Investment fund CEOs: XRP is digital fiat, not real cryptocurrency

In the lead-up to the US Securities and Exchange Commission’s (SEC) critical decision on whether digital tokens are securities, CEOs of digital asset investment firms are really giving it to Ripple’s native cryptocurrency, XRP – claiming it’s really just digital fiat.

Most of the criticism centers on the role the centralized nature of the XRP tokens distribution model plays in its eventual classification. The collective pooling of investments – with an intention of monetary gain from the efforts of others – is central to the definition of a security, and the SEC has already deemed that ‘ initial coin offerings ’ (ICOs) fit that description.

As such, ICOs are already strictly regulated to the point of non-existence in the US. It’s also worth noting that the SEC has already ruled that Bitcoin and Ethereum are not securities – but tokens based on Ethereum can be .

But – is XRP a cryptocurrency? Or a security?

SEC Chairman Jay Clayton made the distinction clear with CNBC back in June:

Some major players in the industry are seemingly under the impression that XRP will be deemed a security, and that could have massive, wide-reaching implications for the future of Ripple Labs.

Anatoly Castella, CEO, Elpis Investment, the world’s first AI-powered digital assets investment fund, told reporters he believes that XRP is not a ‘real’ cryptocurrency’, not fitting with the ‘purest interpretation’ of the word.

The founder of another major digital assets fund, Arianna Simpson of Autonomous Partners, echoed his sentiment:

Castella went even further, calling for a third category for digital assets such as XRP – ‘digital fiat’, so as to ensure that ‘real’ cryptocurrencies such as Bitcoin are not negatively affected by the potential fallout related to XRP being deemed a security.

We recently reported on the latest in a series of securities fraud lawsuits filed against Ripple Labs and its CEO, Bradley Garlinghouse. That particular suit claimed that Ripple Labs has been steadily funding itself by selling XRP slowly.

This technique of self-funding is a defining characteristic of ICOs and would ultimately lead to its classification as a security, leaving defendants open to being charged with illegally trading millions of dollars in securities.

In fact, Ripple Labs has been compelled to address certain aspects of the lawsuit, tweeting to clarify the differences between the Ripple backbone and XRP.

The SEC is yet to set an official date for announcing its decision, but it’s expected to be handed down within the coming months. Whatever the decision, it is sure to be critical for XRP in its quest to relive its market highs of earlier this year, when it briefly reached just over $3 before tumbling back down to below $0.30.

Update 09:10, July 24:

A Ripple spokesperson has reached out to us to provide the following statement:

Binance: Calm down, we haven’t been hacked

When money is on the line, going dark without warning is rarely the best idea. Last night, Hong Kong-based cryptocurrency exchange Binance did just that. With little warning beforehand, and a message afterward claiming it needed 12 hours to complete site upgrades, people started to panic.

And then 12 hours turned to 24.

Binance, though, assured customers again today that everything was fine, claiming the outage was due to a server issue that caused data to fall out of sync. Chief executive Changpeng Zhao announced last night that the development team would need to re-sync from a master database, a project he anticipated would take 12 hours.

Things didn’t go as originally planned. Now the idea is to bring the exchange back to life in the wee hours of Friday morning, at around 4 a UTC (8 Pacific). After halting all trading during the outage, Binance representatives today promised a “30-minute window where users can cancel open orders prior to trading being opened.”

As you might expect, the outage — and the additional downtime — led many to believe something was amiss. John McAfee, the patron saint of cocaine and cryptocurrency, had this to say:

Binance quickly refuted the claim, stating:

A quick check of two posted wallet addresses would seem to confirm the company hasn’t been breached. An Ethereum wallet currently holds the USD equivalent of $153 million in Ether. A bitcoin wallet confirms over 84,000 transactions worth a total value of 1.3 million bitcoin (over $11 billion USD), and a current balance of 32,125 bitcoins ($ 268 million USD).

Relax, folks.

Cryptocurrency startup LoopX pulls exit scam after raising $4.5M in ICO

Another day, another exit scam: an emerging cryptocurrency startup more commonly known as LoopX has suddenly vanished out of thin air along with millions worth of its investors’ savings.

The sketchy investment platform, which promised to earn backers’ money with its proprietary trading algorithm, has abruptly gone dark after raising $4.5 million in a series of initial coin offerings (ICO). The company has since also pulled its website and deleted its social media fingerprint, including Facebook , Twitter , YouTube , and Telegram accounts.

The only remainder from LoopX is a still active BitcoinTalk thread from December last year – that and its entries on ICO review services ICOBench and TokenDesk .

According to a cached version of its now-purged website, investors pledged a total of 276 Bitcoin and 2,446 Ethereum into the fraudulent initial coin offering over five separate token sales in January 2018.

“ After developing over months and testing successfully with great profits, we can release now with great confidence the LoopX [t]rading [a]lgorithm,” the LoopX marketing read. “This [s]oftware will give us all the opportunity to make more money online then we could ever do in real life.”

“Our software handles over 10,000 trades per second and calculates over 100 currencies at a time,” it continued. “Always looking for those opportunities to make profits bigger then 10%, which will payed out to our members on a weekly basis.”

“This was not thinkable in the normal financ[i]al sector, but has become reality in the cryptoworld.”

A roadmap posted by LoopX support member on BitcoinTalk reveals that the company was planning to launch its lending investment platform in February this month.

The trading software approach LoopX went for is nothing new in the cryptocurrency space.

The notorious BitConnect scam leveraged similar tactics to trick naive investors into backing its fraudulent scheme for months – until it eventually collapsed in January this year.

“Finally the opportunity is here for the common investor to be part of a revolution and be finally free, financially free,” said the now-removed LoopX white paper . “Our top priority is to give you an opportunity to sit back, let us do the work and watch your money grow.”

Indeed, a sharp-eyed sleuth took to Reddit warn that LoopX might be running a scam over a month ago. Unfortunately, not everyone got the memo.

This development marks at least the fifth time a cryptocurrency firm has pulled a Houdini since the beginning of 2018.

Earlier in January, long-time Ponzi-suspect BitConnect announced it is shutting down its trading platform following a slew of legal issues . Then Lithuanian-based startup Prodeum dashed off with its investors’ cash at the end of January, leaving only a “penis” behind .

More recently, controversial crypto-investment platform Davor similarly put an end to its lending packages after getting served a cease-and-desist order from the Texas State Securities Board. In the meantime, users of exchange desk BitGrail are freaking out over the possibility the service might be getting shut down too.

Do your research folks, not every crypto-startup is what it claims to be.