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SEC scuppers ShipChain’s $27M ICO and fines the firm its last $2M

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The Securities and Exchange Commission sinks the firm behind another initial coin offering.

Per a Dec. 21 cease and desist order, the SEC has determined that ShipChain’s ICO for its SHIP Tokens was another example of an unregistered securities offering in disguise.

Registered ShipChain raised $27.6 million from the end of 2017 through the beginning of 2018, at the high tide of the ICO craze. Registering in Delaware at the end of November 2017, the firm promised to enhance transportation and shipping transparency with its undeveloped blockchain platform. Unfortunately for the firm, it tied access to that platform to purchase of SHIP tokens and even paid promoters of the ICO in said tokens, committing several of the deadly sins of securities law at once. 

ShipChain announced the launch of its mainnet at the end of July of this year, but the firm seems to have packed up its bags sometime in October. The latter half of this year indeed saw some spikes in SHIP’s price and market cap, but now the firm will have to transfer all its an SEC appointee

Source: CoinMarketCap

On top of the return of all SHIP tokens, the SEC is fining ShipChain $2,050,000, which the SEC calibrated based on “the fact that ShipChain has decided to cease all operations, and that the penalty represents substantially all of ShipChain’s net assets.”

Based in South Carolina, ShipChain received a similar cease and desist order from the state’s securities regulator back in May 2018. The firm, however, managed to get out of that bind. 



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.