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Blockchain Is Suing Blockchain – Things Are Getting Messy in Crypto World

Talk to anyone about the blockchain industry and the conversation usually turns to regulation, or rather, its lack of. However, just as many countries are starting to use existing securities laws as a framework for ICOs, blockchain companies are using existing legal channels to take action on each other. Specifically, Blockchain is suing blockchain.io for in excess of $10 million.

What’s the Problem?

The full complaint filing is in excess of 100 pages, but here’s the lite paper version:

Blockchain is suing Blockchain.io mainly due to infringement on their intellectual property, holding an ICO under false pretenses, and making misleading statements.

Blockchain (not to be confused with the technology) is one of the oldest and most trusted cryptocurrency exchanges in the industry. They have almost 30 million wallets registered, over $200 billion in transactions, and have been operating since 2011.

Blockchain.io (not to be confused with Blockchain) is seeking to raise €60 million in an ICO to present a similar offering. Using almost the same colors, fonts, icons, and statements like: “The European cryptocurrency exchange of trust.” This is leading to understandable confusion from crypto users.

In a blog post on the Blockchain website, the company claims to work hard to prevent crypto users from fraud, scams, hacks, and false advertising. With over $2.3 million already stolen through phishing attacks at the end of Q2 this year, Blockchain says that hundreds of bad actors target their site every year. And that they proactively work with search engines, social media, and regulators to shut them down.

This, however, is their most aggressive move to block an ICO that is due to take place in a little over 2 days.

A Federal Court Filing and a Controversial ICO

On September 20, Blockchain filed the complaint in a U.S. federal court against Blockchain.io, which is actually run by Paymium, a defunct Bitcoin company with a sketchy past.

If you’ve been in the industry long enough, you may remember the Instawallet hack of 2013. The company lost its users’ funds and failed to reimburse the majority, thereafter closing down and rebranding as Blockchain.io.

With just days until their ICO, regulators will have to move fast to block it, although, either way, it will certainly be viewed under a microscope and with a due dosage of scrutiny. Apart from trying to copy branding and wording from Blockchain, some of the other major concerns about the ICO are:

  • Claiming to raise funds to offer technologies that don’t exist
  • Claiming to have the ICO compliant and registered with the SEC (there is no such registration in place)
  • Claiming to be registered with French regulator ACPR (again, the evidence of this has yet to be produced)
  • Confusing customers into thinking that Blockchain.io is Blockchain

In fact, Blockchain has received a number of queries and comments on social media asking if they are holding an ICO. The crypto exchange would like to reaffirm to all its users and interested parties that no, they are not holding an ICO. And no, they are not affiliated in any way with Blockchain.io.

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After a seemingly endless cycle of non-action, the crypto market finally saw a spark of life on Monday, as fears of a Tether ‘bank run’ hit newfound highs, while confusion strong-handed investors into making moves. In the span of just a few hours, exchanges recorded billions of dollars volume, quickly pushing this market off its year-to-date lows from a volume standpoint. Crypto Trading Volumes Surge To 1 Month High As reported by NewsBTC previously, crypto investors were in for a treat in the wee hours of Monday morning, as digital assets saw an unexpected influx (and a large one at that) of buying pressure, pushing Bitcoin above $7,000 for the first time in months. Following some quick internet sleuthing, many traders determined that Bitcoin’s strong surge to the upside could be boiled down to a single factor. This factor, of course, as widely reported, was the fears of Bitfinex’s insolvency spreading like wildfire through this market, resulting in a capital flight of cryptocurrencies from Bitfinex to other leading crypto exchanges. At one point, the now-infamous ‘Bitfinex premium’ somehow surpassed $1,000, as Bitcoin surged above $7,600 due to thin order books on the aforementioned exchange. On the other hand, on well-regulated platforms like Gemini and Coinbase, which offer insurance for their client’s crypto holdings, Bitcoin only traded at a relatively measly $6,600, which was the “true” price of the digital asset. Bitfinex Premium $1000+ pic.twitter.com/bf9vWCSRCg — Bitfinex'ed (@Bitfinexed) October 15, 2018 Volumes on Bitfinex quickly surged, as users rushed to liquidate their U.S. credit for crypto assets to subsequently withdraw their holdings to a wallet of someone or some organization they could trust. Due to the well-read belief that Tether goes hand-in-hand with Bitfinex, traders also rushed to sell their USDT holdings, as many claimed that the Tether Foundation didn’t have the reserves to back all issued stablecoins. At one point, Tether tokens fell under $0.91 on Kraken, alluding to the fact that a copious amount of USDT had just been dumped by a multitude of wary traders. The rise of Bitfinex’s insolvency rumors, coupled with growing fears about the legitimacy of Tether, happened to manufacture a perfect storm, so to speak, resulting in a period of market uncertainty, confusion, and even panic in some fringe cases. And although the collective value of all crypto assets saw a $20 billion bump, many investors claimed that this obviously wasn’t the breakout that bulls have been clamoring for. Still, what went under the radar of many investors is that volumes saw an unprecedented surge in correlation with thousands of traders choosing to sell their USDT and withdraw their funds from Bitfinex, which was a sign some analysts have been waiting for. Preceding this move, which saw nearly every single crypto asset move well into the green, NewsBTC’s very own Joseph Young, claimed that while nearly every important indicator is calling for growth, volume was still mysteriously absent. Bitcoin and crypto market waiting for 1 thing 1. Final shakeout 2. Positive developments (Bakkt, Custody, Banks) 3. Months of stability Bitcoin at $6,200 ~ $6,800 range since August 9 4. Lower highs since January bottoming out with record low volatility 5. Volume — Joseph Young (@iamjosephyoung) October 15, 2018 But now, with Bitcoin volumes doubling from $3 billion to a monthly high at $7 billion, per data compiled by CoinMarketCap, Joseph added that the prospects of this market are starting to look “great,” likely indicating that he saw this surge of volume as something to keep watching. The volume of Bitcoin has more than doubled in the last 24 hours. $2 billion to $5.64 billion on CoinCap$3 billion to $7 billion on Coinmarketcap Real price of BTC is around $6,400 (fiat exchanges). $6,150 to $6,400 with solid increase in volume is great. — Joseph Young (@iamjosephyoung) October 15, 2018 It wasn’t only Bitcoin that saw its volume return, as cryptocurrencies across the board all saw their time in the sunlight in the past 24 hours. To attest to this fact, per data compiled by CoinMarketCap, the total volume seen by crypto rose from $9 billion on Sunday to $22 billion, where this figure has held for the past few hours. 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