Initial Coin Offerings (ICOs) remain largely a mystery to conventional investors, so any clarity, on what they are and do and on the specific risks of investing your real money in one, should be welcomed.
Those involved in the crypto-crowdfunding world of ICOs claim regulators can misunderstand them as well, classifying them as being securities offerings, when the tokens sold can be more like air miles points. For me, there is added confusion caused by the ICO naming.
In this context, the US Securities and Exchange Commission's decision, to sue the Canada-based messaging app Kik for conducting a $100m ICO without registering it, has actually been welcomed by its target.
“This is the first time that we’re finally on a path to getting the clarity we so desperately need as an industry to be able to continue to innovate and build,” Kik chief executive Ted Livingston said in a statement. And the court case should shed much-needed light on an industry that has had its fair share of scams, with tokens ending up being as worthless as the products they were supposed to finance.
Let's be clear, the SEC is not accusing Kik of fraud here. It details its attempt to "pivot" to a new kind of business, financed by the ICO, as the popularity of its app faded and its money began to run out in 2017. Kik sold 1tn "Kin" tokens, raising $55m and saying buyers could expect profits from them. But the SEC allegations are that it did not properly register the offer, depriving investors of information to which they were legally entitled, and preventing them from making informed investment decisions. Kin tokens traded recently at about half of the value paid in the offering.
“Future profits based on the efforts of others is a hallmark of a securities offering," the SEC said, in its definition of the ICO.
The FT's Alphaville team has been following ICOs closely for some time and Jemima Kelly has a must-read on how Kik is trying to raise more money for a "Defend Crypto" foundation, as sceptics set up their own "Defund Crypto" website.
The Internet of (Five) Things
1. Disappearing acts are difficult on the web
DeleteMe sends opt out requests on behalf of customers not wanting to be found on the web to more than 20 people search engines, but at least one record reappears online for 45 per cent of them within four months, it says. Camilla Hodgson in San Francisco has been investigating how the quantity of data per person on people search engines is increasing: it is both more granular, and from new sources, such as genealogy site Ancestry.com.
2. YouTube gets tough on the haters
YouTube said in a blog post on Wednesday that it would remove false videos alleging that major events like the Holocaust didn’t happen, as well as a broad array of content by white supremacists and others in a move to act more aggressively against hate speech. (Washington Post)
3. Can the Kremlin control the internet?
Today's Big Read asks the question. The answer is that this seems only likely as a "nuclear" option. President Putin approved a law in May that could create a “sovereign internet” run entirely on Russian servers, but the "kill switch" to separate itself from the worldwide web could only be practically used in an emergency.
4. No PlayBox planned, says Sony games boss
Jim Ryan, chief executive of Sony Interactive Entertainment, tells Tim Bradshaw that the collaboration on cloud gaming announced by Sony and Microsoft last month does not mean there is any "scenario where the PlayStation and Xbox platforms combine". Instead, there will still be a "PS5" where players can expect games to load much faster thanks to solid-state drive storage. It will be “absolutely transformational”, he said, solving a big pain point for console gamers compared with streaming services.
5. Samsung sliding out of smartphones in China
The Korean company says it is cutting production and staff at its only remaining smartphone plant in China, with plummeting sales and trade tensions forcing it to look at shifting production to lower-cost Asian locations. Samsung's smartphone market share is at around 1 per cent in China, down from about 20 per cent in 2013. Meanwhile, a Samsung Electronics executive was arrested overnight on allegations of ordering the destruction of evidence. It was South Korean prosecutors’ eighth arrest in recent weeks relating to an investigation of alleged accounting fraud in 2015 and the succession of Samsung group heir Lee Jae-yong.
Forwarded from our Tech Scroll Asia newsletter
The fall out from the escalating US-China tensions continues. Global semiconductor demand is set to slump this year by a bigger margin than it did in the 2009 aftermath of the global financial crisis, a leading industry body predicts. Read the report here and see which other companies are being buffeted by the trade war in this week’s Tech Scroll Asia newsletter.
Tech tools — Flow brain stimulation headset
Brain stimulation devices that tackle problems such as lack of sleep or aim to enhance athletes' performance are coming out of the clinic and into the home, with the technology of transcranial direct current stimulation (tDCS) and its mild dose of targeted electricity being favoured. Swedish medical device company Flow Neuroscience has won regulatory clearances to launch its headset and app in Europe this week, aiming to counter depression.
Users download its app, connect it to the headset and follow instructions for attaching pads soaked in a saline solution to their foreheads. They then trigger the 30-minute sessions of a low electrical current directed at their left frontal lobes, where lower neural activity is believed to cause depression. They can continue to follow the app and a friendly virtual therapist through the session, as other depression treatments are covered such as cognitive behavioural therapy, meditation and brain-training games.
Positive effects can begin to be felt after three to four weeks and, in one controlled trial, 24 per cent of patients using tDCS completely overcame their depression, while 41 per cent found at least half of their symptoms had disappeared. Side effects compared to antidepressant medication seem minor, consisting mainly of possible skin irritation from the electrodes. Flow sells for £399 and refill pads can be bought from its online store.