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Belt and Road in Hong Kong: the Emergence of Digital Gold in IoT

Since President Xi Jinping’s original proposal of the Belt and Road Initiative in 2013, a major limitation that the initiative has faced is the underwhelming volume of growth of Chinese goods being traded among the Belt and Road countries and corridors. The main reason for this inability to solicit further trade are that the relevant trading parties lack substantial holdings of US dollars.

The 4th Belt and Road Summit held in Hong Kong serves as a gateway to facilitate the trade of Chinese goods along the Belt and Road countries. In this article we look at an interesting blockchain application of digital gold, which appears to be a game-changer for the ecosystem of gold trading.

The game-changer with digital gold

Belt and Road Quota Limited (BNRQ), based in Hong Kong, is a company that has been promoting ‘Goldzip’—a gold standard barter trade tool that utilizes blockchain technology. Blockchain.News was able to meet and discuss the innovative digital barter system with one of the Belt and Road Quota Limited’s founders, Ms Law Yee Ping who was in attendance at the latest Belt and Road Summit in September.On the GoldZip tool, Law said, “It’s a new product from the Chinese Gold and Silver Exchange (CGSE) that uses the latest digital gold as a pricing unit to help members trade barter and ultimately helps to reform the development of the supply side of the Belt and Road.” She continued, “If you look at the history of trade, we have gone from bartering goods, to gold and then to US dollars, and now we are moving in reverse—away from US dollars back to gold to be used for bartering.”

Ms Law illustrated, “For example, if we have a client from Kenya who is interested in buying motors from China, they would have had to go to CIPS or their Stripe account to leverage US dollars to buy a Chinese motor. For our members using our Goldzip platform, anything can be bartered based on its value in gold. So perhaps the Kenyan company does not have the necessary US dollars but has the equivalent in another product like coffee or tea, these goods can be interpreted as their gold token value and swapped for an equal converted token value—we then create a smart tender, clear the contract using digital gold settlements and add them to our partner chain.”

Law commented that leveraging a substantial and real asset such as gold inspires far more confidence in the transaction than she believes a Bitcoin based barter would yield. She explained, “Our clients prefer gold over Bitcoin—which could theoretically fall to zero at any moment. Gold has been the standard for centuries and is unlikely to ever really depreciate.”

Smart Contracts & Blockchain IoT

The BNRQ is regarded as a dedicated FinTech and blockchain company which utilizes the technology to enhance several areas of trade. Law outlined, “When a client receives a smart tender, it offers an initial price of their product. When the deal is done, there are four smart contracts that will be issued, one is in terms of gold, another is in U.S. dollars, one for RMB and another will be created for the local currency of the trading partner. Utilizing the appropriate smart contracts the risk is all but eliminated, the trade is cleared through customs and the whole process increases transparency for all parties as they can analyze and compare the relevant trading statistics.”

Blockchain IoT will also be used to ensure trades are completed within the terms of the smart contract and additionally used for factoring. Law said, “Our smart contracts may offer factoring of up to 80% of the gold necessary for the trade, which may be bought back before the completion of the contract.”

On the macroeconomic uncertainty caused by the US-China trade war, Law stated, “The trade war is one of the reasons we established this company. Through 2013-2018, the total trade volume of goods between China and countries along the BRI has exceeded USD $6 trillion but the average annual growth rate of 4% has been higher than China’s foreign trade growth rate over the same period and China’s total trade in goods accounted for only 27.4% which clearly indicated that trade was still being dominated by the US and Europe, we were moving too slowly.” She continued, “Through digital gold barter we are reforming the entire supply chain beginning with the ASEAN countries. We are leveraging the traditional international supply chain and have so far had very positive reactions from Indonesia, Myanmar, Malaysia and some African nations such as Kenya.”

On Hong Kong’s overall FinTech and blockchain market, Law concluded, “We have the historical structures in place and our FinTech and blockchain industry is starting to reach a synergy that will give us some power and an advantage in the future of financial business.”

Image via Shutterstock

SEC Fights Telegram on Gram Token Sale at US Court Battle

The cryptocurrency and blockchain community have been closely watching the court case between the United States Securities and Exchange Commission and Telegram over the legality of the latter’s $1.7 billion token offering.

Judge P. Kevin Castel of the US District Court for the Southern District of New York started the hearing by stating that both the SEC and Telegram should “consider the economic realities” of the $1.7 billion token sale. The judge added that the disclaimers do not control how the court views the digital asset.

When Pastel questioned the utility of the tokens sold in the first round, Telegram’s attorney assured the court that the testnet blockchain had sufficient interest in the blockchain from the “decentralized community.”

The suit was brought against Telegram last October from the SEC, as the regulator believes that Telegram violated the Securities Act of 1933 with its token offering by not adhering to the registration requirements.

Since the SEC considers tokens to be securities and the Securities Act of 1933 requires all securities to be registered with the SEC. Telegram and TON failed to register their sale of Gram tokens, and the SEC considers the sale to be “unlawful.” The complaint reads, “Telegram committed to delivering Grams to the Initial Purchasers in conjunction with the launch of the TON Blockchain by no later than Oct. 31, 2019, and it plans to sell millions of additional Grams at the same time.”

SEC senior trial attorney Jorge Tenreiro argued that Gram tokens were sold to investors without any utility. The SEC claims that the transaction was a “straightforward capital raise.”

Although Judge Castel referred to Telegram’s Gram token sale to gold, stating that the seller of the precious metal would not ask the investor if they were interested in the gold before the transaction, leaving some investors with doubts.

Telegram’s lawyer, Alexander Drylewski said that the SEC’s Howey Test, a test designed to categorize securities does not apply to digital assets that are offered with a promise of managerial oversight, that will increase their value over time. The lawyer argued that when TON blockchain launches, Grams will not be securities.

Castel concluded judgment on the preliminary injunction, and assured Telegram’s lawyer there would be a judgment in the case before April 30, when the TON blockchain is expected to be launched.

Image via Shutterstock

Telegram Prohibited from Issuing Gram Tokens as US Court Grants SEC's Injunction

A United States District Court has sided with the US Securities and Exchange Commission (SEC) granting an injunction against Telegram to to temporarily prevent the company from issuing its Gram tokens.

Gram is a security according to Howey Test

The cryptocurrency and blockchain community have been closely watching the court case between the SEC and Telegram over the legal status of the latter’s $1.7 billion token offerings. The SEC has maintained throughout that the tokens sold were unregistered securities and today a US district court has sided with the regulator.

In a March 24 filing, the Court granted the SEC’s motion for a preliminary injunction to halt the sale of Gram tokens.

As per the Court’s filing, “The Court finds that the SEC has shown a substantial likelihood of success in proving that the contracts and understandings at issue, including the sale of 2.9 billion Grams to 175 purchasers in exchange for $1.7 billion, are part of a larger scheme to distribute those Grams into a secondary public market, which would be supported by Telegram’s ongoing efforts. Considering the economic realities under the Howey test, the Court finds that, in the context of that scheme, the resale of Grams into the secondary public market would be an integral part of the sale of securities without a required registration statement.”

The story continues

The saga began when a suit was brought against Telegram last October from the SEC, as the regulator believes that Telegram violated the Securities Act with its 2018 token offering by not adhering to the registration requirements.

According to the SEC, citing the Securities Act of 1933, Telegram and TON failed to register their sale of Gram tokens, and the SEC considers the sale to be “unlawful.” The SEC’s complaint reads, “Telegram committed to delivering Grams to the Initial Purchasers in conjunction with the launch of the TON Blockchain by no later than Oct. 31, 2019, and it plans to sell millions of additional Grams at the same time.”

Telegram has maintained its stance that the ICO was authorized to sell to accredited investors since the company had filed a Form D 506(c) Notice of Exempt Offering of Securities prior to the first round of its offering. The court has disqualified this argument in the recent injunction filing, which read, “Telegram’s sale of Grams to the Initial purchasers, who will, function as statutory underwriters, is the first step in an ongoing public distribution of securities and, as such, Telegram cannot receive the benefit of an exemption from the registration requirement under either section 4(a) of Rule 506 (c).”

The SEC’s Howey Test

As investment continues to increase in the cryptocurrency space has grown, the SEC has become increasingly interested in defining cryptocurrencies.

If the SEC is able to determine that a particular cryptocurrency token is classified as a security, that brings about a host of implications for that cryptocurrency. Effectively, it means the SEC can determine whether or not the token can be sold to US investors legally or not; it also compels US investors to register their token holdings with the SEC.

When applying the Howey Test, the question to ask, in this case, is whether or not Gram’s investors were participating in a speculative enterprise, and if so, if the profits those investors believe they will receive are entirely dependent upon the work of Telegram.

On Feb. 18, Telegram’s lawyer, Alexander Drylewski had criticized the application of the SEC’s Howey Test, citing that a test designed to categorize securities does not apply to digital assets that are offered with a promise of managerial oversight, that will increase their value over time. The lawyer argued that when TON blockchain launches, Grams will not be securities but commodities.

The injunction filing also indirectly countered Drylewski’s stance—rejecting Telegram’s argument that Gram should not fall under the SEC’s jurisdiction as it would soon become a commodity, the Court stated, “The Court rejects Telegram’s characterization of the purported security, in this case. While helpful as a shorthand reference, the security, in this case, is not simply the Gram, which is little more than alphanumeric cryptographic sequence. Howey refers to an investment contract…that consists of the full sets of contracts, expectations, and understandings centered on the sales and distribution of the Gram. Howey requires and examination of the entirety of the parties’ understanding and expectations.”

TON Developers Threaten to Go Rogue and Launch Network as Telegram Battles SEC Lawsuit

While the US Securities and Exchange Commission (SEC) may have temporarily succeeded in stopping the launch of Telegram’s TON network, can they really stop open-source technology?

On March 24, the SEC won an important decision in their court case against Telegram over the legal status of the latter’s $1.7 billion Gram token offering in 2018. The SEC has maintained throughout that the tokens sold were unregistered securities and on March 25 the US federal court granted the regulator an injuction to halt the distribution of Grams as the legal battle continues.

As the picture is starting to look very grim for the launch of the Telegram Open Network (TON), those in the TON Community Foundation are now discussing alternatives: notably their ability to launch with or without the messaging platform’s further participation and without regulator approval.

The Amicus Brief

The TON Community Foundation (TCF) is a non-profit association of TON ecosystem participants on a mission to enable the development of TON as a decentralized system through collaboration and cooperation.

The Foundation was formed amid the escalating legal tensions between the SEC and Telegram. On Feb 14, TCF filed an amicus brief which was in defense of the messaging giant.

The brief focused on the arguments made by Professor Maurice Herlihy of Brown University, in his report on TON for the United States Securities and Exchange Commission. Herlihy had concluded that the network was lacking critical components for a successful launch and was not secure. He also highlighted the lack of uses for the Gram token, from the report, “the TON public documents describe a suite of services that will eventually be purchasable by Gram holders. Today, however, few if any of these services exist.”

TCF insisted in the brief that the TON blockchain is fully operational, has “state-of-the-art prelaunch security” and a wide range of services on offer.

Arguing that the components Herlihy had criticized were not necessary, the Foundation stated that TON, in its current state, could be launched as a mainnet in a “matter of seconds.”

Will TCF Launch TON without Telegram?

Telegram has been fighting the SEC’s allegations that its 2018 token sale facilitated the sale of unregistered securities while fronting as a decentralized system, like bitcoin and ethereum since Oct 2019.

As the US Courts appear to be siding with regulators, granting a temporary halt on Gram distribution; the TON Community Foundation’s founder, Fedor Skuratov told Coindesk on March 25, that the community is seriously considering contingency options like launching the network without Telegram.

According to the article, Skuratov said “Strictly speaking, no additional measures are required to launch TON by the community, except for a consensus within the community. But in order to get recognized, we will need to come to an agreement with investors (at least, with a majority of them).”

Skuratov highlighted that all the code necessary to launch TON is available online as it was published as open-source by Telegram. He explained that they would merely need to create the genesis block and could run the network on a minimum of 13 validators.

Judge Denies Telegram's Appeal to Issue Grams to Non-US Entities, Says it's Too Late to Question SEC Jurisdiction

US Federal Judge P. Kevin Castel has denied Telegram’s request to issue its Gram tokens to overseas investors.

Telegram had filed an appeal to last week’s ruling by a United Stated federal court in favour of the US Securities and Exchange Commission (SEC) which is prohibiting the issuance of Gram tokens for the time being.

In the most recent turn in Telegram’s six-month court battle with the U.S. Securities and Exchange Commission (SEC) over the legal status of the former’s $1.7 billion Gram token offering in 2018, the US courts have ruled that the injunction barring Telegram from issuing its Gram tokens is applicable to all potential investors both in the United State and overseas.

Courts Continue to Side with SEC

In Telegram’s notice of appeal with the Court of Appeals for the Second Circuit, the company cited the SEC’s lack of jurisdiction with overseas investors and even made the suggestion that it would implement safe-guards to protect against “non-US Private Placement purchasers reselling Grams to US purchasers in the future.”

Judge Castel argued that Telegram had not provided enough evidence that it could implement these types of safeguards and cited that, “the TON Blockchain was designed and is intended to grant anonymity to those who purchase or sell Grams,” meaning that the proposed safeguard would be unenforceable in the real-world.

The order also points out that the question of the SEC’s jurisdiction has not been previously raised by Telegram, and said at this point it is too late to consider it.

Will TCF Launch TON without Telegram?

As the picture is starting to look very grim for the launch of the Telegram Open Network (TON), some in the TON Community Foundation came forward with contingency alternatives on March 26: notably their ability to launch with or without the messaging platform’s further participation and without regulator approval.

As the US Courts appear to be siding with regulators, granting a temporary halt on Gram distribution; the TON Community Foundation’s founder, Fedor Skuratov said that the community is seriously considering options like launching the network without Telegram.

Skuratov said “Strictly speaking, no additional measures are required to launch TON by the community, except for a consensus within the community. But in order to get recognized, we will need to come to an agreement with investors (at least, with a majority of them).”

While the US Securities and Exchange Commission may have temporarily succeeded in stopping the launch of Telegram’s TON network, can they really stop open-source technology?

Images via Shutterstock

Harvard Blockchain Lab Applauds Fight to Fame Model for True Realization of Decentralized Ecosystem

Fight to Fame, a blockchain-based entertainment platform has been praised by the Harvard Blockchain Lab for consistently presenting decentralized events, online malls, movies, and action star reality shows. According to the release shared with Blockchain.news, it uses a BMS business model in the production of action movies, and fans are empowered by the FF Token when voting and making purchases.

Notable strides in the crypto space

By granting the fans using the platform with FF tokens, they can bet on preferred players, exchange derivatives, and buy tickets, and this offers an ideal way of crypto application. As a result, these tokens are circulated across the globe enabling users to create a consensus among themselves.

Rain Huan, a renowned cryptocurrency expert, noted, “Fight to Fame BMS conducts decentralized events, action star reality shows, movies, online malls with blockchain technology in the countries that support cryptocurrencies around the world, with FF tokens to purchase tickets, exchange derivatives, and bet on players, which truly realizes the application scenario of cryptocurrency.”

The Harvard Blockchain Lab asserted that numerous blockchain ventures have not stood the test of time in the entertainment industry. It, therefore, saw it fit to compliment Fight to Fame for stabilizing its token across the board.

Innovative blockchain 4.0 technology

The BMS business model utilized by the platform exclusively employs blockchain 4.0 technology’s decentralized voting mechanism, and this prompts technical commands.

According to Harvard’s Blockchain Lab, “The scope for the potential impact of cryptocurrency on entertainment industries like gaming and television streaming services is nothing short of exciting (to say the least), and it is always thrilling to see companies coming to the call and realizing that there are companies who are willing and able to rise to the challenge.”

The use of FF tokens is proving to be a game-changer in the entertainment sector. Recently, the International Chamber of Commerce (ICC) established a blockchain-enabled app to provide individuals’ immutable COVID-19 compliance conditions.

Image via Fight to Fame

PornVisory Plans Token Rewards for Porn Streaming

In the crypto-sphere today, there are many live use cases of blockchain technology and the vast adoption of these applications is redefining the technological landscape as we know it today. Several online streaming services including dlive, theta, choon, musicoin have pioneered the space but PornVisory is making a remarkable debut that completely aligns with the anonymity of the blockchain ecosystem as it is set to reward users who stream porn on the site with cryptocurrencies.

Porn Industry and Cryptocurrencies

The direct involvement of porn sites with cryptocurrencies began when Pornhub began utilizing Verge coin for its transactions as far back as 2018. The use of cryptocurrency further increased when Pornhub was banned by PayPal back in 2019. The adult video site’s acceptance of Verge tokens has helped in driving mainstream cryptocurrency transactions and real-world use-cases. With the Verge coin that boasts of privacy, the anonymity of their over 100,000 users can be further enhanced.

The PornVisory Model

PornVisory is an Italian based cryptocurrency project owned by Veronica Noschese. Noschese, in a conversation with a popular blockchain media site, said that her company is inspired by the Basic Attention Token (BAT). She insinuated that if the users of the Brave Browser are being compensated with BAT, then users of PornVisory can also be rewarded with PVY tokens when they view ads and other content on the site. Noschese plans to sponsor the development and launching of PornVisory with her personal funds while admitting that there will be no Initial Coin Offering ICO. Upon successful launch and operations, PornVisory will welcome “angel investors.” The project is being handled by Deepit, a Switzerland based startup.

Drive for global acceptance

The PornVisory project when fully operational will benefit from the privacy centered blockchain system while also registering itself as a blockchain ambassador with the sole aim of seeing cryptocurrencies dominate the financial system of the world.

Image via Shutterstock

Blockstack’s STX Token Starts Trading on KuCoin Today

Blockstack is increasing its presence in Asia with the addition of its token Stacks (STX) to popular Asian-based cryptocurrency exchange KuCoin.

Blockstack PBC is a creator of software for a user-owned internet and secure app ecosystem. As announced, Blockstack’s Stacks token (STX) will be available for trading at 6am ET today May 27, by non-U.S. persons on KuCoin, a popular Asia-based cryptocurrency exchange.

KuCoin currently serves 1 out of every 4 cryptocurrency holders globally and has more than 5 million registered users. The live trading of STX on this exchange will increase global access to the Blockstack network.

Muneeb Ali, CEO of Blockstack PBC commented on the STX addition to KuCoin, “This listing is an important one for our overall ecosystem. KuCoin’s strong global presence will enable the Blockstack ecosystem to make further progress after a very busy 12 months for the company. Kucoin prides itself on conducting extensive research to list quality projects in the blockchain industry, and we are thrilled for our project to be a part of its community.”

The Stacks token plays a very vital role in Blockstack’s ecosystem. STX tokens are used for registration of internet assets and will be consumed as fuel for smart contracts written in Clarity. The Stacks token is also a key aspect of the upcoming Stacks 2.0 launch. With the launch of Stacks 2.0, STX miners will be able to forward bitcoin (BTC) to participate in mining, and STX holders will be able to earn Bitcoin by participating in consensus.

Stacks are vital to Blockstack’s ecosystem and are used for registration of internet assets and will be consumed as fuel for smart contracts written in Clarity. As part of the anticipated Stacks 2.0 launch in mid-2020, internet assets on the Stacks blockchain will anchor to Bitcoin. The interconnection of Stacks with Bitcoin provides a scalable foundation for a Web 3.0 rooted in the security of Bitcoin.

This listing follows Blockstack’s first annual report filed with the SEC. The Stacks (STX) token is believed to be the first and only crypto asset listed on CoinMarketCap for which regular disclosures are filed with the SEC, reflecting an unparalleled level of transparency in the crypto industry.

STX tokens are also currently available for trading on Binance’s global exchange and HashKey Pro’s institutional exchange.

SEC Finalizes Lawsuit Against the Founder and CEO of Fraudulent ICO

The US Securities and Exchange Commission (SEC) has revealed that it has received a final judgment in a US district court action against Eran Eyal, the CEO and Founder of Shopin, for carrying out an allegedly fraudulent ICO. The US District Court for the Southern District Of New York handed a final judgment against Eyal on June 23, 2020.

Verdict and Sentencing

In December 2019, the SEC brought the lawsuit against the founder of the firm that launched an allegedly fraudulently initial coin offering (ICO). The lawsuit filed by the SEC showed that Eyal and Shopin fraudulently raised $42.5 million worth of cryptocurrency from the unregistered sales of securities called Shopin tokens from August 2017 to April 2018 based on a series of misleading and false statements to actual and potential investors. Eyal was accused of misappropriating funds obtained from the $42 million ICO.

Eyal, 45, has joint Israel-South Africa citizenship. On May 18, 2020, Eyal was deported from the United States to Israel, after being held in a New Jersey prison facility by the ICE (US’s Immigration and Customs Enforcement) since February.

According to the SEC’s final judgment, Eyal was found guilty and therefore ordered to repay investors a total of $422,100 that represented the profits gained as a consequence of the fraudulent activity alleged in the SEC’s complaint. The addition of interest levied of the amount of $34,940 consequently made the total to become $457,040.

But Eyal was considered to have satisfied the payment. It is reported that he gave up a total of 3105.78 Ethereum tokens to pursue his plea agreement, which guaranteed protection of his rights as the accused party.

As part of the court’s final judgment, Eyal and also former Shopin agents and employees are prohibited from acting as a director or officer of any issuer, which has digital asset securities registered under Section 12 of the US’s Exchange Act. Furthermore, Eyal is prohibited from engaging in any offering of digital asset securities.

However, Shopin investors are shocked as they termed the court’s final judgment as a joke and ridiculous. They say that with the final judgment, Eyal can use investors’ money to settle his own personal liabilities as the SEC appears to agree with that.

Will Cryptocurrency Scam Ever Subside?

The anonymous nature of crypto assets has indirectly assisted in proliferating crypto-related scams. The latest scenario handled in the court is just one out of many crypto-related scams that have been reported across the globe this year. Crypto and blockchain users may wonder if a lasting solution could ever come to stop the rising cases of cryptocurrency scams.

With the evolving nature of new cryptocurrencies and their related services such as ICOs (Initial Coin Offerings), transfer, exchanges, and trading services, the crypto world is becoming more complicated. Although it is difficult to stop the scams, a balanced approach involving a proper security framework and regulation could assist in containing the epidemic.

McAfee's Ghostcoin Gets Backing as Payment in Hong Kong

Days after McAfee’s Ghostcoin confirmed its partnership with ZelaaPayAE, a payment startup based in the UAE, it was announced that the privacy coin would be expanding into the Hong Kong market. The announcement confirmed in a Twitter post, will see Ghostcoin’s adoption and integration by 60 vending machines in Hong Kong including those at Disneyland.

Ghostcoins Launching and Giant Leaps

Ghostcoin was launched last week disregarding the controversies surrounding it. The privacy coin is the invention of John McAfee, a British American Inventor famous for the game-changing anti-virus software McAfee. Ghost coin has unique features that further the fundamental agenda of blockchain technology which includes providing complete anonymity when making transactions. Ghost transactions use a state of the art escrow pool to shield and erase the history of transactions. GHOST transactions are verified using zero-knowledge proofs.

The super-privacy coin runs on a decentralized system that uses a proof-of-stake network controlled by GHOST token holders and users. GHOST has no central company or owner and is run and maintained by the community. The unique features of Ghost have attracted businesses in the UAE and Hong Kong where payment startups ZelaaPayAE and iVendPay are helping to drive its integration by vendors.

Higher Expectations

McAfee’s Ghostcoin has gained a lot of attention from the cryptocurrency sector since the announcement of its impending launch. While it may be too early to rate the coin’s users’ experience, blockchain enthusiasts’ reaction to the series of strides the coin has made is impressive. In keeping up with future expectations, the project will need to amply introduce more value while creating bigger markets across countries. In all, the blockchain ecosystem stands as a winner with this new addition to the family.