Bancor to Restrict Access to US-based Traders

Decentralized cryptocurrency exchange (DEX) Bancor has announced that it stop providing its trading service to US-based clients.

Bancor Stops Servicing the U.S.

According to the announcement, a lack of clarity from regulators is the main reason behind the decision to ban all users with a U.S. IP address from exchanging digital currencies.

“US citizens, domiciliaries or users from US IPs will no longer be able to use Bancor’s web application, https://www.bancor.network, to convert tokens,” the announcement noted. “This decision has been made in light of increased regulatory uncertainty; at this time, we believe this is the most judicious decision for all the members of our ecosystem.”

Bancor runs as a decentralized protocol using a peer-to-peer (P2P) architecture. This is the latest development in the uncertain regulatory market for decentralized trading applications.

Previously, DEX Ether Delta’s founder was charged with operating an unregistered exchange, resulting in a fine of $300,000. It’s not clear what the regulator requirements are for firms offering decentralized financial services, in which users trade peer-to-peer.

The company also clarified that any clients, who have been identified as US citizens and not staying in the country, cannot use its trading services, while people from overseas staying in the US can still trade on the platform.

“We would like to clarify that this functionality will be blocked to users accessing the website bancor.network, which offers an interface to blockchain activity. As the Bancor Liquidity Network is a collection of smart contracts on the blockchain, and a non-custodial system, we cannot restrict users from accessing the blockchain itself. This cannot be blocked.”

U.S. Being Excluded From Several Platforms

The non-existent regulatory guidelines from official institutions in the U.S. are forcing many cryptocurrency companies to stop servicing the region. Recently, Binance one of the largest crypto exchanges in terms of trading volume, announced that it will halt trading in the U.S. starting September 12th.

Another U.S.-based crypto exchange, Poloniex, delisted nine digital currencies from its trading platform only for US-based clients, citing the same unclear regulations. It is expected that the SEC and other financial regulators in the U.S. are preparing a regulatory framework that will see many digital currencies classified as securities.

New international recommendations from the Financial Action Task Force, set for publication this week, will place stringent new ID requirements on any entity facilitating cryptocurrency trading, both in the U.S. and elsewhere.

Binance.com Closes Doors to Restricted Jurisdictions

The world’s largest cryptocurrency exchange platform Binance has announced it is updating its internal policies.

The global crypto exchange announced Friday morning that it was reviewing user accounts to confirm they follow Binance’s terms of use and know-your-customer (KYC) procedures and will consequently remove deposit and trading permissions for anyone in violation of its policies.

The updated statement in Binance’s Terms of Use notably reads that the company is unable to provide services to any U.S. person.

The news follows after Binance announced it was formally launching a separate, fully regulated fiat-to-crypto platform for the U.S. market. Prior to this, the exchange stated it would strengthen its compliance and security practices through a number of partnerships, most notably with software provider Chainalysis and KYC/AML tool provider IdentityMind.

According to the news, the company has stated that it “constantly reviews user accounts to improve our platform security and to comply with global compliance requirements.” It is further added that users may be required to provide evidence that shows that their account registrations are consistent with the company’s Terms of Use. The exchange will not continue serving users who are found to have been in violation of terms and conditions or unable to provide evidence that states otherwise.

The exchange further stated that users who are not in accordance with Binance’s Terms of Use by September 12 will continue to have access to their wallets and funds, but will no longer be able to trade or deposit on Binance.com.

Previously, Binance listed 15 countries and six U.S. states (including New York) on a restricted countries list page. At any given month, Binance.com receives approx. 15% of traffic coming from U.S. customers, having halved since early 2018 when the figure was approximately 30%. It currently offers trading of more than 150 different cryptocurrencies.

In a tweet published yesterday, Binance CEO Changpeng Zhao said of the new exchange’s evolving global structure:

“Some short term pains may be necessary for long term gains. And we always work hard to turn every short term pain into a long term gain.”

Whilst Binance traditionally offers crypto-to-crypto trading, it has already launched fiat-to-crypto exchanges in Uganda, Singapore, and Jersey, all of which only support trading of Bitcoin (BTC), Ether (ETH), and BNB. It has plans to have two fiat-to-crypto exchanges on every continent, which will likely also only support trading of BTC and ETH primarily.

Telegram to Hold a Partial Public Sale via Liquid Crypto Exchange

Messaging app giant Telegram’s gram token, previously sold to accredited investors in one of the bigger ICOs of 2018, is finally going on public sale, a press release confirmed on June 11th.

According to the news, a limited sale of the gram token will be hosted by cryptocurrency exchange Liquid from July 10th.

The offering comes before a full public sale planned for October. However no further details about the sale have been disclosed to the public. The sale will ensue via Gram Asia, which claims to be the largest holder of gram tokens.

Prior to this, grams have been sold only to accredited investors in Telegram’s massive two-phase private initial coin offering (ICO) back in February and March of 2018, which subsequently raised  around $1.7 billion for its Telegram Open Network (TON) project and was by far the largest fundraise made via a crypto token offering.

The Telegram Open Network (TON) was an ambitious blockchain project with the goal to decentralize multiple facets of digital communication, varying from file sharing to browsing to transactions.

According to the gram sale page on Liquid’s official website:

TON brings speed and scalability to a multi-blockchain architecture that addresses the need for minimal transaction times and airtight security.”

Liquid CEO Mike Kayamori has stated in the press release that:

“We share the vision for a more secure and open value transfer system in order to enable the mainstream adoption of cryptocurrencies.”

He further added that the TON blockchain infrastructure could help boost Telegram’s current capacity as well as efficiency as a peer to peer network of value, with the launch of their cryptocurrency light wallets for Telegram’s highly engaged user base.

Meanwhile, the sale is open to all investors globally; however it excludes several nations including the U.S. and its territories as well as Japan, most likely due to regulatory reasons that the token could be considered a security within those jurisdictions.

Investors interested in participating in the sale on the Liquid platform can purchase grams with either U.S. dollars or the USDC stablecoin. According to the official website, a full token launch is expected at the end of October.

Notably, any gram tokens sold in the upcoming offering will not be immediately tradeable.

“The tokens being sold will not be released until after TON goes live (mainnet release), in accordance with the delivery schedule. Purchasers will not be able to transfer, withdraw, or trade the Grams before they are released.”

This news comes roughly two weeks after Telegram released a testnet version of the TON client, which itself follows an extensive development process and the Q3 launch date.

As of press time, Telegram has not released any official comments regarding the news.

Poloniex Socializes 1800 BTC Loss From CLAM Margin Trading

Cryptocurrency exchange Poloniex revealed in a post Thursday that lenders in its Bitcoin margin lending pool suffered a loss of 1800 BTC due to a flash crash in the Clams (CLAM) spot market on May 26.

On May 26, the Clams (CLAM) market dropped by 77% in value in just 45 minutes on Poloniex. Since CLAM is also available for margin trading on the platform, it caused a flurry of liquidations designed to cut losses in order to repay lenders.

The high number of defaults drained the lending pool with 1800 BTC remaining un-repaid by borrowers. In order to mitigate the loss, Poloniex socialized it among Bitcoin margin traders. The platform took 16.2% from the principal of all currently active Bitcoin loans.

Poloniex’s peer-to-peer margin system includes both lenders and borrowers, the lenders of which are pooled together and rewarded in interest for lending out their funds. In order for a user to borrow the margin funds, they must hold a certain amount of collateral in case of liquidations.

However, the magnitude of the crash was too severe for Poloniex’s automatic liquidation system to function properly due to the low liquidity of the CLAM market.

In the post, Poloniex stated:

“The velocity of the crash and the lack of liquidity in the CLAM market made it impossible for all of the automatic liquidations of CLAM margin positions to process as they normally would in a liquid market.”

Unfortunately for both lenders and borrowers in this case, much of the collateral provided by the borrowers was in the CLAM cryptocurrency itself. Since CLAM is now trading at an 80 percent discount than moments before the crash, it’s unlikely the borrowers are capable of repaying that debt.

Subsequently, the exchange froze all of the defaulted borrowers’ accounts and will keep them frozen until the borrowers repay their loans. Poloniex also claims that it will return the funds to affected lenders as soon as it recovers the lost money. Further, Poloniex said that it is seeking to contact those that defaulted on the loans in question.

“We’re pursuing the defaulted borrowers to get them to repay the BTC they owe to lenders. As we recover funds, we will return them to affected lenders. We’re also exploring other ways to help defray margin lender losses,”

To combat another situation like this going forward, Poloniex is taking steps to protect its margin users including removing illiquid markets such as BTS, CLAM, FCT, and MAID, add adding layers of processes and protections to monitor the risk in its margin markets.

BitMex Ventures Invests in Philippines-Based Crypto Exchange

Philippines Digital Asset Exchange (PDAX), a Philippines-based cryptocurrency exchange platform recently received an undisclosed sum of funding from BitMEX Ventures.

Founded in 2017, PDAX currently works closely with selected regulators to ensure safe and secure buying and selling of digital assets. Besides regulatory developments, the cryptocurrency exchange also seeks to enable the trading of commodities, real estate equities, and debt securities in tokenized form.

PDAX obtained its virtual currency exchange (VCE) license from the Philippine central bank Bangko Sentral ng Pilipinas (BSP) last year, enabling the exchange of Philippine Piso against cryptocurrencies, such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), among others.

The co-founder and CEO of PDAX, Nichel Gaba, says a limited infrastructure in the country has left consumers struggling to access financial products and services. He added:

“Through digital assets and blockchain, we want to even the playing field to give every Filipino from all walks of life the ability to grow their hard-earned wealth.”

PDAX says it is working closely with regulators to ensure the safe and secure buying and selling of cryptocurrencies and other digital assets at the best price on the market.

BitMEX Ventures – the investment arm of the popular BitMex trading platform – has made a number of investments since inception in 2018, and is committed to advancing financial inclusion and accessibility to trading cryptocurrencies.

Arthur Hayes, the co-founder and CEO of BitMEX, said the cryptocurrency trading platform sees a large amount of trading volume from consumers in the Philippines — adding he was confident in PDAX’s ability to increase cryptocurrency adoption in the country while helping the public learn more about digital assets.

In April, payment services firm Bitspark announced plans to release a cryptocurrency pegged to the Philippine Piso.

And earlier in the year, Western Union partnered with the Philippines-based Coins.ph to enable consumers to conduct cross-border money transfers and receive funds directly into their e-wallets.