adam White, the former Coinbase executive turned Bakkt COO, seemed optimistic.

He said in an interview with CNN’s Julia Chatterly that the ICE futures contracts’ launch meant

“for the first time ever you have an end-to-end regulated marketplace for the price discovery of bitcoin.”

White hopes that the daily and monthly futures contracts will lead price discovery, and while most of the attention is focused on the (thus far unrealized) potential for institutional money to enter the space through Bakkt, White opened the door for retail investors to enter the market, saying:

“Bakkt is really designed for the institutional trader. So this is a futures contract. That said, we expect this futures contract to trade through retail brokerages as well, so retail customers can trade this contract.”

He also noted that ICE has been working on Bakkt and the futures contract “for over two years.” (The project was first made public during summer 2018.)

Demand may be slow to ramp up, however.

In comments of his own to CNBC’s Closing Bell, new Commodity Futures Trading Commission (CFTC) Chairman Heath Tarbert also addressed the cryptocurrency space, noting that while demand for crypto derivatives products is growing, “the demand is far below [what] we see for other commodity classes.”

Halvening

Bakkt first revealed it would offer traders a monthly contract in May, the same day it announced it had self-certified its contracts with the CFTC.

See:  Waterloo-based Kik shuts down signature app, lays off staff amid cryptocurrency legal battle

White noted Monday that Bakkt’s monthly contract extends out 12 months, meaning traders will likely be able to predict where bitcoin’s price might be across a year.

“That’s important not just for speculators but the actual businesses relying on the price of bitcoin – the miners are the companies that mine bitcoin  – want to hedge their risk so we think this contract is the perfect fit for them,” he explained.

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NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Waterloo-based Kik shuts down signature app, lays off staff amid cryptocurrency legal battle

Financial Post | James McLeod | Sep 24, 2019

kik chat app - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing'While we are ready to take on the SEC in court, we underestimated the tactics they would employ,' CEO Ted Livingston said Monday, vowing the fight will continue

Waterloo-based Kik Interactive Inc. is shutting down its signature chat app and laying off most of its staff in order to focus on a legal battle with the U.S. Securities and Exchange Commission, the company’s chief executive officer said in a blog post Monday.

Ted Livingston said he was reducing the number of employees from more than 100 to 19.

The U.S. regulator has sued the company, alleging that it conducted an unregulated sale of securities when it raised around US$100 million in 2017 through an initial coin offering for its nascent cryptocurrency, Kin.

“We are all in. And despite these hard decisions my confidence in Kin only continues to grow,” Livingston said in his post. “Together we will show the power of the Kin Ecosystem. Together we will get millions of people to buy Kin to use it. And together we will build a new economy that offers equal opportunity to billions of people. Together we will win.”

Kik Messenger launched in 2010 and quickly established a sizeable user base, and according to recent court filings the service still has “millions” of active users. The company was reportedly valued at US$1 billion when it received a US$50 million investment from Chinese tech giant Tencent.

See: 

However, Kik struggled to generate revenue with the app, which competed with larger rivals such as Facebook Messenger and WhatsApp. In 2017, Livingston announced a plan to launch the Kin, and essentially use the Kik user base as the launchpad to spur widespread adoption of the digital currency.

In a legal complaint earlier this year, the SEC alleged that by tying the success of the cryptocurrency to Kik’s business success, the company was effectively using the initial coin offering to sell cryptocurrency as a security without proper regulatory compliance.

In August, the company filed a blistering response, alleging that the SEC was misrepresenting key facts and taking quotes from executives out of context to create a false picture.

On Monday, Livingston again took aim at the SEC, saying that the legal fight was a major factor in the decision to shut down the Kik Messenger app.

“So with the SEC working to characterize almost all cryptocurrencies as securities we made the decision to step forward and fight,” he said.

“While we are ready to take on the SEC in court, we underestimated the tactics they would employ. How they would take our quotes out of context to manipulate the public to view us as bad actors. How they would pressure exchanges not to list Kin. And how they would draw out a long and expensive process to drain our resources.”

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NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Crypto Startup Sues Exchange Group for $500 Million Over Soured Deal

Coindesk | Nathan DiCamillo | Sep 24, 2019

Paycase sues TMX group 500m - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backingCanadian startup Paycase Global Corp. is suing TMX Group, for breach of contract after the operator of the Toronto Stock Exchange terminated their deal to create cryptocurrency-related products and services.

Paycase is claiming loss of revenue, loss of opportunity and loss of reputation and is demanding $500 million for damages and that TMX resumes its performance, according to a lawsuit filed Monday in Canada’s Superior Court of Justice.

A spokesperson for TMX Group said its subsidiary, Shorcan Digital Currency Network, had been working with Paycase “to try to find a viable and mutually-agreeable business solution. We are very disappointed that Paycase has chosen to go this route. TMX disputes the claims made and we plan to defend ourselves vigorously.”

The damages sought are likely among the largest in any crypto-related lawsuit to date; previous cases have demanded as much as $100 million.

Paycase and TMX, both based in Toronto, entered into 10-year contracts for collaboration and revenue sharing on an over-the-counter (OTC) cryptocurrency brokerage desk and creation and administration of data feeds and crypto indexes and the sharing of crypto-index revenue.

See:  Paycase Financial: Cryptocurrency Brokerage Expects a Large Amount of Volume When the Desk is Launched

According to the complaint, Paycase entered into these contracts on March 21, 2018, with TMX’s subsidiary Shorcan DCN, with the intention to launch a TMX OTC desk and data feed in the second quarter of that year. TMX would receive a cryptocurrency data aggregation platform and a global network of industry participants and leaders, and Paycase benefited from TMX’s stature and clientele, according to the suit.

At the time, Paycase chief executive Joseph Weinberg said Shorcan would be “the first-ever public crypto brokerage desk by an exchange.”

On Aug. 31, 2018, TMX added an amendment to the contract to extend by two weeks a deadline to put together a Statement of Work outlining services, consent, service levels, specifications and delivery timelines for the products. Paycase alleges that it never received this statement.

‘Board issues’

Peter Conroy, president and CEO of Shorcan DCN, encouraged Paycase to buy Shorcan DCN from TMX to bypass “board approval” issues affecting the progress of the products, the suit alleges. In the middle of November, Paycase delivered an offer to purchase Shorcan DCN to Luc Fortin, the director of Shorcan DCN and Global Head of Trading with TMX Group. Paycase claims that TMX announced in or around Sept. 25 that Conroy would be moving to another TMX company but still listed him publicly as president of Shorcan DCN.

Paycase claims that Fortin controlled the business and operations of Shorcan DCN and began to dismantle those operations, including dismissing the two employees hired by Shorcan DCN dedicated to the design, implementation and ongoing operation of the TMX OTC Desk in early December.

See:  SEC sues Kik for US$100M for ‘illegal’ securities offering of digital tokens

On Dec. 6 – the same day as the dismissals – TMX sent Paycase a “Mutual Termination Agreement,” but Paycase claims no event occurred to justify the termination and that there was no termination for convenience in the contract.

Paycase rejected the termination offer and requested a meeting with TMX executives which happened in February 2019. During that time, Shorcan DCN has stopped performing its part of the contract, which Paycase says includes an obligation of continuing performance.

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NCFA Jan 2018 resize - Facebook faces EU grilling over Libra ‘cryptocurrency’ after losing PayPal backing The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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