The battle between cryptocurrency exchanges and brokers has been raging for some time. The latest salvo comes from the New York-based brokerage firm Quoine, which filed suit in Texas against American entrepreneur Mark Cuban over alleged failures to abide by terms of a non-disclosure agreement and maintain confidentiality over an investment that was never made.
The lawsuit, which has been filed by New York-based brokerage firm Quoine, accuses Mark Cuban of failing to maintain the confidentiality of his investment, as well as failing to abide by the terms of a non-disclosure agreement. Additionally, the firm claims that Cuban had agreed not to promote any particular ICOs on his social media accounts prior to their respective token sales.
Mark Cuban In A Spot Of Bother
Quoine is a leading global fintech company that provides trading, exchange and next generation financial services powered by blockchain technology. The company has been in operation since 2014 and is headquartered in Tokyo with offices in Singapore and Vietnam. In 2017 it became the first cryptocurrency exchange to be officially licensed by Japan’s Financial Services Agency (JFSA).
Quoine alleges that Voyager is in violation of the Investment Company Act, claiming that the exchange is operating a mutual fund by allowing clients to pool their funds and invest in a basket of cryptocurrencies.
In a motion filed on January 10 to dismiss Quoine’s lawsuit, Voyager argued that it operates as a clearinghouse for cryptocurrency trades, not as an investment company. The company also asserted its right to use customer funds “to offset losses or liabilities caused by other customers” rather than as part of an investment strategy.
While this may seem like a minor distinction, it has significant implications for how regulators should treat both companies. If regulators believe Voyager does indeed execute its own trades on other platforms (as Quoine alleges), then they can regulate the company as if it were a stock exchange and subject it to much harsher scrutiny than they would otherwise apply.