While cryptocurrencies and initial coin offerings are facing strict regulations in countries like China, South Korea, and others, Canada is creating an environment for fintech startups to flourish.
A Crypto Friendly City
In 2017, several successful ICO projects were held in the Canadian city of Vancouver. Vanbex Group, creators of FUEL token, is blazing the trail in the Canadian Fintech ecosystem. CEO of the Vancouver-based Fintech company Kevin Hobbs told Business Vancouver that,
“U.S crackdown on digital currencies is an opportunity for Canada. We have a once-in-a-century opportunity to regulate Blockchain technology favorably, and we can be home to what will be a trillion-dollar industry. If we get the government on our side for the future, we could be the next Silicon Valley or bigger.”
Vancouver, a vibrant West Coast Seaport city in British Columbia, Canada, thus seems to be on the verge of becoming a significant cryptocurrency and Blockchain technology hub.
According to Mathew Unger, founder, and CEO of iComply investor Services Inc., a Vancouver-based firm focused on the automation of regulatory and legal compliance framework for cryptocurrencies, has termed 2017 “the year of the cryptocurrency explosion.”
Although 2017 was the most successful year for cryptocurrencies, there were plenty of hard fought battles. China, which at one time controlled nearly 80 percent of the world’s cryptocurrency trading volume, placed a blanket ban on exchanges and Initial coin offerings.
The American SEC also lanced a cybersecurity team, which has since clamped down on several ICO projects. These facts place Canada in a favorable position to take the sector by force.
ICO and Legal Troubles
Vanbex Group claims it has completed the largest ICO project in the history of Canada, by raising $33 million October 2017. There were a total of 4,611 contributors, with an average purchase of over $7,100. The ICO was held to raise funds for the continued development of Vanbex Group’s Etherparty platform, which facilitates smart contracts.
Vanbex says its FUEL token is a utility token since it is used by its Etherparty product which enables developers to create smart contracts for the secure transfer of money, assets or services across multiple blockchains.
These days, Initial Coin Offerings are a viable tool for fundraising for startups. Investors buy the firms’ tokens or coins often by exchanging either Bitcoin or Ethereum. The ICO tokens are usually traded at a later time when the value must have appreciated, just like company shares do in the IPO world.
While the Vanbex ICO was a hugely successful one, the company is also the target of legal action. Elev3n LLC, a former client of Vanbex, based in Philadelphia, sued Vanbex Group on September 29, 2017, alleging misuse of funds and copyrighted materials.
Vanbex officials would not comment on the issue. Instead, the Fintech Company is slamming a lawsuit on Kip Warner, its former director of engineering and a plaintiff declarant in the Elev3n lawsuit, for defamation and breach of contract.
The Canadian cryptocurrency community is keenly watching to see the outcome of the class action lawsuit leveled against Vanbex Group. If the SEC rules in favor of Vanbex, the startup could be a source of inspiration for many more ICO projects in Vancouver. Further, a strong legal win could be the beginning of greater things to come in the Canadian ecosystem overall.