Two Trading Products of XBT Provider Suspended by SEC
Two XBT Provider products had their trading activity suspended by the U.S. Securities and Exchange Commission due to “a lack of current, consistent and accurate information” which generates “confusion amongst market participants.” The two products are Bitcoin Tracker One and Ether Tracker One.
On September 9th, SEC issued an “Order of Suspension of Trading” for two trading products distributed by XBT Provider AB, a Swedish company based in Stockholm.
The Commission cites that “there is a lack of current, consistent and accurate information” with regards to Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF), “resulting in confusion amongst market participants regarding these financial instruments.” One product was designed to track the price of bitcoin while the other was designed to track the price of Ethereum.
“The Commission is of the opinion that the public interest and the protection of investors require a suspension of trading in the securities of the above-quoted company.”
According to Section 12(k) of the Securities Exchange Act of 1934, to trade in two securities “is suspended for the period from 5:30 p.m. EDT on September 9, 2018, through 11:59 p.m. EDT on September 20, 2018,” stated the agency.
The SEC went on to explain how the two products are categorized:
“The broker-dealer application materials submitted to enable the offer and sale of these financial products in the United States, as well as certain trading websites, characterize them as ‘Exchange Traded Funds (ETF)’.”
The agency classifies ETFs as listed investment companies which provide investors an option for pooling money in a fund that invests in assets such as stocks, bonds, and shares. In exchange, investors get an interest in the fund.
But, the agency remarked that “Other public sources characterize the instruments as ‘Exchange Traded Notes (ETN)’.” These notes are debt obligations of financial institutions which are not secured and are traded on a securities exchange. “ETN payment terms are linked to the performance of a reference index or benchmark, representing the ETN’s investment objective,” stated the commission.
“ETNs are often confused with exchange-traded funds (ETFs). ETNs and ETFs are both traded on a securities exchange and can be bought and sold throughout the day, but there are important differences.”
The Commission went on to clarify that “the issuer characterizes them in its offering materials as ‘non-equity linked certificates’,” which XBT Provider states “are not principal protected” as well as “do not bear interest.”
XBT Provider has two other tracking products aside from Bitcoin Tracker One and Ether Tracker One, which are: Bitcoin Tracker Euro and Ether Tracker Euro.