The Daily: SEC Ramps Up Enforcement, 60% of Smart Contracts Are Dormant

In Saturday’s edition of The Daily, we take a look at the SEC’s annual report, which reveals where cryptocurrencies sit on their radar. We also consider the fate of dormant smart contracts, 60% of which have never seen use according to a new report. All that plus the reaction to Coinbase’s latest token listing, which hasn’t pleased everyone.

Also read: ‘Decentralized’ Exchange IDEX to Introduce Full KYC

SEC Zeroes in on Cryptocurrency Scams

The U.S. Securities and Exchange Commission (SEC) has released its annual report and the 45-page document has plenty to say about cryptocurrency. Initial coin offerings (ICOs) are referenced more than 30 times in the report, which notes: “In the past year, the Division has opened dozens of investigations involving ICOs and digital assets, many of which were ongoing at the close of FY [financial year] 2018.” The report also explains that the SEC isn’t just looking at ICOs, but at other potential scams being perpetrated within the cryptocurrency space. It finishes:

The Division also has recommended that the Commission use its trading suspension authority to prevent investors from being harmed by possible scams … the Commission suspended trading in the stock of over a dozen publicly traded issuers because of questions concerning, among other things, the accuracy of assertions regarding their investments in ICOs and operation of cryptocurrency platforms.

The SEC’s report surfaced just as it emerged that another celebratory is facing a lawsuit over their promotion of a dubious ICO. Clifford Joseph Harris Jr., better known as T.I., is being charged over his involvement with “flik token,” which investors were promised would increase by 25,000 percent. It didn’t.

60% of Smart Contracts Have Never Been Used

Researchers at Northeastern University and the University of Maryland have pored over the code governing Ethereum smart contracts and emerged with some interesting findings. Of the 1.2 million smart contracts they examined, the vast majority were clones or extremely similar to one another. As a result, they found there to be less than 6,000 unique smart contract “clusters.”

The danger with such widespread usage of code, as the researchers pointed out, is that vulnerabilities are likely to spread far and wide throughout the ecosystem. There is one saving grace, however, that might limit the fallout from a widespread bug: around 60% of all Ethereum smart contracts have never been interacted with. These “ghost contracts” remain dormant, deprived of users willing to spend the gas required to trigger them.

New Coinbase Listing – Brave or Foolish?

On Nov. 2, Coinbase Pro announced that the latest token to be added to its exchange would be BAT, the advertising rewards-based currency used within the Brave browser. While the news was hailed in some quarters, not least among BAT bagholders, not everyone was impressed. “Welp, it’s official,” tweeted Dan Elitzer. “Coinbase’s lawyers are comfortable with listing digital Chuck-E-Cheese tokens. The Howey Test is clearly out the window.” Jackson Palmer, meanwhile picked holes in Brave’s integration of BAT, and suggested the browser would operate more effectively without the token:

What are your thoughts on today’s news tidbits as featured in The Daily? Let us know in the comments section below.

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