Today in crypto: OSC and BCSC crack down on unregistered cryptocurrencies, CryptoKitties gets sued

justice

This week was not the best for cryptocurrency companies operating in Canada, with regulators turning their attention to the nascent industry, and legal battles over a Stephen Curry collectable. Here’s the latest in crypto news.

OSC and BCSC issue warnings against cryptocurrency firms

The Ontario Securities Commission has issued a warning against firms that it says are not registered to provide advice on investing in securities in Ontario.

In a statement, the Commission calls out BTCReal, BitSerial, Hypercube Ventures LP (which operates hypercube.fund, vnn.money ,and vnn.cash), CabinCoin OÜ (which operates cabincoin.com and cabincoin.exchange), and BaapPay. The concerns range from running unregistered token sales, claims to run full investment services, and buying emission pools to invest in a certain cryptocurrency.

The Commission said that any distribution to Ontario residents requires a prospectus or exemption from the prospectus requirement, which these organizations do not have.

The British Columbia Securities Commission also put out a broad warning against cryptocurrencies.

“These firms appear to be involved in schemes that target Ontario investors and encourage them to trade or invest in cryptocurrencies,” the statement reads. “BTCReal, BitSerial, Hypercube Ventures LP, CabinCoin OÜ, and BaapPay Inc. are not registered in Ontario to solicit investments or provide advice on investing in, buying or selling securities.”

The British Columbia Securities Commission also put out a broad warning against cryptocurrencies, per the Canadian Press, saying that it’s a market “ripe for scams” with an increase in initial coin or token offerings.

In April, The North American Securities Administrators Association announced that state and provincial securities regulators in the United States and Canada would coordinate joint efforts to crack down on fraudulent Initial Coin Offerings, called Operation Cryptosweep. To date, the operation has resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions related to ICOs or cryptocurrencies since the beginning of May.

“The persistently expanding exploitation of the crypto ecosystem by fraudsters is a significant threat to Main Street investors in the United States and Canada, and NASAA members are committed to combating this threat,” said Joseph P. Borg, NASAA President and Director of the Alabama Securities Commission. “Despite a series of public warnings from securities regulators at all levels of government, cryptocriminals need to know that state and provincial securities regulators are taking swift and effective action to protect investors from their schemes and scams.”

CryptoKitties sued for trade secret misappropriation

According to a report from VentureBeat, Axiom Zen is being sued by California-based StarCoin (which goes by Tradestar) for trade secret misappropriation and breach of a previously signed confidentiality agreement.

Vancouver-based Axion Zen founded CryptoKitties, which recently raised $12 million from investors like Andreessen Horowitz. Tradestar founder Jevon Feinblatt told VentureBeat that he began discussing a collaboration with Axiom Zen in February 2018, disclosing that it was developing a digital Stephen Curry collectable trading card, and that Axion Zen signed an NDA.

Tradestar told VentureBeat that Axiom Zen said it could not work on a partnership for a specified amount of time (VentureBeat reports it as ‘some months’). On May 7, Axiom Zen announced Curry assets, which pushed Tradestar to sue.

Axiom Zen has since pulled the ‘CurryKitties’ from its website. “We have reason to believe Steph wasn’t as involved in the CurryKitties as we thought. Until we’re sure he’s an active participant, we’re suspending the campaign,” the website reads.

Photo via Burst.

Jessica Galang

Jessica Galang

Jessica Galang is BetaKit's News Editor. Follow her on Twitter @jessicagalangg or send her pitches to jessica.galang@betakit.com.