Stephen Palley, a well-known lawyer in the crypto-space spoke to CNBC’s CryptoTrader Ran NeuNer and opined his views on the lawsuit against Kik by the SEC.
Kik’s issue with the SEC was made public when the company announced that they were planning to fight against the lawsuit brought forth by the SEC. The company has since raised approximately $5 million funds in crypto, to fight SEC.
Stephen Palley explained that the SEC had filed the case against Kik in a Federal Court for an ‘unregistered $100 million token offering in 2017’ and not securities fraud. Palley added:
“This is the first instance of the SEC actually going to a Federal Court and suing a token issuer for violating the registration provisions of the Securities Act of 1933.”
He added that all the other cases which have failed to register securities have been filed and settled in administrative courts. and that this was “pretty big news”. Palley further added that the SEC’s strategy on focussing with “failing to register security” was a “wise” move but also mentioned that “it is not an un-winnable case”.
Palley mentioned that Kik had already spent $5 million as seen on the “defend crypto” website even before going to court and that it would take them a lot more than that if the case were to proceed. He said:
“I don’t think that $5 million is enough… Defense lawyers for this sort of case can cause $1000 an hour sometimes more, depends on depositions, whether it goes to trial, how the appeal cost… it can easily cost $10 to $20 million. I don’t think $5 million will be enough if they intend to take this all the way through.”
Ted Livingston, the CEO of a Canadian-based messaging startup Kik opined that the SEC’s allegations were a “gross mischaracterization and misleading facts”. He also mentioned that they would take this all the way to the end.
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ErisX goes all hands on deck to launch a Bitcoin Futures market
ErisX’s CSO, Matt Trudeau, detailed the company’s four important plans for the future, which includes launching a spot market, to secure a Bit License, DCO, and to launch a futures market.
ErisX currently has a DCM contract, which is a Derivative Contract Market that allows ErisX to run a CFTC-regulated futures exchange. However, ErisX aims to get a DCO [Derivatives Organization], which will effectively allow it to run a CFTC-regulated clearinghouse. A clearinghouse would mean that ErisX can take control of the custody of the assets and clear and settled trades.
The CSO explained the benefit of this, stating,
“There is some efficiency for firms like producers [like mining companies]; if they need to hedge their inventory or need liquidity on a spot market, they could do that conveniently on a single platform. “
Trudeau added that from the “post-trade standpoint” and “the collateral management standpoint,” ErisX would have cash, crypto, and the futures, all stored in their clearinghouse. This would boost efficiency since it would be available for all customers under a single platform. The CSO added,
“… so there is some efficiency in terms of managing collateral, if you don’t have assets on multiple platforms, it can all be in our clearinghouse.”
Apart from the aforementioned plans, Trudeau added that the crypto-industry needs to mature more and that ErisX plans to make a significant contribution to that. He added,
“The market is professionalizing and we think that in terms of what institutions are expecting from a trading/custody experience, we will bring some of the solutions to the market and that’s really the foundational pieces that they are looking in order to build their businesses on top of us.”
Apart from ErisX, LedgerX has also received a go-sign from the CFTC to settle Bitcoin Futures in Bitcoins. Other exchanges include Intercontinental Exchange’s Bakkt and Seed CX.
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