SEC Fines Bitcoin Crypto Wallet – Trustnodes

SEC Fines Bitcoin Crypto Wallet



The United States Securities and Exchanges Commission (SEC) has fined Abra, a bitcoin and crypto wallet, for failing to register. They say:

“Abra developed and owns an app that enabled users to bet on price movements of U.S.-listed equity securities.

Using the app, individuals were able to enter into contracts that provide synthetic exposure to price movements of stocks and exchange-traded fund (ETF) shares trading in the U.S. through blockchain-based financial transactions with Abra or with related company Plutus Technologies Philippines Corp.

The order finds that Abra told users they could choose securities whose performance they wanted to mirror, and the value of their contract would go up or down the same amount as the price of the underlying security.

The order further finds that these contracts were security-based swaps subject to U.S. securities laws.”

Abra ceased this stocks synthetics aspect in February 2019 after SEC reached out to them, but resumed it in May of the same year after banning US users.

However, SEC says this was designed in America and therefore even though they banned the American jurisdiction, SEC can still boss around.

“Although Abra moved certain operations outside the U.S., the order finds that its employees in California designed and marketed the swap contracts, and screened and approved users who would be allowed to buy the contracts,” they said in a statement.

Abra did not contest this order in court, settling instead with SEC for a fine of $150,000 with this being a centralized wallet.

Nowadays coders can do what Abra tried to do in a decentralized way on the ethereum blockchain.

They can do so in a Nakamoto way too. The bitcoin inventor, Satoshi Nakamoto, remains unknown for now more than a decade since he or she launched bitcoin, and that’s because bitcoin is run by code only and in a decentralized way.

Likewise smart contracts on ethereum that perform Abra like functions can run only on code and in a decentralized way. Meaning their devs don’t necessarily need to be known.

That means SEC risks driving coders underground to the detriment of their mandate to protect investors which they claim as justification for these actions, and to their detriment because then dapp users wouldn’t be able to hold these coders accountable for important things like needing to fix bugs, instead of for gatekeeping permission slip requirements.