U.S. Crypto Trading Firms Make Acquisitions Targeted at “Prime Brokerage” Services
This week major U.S. cryptocurrency exchange Coinbase announced plans to acquire Tagomi, a U.S.-based prime brokerage platform focused on the cryptocurrency industry. In a press release, Coinbase referred to Tagomi as “the leading crypto prime brokerage platform” and said the acquisition “will bolster our offerings for advanced traders and the most sophisticated crypto investors.” According to the press release, the acquisition will allow Coinbase “to offer custody, professional trading features, and prime brokerage services on one platform, giving sophisticated investors the seamless, powerful trading experience they have come to expect in equities and FX markets.”
In a similar move, U.S.-based Genesis Global Trading, a cryptocurrency trading firm, recently acquired UK-based Vo1t, a cryptocurrency custody provider. A recent report notes that the acquisition is intended to allow Genesis Global Trading to “begin developing a full suite of prime brokerage services under one roof including lending, trading and custody.” According to Investopedia, “[p]rime brokerage refers to a bundle of services that investment banks and other major financial institutions offer to hedge funds and similar clients.”
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FINRA Approves Blockchain ATS, Institutional Crypto Trading Firm Expands Reach
Last week an investment management company announced that the Financial Industry Regulatory Authority (FINRA) had approved its request to engage in private placements and to operate an alternative trading system (ATS) to trade digital securities. The company, whose ATS technology has been in development since 2016, will use blockchain technology to offer new capital formation opportunities for issuers, investors and traders.
A large Swiss securities and financial infrastructure company announced on Wednesday that it is leading a $14 million Series A investment into a California-based enterprise infrastructure provider that builds institutional investing tools and technology for cryptocurrency industry clients, including several major cryptocurrency exchanges. According to reports, the provider plans to use the investment funds to build out its portfolio of institutional bitcoin investing tools. The Swiss securities company also reportedly plans to use the provider’s technology to connect its private banking customers to a panoply of digital asset investment opportunities.
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SEC Announces Charges and Consent Order Against Issuer of $25.5 Million ICO
This week the U.S. Securities and Exchange Commission (SEC) announced charges against BitClave PTE Ltd., a company based in San Jose, California, “for conducting an unregistered initial coin offering (ICO) of digital asset securities.” According to an SEC press release and the SEC’s consent order, “from June to November 2017, BitClave raised over $25 million by selling its Consumer Activity Tokens (CAT) to approximately 9,500 investors, including investors in the U.S.” and “planned to use the ICO proceeds to develop, administer, and market a blockchain-based search platform for targeted consumer advertising.”
Under the consent order, BitClave has agreed to pay disgorgement of $25,500,000, prejudgment interest of $3,444,197 and a penalty of $400,000. The consent order also establishes a Fair Fund to return monies to injured investors, paid by BitClave. According to the press release, “BitClave also agreed to transfer all remaining CAT in its control to the fund administrator for permanent disabling, publish notice of the order, and request removal of CAT from all digital asset trading platforms.” The press release also notes that CAT has already been removed from many third-party trading platforms, and “BitClave is currently winding down its operations and does not plan to continue developing or supporting the platform.”
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Major Crypto Mining Malware Attack Detected
Earlier this month, a computer and cloud security firm reported that since December 2019, a hacker group known as Blue Mockingbird infected more than 1,000 business computer systems with mining malware. According to that report, the malware attacks servers running ASP.NET applications and exploits a vulnerability to obtain administrator-level access in order to modify the server settings. Once that high-level access to the system is obtained, an application is installed and run to mine Monero, a popular cryptocurrency. The report did not reveal the names of the attacked companies.