American SEC begins purge of cryptocurrencies by targeting Bittrex

in Currencies

Bittrex.com – one of the world’s largest cryptocurrency exchanges announced that it will stop trading following cryptocurrencies: Bitshares, Bata, BT Token (Draco), DAR.

Bittrex

Source: Bittrex

Bitshares is largest from these cryptos, holds $155 mln in capitalization and fell in just a few minutes by a 24%, while Draco’s price decreased 60% and DAR -58%. This means effectively death for these virtual online coins and big losses for unlucky investors.

bitshares drop

A very bad day for Bitshares: nearly 60 million USD evaporated from investors accounts. Source: coinmarketcap.com.

The reason behind this purge is SEC (U.S. Securities and Exchange Commission) demand to stop these coins from being offered by Bittrex, because they are securities. SEC just a few days ago exposed cryptocurrency scam, charging two companies with defrauding investors in a pair of ICOs purportedly backed by investments in real estate and diamonds. REcoin meant to be “The First Ever Cryptocurrency Backed by Real Estate.”, but in fact it turned out to be nothing more than a scam.

Securities are tradable financial assets like stocks, futures contracts for commodities or currency pairs and to trade one, trading institution needs to obtain US license and meet the requirements, which none of virtual coin exchanges can met, because of intangible value of cryptos. No one can trade securities in US without SEC permit and that is big problem for businesses offering these online currencies to investors.

What does it mean for cryptocurrencies?

In fact it shouldn’t be a surprise for anybody , because SEC don’t want to list Bitcoin as a financial product, and actually warnsinvestors about dangers of buying virtual internet coins such as as Bitcoin. In 2014 SEC issued an “Investor Alert about Bitcoin and Other Virtual Currency-Related Investments” where this financial institution raises a few juicy points about Bitcoin:

  • “Bitcoin might be a Ponzi scheme”
  • “Bitcoin users may be targets for fraudulent or high-risk investment schemes”
  • “Bitcoins are not legal tender”
  • “Bitcoin exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers or malware. Bitcoins also may be stolen by hackers.”
  • “Bitcoin does not have an established track record of credibility and trust”

Source: SEC

sec purges cryptocurrency bitcoin

SEC also stresses that exchanges need to obtain their permits before selling – but in fact, none of crypto exchanges bothers with such trivial matters.

Especially larger virtual coins like Bitcoin and Ethereum are vulnerable, because they aren’t back by anything more than a firm beliefs and lambo dreams, so they aren’t really a real financial assets. SEC uses exact same argument as Chinese regulators, who closed all virtual exchanges in China just few days ago.

bitcoin sec

If SEC will follow this path and starts targeting other US exchanges, it means a unrecoverable crash for  Bitcoin and Ethereum. As Twitter user StartaleTV  noted – “all alt are up in the air now”. I would say more: it’s possible end of Bitcoin and other main cryptos like Ethereum. SEC isn’t working too fast – but if it starts regulations on wide scale, it will effectively kill Bitcoin fad.

52 Comments

  1. Maciej, you are doing a disservice to the industry unless you want to harm it. Bitshares is one of the best tokens on the planet. There’s something fishy here with Bittrex.

      • What is it that actually is backing US currency? How is it any less virtual than crypto? and you also said only Government can issue currency? As in the Federal Reserve? This is the Government agency errr I mean Private company you trust?

        • USD is backed by Federal Reserve System, Gross Domestic Product and taxes.

          Cryptocurrencies are backed by sketchy promises, moon memes and lambo dreams.

          • Yes it’s backed by nothing tangible. Doesn’t take any work or incentive to print federal reserve notes.

      • so why they dont avoid all the propertty bubble and debt bubble that the banks got in, this is only the big capitalization whales trying to stop the common citizen from getting out of the matrix

        • > Cryptocurrencies are backed by sketchy promises, moon memes and lambo dreams.

          … much like Gold … all it does is *bling* *bling*

          • Gold is precious metal used to produce expensive jewelry and industrial parts, thanks to its excellent conductive properties.

            Bitcoin is “virtual internet coin”, mined in Chinese server farms. It’s used to power dreams of Lamborghini cars and moon missions.

  2. This article is pretty much a fabrication and is laden with FUD. Very sad to see. BitShares is a major threat to all centralized exchanges. I think that’s why Bittrex is removing them. Cheap shot!

      • Not a conspiracy, more like fear from folks scared of economical and technological evolution and progression, so they try to kill what threatens their status quo.

        Too bad they can’t kill the internet, rewrite the laws of mathematics, or stop society from pushing forward into what they want.

        Try harder.

  3. Hahaha.. Stock Traders Keep Dreaming! Removing coins from one exchange means NOTHING! We will trade on any exchange. Matter of fact, we don’t even need exchanges anymore. Decentralized exchanges are popping up everywhere! Good with your rigged game!

    • It’s not currency – because only government may issue one.
      It’s a security – because it’s tradable financial asset intended for profits.

      Your virtual fake coin continues to tank and is -35% today. SEC tries to protect investors from such inexcusable losses, which aren’t possible in case of real financial assets like currency pairs (I mean, real currency like EUR/USD not “internet coins”), stock or commodity contracts.

      BATA cap fell since yesterday in market cap from $4 mln USD to $1,3 mln USD. Will you pay back almost $3 mln that all holders lost? No – and in case of real financial instruments you would be obliged to.

      • Before I ever learned about cryptocurrencies I was aware of the fact that the US dollar, (the currency standard of which most developed nations of the planet base their currencies upon) is about to crash to zero. It’s the result of printing money (at the whim of some central authority) that is backed by absolutely nothing. A country’s currency is nothing more than a representation of their productivity, i.e. their ability to produce something in exchange for the IOU they have written (their currency). Here in the USA the last president decided that he would run up the debt to $20 trillion and then pay a large segment of the population to stay at home, sit on the couch, watch television and receive free internet and cell phones. So not only has the US government written IOUs which it can’t honor by printing an extra $10+ trillion of national debt, it has made itself more and more unproductive by teaching multiple generations that they can sit at home and they will get a government check every month. And their answer to this problem is to just print more money, or in this case create more debt that they have absolutely no way of paying. I realized that it was only a matter of time before this bubble would burst and there will be a world-wide cataclysmic shift of economies. Every developed nation will get sucked into the same whirlpool that the USA will be in, and there is no swimming out of it. The Great Depression will have nothing on this one!
        And then I came across cryptocurrencies. I read the white paper and did my own research and I realized that the cause of the fiat currency crash that is inevitably coming is completely taken out of the equation with a decentralized cryptocurrency. It is such an elegant solution and the really beautiful thing about it is that there is really no way anybody can stop it. Do you really think the US government will outlaw cryptocurrencies when nations like Japan and the Ukraine are positioning themselves to embrace them? You can see that even though China acts like it is outlawing cryptos it is actually trying to lure other nations to do the same so that they can pull a big switch? There is too much government sponsorship going on in China behind the scenes. If the US and the IMF try to outlaw cryptos they are essentially going to make themselves irrelevant. People will flock to the crypto space when the dollar crashes and then it will be all over for fiat currencies, and unless they want to turn off the internet and destroy a multi-trillion dollar global economic machine and cause even more death, destruction and starvation then there is really nothing they can do to stop it. The jeanie is out of the bottle. You can’t unring this bell. It may be a rough road getting there but we will all get there. But you just hang on to that dollar bill and let’s see how that works out for you…

      • No as the cryptocurrency is mined and miners are rewarded for their efforts in securing the network,

        It is not a security at all. Of course, I suppose you are in the class that believes Bitcoin is a security as well.

        Government currency is fake as it is an IOU.

        • You should at least apologize to BATA holders – now it’s just $900K, so I guess this “decentralized currency” is dead.

      • Before crypto I flipped antique photos on ebay as a hobby, if you think crypto is volatile, imagine spending $500 for a civil-war daguerrotype, re-selling it on ebay and it ends up going for $300, there you’re out $200. But did I ever beg the government to come protect me or bail me out? No, because i’m a responsible adult who does with my money what I want. You win some, you lose some.

        You are correct though crypto coins are not legal currencies, but by the IRS’s own definitions coins is property, akin to the photos I used to sell. So how can the SEC label it a security while another branch of government disagrees, were my antiques securities? Is my Adobe Cloud license key a security, because essentially that is all coins are are cryptographic keys. This all gets real fuzzy in the 21st century.

        Personally I think mature adults are capable of making their own decisions, i’ve made more money in crypto in one year then I could ever have hoped to make in a lifetime, and all this talk of regulation, China bans etc. has done more to kill the price of the market as a whole lately then scams have, is this what is considered protecting investors? Snatching money out of the hands of working class people who found a nice niche in life that is profitable and easy to get in? I’m not a moron and I doubt 90% of other traders are either, we know its volatile and that is exactly how we like it. Regulating it is one thing, threatening to outright destroy a whole market is another.

        And if you think crypto is a fraud, how can these social media companies like Snapchat which turn no profit and deals primarily in teens sending child porn to each other be valuated at $17 BILLION dollars? Where are the regulators when it comes to outright con jobs like that? And yet people call Bitcoin at $70b a “bubble”.

        I think your hate or extreme concern is misplaced.

        • Currencies aren’t securities, but currency pairs are. Cryptocurrencies are actual pairs like BTC/USD or ETH/USD.

          Your Adobe key isn’t security, because it’s not investment asset devised for taking profits.

          Snapchat lost 50% since IPO in March 2017 and is as bad investment as cryptocurrencies, that’s why investors are abandoning this ship.

          • They’re “abandoning this ship,” so hard that it’s growing at a rapid pace each and every day. Are you even thinking about what you write? You aren’t instilling much trust in your audience . . . You’re coming across as someone who feels threatened and is now switching to a defensive posture that doesn’t take reality into account.

    • More like he’s praying they’ll die, but knows that it’s a force of nature at this point that isn’t going to be stopped. Lol.

  4. IF SEC or whatever government body decides to close exchanges, traders will move to DEX or to exchanges which got government support, such as those in Japan.

    Crypto Currency will not just vanish.
    That’s what I think, but the time will tell.

  5. Hey. No one cares SEC. You are irrelevant. Close them all, we will have our own de-centralized exchanges and will always carry a store of value.

    We are the threat that you cannot stop.

  6. We must be entering the “Then they fight you” phase. Every article this guy writes is anti-crypto which holds an obvious conflict to his empire of stocks.

    Fear it up much? You, other rich-guy gamblers, the SEC, the banks, and govt’s will lose control of portions of the economy and are the ones who are really hodlin’ the fear coin.

    • This common cryptocurrency “Rich Banksters and Evil Government” narration is equal parts cringy and stupid. It’s the same level of conspiracy theory as flat earth or anti-vaccination.

  7. Hi Maciej, for something to be a security or not it must be subjected to the Howie Test. According to the TXSRB, The Tokens & Exchange Self-Regulating Body, Bitshares is a clean token and will not be subject to SEC or other government crackdowns which is happening right now!

    You seem like an intelligent guy so I am confused why you are saying that Bitshares is a security. Perhaps you should be more research before reporting your FUD unless of course that’s really your real intention

    https://docs.google.com/spreadsheets/d/1QxOV2dgxO3C_TyVE0-41ZwLlzPmB-EE1NNshJGuedCU/edit?usp=sharing

  8. Regulations imposed by the SEC on scam ICO’s is nothing but bullish for bitcoin. ETH should definitely take a hit since currently its only smart contracts are contracts for launching ICO’s lol.

  9. So the SEC decision makes the US very cryptocurrency and blockchain unfriendly. Definitely not the smartest move ever, one step backwards. People will move else where. The next step in the blockchain and cryptocurrency evolution will be accelerated with decentralised exchanges. At that point no-one will care about the SEC and it becomes obsolete.

    Also makes me wonder just what they will approve, with everyone waking up to blockchain technology and realising just how important it is. No-one will want to touch some blockchain with a centralised coin with a ten foot barge pole!

  10. Even if SEC decided to ban crypto, it ain’t going to stop people invest in crypto.

    What’s make you think Bitcoin and other cryptocurrency will die ?

    It’s only 140B market and suddenly SEC start to panic to follow china footsteps to ban crypto ICO and exchanges.

    Oh wait, why even SEC follow china footstep? When is this so called powerful SEC even want to follow China? Why SEC didn’t ban Facebook, Amazon when China Ban them ?

    If you are thinking Japan will ban Bitcoin, Guess this is where you are wrong. Mt.GOX was a disaster in crypto history, that is why, Japan take the first step to come out with regulation in regards to Bitcoin, and now, they are friendly country that allow Bitcoin to boom.
    Have you even read the latest 11 exchanges has been given license to operate as cryptocurrency exchanges ?

    Now, you are laughing everyone who invest in cryptocurrency, but down the road in 3-5 years, we will look back at this article again and laugh at you.

  11. “All truth passes through three stages – first, it is ridiculed, then it’s violently opposed until finally it’s accepted as being self-evident.”

  12. During the next financial crisis, Stock Emperor will become “Bagholder Emperor”. People in crypto will be not affected by the crisis. It’s just matter of time.

    • “Global Crisis” is another cringy cryptocurrency narrative. Global economy is now in the best condition in a years and indices worldwide are breaking all-time high each month.

      And in the (unprobable) event of crisis volatile, weak and unregulated cryptocurrencies would be the first victim – so you better not pray for one.

      • Best condition? This is made me laugh. Hedge funds for one example have been shutting down at a record pace. Those liquidations aren’t reflecting in the market. Figure out who’s pulling the strings on the stock market or you can just keep living in la la land

        • US, German, Japan, China (Shanghai and Hongkong), French, UK and other stock markets are now all time-high. Can you provide examples of those “hedge funds” of yours? You can’t.

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