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Category Archives: Legal Issues, Regulation, Consultation

The Global Effort to Level the Playing Field with Tech Giants

Competition | Feb 12, 2024

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The global community has begun to question whether big tech corporations are being held suitably accountable for their actions.

Today technology companies have grown to unprecedented sizes, their influence permeates every facet of our daily lives. From how we communicate and consume media to the way we shop and interact with the world around us, tech giants like Google, Meta (formerly Facebook), Amazon, and others have become central to our digital existence.

The Rise of Regulatory Interventions

Recently, there's been a shift in how governments approach the regulation of tech giants:

  • The European Union's Digital Markets Act (DMA) is a prime example, identifying 22 "gatekeeper" services that will face stringent new rules aimed at ensuring fair competition and innovation.
  • Meta complied with the UK Competition and Markets Authority (CMA) to sell the animated images platform Giphy, signaling a growing willingness among tech companies to adapt to regulatory demands. These actions represent significant steps toward curbing the unchecked power of Big Tech, setting a precedent for other nations to follow.

See:  DoF Consultation: Financial Competition in Canada

  • Also, the Canadian government took decisive action against Facebook (now Meta Platforms Inc.) over privacy violations. Stemming from the global Cambridge Analytica scandal, the Privacy Commissioner of Canada found in 2019 that Facebook had contravened Canadian privacy laws by inadequately protecting Canadians' personal information. This failure allowed third-party applications to access users' data without obtaining explicit consent, spotlighting serious flaws in Facebook's approach to privacy and its compliance with national regulations. Despite the investigation's findings, Facebook contested the Privacy Commissioner's authority and recommendations, leading to a legal standoff that highlighted the challenges faced by national regulators in enforcing compliance among global tech behemoths.
  • The approach to tech regulation varies significantly across jurisdictions. Japan, for instance, has recently begun to implement new legislation focused on data protection and social media platforms.
  • Australia's News Media Bargaining Code forced major tech companies to negotiate payment with Australian media companies for their content. These examples illustrate the diverse strategies employed worldwide to manage the impact of Big Tech, reflecting different national priorities and regulatory philosophies.

The Role of Competition Law and Litigation

Competition law has emerged as a key tool in establishing checks and balances against the monopolistic tendencies of Big Tech. The landmark judgment in Meta Platforms and Others v Bundeskartellamt by the Court of Justice of the European Union (CJEU) underscored this point, linking breaches of the EU General Data Protection Regulation (GDPR) to abuses of dominant market positions. This case, among others, highlights a growing recognition of the need to adapt legal frameworks to address the unique challenges posed by the digital economy.

See:  CFPB (Office of Competition and Innovation) is Shifting Policies that Provide Special Regulatory Treatment for Individual Firms

In 2021, the Canadian Competition Bureau launched an investigation into Google's alleged anti-competitive practices, focusing on the tech giant's dominance in the online advertising market. This investigation is a critical example of how competition law is applied to ensure that the digital economy remains competitive and innovative.

Beyond governmental action, private litigation has proven to be a potent tool in holding tech companies to account. High-profile cases, such as Google's settlement over privacy allegations in its "incognito" mode, have brought significant public attention to the practices of these corporations. These legal battles, while challenging, play a crucial role in ensuring that tech giants cannot operate above the law.

Ben Lasserson, Partner, Mishcon de Reya:

Each of the Big Tech giants is essentially a monopolist in their own ecosystem

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Best Practices for Regulating Tech Giants

The goal is to create a digital ecosystem where tech companies can thrive and innovate while ensuring they do not abuse their market power to the detriment of consumers and smaller competitors. Here are some key best practices:

1. Clear and Adaptable Regulatory Frameworks

  • Regulations should be clearly defined to avoid ambiguity that tech giants could exploit. Laws need to precisely target anti-competitive behaviors without stifling innovation. Given the rapid pace of technological change, regulatory frameworks must be adaptable. This could involve sunset clauses for regulations to be reviewed and updated regularly based on the evolving digital landscape.

See:  Is productivity, wealth creation and competition at the forefront of Canada’s growth agenda?

2. Promoting Fair Competition

  • Implementing strict anti-monopoly measures to prevent market dominance that stifles competition. This includes scrutinizing mergers and acquisitions that could lead to unfair market consolidation.
  • Ensuring that smaller players have fair access to markets dominated by tech giants. This could involve mandating interoperability standards or opening up platforms to third-party developers under fair, reasonable, and non-discriminatory (FRAND) terms.

3. Consumer Protection

  • Strengthening privacy and data protection laws to ensure that consumers' personal information is not exploited for profit without explicit consent. This includes enforcing transparent data practices and giving consumers control over their data.  (See:  67 of top 1000 US websites violate EUs GDPR law)
  • Requiring tech companies to be transparent about algorithms, data collection practices, and the use of personal data. This transparency can empower consumers to make informed decisions about their digital interactions.

4. Encouraging Innovation

  • Creating a supportive environment for startups and smaller tech companies through grants, tax incentives, and access to resources. This can help foster innovation and provide viable alternatives to services offered by tech giants.
  • Promoting the use of open standards to encourage interoperability and compatibility across different platforms and services, facilitating innovation and competition.

5. International Cooperation

  • Working towards global regulatory standards for digital markets can help prevent tech giants from exploiting regulatory gaps between countries. International cooperation can lead to a more consistent approach to antitrust enforcement, data protection, and cyber security.

See:  BoE Report: Open Banking Boosts Productivity, Competition

  • Establishing agreements on cross-border data flows that protect consumer privacy while not impeding global digital commerce.

6. Effective Enforcement

  • Ensuring that regulatory bodies have robust enforcement mechanisms, the authority and resources to enforce regulations effectively. This includes the ability to impose significant penalties for non-compliance that are substantial enough to deter anti-competitive behavior.
  • Establishing mechanisms for consumers to report grievances and seek redress for harms caused by the actions of tech giants. This can include simplified legal processes or dedicated consumer protection agencies.

7. Stakeholder Engagement

  • Engaging a broad range of stakeholders, including tech companies, consumer groups, academics, and policymakers, in the regulatory process. This inclusive approach can help ensure that regulations are balanced, effective, and reflective of diverse perspectives.

8. Monitoring and Research

  • Continuous regularly monitoring the tech sector for emerging trends and potential anti-competitive behaviors. This can help regulators stay ahead of the curve and address issues proactively.  Investing in research to understand the impacts of digital technologies on society, competition, and the economy. This knowledge can inform evidence-based policymaking.

Conclusion

the path to regulating tech giants will undoubtedly require a concerted effort from all stakeholders. The outlined best practices offer a roadmap for creating a digital environment that prioritizes consumer welfare, fosters healthy competition, and encourages innovation.

See:  FCA’s Emerging Regulatory Strategy for Big Tech and Artificial Intelligence

By embracing these principles, regulators can ensure that the benefits of the digital age are widely shared, preventing monopolization by a few dominant players. The journey is complex, but through vigilance, adaptability, and collaboration, we can shape a digital ecosystem that benefits all, characterized by innovation, fairness, and respect for individual rights.


NCFA Jan 2018 resize - The Global Effort to Level the Playing Field with Tech GiantsThe 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, artificial intelligence, 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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Open Banking Regulation in the U.S. Strikes a Chord

Open Banking | Feb 12, 2024

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Impending Open Banking Regulation Is Set to Transform Finance in the U.S.

In a recent Forbes article, Alexandre Gonthier, CEO of Trustly, Inc., digs into the transformative potential of open banking regulation in the U.S.  This forthcoming regulation, championed by the Consumer Financial Protection Bureau (CFPB), aims to formalize consumers' rights to share their banking data, ensuring the continued availability of innovative financial services that have become integral to modern financial management.

Threat or Financial Innovation and Security Catalyst?

  • Open banking levels the playing field by enabling consumers to share their banking data with third-party services, potentially bypassing traditional card-based transactions.  Some large banks view open banking as a competitive threat, particularly concerning the revenue generated from credit card interchange fees, which amounted to $100 billion in 2022.
  • The promotion of Tokenized Account Numbers (TANs) by big banks as a security measure. However, Gonthier points out that TANs, especially when tied to revocable data sharing, can be exploited by fraudsters, complicating fraud prevention efforts within the banking payments context.
  • The CFPB's proposal mandates that consumers renew their data-sharing consent every 12 months. While intended to protect consumer data, this requirement could introduce friction into recurring payment processes, inadvertently boosting card transaction volumes.

See:  BoE Report: Open Banking Boosts Productivity, Competition

  • Gonthier applauds the CFPB's push for an API-based connection standard but warns of potential consumer harm if a proper transition period is not allowed for fallback to legacy connection methods during API outages.
  • Monetization of Data Access: The lobbying efforts by banking associations to impose fees on consumer data access, a move that could adversely affect open banking business models reliant on high volume and low margin economics.

Gonthier believes that while the CFPB's proposal is a positive step towards fostering competition in the payments sector, the final rule must go further to ensure that alternative payment methods, such as ACH, RTP, or FedNow, can compete on equal footing with traditional card-based payments. This competition could lead to lower payment processing costs and, consequently, lower prices for consumers.

FIS's Open Access Platform

FIS recently announced its Open Access platform is set to revolutionize how consumers interact with their financial data. By integrating with leading data networks such as Akoya, Envestnet | Yodlee, MX, and Plaid, the platform offers consumers unparalleled access to and control over their financial information. This initiative not only accelerates the shift towards open banking but also aligns with the Consumer Financial Protection Bureau's (CFPB) proposed Personal Financial Data Rights rule, establishing industry-wide standards for data access and protection.

The Open Access platform empowers consumers to securely share their financial data with a broader array of financial institutions and third-party apps, enhancing their ability to manage finances through their preferred services. This approach not only fosters a more inclusive financial ecosystem but also ensures that consumers can exercise control over their data, with the flexibility to revoke access at any time.

Conclusion

By formalizing the right to data sharing, impending open banking regulation, led by the CFPB, challenges traditional banking paradigms, promising enhanced financial innovation and competition.

See:  Feds Promise Open Banking Laws in 2024 and to Broaden Access to Payments Canada

As the industry adapts, initiatives like FIS's Open Access platform exemplify the potential for greater consumer empowerment and control over financial data paving the way for a future where financial services are more accessible, efficient, and aligned with consumer needs.


NCFA Jan 2018 resize - Open Banking Regulation in the U.S. Strikes a ChordThe 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, artificial intelligence, 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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Globalive’s Lacavera Acquires Wealth One Bank

M&A News | Feb 12, 2024

Globalive Capital has officially entered into an agreement to acquire Wealth One Bank of Canada, a move that is currently pending regulatory and government approvals.

Anthony Lacavera, the visionary founder of Globalive Capital Inc., has once again made headlines, this time in the Canadian banking sector. Following his successful disruption of the telecom industry with Wind Mobile, Lacavera is poised to bring his innovative approach to banking with the acquisition of Wealth One Bank of Canada.

See:  KOHO’s Strategic Push Towards A Banking License

  • An article in the Wealth Professional reported that Lacavera had raised $51 million for a consortium bid through a special purpose vehicle to secure a 54% stake in Wealth One Bank with existing shareholders retaining a minority share, which has been navigating federally imposed national security conditions.  The deal is supported by a mix of Canadian and U.S. backers and could see further capital injections of up to $200 million in the future.
  • With over $600 million in assets as of November, according to the latest filings with the Office of the Superintendent of Financial Institutions.
  • This strategic acquisition is aiming to leverage Wealth One's Schedule 1 banking license to provide Canadians with more choices in banking services, echoing Lacavera's commitment to challenge and diversify industries that benefit from increased competition.

Addressing the Oligopoly

Lacavera criticizes the current banking oligopoly for stifling competition, leading to higher prices and a diminished experience for Canadian consumers. His bid for Wealth One is seen as a long-term strategy to introduce more competition into the market, which he believes is crucial for the economy.

See:  DoF Consultation: Financial Competition in Canada

The focus is not just on serving the Chinese immigrant community, which was Wealth One's initial target since its launch in 2016, but on expanding offerings to all Canadians, including the approximately 500,000 newcomers arriving each year.

Challenges and Regulatory Scrutiny

The bid comes amid national security concerns, with the federal government previously citing potential links between Wealth One and the Chinese government. This led to directives for three investors to sever ties with the bank. Despite these challenges, Lacavera is confident in the bank's solid foundation and believes that the acquisition could alleviate regulatory and government concerns.

Outlook

Anthony Lacavera's track record of innovation and disruption promises a future where competition is intensified, and consumers have access to a broader range of banking services. While regulatory hurdles loom, the acquisition aligns with the broader goals of enhancing financial inclusivity and choice for Canadians across the country.


NCFA Jan 2018 resize - Globalive's Lacavera Acquires Wealth One BankThe 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, artificial intelligence, 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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SEC Expands ‘Dealer’ Definition That Could Ensnare DeFi

Regulation | Feb 8, 2024

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SEC Expands 'Dealer' Definition, Impacting DeFi and Markets

The U.S. Securities and Exchange Commission (SEC) has adopted new rules broadening the definition of a 'dealer,' which could now encompass significant participants in the decentralized finance (DeFi) sector. This regulatory shift mandates entities engaging in liquidity-providing roles to register as dealers, aligning with efforts to bolster market transparency, integrity, and investor safety. The move has sparked a mix of support and criticism, highlighting its potential wide-reaching implications.

  • The SEC's rules, Exchange Act Rules 3a5-4 and 3a44-2, clarify activities that constitute as 'dealer' functions, requiring registration and compliance with federal securities laws.
  • The rule as adopted states:  "Any market participant that engages in activities as described in the rules would be a “dealer” or “government securities dealer” and, absent an exception or exemption, required to:
    • Register with the Commission under Section 15(a) or Section 15C, as applicable;
    • Become a member of an SRO; and
    • Comply with federal securities laws and regulatory obligations, including as applicable, SEC, SRO, and Treasury rules and requirements."
  • Affected market participants must register with the SEC, become members of a self-regulatory organization (SRO), and adhere to a comprehensive set of regulatory obligations.

See:  Prometheum’s Controversial ETH Custody Launch

  • The expanded definition raises concerns within the DeFi community about the feasibility of compliance, potentially stifling innovation and growth in the sector.
  • Ongoing legal battles over the classification of cryptocurrencies as securities could further influence the regulatory landscape for DeFi and crypto-related activities.

Commissioner Peirce Criticizes Final Rule

Commissioner Peirce expresses her inability to support the final rule, criticizing it for perpetuating the proposal's fundamental flaw and for being inconsistent with the statutory framework. She believes the rule will distort market behavior and degrade market quality.

The rule is seen as turning traders, many of whom are customers, into dealers, which runs counter to the statute as interpreted by the Commission and market participants for decades. Peirce argues that this obliterates the long-standing dealer-trader distinction.

See:  SEC’s Escalating Crypto Enforcement

Peirce warns that the rule penalizes liquidity provision, potentially leading to reduced market liquidity and driving competitors out of the markets. She highlights the rule's costly and ill-fitting regulatory regime for liquidity-providing market participants, which could deter them from activities that contribute positively to market liquidity.  She suggests that the rule could lead to a more concentrated and homogenous group of liquidity providers, making both these firms and the market more fragile.

The rule's broad application could force entities that do not have characteristics of dealers under the current understanding to register as dealers. This includes entities executing common trading, investing, and risk management strategies that incidentally provide significant liquidity to the market.

Commissioner Mark Uyeda Disagrees Too

After the new rules were adopted, Commissioner Uyeda expressed a dissenting view, criticizing them for being unclear and problematic. He pointed out that the rules fail to clearly define dealer status, leading to potential broader interpretations beyond the Treasury market.

Commissioner Mark Uyeda disagrees with the decision:

“The lack of any limiting principle creates the potential for arbitrary and capricious government action.  Further, today’s action may reduce liquidity in the Treasury markets, make them more volatile, reduce the number of liquidity providers, and increase debt costs to taxpayers.”

Why It's Important

By bringing more market participants under its regulatory umbrella, the SEC aims to enhance market integrity and protect investors. However, this move raises important questions about the balance between regulation and innovation, the practicality of compliance for decentralized entities, and the future of liquidity provision in the markets.


NCFA Jan 2018 resize - SEC Expands 'Dealer' Definition That Could Ensnare DeFiThe 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, artificial intelligence, 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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Prometheum’s Controversial ETH Custody Launch

Digital Assets | Release | Feb 8, 2024

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Prometheum Launches Ethereum Custodial Services.  A Controversial Step Towards Regulatory Clarity?

Prometheum Inc. officially announced the launch of custodial services for Ethereum's ether (ETH) token, on February 7, 2024, as a direct result of Prometheum's subsidiary, Prometheum Capital LLC, receiving approval from the Financial Industry Regulatory Authority (FINRA) as a Special Purpose Broker-Dealer (SPBD). This approval allows the firm to custody, clear, and settle digital asset securities, setting a new precedent for the digital asset sector in a manner that complies with U.S. financial regulations. This approval is a big deal because it shows that Prometheum is operating within the legal framework set by regulatory bodies, which is not always common in the crypto space.

See:  Post-Merge Will Ether Be Closer to a Security?

  • By opening up its services to institutional clients like asset management firms, hedge funds, and banks, Prometheum is paving the way for more significant investments in cryptocurrencies from these entities. Institutional investors have traditionally been cautious about entering the crypto market due to regulatory uncertainties and security concerns. Prometheum's regulated and compliant platform could encourage more institutional money into the crypto space, potentially increasing the market's stability and maturity.  The service is set to launch in Q1 2024.
  • One of the most controversial aspects of this announcement is the implication that ETH could be considered a security.  If ETH is custodied under a FINRA member firm and an SEC-registered broker-dealer, it suggests a level of regulatory scrutiny and acceptance that could influence how cryptocurrencies, particularly Ethereum, are viewed and regulated in the future.
  • A precedent could be set for other cryptocurrencies and digital assets, showing that it is possible to operate within the existing regulatory framework. This could lead to more crypto firms seeking regulatory approval and compliance, contributing to a more regulated and less volatile crypto market.

See:  Ethereum’s Market Dynamics and Outlook in 2024

  • Prometheum's plan to extend its services to include trading, clearing, and settlement for both retail and institutional clients indicates a move towards creating a comprehensive, blockchain-enabled market infrastructure. This could make digital asset trading more accessible and safer for a broader audience, further integrating cryptocurrencies into the mainstream financial ecosystem.

Cautious Optimism

This development, while seen as a pioneering effort to bridge the gap between traditional finance and the burgeoning world of cryptocurrencies, has also raised eyebrows and sparked debates across the industry about the classification of Ethereum as a security or a commodity. A clear stance from the Securities and Exchange Commission (SEC) on this matter, prompted by Prometheum's custodial services, could provide much-needed regulatory clarity for the industry.

Critics argue that by potentially classifying Ethereum as a security, Prometheum's actions could impose stringent regulatory burdens on the broader crypto industry, stifling innovation and limiting the decentralized ethos that cryptocurrencies were built upon. There is a fear that such a move could lead to increased regulatory scrutiny on other cryptocurrencies, altering the landscape of the crypto market in unpredictable ways.

See:  SEC Greenlights Bitcoin ETFs. Is Ethereum Next?

The controversy also stems from concerns about the centralization of custodial services. By holding investors' digital assets, custodial services like those offered by Prometheum could concentrate power and control, moving away from the decentralized model that many in the crypto community advocate for.

Conclusion

Prometheum's launch of Ethereum custodial services is a watershed moment for the crypto industry.  As the industry grapples with related issues, the launch could set important precedents for the future of cryptocurrency regulation and adoption.  For stakeholders in the crypto and financial sectors, including members of the National Crowdfunding & Fintech Association (NCFA) of Canada, this development serves as a reminder of the challenges and opportunities that lie ahead.


NCFA Jan 2018 resize - Prometheum's Controversial ETH Custody LaunchThe 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, artificial intelligence, 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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NBA in Legal Battle Over Crypto Marketing

News | Feb 8, 2024

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NBA Faces Lawsuit for Alleged Negligence in Crypto Exchange Marketing Deals

The National Basketball Association (NBA) is currently embroiled in a significant legal challenge, accused of "gross negligence" for its marketing affiliations with the now-defunct crypto exchange Voyager Digital Holdings Inc.

  • Investors have filed a lawsuit against the NBA, claiming the association was "grossly negligent" in its marketing agreement with Voyager Digital Holdings Inc., facilitated by Mark Cuban, the then-owner of the Dallas Mavericks.
  • This partnership, formalized through a five-year deal making Voyager's token the official cryptocurrency of the Mavericks, is blamed for leading investors into what is described as "an unregulated and unsustainable fraud," culminating in $4.2 billion in losses.  The situation was further complicated when Voyager filed for Chapter 11 protection from creditors in 2022, leading to a court-authorized liquidation of assets to repay a portion of the crypto held on its platform to customers.

See:  Kim Kardashian Pays $1.26M to the SEC in Penalties for Unlawfully Touting Crypto

  • In 2022, Mark Cuban faced legal action for his promotion of Voyager's offerings. The lawsuit accused him of endorsing Voyager's products, specifically the platform's Voyager Earn Program Accounts (EPAs), as viable investments, despite allegations that he was aware these were "unregistered securities."
  • The lawsuit not only targets the NBA but also implicates Voyager's legal advisors, McCarter & English, accusing them of producing fraudulent legal opinions that contributed to the alleged conspiracy. This highlights the broader implications of the case, affecting various stakeholders within the crypto and legal sectors.
  • The collapse of Voyager and similar crypto entities like FTX has spotlighted the influence of celebrity endorsements in the crypto market. High-profile figures, including sports stars and entertainers, have faced lawsuits for their promotional activities, emphasizing the legal risks associated with celebrity-driven marketing in high-risk financial products.

Why It's Important

This legal battle may set a precedent for how sports organizations approach partnerships with financial and tech companies, especially in emerging and volatile markets like cryptocurrency.

See:  FTX Fallout: Stephen Curry and Tom Brady Reportedly Under Investigation in Texas

This case could prompt stricter scrutiny and regulations on sports organizations' marketing deals, especially those involving financial products, to protect investors and maintain the integrity of the sports industry.


NCFA Jan 2018 resize - NBA in Legal Battle Over Crypto MarketingThe 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, artificial intelligence, 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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B.C. Supreme Court Rejects Crypto Miner’s Power Bid

News | Feb 6, 2024

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Court Denies Crypto Miner's Power Request

Conifex Timber Inc., a forestry company that ventured into cryptocurrency mining, faced a setback in its efforts to secure a substantial power supply from BC Hydro for its operations. The B.C. Supreme Court, led by Justice Michael Tammen, upheld the provincial government's decision to temporarily halt new power connections for cryptocurrency miners, a policy introduced in December 2022 to last for 18 months. This decision was deemed "reasonable," reflecting a cautious approach towards the allocation of the province's electrical resources.

See:  Bitfarms Ltd. Announces Upgrade to Its Mining Operations

Cryptocurrency mining, known for its intensive energy consumption due to the continuous operation of high-powered computers, has been a topic of debate regarding its economic benefits versus environmental impact. BC Hydro's CEO, Christopher O’Riley, highlighted the enormity of the power demand by revealing that the data centers proposed by Conifex would have required 2.5 million megawatt-hours of electricity annually, an amount sufficient to power over 570,000 apartments. This revelation brings to light the significant energy footprint associated with such operations, raising questions about the sustainability of large-scale cryptocurrency mining.

Misalignment?

The Energy Minister, Josie Osborne, pointed out that despite the high energy consumption, cryptocurrency mining contributes "very few jobs" to the local economy, suggesting a misalignment with broader economic development goals.

See:  Hut 8 Mining’s Merger with USBTC Gets BC Supreme Court Nod

Conifex's response to the court's decision was one of disappointment, with the company expressing its belief in the missed opportunities for the provincial government to enhance energy affordability, foster technological innovation, and achieve more inclusive economic growth.

Outlook

The issue utility providers worldwide must address is the challenge of balancing the power demand from cryptocurrency mining with the goals of clean energy and electrification, especially as the adoption of electric vehicles and heat pumps increases. The global context of cryptocurrency mining, with moratoriums in places like China, Algeria, and some U.S. states, has led to a surge in demand for power in regions like British Columbia, further complicating the energy landscape.

See:  White House Proposes 30% Digital Asset Mining Energy (DAME) Excise Tax


NCFA Jan 2018 resize - B.C. Supreme Court Rejects Crypto Miner's Power BidThe 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, artificial intelligence, 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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