Virtual currencies, including Ether and Bitcoin, are used to facilitate the transfer of money in any part of the world conveniently, and with relative anonymity, whether there is central authority supervision or not. However, trading of these financial instruments must always be done in accordance with the law, and failure to do so attracts penalties including both permanent and temporary suspensions. Bitcoin Tracker One and Ether Tracker One traders are the latest to face the wrath of the law as the two have been temporarily suspended by the US Securities and Exchange Commission (SEC). The two are investment products that track cryptocurrencies that are issued by Coinshare’s subsidiary company, XBT Provider, AB.
According to the order, this move was attributed by lack of consistent, accurate and updated information about Bitcoin Tracker One and Ether Tracker One, which confused market participants. The body went on to state that the suspension decision was solely made to protect the public interest and that it was in accordance to the “protection of investors” mandate.
The suspension order was reportedly issued on 9th September 5:30 pm EDT and will last on 20th September 11:59 pm, unless the agency finds other reasons to extend the suspension. The order is pursuant to Section 12(k) of the Securities Exchange Act, 1934 (Exchange Act).
The official order states that SEC found out that inconsistent language was used to describe the two financial products making it hard for customers to understand.
For instance, the broker-dealer application materials submitted to allow the trading of Ether Track One (CETHF) and Bitcoin Tracker One (CXBTF) in the United States and their websites indicate that they are ‘exchange-traded funds’. Other public sources and websites characterize them as ‘exchange-traded funds (ETFs).’ This also contradicts the issuer’s information which characterizes them as non-equity linked certificates.
SEC defines ETFs as licensed companies that provide investment opportunities inform of bonds, stocks, and other assets, and give the investors some funds in return. However, the agency pointed out that “unlike the ETFs, public sources characterize them as Exchange Traded Notes (ETNs).” This would mislead investors since unlike the ETFs; the notes are unsecured debt obligations and traded on the securities exchange.
The SEC described:
The payment terms for ETFs are directly linked to the performance of the benchmark or reference index, which represents the investment objective of the ETN,”
The two financial instruments CETHF and CXBTF were initially listed and regulated by the Sweden financial market. They were introduced to the market by the Nasdaq Stockholm Exchange back in 2015 before they were officially launched in the US market.
No public word has so far been heard from the team behind the financial products. Other than Ether Tracker One and Bitcoin Tracker One, the firm has two more financial products: Ether Tracker Euro and Bitcoin Tracker Euro.
Early this year, the body ordered a temporary suspension for IBITX Software Inc, a New York-based corporation. The commission announced that the decision was attributed by “questions in regards to the IBXS accuracy assertions, a corporation which was listed by the Philippines principal place, though it was based in New York City.
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