BaFin Orders Gold-Backed Token Issuer to Cease-and-Desist Order

BaFin Orders Gold-Backed Token Issuer to Cease-and-Desist Order

BaFin has ordered Karatbit Foundation to stop doing business in Germany immediately due to the absence of a necessary license

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The German Federal Financial Supervisory Authority (BaFin) has issued a cease and desist order to Karatbit Foundation to immediately stop unauthorized business in Germany. 

BaFin alleges that Karatbit Foundation is issuing the KaratGoldCoin (KBC) without the necessary license, according to a Nov. 11 announcement.

Karatbit describes itself as a provider of a blockchain-based payment system that enables users to conduct transactions with gold, as well as trade gold with cryptocurrencies. The company claims that over 500,000 acceptance points around the world and ten crypto exchanges support trading of gold and gold products for KBC.

Absence of the necessary licence and launched investigations

In the announcement, BaFin said that Karatbit conducted business in Germany without the necessary license. However, the regulator pointed out that although the order was effective immediately, it may still be subject to judicial review.

As The Guardian reported on Nov. 13, the public prosecutor in Stuttgart had also initiated investigations into the company’s activities. In response to the allegations, Karatbars told the Guardian that no investigations into KBC had begun and ensured that “no customer or partner has ever incurred losses due to Karatbars and its products.”

Karatbars further argued that those German customers holding KBC received it as “only a free bonus gift that came with other Karatbars products,” and that BaFin’s ruling was based on a fake Karatbars website.

Contradicting share in a gold mine

To guarantee the stability of its tokens, Karatbars claims that it owns a share in a gold mine located in Madagascar that purportedly contains 900 million euros ($990 million) worth of the precious metal. Moreover, the company’s founder, Harald Seiz, said that the company had secured $100 million through sales of KBC.

In contradictory figures, the company specifically asserted in its white paper that “the gold mine in Madagascar having 900 billion euros was bought.” Seiz also reportedly failed to prove his ownership of a stake in the gold mine.

Moreover, Karatbars used former football stars Lothar Mattäus, Roberto Carlos and Patrick Kluivert’s images without their permission to promote its products. Kluivert and Matthäus denied their relation with the project.


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BaFin has ordered Karatbit Foundation to stop doing business in Germany immediately due to the absence of a necessary license

Germany Grants BaFin License to Financial Firm for STO Platform

Germany Grants BaFin License to Financial Firm for STO Platform

Black Manta Capital Partners receives licens from BaFin for its STO platform

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Luxembourg-registered financial firm Black Manta Capital Partners has received a license from the German Federal Financial Supervisory Authority (BaFin) for its Security Token Offering (STO) platform.

A regulated STO platform in Germany

Black Manta Capital Partners announced on Aug. 19 that its Berlin-based entity received a MiFID II license by BaFin for its regulated STO platform on Aug. 1 nine months after filing. Now, the company will be able to offer regulated brokerage services using blockchain technology.

On its platform, the firm represents rights to an asset as tokens managed by on-chain contracts. This system reportedly allows for new access to capital for small and medium-sized enterprises, real estate projects, startups, commodity markets or funds and new access to investments for new investors.

A firm with global ambitions

The issuance of such security tokens is regulated in Germany by the MiFID II Directive on Financial Instruments, and the first STOs are planned to be conducted in early Q4 2019. The company has also broader ambitions:

“Apart from the licenced operating entity in Berlin, Black Manta Capital Partners drive the market launch of their investment platform also through BMCP Consulting in Vienna and BMCP Limited for international business development, based at the Malta Stock Exchange in Valletta.”

The firm also plans to found Black Manta Asia, in Singapore, and apply for a similar license with the local monetary authority. Co-founder and managing partner of the company commented on the firm’s intentions:

“While Black Manta Capital Partners want to be ‘boutique’ in its beginnings and run ‘handpicked’ STOs only, our strategy is global from day one: the first step is to link Europe and Asia on one blockchain-based investment platform. Therefore we look already today into Singapore.”

As Cointelegraph reported in July, Latin America’s biggest investment bank, BTG Pactual, plans to shift its security token offerings (STOs), a pipeline of over $1 billion in sales, onto the Tezos blockchain.


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Black Manta Capital Partners receives licens from BaFin for its STO platform

Germany: Crypto Businesses will Require a BaFin License Next Year

Germany: Crypto Businesses will Require a BaFin License Next Year

German cryptocurrency businesses to hold a BaFin-issued license starting next year

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Starting next year, new Anti-Money Laundering (AML) regulations will require German cryptocurrency businesses to hold a Federal Financial Supervisory Authority (BaFin)-issued license, Cointelegraph Deutschland reported on July 24.

Possible innovation obstruction

Per the report, the new regulations will require cryptocurrency-related businesses such as exchanges and wallet providers to be licensed by BaFin and comply with AML regulation, since crypto assets will be considered a financial instrument starting on January 1, 2020. According to local media FAZ, Bundestag Free Democratic Party Frank member Schäffler commented suggesting that the government is hurting local innovation and forcing crypto businesses to move to other EU states.

Some welcomed regulatory clarity in Germany

On the other hand, Christian Schmies, partner of the law firm Hengeler Mueller, welcomed the regulation suggesting that more clarity will allow for further growth in the industry. According to him, “the technology has not yet been accepted by institutional investors because a reliable legal framework is missing.” While Schmies considers the classification as a financial instrument to be a step in the right direction, he also notes that the space still needs more clarity.

As Cointelegraph reported yesterday, BaFin recently approved an Ethereum-based real estate bond for security issuance firm Fundament Group.

The German Central Bank also noted in a recent statement that the potential benefits of Facebook’s Libra should not be suppressed despite regulatory uncertainty and potential risks.


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German cryptocurrency businesses to hold a BaFin-issued license starting next year

BaFin Head Urges Global Bank Standards in Response to Facebook’s Libra

BaFin Head Urges Global Bank Standards in Response to Facebook’s Libra

BaFin’s president Felix Hufeld urged regulators not to stand aside on the issue of Facebook’s stablecoin Libra

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The head of the German Federal Financial Supervisory Authority (BaFin) has urged regulators to develop standards in response to Facebook’s forthcoming cryptocurrency, Libra, Cointelegraph Deutschland reported on June 26

Speaking at the International Club Frankfurter Wirtschaftsjournalisten, BaFin President Felix Hufeld stressed that policymakers and regulators should not stand aside on the issue of Facebook’s Libra as considerable control questions could arise once the coin comes into use.

Hufeld hinted at possible regulatory measures introduced by BaFin, but also pointed to the need for an international regulatory framework:

„We certainly can not just watch. We will have to respond appropriately in any way. I can only hope that we will succeed in developing at least European, if not globally, basic standards.“

Additionally, Hufeld warned about the dangers posed to banks by cheap money, stating that a further reduction of interest rates would put even more pressure on banks. This could purportedly prompt banks to merge or change their business models.

Other European financial market players have also spoken on Libra’s possible effect on the economy. Earlier this week, Bank of France Governor Francois Villeroy de Galhau said that the Libra stablecoin must comply with Anti-Money Laundering regulation and seek banking licenses if it offers banking services.

An alternate member of the Swiss National Bank’s governing board, Thomas Moser, said at the Crypto Valley Conference in Zug that “Overall I think it’s [Libra] an interesting development and I’m pretty relaxed about it. […] They have clearly indicated that they are willing to play according to the rules, they have been contacting the regulators.”


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BaFin’s president Felix Hufeld urged regulators not to stand aside on the issue of Facebook’s stablecoin Libra