• Bitcoin prices take a slight hit after a string of SEC and US regulatory body victories against crypto this week, but losses are limited
  • Bitcoin records its longest streak staying above USD 10,000 as the psychological support level holds

Bitcoin took a slight shudder today to drop some percentage points, trading as low as USD 10,300 on Friday before settling higher around USD 10,500 by North American waking time today, and most analysts will blame a series of perceived victories against crypto companies by US regulators.

It all started off when the US Securities and Exchange Commission (SEC) found itself on the winning side against tech company Kik when a US court ruled in favor of the regulator’s motion for summary judgment in its now three-year legal dispute against Kik and its USD 100 million initial coin offering (ICO).

The opinion by US Judge Hellerstein noted that “[t]he US Securities and Exchange Commission (“SEC” or “Plaintiff’) filed this action against Kik Interactive Inc. (“Kik” or “Defendant”), and alleges that Kik’s unregistered offering of digital tokens was in violation of Section 5 of the Securities Act. The parties cross-moved for summary judgment. He went on to say:

“As detailed further herein, I hold that undisputed facts show Kik offered and sold securities without a registration statement or exemption from registration, in violation of Section 5. Therefore, the SEC’s motion for summary judgment is granted, and Kik’s motion for summary judgment is denied.”

Both parties to the dispute had in July submitted their arguments to the court for their respective motions for summary judgment during a virtual court hearing. The SEC had actually sued Kik in July 2019, alleging that the crypto firm “sold the tokens to U.S. investors without registering their offer and sale as required by the US securities laws”, a claim that Kik fought back.

Now the ruling has been made, both parties are now to submit a joint proposal for “judgment for injunctive and monetary relief” by 20 October 2020. Failing that, they are asked to “note their differences in a single document, supported by separate statements in a single letter, to be submitted by the same date”.

And yesterday, the world’s largest Bitcoin derivatives platform, BitMex, was also charged by the Federal authorities for allegedly failing to prevent money laundering and offering American customers illicit derivative trading services for crypto.

CEO Arthur Hayes, along with Ben Delo, and Samuel Reed, plus its first employee Gregory Dwyer, were charged with violating the Bank Secrecy Act and conspiracy to violate the act by “willfully failing to establish, implement, and maintain an adequate anti-money laundering (“AML”) program”. According to the statement by the United States Office of Southern District of New York, they have arrested Reed while Hayes, Delo and Dwyer remain at large. Each charge carries a maximum penalty of five years in prison.

Hayes, a resident of Hong Kong but born in the US, was an equities and derivatives trader for Citi and Deutsche Bank prior to operating BitMex in 2014. Acting Manhattan US Attorney Audrey Strauss said:

“…these defendants flouted that obligation and undertook to operate a purportedly ‘off-shore’ crypto exchange while willfully failing to implement and maintain even basic anti-money laundering policies.”

FBI Assistant Director William F Sweeney Jr added:

“One defendant went as far as to brag the company incorporated in a jurisdiction outside the US because bribing regulators in that jurisdiction cost just ‘a coconut’.”

Not all is bad news, though, as Bitcoin has not actually lost a lot after both items of news. In fact, it is currently at a record-setting longest streak in terms of days spent above the psychological price barrier of USD 10,000.

As of today, Bitcoin has now spent 68 consecutive days closing above USD 10,000 when using data aggregated by Messari. This does not actually mean it never fell below that price, as it appeared to have done briefly for 2 days in September, but it has always managed to claw back gains and close above USD 10,000.

The record was actually broken on Sunday, beating the old record of 62 consecutive days that ran from 1 December 2017 during the all-time high reign of Bitcoin. Many traders will see this recent development as a sign of strength, and the ability of Bitcoin to stay in a range between USD 10,000 and USD 12,500 over these two months will only instill more confidence in the narrative that Bitcoin will lose its volatility factor soon.

 

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