2019 has been a year of ups and downs. While the market recovered from its bearish mood of 2018, most top cryptocurrencies are well below…
2019 has been a year of ups and downs. While the market recovered from its bearish mood of 2018, most top cryptocurrencies are well below their all-time highs of late 2017-early 2018. What 2019 has also been, is a year of controversies for the world of crypto. Let’s look at some of the top cryptocurrencies which made news in 2019 because of the controversies surrounding them –
XRP is the third biggest cryptocurrency by market capitalisation and with a massive following of its own, called the XRP army. There are theories that the XRP army is just a collection of bots and fake accounts on Twitter. While that was one controversy that was doing the rounds in March 2019, another controversy that landed Ripple in trouble with the crypto community were the rumors that Ripple was dumping XRP in the market, thereby suppressing its price.
It is to be noted that Ripple’s expansion spree in which it has partnered with notable banks and payments service providers across the globe, including Moneygram, has not been able to help XRP’s price. XRP’s 2019 performance remains dismal. Ripple is down 27% in the last 1 year, even lower than its 2018 levels.
Though Ripple CEO Brad Garlinghouse dispelled FUD around XRP dumping in an interview with Anthony Pompliano, the price of XRP continues to struggle in this bearish market.
To add to XRP’s woes was the lawsuit filed against Ripple by investors in 2018 alleging that the company had misled them by selling an unregistered security. In September, Ripple had tried to win the argument by claiming that investors were not in a position to file the claims as their timeline had expired. However, it failed to answer how XRP was not a security. The lawsuit is still going on, and as per latest updates, on December 4, Ripple filed a motion to dismiss the class-action lawsuit arguing that the case is contradictory and “self-defeating”. The federal court’s verdict on the case is yet to be declared, and when that happens, it is likely to cause significant positive or negative movement in XRP’s price.
Tether grabbed the limelight, for the wrong reasons, in May this year when its lawyer admitted that the stablecoin was only 74 percent backed by cash and equivalents. Stuart Hoegner, the company’s general counsel, said –
“As of the date [April 30] I am signing this affidavit, Tether has cash and cash equivalents (short term securities) on hand totalling approximately $2.1 billion, representing approximately 74 percent of the current outstanding tethers,”
The New York Attorney General (NYAG) has also claimed that Bitfinex, the other company under iFinex, Tether’s parent company, took a loan of $600 million from Tether’s reserves which it has not repaid. This started a debate in the crypto community on the legitimacy of Tether as a dependable stablecoin.
Tether’s parent company, iFinex, also got into trouble when a New York-based law firm, Roche Freedman LLP slapped a lawsuit against it and associated companies and individuals, accusing them of collectively using cryptocurrency to “defraud investors, manipulate markets, and conceal illicit proceeds”. As per the lawsuit, BitFinex and Tether were two enterprises involved in iFinex’s scheme which was “Part Fraud, Part Pump and Dump and Part Money Laundering.” The lawsuit also alleged that iFinex had been issuing massive amounts of unbacked USDT tokens to manipulate the cryptocurrency market.
However, despite all these controversies, Tether continues to be the largest stablecoin in the cryptocurrency market.
TRX is a coin which, despite Justin Sun’s numerous efforts, has remained bearish for more part of 2019. The coin had embarked on a bull run at the end of 2018, peaking in January 2019 at $0.29, but it has been on a downtrend since then.
TRX’s performance partially has to do with the controversies surrounding their CEO, Justin Sun. In July, Sun had to attend a lunch with Warren Buffett, which he had bagged by paying a record $4.57 million in a charity auction on eBay. However, 4 days before the lunch, Justin Sun cancelled it citing a medical emergency. The cancellation sent the price of TRX crashing down. Later, Justin Sun posted photos of him at a party with crypto influencers in San Francisco, and that was not received too well by the crypto community. However, the party story may just have been a fake alibi. Rumours are that Sun had been detained by Beijing’s top internet regulator in China that was investigating him on suspicions around illegal fundraising, money laundering, pornography distribution, and gambling.
Another controversy around Tron in 2019 has been allegations of TRX being wash-traded. As per a report by Blockchain Transparency Institute released in April 2019, Tron is among the highest wash-traded tokens with 85% fake volume.
The top privacy coins – Dash (DASH), Monero (XMR) and ZCash (ZEC) – all have been plagued by the same issue, that of getting delisted from exchanges because they are allegedly non-compliant with FATF’s travel rule. Recently, Bitbay, a crypto exchange operating in Eastern Europe announced that it was delisting Monero [XMR] because the cryptocurrency “can selectively utilize anonymity features among projects”.
South Korean exchange Upbit, and Japanese exchange Coincheck has already delisted the three privacy coins. OKEx, after announcing that it is going to delist them, has decided to review its decision. CEX.io has also announced its plans of delisting XMR, DASH and ZEC.
Owing to the announcements of delistings and the overall bearish mood of the market, the values of the coins have dropped significantly from their all-time highs. At press time, Monero is trading at $49, down 91% from its January 2018 ATH of $542.33. Dash is trading at $46.22, down 97% from its December 2017 ATH of $1493.59. ZCash is doing the worst of all. It is trading at $29.94, down 99% from its October 2016 ATH of $3191.93.
Digibyte (DGB) became the center of controversy when the coin’s founder Jared Tate harshly criticised Justin Sun, CEO of Tron and the cryptocurrency exchange Poloniex. His argument against Tron was that it was heavily centralized. He said that TRX was 100% premined and controlled by Justin Sun and the Tron Foundation. Out of the 100 billion TRX that were pre-issued, 66 billion were in circulation and the rest – 34 billion were with Justin Sun. He also said that the Tron network was run by a grand total of 27 “Super Representative” nodes and they were mostly controlled by Sun and the Tron Foundation using Delegated Proof-of-Stake (DPoS).
He also expressed his annoyance at Justin Sun having taken over Poloniex. As per his tweet, he was upset that his personal data, and that of his friends, family’s and other US Digibyte’s customers’ most sensitive data was now in the hands of Poloniex.
Poloniex responded to Tate’s by delisting DGB from the exchange without an explanation.
Poloniex received severe backlash from the crypto community for its reaction to Tate’s criticism.
Matic Network (MATIC) recently became the centre of attention in the crypto community when the coin got dumped on Binance and from $0.041, it dropped to $0.011, thereby losing over 60% of its value in a matter of a few hours.
At that time, rumours of the dump being an insider job were circulating in the market. As per Samuel JJ Gosling, the founder of Validity Crypto, the Matic Network team had been responsible for the dump ad they had transferred 1,495,322,715 MATIC, which made up for 15% of the supply, in the past 50 days, and the tokens had landed upon Binance for liquidation. However, the rumour was dispelled by an Ethereum developer, Eric, who shared that only 290,000,000 MATIC had been sent to Binance. Soon after, Gosling also corrected his claims and posted his apology, but by then the damage had already been done.
Matic made a recovery soon after the dump, hitting $0.0196 on the 11th of December, but now the coin has fallen to $0.0121 owing to the overall bearish mood of the crypto market.
Canadian messaging app, Kik had done an initial coin offering (ICO) for selling its token, Kin, and raised $100 MM from it. The ICO became controversial when the US Securities and Exchange Commission (SEC) decided to sue it for selling an unregistered security. As per SEC’s filing, the cash-strapped company had conducted the ICO and sold a digital token without proper disclosures.
“Fewer and fewer people were using Kik Messenger. The company expected to run out of cash to fund its operations by the end of 2017, but its revenues were insignificant,” said the filing.
In response to the filing, KiK launched a campaign called #DefendCrypto and raised over $4 million to meet the legal expenses of the lawsuit. In August, KiK issued a filing, rebutting the SEC’s claims. As per the130-page long document, KiK stood by its stance that Kin was not a security and the SEC was deliberately “twisting the facts” to show it as one. KiK’s CEO, Ted Livingston, had alleged that –
“The SEC tries to paint a picture that the Kin project was an act of desperation rather than the bold move that it was to win the game, and one that Kakao, Line, Telegram, and Facebook have all now followed.”
The legal turmoil has affected the value of the token drastically. It is now trading at $0.000003, down over 99% from its all-time high of $0.0012 achieved in January 2018. The 24-hour trading volume of the token is less than $200,000.
Like KiK, messaging app Telegram is also in the soup because of its cryptocurrency initiative. The company also conducted an ICO which raised a whopping $1.7 Bn from private investors, but the company could not conduct the public sale piece of its ICO because it feared running into trouble with the SEC. Because of this, the GRAM token is not available to the general public as it has not been listed on exchanges. However, according to reports, an underground market for the token is thriving.
However, in October, the SEC filed a lawsuit against the company for allegedly breaking federal securities laws by selling security tokens unlawfully. As per recent updates, the SEC has ordered Telegram’s founder and CEO Pavel Durov to testify in the US Securities Exchange Commission‘s (SEC) case against the company’s controversial digital token.
Which token, do you think, will rise above controversies in 2020 and regain its reputation and value? Share your views with us in the comments below!
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