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US CFTC Orders Ponzi Scheme Operator To Pay $32 Million Fine

A US District Court for the District of Nevada has fined Circle Society and owner David Gilbert Saffron for operating a cryptocurrency ponzi scheme. This is according to the Commodity Futures Trading Commission (CFTC).

Circle Society Ponzi Scheme

The regulator stated that both the Nevada-based corporation and its operator have to pay $32 million as ordered by the court.

Saffron, an Australian citizen, residing in the US, started the firm Circle society to offer binary options on forex and cryptocurrency pairs. Both he and the company allegedly deceived investors to send funds in order to participate in a commodity pool, with promises of high returns.

Since 2017 when Circle society was created, Saffron has reportedly duped investors of at least $15.8 million from about 179 people. According to the CFTC, he diverted investor funds to his crypto wallet to pay other participants “in the manner of a Ponzi scheme.”

The court’s final judgment requires defendants Saffron and Circle Society, jointly and severally, to pay restitution claims of more than $14.8 million to defrauded pool participants and disgorgement fine of $15.8 million, and a civil monetary fine of over $1.48 million.

The judgment also enjoined the defendants from registering with the CFTC or trading on any other CFTC-regulated entities.

However, the CFTC has told victims not to expect much as they might not be able to get their full funds back.

“The CFTC cautions victims that restitution orders may not result in the recovery of any money lost because the wrongdoers may not have sufficient funds or assets,” the statement read.

The regulator filed the civil enforcement action against Saffron and Circle Society in 2019, alleging that Saffron solicited and accepted a minimum of $11 million in Bitcoin and US dollars with other defendants’ help in the company.

The CFTC Chairman Heath Tarbert had then said that fraudulent schemes like Saffron and his company do not only cheat innocent people out of their hard-earned money, but they also threaten to undermine the development of new and innovative markets.

Spike In Crypto-Related Scams

Cybercrime seems to have increased since the advent of cryptocurrency as it is constantly being used to scam people. Even though regulators continue to warn users against crypto scams and, in fact, scams in general, people are still falling victims.

Even though fraudulent activities had existed before crypto came along a decade ago, many crypto owners are falling victims because many retail investors have knowledge gaps. With the fear of missing out (FOMO) surrounding digital tokens, crypto investors are readily suckered into deals with these fraudsters promising huge returns.

Last month, the CFTC ordered fraudulent Bitcoin trader Benjamin Reynolds to pay $572 million in penalty and restitution for a crime he committed in 2017. He was ordered to pay a $429 Million fine penalty and an additional $142 million as restitution to victims.

US CFTC Orders Ponzi Scheme Operator To Pay $32 Million Fine

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Fidelity’s Tom Jessop says crypto has hit a ‘tipping point’

Executives at investment giant Fidelity are confident that cryptocurrency market momentum will continue for the foreseeable future.

Speaking to MarketWatch on April 8, Tom Jessop who heads the investment firm’s crypto division said that he believes crypto has opened a new chapter in traditional finance circles and things have reached a tipping point for the industry.

Jessop stated that the maturation and adoption of crypto assets as an investment class will continue at a rapid pace in the coming years. There are a number of reasons according to the finance manager, one of which is extremely low interest rates in traditional finance.

This, coupled with an environment stimulated by monetary policies, has driven momentum for crypto markets. The Fidelity executive said that this environment is unlikely to change any time soon:

“I think we’ve reached a tipping point. I think you’ve had the accumulated experience of now roughly 12 years of the Bitcoin blockchain being operative since the genesis block in early 2009. And the pandemic, quite frankly, was a catalyst for institutional adoption, and specifically Bitcoin and the narrative, or use-case, around digital gold,”

Jessop added the narrative has been exacerbated by the unprecedented monetary stimulus from central banks and governments in response to the pandemic.

Since the pandemic began, U.S. stimulus packages have topped $6 trillion with much of that money being freshly minted by the Federal Reserve.

Jessop is not the only finance executive to believe that Bitcoin and crypto has reached a tipping point. In early March, Galaxy Digital CEO Mike Novogratz used the same phrase while commenting on the CI Galaxy Bitcoin ETF on Bloomberg:

“Bitcoin adoption has hit a tipping point and investors don’t want to sit on the sidelines,”

On March 24, Fidelity filed paperwork with the U.S. Securities and Exchange Commission to list a new Bitcoin exchange traded fund (ETF). The Wise Origin Bitcoin Trust aims to track the asset’s daily performance using the Fidelity Bitcoin Index PR, an index derived from several price feeds.

Analyst at CFRA Research, VanEck, and Fidelity Investments, Todd Rosenbluth, opined that the SEC is likely to approve an ETF in the coming year or two.

Fidelity created the digital asset unit in 2019 and has been integrating digital assets into traditional investment portfolios ever since.

Fidelity’s Tom Jessop says crypto has hit a ‘tipping point’

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Malaysia based Telecom Axiata Group and Norway’s Telenor to Merge Malaysian Mobile Businesses

Axiata Group and Telenor Asia revealed on Thursday (April 8, 2021) that they’ve revisted and confirmed their merger plans involving Celcom and Digi. At present, the deal is in advanced discussions.

Malaysian telecoms company Axiata Group Bhd and Norway-based Telenor ASA will be focused on merging their  Malaysia-based mobile business operations.

Both firms stated that they had been planning the merger of the telco operations of Celcom Axiata Berhad and Digi.Com Bhd. As part of the deal, both companies will have equal ownership (at around 33% for each company).

As first reported by Reuters, Malaysian institutional investors need to own at least 17.9% of the outstanding shares in the new firm, ensuring that the total domestic ownership is more than 51%, Axiata confirmed.

The firm will be known as Celcom Digi Bhd.

Reuters had also reported earlier that Axiata and Telenor were planning to confirm a deal that was expected to involve the Malaysia-based mobile operations of both companies.

As part of the deal, Axiata will be getting newly issued shares in Digi, which is a cash consideration from new debt in the merged firm of around $400 million and an additional $70 million from Telenor Group, Telenor’s management noted.

Telenor also mentioned:

“A transaction will realize synergies and provide value for shareholders in line with our strategy of further developing Telenor’s Asian portfolio.”

The Norwegian firm, which is the major shareholder in Digi, has other Asia-based operations in Bangladesh, Pakistan, Myanmar, and Thailand.

Axiata’s management confirmed that the merged entity will aim to serve as “a leading telecommunications service provider in Malaysia in terms of value, revenue and profit.” It’s expected to generate proforma revenue of approximately 12.4 billion ringgit or around $3 billion USD.

The entity is also expected to have earnings before interest, taxes, depreciation and amortisation of around 5.7 billion ringgit, and about 19 million customers.

Trading in the company shares of Axiata and Digi had been suspended earlier, as the announcement details were being finalized.

In September of last year, Axiata and Telenor had backed out of a potential deal to establish a telecoms joint initiative with almost 300 million clients based in Southeast Asia. The firms had said that the transaction may have led to certain “complexities” which is why they didn’t follow through with it.

During 2020, Telenor had also been planning to combine its Asia-based business operations into one entity under new management so that it could work on other initiatives more effectively.

Digi is notably one of Malaysia’s biggest mobile services platforms in terms of subscribers, while Axiata’s local division Celcom is the third-largest.

As covered in February of last year, the Telenor Microfinance Bank of Pakistan revealed the new DLT-based cross-border payments service, which is available via Easypaisa, a leading mobile-based digital wallet.

The Easypaisa online wallet app lets Pakistani citizens, working in Malaysia, send money back home instantly and securely, via Telenor’s Malaysia-headquartered payment platform Valyou.

As reported in June 2020, GREAT Eastern (Life Assurance), the largest life insurance company in Singapore and Malaysia, had confirmed a $70 million investment into Axiata Digital’s financial services business, in order to take part in the company’s Fintech-focused plans, according to Khor Hock Seng, group CEO at Great Eastern.

The investment was reportedly made through a newly launched holding company, called Boost Holdings.

As mentioned in the announcement, Boost Holdings is a wholly-owned subsidiary of Axiata Digital, which is the digital services division of the Axiata Group, a major telecommunications group in Malaysia.

After finalizing the investment, Great Eastern will have a 21.875% stake in Boost Holdings. As noted in the release, Axiata Digital Services will be holding the remaining stake in the company.

Malaysia-based Boost offers a digital wallet and lifestyle app which has more than 7.5 million users and around 170,000 merchant touchpoints (as of June 2020).

The investment will reportedly be used to finance Axiata Digital’s new digital financial services business in Malaysia (and in Asia in general). The expansion includes Boost Holdings’ plans to support and develop its merchants network while onboarding more customers. The funds will also be used to improve Aspirasi’s credit-scoring technology. Aspirasi is an online micro-financing and micro-insurance provider.

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Digital Asset Custody Provider Hex Trust Finalizes $6M Round led by QBN Capital

Hong Kong-headquartered crypto-asset custody service provider Hex Trust reveals that it has secured $6 million in capital via a Series A round that was led by QBN Capital.

As part of its latest investment round, Hex Trust also received contributions from Cell Rising, Radiant Tech Ventures, Kenetic Capital, HashKey, MD Labs, Fenbushi Capital, Borderless Capital, Genesis Block Ventures and Henri Arslanian.

Hex Trust’s management noted that the funds raised would allow it to further scale its business operations while being able to recruit new talent to work at its Hong Kong and Singapore offices.

Hex Trust further noted that during 2021, they’ll make plans to  expand operations into the European market, where the company has teamed up with SIA, an established provider of banking tech infrastructure.

Hex Trust said the capital secured will also be directed towards making enhancements to its proprietary, bank-grade custody solution, called Hex Safe™. The technology-driven service provides a wide range of custody and treasury management solutions for digital assets, security tokens, and non-fungible tokens (NFTs) as well.

Alessio Quaglini, CEO and Co-founder at Hex Trust, stated:

“We are past the inflection point, as blockchain has established itself as the next financial markets infrastructure. Financial institutions are quickly making their moves, and the next 12 months will be critical to define the structure of the overall market. Hex Trust is now perfectly positioned to accelerate its growth and play a leading role in this space, enabling digital assets adoption for a broad range of regulated financial institutions. We are thrilled to be accompanied in this journey by such established investors.”

As noted by its management team, Hex Trust claims to be one of Asia’s leading digital asset custodians. The company says it’s “fully licensed, insured, and provides bank-grade custody for digital assets.”

Hex Trust is reportedly led by experienced banking technologists and “award-winning” financial markets. The company has developed a proprietary platform – Hex Safe™ – that “delivers a flexible custody solution for banks, financial institutions, asset managers, exchanges, and corporations to safely, securely, and efficiently operate in the digital asset ecosystem.”

As explained by Hex Trust:

‘”Through Hex Safe™, clients can access liquidity providers, exchanges and lending & staking platforms, enabling seamless access to services while assets are held in our highly-secure and regulated platform. Hex Trust has offices in Hong Kong and Singapore.”

As covered in April 2020, Hex Trust became the very first licensed crypto-asset custodian in Hong Kong to integrate its services with R3’s Corda platform.

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Coinbase’s first quarter revenue hits record $1.8B ahead of its Nasdaq listing

Coinbase has announced impressive first quarter results one week before the exchange’s direct listing on the Nasdaq, estimating that trading volume is up 276% and quarterly revenue has hit $1.8 billion.

The bountiful revenue, revealed in the company’s Q1 earnings call, dwarf its $190 million revenue from the same time last year with the company attributing a portion of this explosive growth to Bitcoin’s bull market.

The U.S exchange estimated net income between $730 million and $800 million and an EBIDTA of approximately $1.1 billion.

The bull market has also seen monthly active users grow to more than six million users, up from 1.3 million in the first quarter, with crypto assets on the platform rising 1200% year-on-year from $17 billion to $223 billion.

The U.S.-based exchange’s CEO Alesia Haas said:

“We have seen all time high crypto prices drive elevated levels of user activity and trading volume on our platform.”

Boasting 56 million verified users, Haas suggested that active monthly users could rise to seven million at most this year, although he warned this could drop to four million if a bear market hits this year.

The company is spending big to acquire new customers. Following next week’s listing, Coinbase intends to increase its sales and marketing expenditure to between 12% and 15% of this year’s net revenue in an effort to drive “meaningful growth in 2021.”

“Looking to full year 2021, in order to scale our operations and to continue to drive product innovation, we expect our technology and development expenses and our general and administrative expenses to be between $1.3 billion to $1.6 billion, excluding stock-based compensation, in 2021.”

The report results are preliminary and unaudited, however, the exchange wanted to release a detailed report prior to the Nasdaq listing set for April 14. The company will register nearly 115 million shares of Class A common stock, under the ticker symbol COIN. As a direct listing, the exchange won’t be selling new stock and can only register existing stock, allowing existing stakeholders to sell their shares to new investors.

Coinbase has received multiple valuations ranging from $68 billion based on private market transactions to more than $120 billion.

Investment research firm New Constructs CEO David Trainer had his doubts about the lofty expectations. “Coinbase’s expected valuation of roughly $100 billion is far too high,” he said in a note to clients Monday.

“It’s hard to make a straight-faced argument that the firm can justify the lofty expectations baked into its valuation given increasing competition in a mature cryptocurrency trading market and the lack of sustainability in its current market share and margins.”

FTX founder Sam Bankman-Fried took to Twitter to congratulate Coinbase on its impressive quarterly figures and upcoming IPO listing, and compared it to his own, much newer exchange’s figures.

Coinbase\’s first quarter revenue hits record $1.8B ahead of its Nasdaq listing

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