Virtu Financial Inc. (VIRT.O) said on March 2, 2018, that it had no affiliation with VirtCoin, an ICO that is linking itself to the global traders. Distancing itself from the new coin, Virtu was emphatic that it had nothing to do with the new VirtCoin offer.
Within the crazed arena of ICOs and with the sudden profits that were made on bitcoin in 2017 still fresh in everyone’s mind, the latest furor is a glimpse into the potential for hype becoming a falsehood and good names becoming tarnished by association. Evidently trading on a fictitious association, VirtCoin is not the only ICO to come under the scrutiny of Exchange Commission investigators.
Regulators Have Their Hands Full
As sober and moderate voices struggle to delineate the discourse around bitcoin and cryptocurrency in general, scam pitches like VirtCoin are not helping. Epitomizing all that regulators fear, VirtCoin seems an outright fraud, listing Virtu Financial Inc. personnel as being behind and contactable for the new coin launch.
Andrew Smith, Virtu’s head of investor relations, said, “VirtCoin has no relationship, connection, or affiliation to Virtu Financial [Inc] and its officers and directors.”
Globally, regulators have been under pressure to formulate appropriate legislation on virtual currencies. While a broadly accepting tone is emerging, with some countries emphatic too that the value of blockchain technology is not lost amid fears of digital coin hype, there are exceptions.
China has issued a ban on cryptocurrency offers and domestic trading, Israel is treating cryptocurrency companies like pariahs and even moderates like South Korea have big guns waiting behind their current acceptance if need be. ICOs are usually paid for in cryptocurrencies like Ethereum’s ether or bitcoin, ICOs will take any form of payment and often seem geared towards nothing more than a fundraiser for the developers without any intrinsic usability or worth in the offer.
The U.S. Securities and Exchange Commission (SEC) is currently investigating some cryptocurrency companies. Many of them claim value but are little more than attempts to siphon a disproportionate amount of cash into the coffers with no thought of future value.
A director of the agency’s enforcement arm, Steven Peikin, said in September 2017 that many paper-thin offers were emerging as nothing more than cheap attempts to cash in on the current craze. January 2018 saw the SEC shut an ICO down in its bid to raise $1 billion, labeling the offer as “an outright scam.”
VirtCoin’s website looks remarkably similar to Virtu Financial’s and makes several spurious claims about being Virtu Financial Inc.’s digital coin offering. The site implicates several executives from Virtu Financial Inc., listing the CEO and others as contacts. The names, titles, and pictures of listed Virtu executives do not match up, however. Tellingly, there is no contact information on the VirtCoin website, something that flies in the face of basic fiduciary standards.
Blatant Lies and Zero Value
In a press release on Thursday, March 1, 2018, VirtCoin claimed Virtu Financial Inc. was about to launch a virtual currency, giving current CEO Douglas Cifu’s name out as a contact for further information.
A day later, Friday, March 2, 2018, Virtu Financial denied the association in a formal statement and called the entire “launch” a fake. Virtu said it was cooperating with regulatory authorities on the issue and that the company would be launching legal action to protect its name, trademarks, and intellectual property.
Searches on cryptocurrency sites that list current action, market prices and virtual currency news draw a blank for VirtCoin. It seems that beyond the initial flash in a pan, VirtCoin has no intention of rolling out anything of substance in the form of a genuine, usable coin.
Bitcoin’s giddy climb in value towards December 2017 attracted millions of private investors and generated huge hype around cryptocurrencies. Regulatory alarm accompanied it, and regulatory pressure is widely seen as having the current bear on a leash. With such huge public interest, regulators have been hard-pressed to stem fraudulent profiteering. Bitcoin is on a slow climb back to former levels, currently trading around $11,000 from December 2017 highs of just under $20,000.