TFU | Mar. 30 – April 13

Leading Off

The SEC charged a startup with fraud related to an initial coin offering (ICO); Coinbase is considering becoming an SEC-regulated brokerage; PayPal is rolling out a new debit card and direct deposit service; Monex acquired embattled crypto exchange Coincheck; and India imposed strict constraints on digital currency activities in the country.

In the News

SEC charges firm with ICO fraud.  The Securities and Exchange Commission (SEC) charged the founders of Miami-based startup Centra Tech with a “fraudulent initial coin offering that raised more than $32 million from investors.” The founders allegedly “created fictional executives [and] lied about . . . relationships with the credit card companies,” among other fraudulent activities.

Coinbase discusses becoming regulated brokerage.  The popular crypto exchange reportedly has approached U.S. regulators about registering its platform as an SEC-licensed brokerage and electronic exchange. The potential move comes amidst increased regulatory scrutiny of the crypto industry and would allow Coinbase to expand into other SEC-regulated markets.

PayPal to introduce deposits and debit card.  The payments company is rolling out PayPal Cash Mastercard, allowing users to pay for goods using cash in their PayPal account and to withdraw cash from supported ATMs, as well as direct deposit capabilities. Customers who enroll will be eligible for FDIC insurance on funds held with PayPal.

Monex to acquire Coincheck.  The Japanese financial services firm agreed to pay roughly $33.5 million for the cryptocurrency exchange, which was hacked for over $530 million earlier this year. Monex CEO Oki Matsumoto noted that “Coincheck is a global pioneer of the cryptocurrency business,” and Monex now will have access to its platform and user-base.

India clamps down on crypto dealings.  The Reserve Bank of India announced that regulated entities no longer may “deal with or provide services to any . . . entities dealing with or settling” digital currencies. The decision is not a full ban, but India now joins South Korea, the U.S., and other countries in placing heightened scrutiny and legal restrictions on crypto activities.

M-Pesa partners with PayPal, goes online.  The popular Kenya-based mobile wallet is working with Safaricom, TransferTo, and PayPal to allow Kenyan users to make purchases globally online. Users will be “required to set up PayPal accounts, which they can top up in real-time using their M-Pesa balances,” before being able to make payments or transfer or withdraw funds.

Softbank and Alibaba invest $445M in Paytm.  The Japanese and Chinese e-commerce giants are investing in the Indian fintech company’s Paytm Mall division ($400M from Softbank, $45M from Alibaba). The investments value Paytm at nearly $2 billion, and the additional cash will help the company expand Paytm Mall into “a major player in India’s ecommerce sector.”

Coinbase launches fintech VC fund.  Coinbase Ventures, currently with $15 million in funding, will aim to invest in early-stage firms with “teams and ideas that can move [the digital currency] space forward.” Coinbase President Asiff Hirji said the fund potentially would invest in direct competitors “because it’s in everyone’s interest to see the ecosystem innovate.”

Amazon considers Alexa for P2P payments.  As it looks to expand into financial services, Amazon is reportedly considering creating a person-to-person (P2P) payments feature for its voice-activated Alexa assistant. Amazon reportedly restructured its Amazon Pay team to support its Alexa team, as part of a strategy to “make voice commands the next wave of commerce.”

SEC chief softens rhetoric on ICOs.  Speaking at an event at Princeton University, SEC Chairman Jay Clayton noted that not all ICOs are fraudulent, and that “distributed ledger technology has incredible promise for the financial industry.” Clayton also said that he hopes the SEC’s current regulatory efforts will prevent the need for overly restrictive regulation in the future.





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