News of the Week

😲 Stablecoin Project Basis is Shutting Down

Basis, one of the most well-known stablecoin projects, is shutting down and returning nearly all capital raised to investors.

According to a Basis investor, Basis had a specific contract with investors defining how the majority of capital raised was required to be held. Most of the money was legally required by contract to be held in the currency in which it was contributed and could not be touched by the company until Basis launched its stablecoin.

In the event that Basis failed to launch, the capital was required to be returned in the form in which it was escrowed. Since Basis contributions were made primarily in cash by investors, nearly the entire treasury of the company remains intact and will be returned to investors.

The firm, which raised $133 million in funding, ran into regulatory headwinds as it attempted to get its algorithmic stablecoin off the ground, said multiple people with direct knowledge of the situation. As a result, Basis is shutting down operations and returning the majority of capital raised to investors. Backers include Bain Capital Ventures, GV, Andreessen Horowitz, Lightspeed Ventures and a number of other firms.

Note: Qiao Wang of Messari predicted something like this would happen 8 months ago!

🚓 Prosecutors Call for Ten Year Jail Term for Mark Karpeles

The former CEO of defunct Japanese Bitcoin exchange Mt. Gox, Mark Karpeles, could spend ten years in jail over alleged embezzlement, Japanese daily news outlet Nikkei reported Dec. 12.

Karpeles, who presided over the major hack of Mt. Gox in 2014 that resulted in the loss of 850,000 BTC ($2.87 billion), has repeatedly denied any wrongdoing.

In a Tokyo court on Wednesday, prosecutors read out an indictment against the embattled executive, who is currently confined to Japan as a condition of his bail, claiming he stole funds worth 340 million yen ($3 million). The prosecution has asked for a ten-year prison sentence for Karpeles’ alleged embezzlement.

⚖️ Former AriseBank Execs Settle Charges in SEC ICO Fraud Lawsuit

The U.S. Securities and Exchange Commission (SEC) has settled charges with two former executives of AriseBank, which was hit with a token sale fraud lawsuit in early 2018.

Former AriseBank CEO Jared Rice Sr. and former COO Stanley Ford will pay a combined $2.7 million in disgorgement and penalties, as well as $187,767 each in penalties. While neither admitted or denied the charges, both have also agreed to lifetime bans from serving as officers or directors of public companies and from participating in digital securities offerings.

Moreover, both are permanently prohibited from violating antifraud and registration provisions of federal securities laws.

🤔 Facebook’s Blockchain Group on Hiring Spree

Facebook’s small blockchain group has ambitious plans to potentially disrupt the entire payments industry, but the company is also running into recruiting challenges amid its many public scandals.

In recent months, the world’s largest social network has been quietly trying to recruit product managers, engineers, academics, and legal experts with experience in cryptocurrencies and payments, according to people familiar with the effort. Nearly 40 employees — including several former PayPal execs — work in Facebook’s secretive blockchain group, and the company recently appointed a head of business development to oversee acquisitions and deals in the space.

Since officially forming its blockchain group just eight months ago, Facebook has sent staffers to crypto conferences around the world to recruit researchers, cryptographers, and top academics in the field. At a private dinner Facebook hosted during a recent crypto conference, one attendee told Cheddar that Facebook employees pitched the idea of creating a decentralized digital currency for the social network’s 2 billion users.

👍 Major German Stock Exchange to Launch Crypto Trading Platform

Germany’s second-largest stock exchange, Boerse Stuttgart Group, is set to launch a cryptocurrency trading platform in the first half of 2019.

The firm announced Wednesday that it has partnered with a local fintech company solarisBank to create an engineering infrastructure for digital assets trading. solarisBank, which operates with a banking license in the country, will also be Boerse’s banking partner for the venture.

Initially, trading for bitcoin and ether will be enabled on the platform, with support for other tokens expected once its initial coin offering (ICO) platform — also currently under development — goes live.