The Securities and Exchange Commission announced a settlement with esports-betting cryptocurrency firm Unikrn for alleged violations of securities laws. Unikrn will shutter its UnikoinGold cryptocurrency token and pay a $6.1 million fine, which is all of the assets of the company.
So ends one experiment in gaming, gambling, and esports that evidently stepped over the line of what the federal government will permit when companies issue cryptocurrencies to the public. And while the fine is heavy, the SEC did not accuse Unikrn, which was headed by Voodoo PC founder and former HP and Microsoft executive Rahul Sood, of any fraud.
The SEC said it was one more in a growing number of enforcement actions related to “initial coin offerings,” or ICO events where companies sell blockchain-based cryptocurrencies to the public. Unikrn thought what it was doing was legal, but it was in a legal gray area that the SEC ultimately decided crossed the line. While heavily fined, the company is not shutting down. Other companies that held ICOs in the U.S. are likely to face similar difficulties.
Unikrn had a tech celebrity CEO in Sood, who was an investor in companies at Microsoft and the steward of the Voodoo gaming brand at HP. He and his brother, Ravi, started Voodoo PC in Calgary, Canada, in 1991 to make gaming rigs for PC players. They capitalized on making the coolest and most expensive machines, and they sold the company to HP in 2006. He left in 2010 and started Microsoft Ventures in 2013. In 2014, he left to start Unikrn with cofounder Karl Flores. They got billionaire Mark Cuban to invest in the company.
Unikrn’s idea was to give gamblers, esports fans, and gamers a currency for wagering and trading. Unikrn started as a cryptocurrency startup in 2015 and raised $31 million in 2017 through its offering of the UnikrnGold token, promising it would facilitate a secondary trading market for the tokens. The SEC ruled that the company was selling unregistered securities that would have required SEC approval. Unikrn obtained a license for gambling from the Isle of Man in the United Kingdom. But that did not provide a shield in the U.S.
Unikrn did not admit or deny guilt in the settlement. Washington State reached a similar settlement with Unikrn. One commissioner dissented on the order.
“While many SEC enforcement actions in this space include allegations of fraud, Unikrn falls within the narrower category of token issuers charged only with violating Section 5 of the Securities Act,” said SEC Commissioner Hester Peirce. “In other words, Unikrn is alleged to have offered and sold its tokens in an unregistered offering and in a manner that did not qualify for an exemption; it is not alleged to have engaged in any fraud in doing so.”
Still, she said that registration violations, even standing alone, are serious.
“Our enforcement actions can serve to deter such violations and protect harmed investors,” Peirce said. “We should strive to avoid enforcement actions and sanctions, however, that enervate innovation and stifle the economic growth that innovation brings. I believe that this action and its accompanying sanctions will have such consequences.”
Under the settlement, Unikrn will permanently disable its blockchain-based token, which it had integrated into its product offerings, and pay the penalty. In effect, the SEC is forcing the company to cease operations because it did an improper securities offering.
Peirce made the unusual post because she disagreed with the rest of the SEC commissioners on the Unikrn ruling, which was deemed to be a securities offering.
“The challenge of discerning a clear legal line is especially difficult with respect to new forms of business and novel technologies,” Peirce said. “Entrepreneurs may be forced to choose between unpalatable options: expending their limited capital on costly legal consultation and compliance or forgoing their pursuit of innovation due to fear of becoming subject to an enforcement action. A regulatory safe harbor could resolve this unhappy dilemma.”
Peirce said that the action may deter other entrepreneurs from taking innovative risks.
“I often share our team wins … on Unikrn,” said Sood in a post on Facebook. “Today is a little different, but I couldn’t be more proud of our team. As an entrepreneur, we face such challenges head-on, and we’ll continue to be relentless. As many of you know Unikrn announced a mutually agreed-upon settlement regarding UKG. You can read more on our UnikoinGold website. In the meantime, I appreciate the view of SEC Commissioner Hester Peirce.”
After UnikoinGold’s token sale in 2017, the SEC established guidelines which, applied retroactively, raised many questions with regards to the future of UKG.
“We spent months working with the SEC to come to a solution that was about moving the business forward,” Unikrn said in a statement. “The common ground we found requires Unikrn to completely stop supporting UKG and help provide a fund for purchasers of UnikoinGold. This gives us clearance to focus on continuing to build our industry-leading business.”
Unikrn said it its own post that it would continue to offer regulator-approved wagering and other services with major currencies including Fiat Currencies, Bitcoin, BitcoinCash, Ethereum, Dogecoin, GUSD, USDC, PAX, BUSD, Ripple, and others. Going forward, Unikrn will also consider other options internationally based on community feedback. So, even though the company has no assets after the fine, the company will continue operating.
The SEC will be establishing and operating a Fair Fund for token holders who would like a refund. The SEC will oversee this process, and they will provide further information regarding making a claim.
LinkedIn founder Reid Hoffman and his billions are disrupting the Democratic Party
Billionaires are pouring money into both sides of the 2020 election. Michael Bloomberg is raising millions to help felons in Florida vote. Home Depot cofounder Bernie Marcus pledged in July 2019 to support Trump’s campaign — which in turn sparked a boycott of the home-improvement store.
The coronavirus pandemic has laid bare the persistence of income inequality and low-income communities have been disproportionately impacted by the pandemic. With a “K-shaped” economic recovery looming — where high-earners bounce back, but the working class finds itself further indebted — the ultrawealthy stand to make more of an impact than ever.
And, as Business Insider’s Taylor Nicole Rogers reported, only 10% of billionaires had pledged as of July to donate to coronavirus relief.
But when billionaires do involve themselves heavily in politics, they may bring with them their own version of disruption — the Silicon Valley type
A new profile of LinkedIn founder Reid Hoffman by Vox’s Theodore Schleifer looks at the tech billionaire’s massive donations and nexus of power in the Democratic Party — and how that’s rubbed some the wrong way.
Hoffman is one of the party’s largest donors. As Schleifer details, he’s also persistent in bringing in fellow big donors and organizing among the three-comma club.
Key to Hoffman’s vision is “fixing” the Democratic Party, which Schleifer reports he’s done from both inside and outside of the establishment.
His drive to fix what he sees as party weaknesses — combined with his major focus on President Donald Trump — aligns with his early career path.
Hoffman received a master’s in philosophy from Oxford but, as Business Insider’s Richard Feloni reported, he chose to go into tech instead of academia because he believed that was a better place to answer his “guiding question” of “how do I help humanity evolve?”
He’s also said that rapidly growing tech companies should consider the ramifications that their growth could have on both stakeholders and on society at large.
Hoffman did not immediately reply to Business Insider’s request for comment.
Despite irking some Democratic officials, Hoffman is still ‘needed’
As Schleifer reports, Hoffman has bypassed the party itself to fund Democratic initiatives — including funneling $3 million into a 2017 election in Virginia through outside groups.
His bypassing of the party brass to get directly involved has had unintended effects at times, as when he accidentally funded a misinformation campaign in Alabama’s special election. Behind the scenes, Schleifer reports, Hoffman and his cash are sorely “needed.”
Although Hoffman initially fundraised for Sen. Cory Booker, he’s been vocal in personally making the case for Biden. He wrote a blog post in July titled, “A Vote for Biden Is a Vote for American Business,” and he was tapped to host a “high commitment” private fundraiser with President Barack Obama.
But throughout Schleifer’s reporting, a main concern from Democratic Party insiders — and campaigns focused on long-term progressive movements — is that Hoffman may be mainly focused on taking down Trump in 2020, and after that point his support may falter.
According to Vox, a member of Hoffman’s team reportedly told a party operative: “Win or lose, we’re not doing anything past 2020.”
Hoffman could very well “disrupt” the 2020 election, Silicon Valley style, and help usher in a return to what he calls “normal” for American business. If that’s successful, the Democratic Party may find itself returning to Hoffman’s guiding question — and evolving further into a party of billionaire disruption.
Read the original article on Business Insider
Breast cancer and sexual harassment survivor Sheryl Crow opens up about ‘darkest moments’ of her life
Sheryl Crow just may be the hard-working woman in show business. The nine-time Grammy-winner and breast cancer survivor just released the candid audio-only memoir Audible Original Sheryl Crow: Words + Music; she has teamed with Hologic’s Genius 3D Mammography to spread awareness about the need for early health screenings; and she recently put out two new timely and topical songs, with more to come. She may have announced last year that her star-studded 11th studio album, Threads, would be her last, but her career obviously hasn’t slowed down one bit.
“I grew up with albums. I’m not forsaking this beautiful art form,” Crow tells Yahoo Entertainment from her home in Nashville, explaining her new desire to write and release individual songs that are “of the moment, because that’s what we need to hear.” One of those songs, “In the End,” is “mainly about karma,” Crow says. “I look at the president and I see a complete and total lack of compassion and empathy. And to me, it’s all about modeling — if you’re modeling that to your country, if you’re modeling in your home to your children, what’s the message? So that’s basically what the song is about. I had to write it and get it off my chest.”
Crow reveals that she actually wrote her latest single, “Woman in the White House,” many years ago, inspired by Hillary Clinton’s run — though it’s just as relevant today. “It’s just shocking to me. If we are such a developed country, and we’re one of the richest countries in the world, how it is that historically we’ve never had a woman leading this country?” she laments. “What does that say, not only about how men see women, but how women see women, and whether they would vote for a woman? What does it say about we perceive a strong woman? You know, we generally think that she’s a ‘bitch’ or [too] ambitious or whatever. And I think it’s time for a reckoning and an awakening, and time for feminine energy in the White House.”
This is hardly the first time Crow has tackled the subject of misogyny in her music. That dates all the way back to 1993, when one of the tracks on her blockbuster debut album Tuesday Night Music Club, “The Na-Na Song,” was inspired by the Clarence Thomas/Anita Hill Supreme Court hearings. “[Hill] wasn’t taken seriously, and now we have not just one person on the Supreme Court enjoying a lifetime appointment; we have two that have been accused of untoward conduct towards women,” says Crow. As the singer-songwriter reveals in her Audible Original and Yahoo Entertainment interview, “The Na-Na Song” and another Tuesday Night Music Club cut, “What I Can Do for You,” were also inspired by her own experience of speaking up and not being taken seriously: When she was sexually harassed by Michael Jackson’s manager, Frank DiLeo, while touring as Jackson’s backup singer in the late ‘80s.
Crow says that after she rebuffed DiLeo’s advances in exchange for him promising to “make her a star,” he threatened her (in front of a cast of 180 people on Thanksgiving Day in Japan), vowing that she would never work in the music business again. She then returned home and plunged into a deep depression for six months — a period that she now describes as “the darkest moment of my life, with the exception of being diagnosed with breast cancer.”
“I went to [DiLeo] and said, I want nothing to do with this deal,” Crow recalls. “And that’s when he came into the tour and said, ‘You will never work again.’ I was definitely frightened. … I came out the other side, and I’m a lucky person to be able to say I did work again; I wound up having my own life and my own career. But it’s a terrible situation to be in, and women who come forward and speak their truth need to be validated and need to be heard. When you aren’t heard and when you’re threatened, it is devastating.”
Crow says she consulted with a “high-powered attorney” at the time to see what she could do about DiLeo’s misconduct, but she was basically told “to suck it up. … [The lawyer’s] direct quote was, ‘There are people all over Hollywood that would die to have to know that they were going to have No. 1 hits come out.’ So, I left there feeling like I had absolutely no protection. I called my parents — which, I mean, what is your mom and dad in Missouri going to do? But I just didn’t know what else to do. I said, ‘I will not do this. I will go public. I don’t want this deal. I’ll go home and I’ll wait tables.’ And that’s what I did. I went home and I waited tables.” (DiLeo died in 2011.)
Crow eventually achieved massive success on her own terms in the ‘90s, which she describes as a “transformative time” for female artists, although she says that even today, “The reality of art and the reality of business is that where there’s strong feminism, it’s a threat to strong masculinity. And there’s always going to be that power-play there.” She touches on that theme in her Audible Original when reflecting on her high-profile personal relationships too, namely with Eric Clapton and ex-fiancé Lance Armstrong, saying: “It did not take long for me to realize that in some relationships, when somebody has a huge profile, that you can’t shine your light around their light. Their light has to be brighter.”
“I think all women have grappled with at some point; I think that will always be the push and pull, the yin and yang,” Crow muses. “It will always be that way. … When a woman steps into her power, it’s beautiful and attractive to a man, and that becomes part of the relationship. And then when it starts encroaching on the man space of being big, it can be conflicting and it can be extremely challenging to figure out: ‘How do we both stay in our power? How do we both shine our lights and our own constellations, and yet still be who we are?’ And generally with a woman, a woman winds up dimming her light to keep the man happy. It’s the age-old song or dance.
“I have not been successful [in my love life], obviously,” Crow continues. “I’m still single. I’ve had some amazing relationships, and I have loved and I’ve been loved. My life didn’t wind up looking like the story I told myself about — what it’s ‘supposed’ to look like. You know, my parents are still married, 65 years now. That’s what it was supposed to look like: I would get married and have children. And at a certain point, I had to let go of the mythology of what I had told myself about what life looks like.” (Crow adopted two sons, Wyatt and Levi, in 2007 and 2010.)
Crow found out she had breast cancer just six days after her very public split with Armstrong, and she confesses that the 2006 diagnosis “totally changed the perception” she had of herself and made her realize that she could no longer put her needs “at the bottom of the pile of the things that you take care of.” That’s why it’s so important to her to get the word out about the need for regular mammograms, even during the COVID-19 pandemic when many women are postponing what they consider to be “non-essential” medical procedures.
“Early detection is probably what kept me from having to have chemo or maybe even worse,” Crow explains. “I was 44 years old, no cancer in my history, was very healthy, ate well, very athletic. It was just a random mammogram, and I wound up being diagnosed with stage one breast cancer. And so, I wound up being a sort of a spokesperson for it, because I think it really does matter. … I think part of that was laying on that radiation table and having to sort of meet myself.”
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‘The rotation to more value and cyclical sectors has already begun’: Wealth Consulting Group CEO
Wealth Consulting Group CEO Jimmy Lee joins Akiko Fujita to break down the latest market action, as 870,000 Americans file for first time unemployment benefits.
AKIKO FUJITA: Let’s bring in our first guest for the hour. We’ve got Jimmy Lee, who is the CEO of the Wealth Consulting Group. He’s joining us from Florida today. Jimmy, you have said that you remain bullish despite some of the choppiness that we’ve seen in the market. There’s plenty of opportunities, you say, for long-term investors. But when you look at the kind of data we saw today, particularly on those initial unemployment claims, how do you process that at a time when we are increasingly seeing that data pointing to a slowdown in the economic recovery?
JIMMY LEE: Well, I think we have a long way to go in jobs, Akiko. And that’s going to be month-to-month. And so I wasn’t surprised at that number today. But I do believe these pullbacks are opportunities for long-term investors to buy on these dips. And so I am one of these buy-on-the-dip people here.
With the stock market being led by big tech, on days like yesterday, when you get the big selloff in tech, investors are thinking about potentially rotating into value and more cyclical stocks on the opposite days. And so I think in the long run, investors need to be diversified with both FAANG– FAANG plus Microsoft has led the market. I don’t think that run is over yet until we do get a vaccine or a treatment. But people should be positioned with value names and cyclical names for that to happen.
AKIKO FUJITA: Yeah, I know you’ve mentioned that before. Earlier this month, we were talking about where big tech is going. You said you expected the selloff to be triggered by some kind of vaccine or just a significant movement, at least on getting this virus under control.
And yet we’ve seen Apple down about 20% this month. I was looking at Netflix, down 16%. Amazon is off as well.
What do you think has been the trigger for that pullback? I mean, you’re arguing that the valuations are still very high. And yet it seems like the rate of the pullback has been pretty noteworthy.
JIMMY LEE: Well, the returns on those names, the big tech names, may be four times greater than the rest of the S&P 500. So if you’re an investor thinking about risk coming up with the election, potentially higher capital gains taxes, not a bad idea to take some chips off the table. So I think you’re going to get some selling due to election risk and a lot of other worries about the coronavirus coming back and maybe the economy taking longer to get back on its feet.
But with that said, the rotation to the more value in cyclical sectors has already begun. Industrials and materials are leading the market lately. In the last one month, I believe that materials is up 7% more than S&P 500, in the last three months, 10%. So we’re starting to see that already.
And by time we get a vaccine, a lot of the beaten up sectors, including financials, will have probably recovered quite a bit since then. So I think that that rotation has started. But I don’t think it will really fully take into effect until we get a vaccine or a treatment that allows people to be comfortable being in large gatherings again.
AKIKO FUJITA: So taking some chips off the table in tech and rotating into value. But you’ve talked about this barbell approach before. What does that look like for you right now?
JIMMY LEE: Well, we still are overweight tech as an overall equity portfolio. But we’ve added to sectors that have been beaten down. So, like I said, materials, industrials, even some financials. And I think that those are the kind of sectors– and if you want to take a little bit more risk than that, in the travel and leisure and gaming industries, there are still a lot of companies are way off their highs. In fact, I think over half the companies in the S&P 500 are still off their highs.
There are still many stocks that are in the bear market. So I think you can find value in some of those names. Right now is a really good time to be an active investor so that you can scrub the balance sheets to make sure that if companies are taking on more debt, what their earnings are going to look like into the future.
So as many retail investors, the common investor is investing through index investing, such as ETFs. They think they’re diversified across, for example, the S&P 500 ETF. Well, what they don’t know a lot of times is that 20%, 23%, 24% of their money is in the top five holdings, all tech related. So investors really need to look underneath the hood of their portfolio and make sure that they’re diversified. And, like I said, have some positions in value-type sectors because economy will reopen.
AKIKO FUJITA: How big of a risk is– are additional restrictions for you? We have heard the president say that there is no new national lockdown coming. And yet we saw the headlines out of Europe earlier this week, with the UK particularly looking to impose– reimpose new restrictions. And we saw that weigh on the market here. So while we may not expect a national lockdown in the way we saw March and April, how much of the potential of that should investors be factoring in right now?
JIMMY LEE: Well, of course, in the United States, it’s state by state, as we were talking about at the break there with the doctor. What’s going on in certain states is way different than other states. And so I think it really depends on where you live. But from an economic perspective, I believe that our country is consumer led. And so if 60%, 70% of the economy being consumer spending– and people are spending.
So we talked about the low inventory on real estate, for example, what’s driving housing prices. And people are trying to get out of the cities to move into the suburbs. And so I don’t think that trend is going to stop. Of course, that’s going to rotate back when things get back to normal a little bit. But a price adjustment in real estate is something we needed in some of these metropolitan cities anyway.
But I’m bullish. I think that the economy will reopen. I’m very hopeful for a vaccine and/or a treatment in record time. I think a lot of the news that we get around the medical side of this has been politically motivated. And so I think we need to stick to the facts and hope for the best on the medical side. But I think we will reopen and the economy– and consumers will spend.
AKIKO FUJITA: How big is the political risk for you from an investment standpoint? We heard from Secretary Mnuchin today, which seemed to suggest that there are ongoing talks with the House speaker. And there is potential for renewed discussions.
And yet now you’ve got the potential for a very contentious Supreme Court nominee fight in Congress, the thinking here being that that could maybe push back the stimulus discussions until after the election. Has the political risk calculation changed for you at all over the last few weeks?
JIMMY LEE: It has. It’s definitely risen. It think it’s up there with the virus. And so right now, I think today, the market’s a little bit bullish because of Secretary Mnuchin talking about the possibility of another stimulus check, which we desperately need in this country, I think. Even though I hate debt, I think we need it. And a lot of people are still out of work and need the money.
And, of course, the scenario of a change in the White House and the Senate is bearish for a lot of investors, one of the reasons being that thinking that taxes will go up at some point during the next term if that were to happen. But with that said, I think it’s up in the air right now what’s going to happen on the political side so. A lot of uncertainty.
And certainly, if there is a change in the White House and the Senate, I think we could look back to the Obama era and slow growth, but still growing. And so I think equities will still be OK. Certain sectors will be better than others. And I would expect a correction in the equity markets if we do get a change in the White House and Senate, but slowly climbing back.
So I don’t see any disasters out there. But certainly, political risk is high. And a lot of investors are very worried about what’s going to happen during election.
AKIKO FUJITA: And we have seen that reflected in the choppy trade we’ve seen so far this week. Jimmy Lee with the Wealth Consulting Group, always good to talk to you. Thank you. Good afternoon.
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