Daily fraud update: 19th December

Chris Lee

Respected investigator claims HitBTC is fraudulent

A well-known face on the crypto investigation scene has accused cryptocurrency exchange HitBTC of being a scam.

Richard Sanders, who works for CipherBlade, made a series of strongly-worded accusations against the controversial firm, including a suggestion that it is the “largest-scale criminally fraudulent entity” in the crypto sector.

He also said that the exchange is a “wolf in sheep’s clothing”.

HitBTC has been accused of creating false levels of volume and interest in its products and services.

Such an accusation was made in a report produced earlier this year by Bitwise, which flagged what the crypto press described as abnormalities.

However, the firm has struck back against the accusations, and in a statement, it defended its practices – and explained them away as simply the product of machine technology.

“HitBTC has managed to attract many institutional participants contributing to institutional (read mass) adoption and market efficiency”, it said.

“This, in turn, has resulted in different order size – order frequency relationship”, it explained.

“To many lacking sophistication and financial literacy, this does seem like an anomaly that these gifted individuals attempt to portray as manipulative trading practices while in fact, this does represent solely the client profile.

“Note that our overnight volumes are consistent with the day-trade pattern: unlike humans placing round digit orders and having to eat and sleep, machines don’t sleep and react consistently on emerging market patterns”, it added.

“Blockchain of Things” pays out to SEC

A cryptocurrency firm which was accused by a US regulator of failing to properly register its initial coin offering (ICO) has agreed to pay $250,000 in fines.

Blockchain of Things Inc., which raised almost $13m from an initial coin offering back in 2017, was told by the Securities and Exchange Commission (SEC) that it had not registered itself appropriately as a provider of securities.

The tokens, which were sold between 2017 and 2018, had the aim of increasing capital as part of the firm’s business plan.

Now, it will have to ensure that its tokens are listed properly as securities in order to continue to sell them.

In a document published on its website, the SEC provided further details about the accusations against the firm, which is also known as “BCOT”.

“BCOT raised more than $12 million worth of digital assets through its Offering”, it said.

“BCOT did not register its Offering pursuant to the federal securities law, nor did it qualify for an exemption to

the registration requirements.”

It also appeared to suggest that the firm supplied tokens abroad through the use of “foreign resellers”.

“There were no restrictions on the resale of these tokens to prevent their distribution to U.S. persons”, it said.

“Between January and May 2018, the Foreign Resellers raised more than $12million USD in BCOT Token sales, selling tokens to more than 1,380 individuals”, it added.

Chris Lee

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