His shareholders accused him of market manipulation, but the Japanese Financial Services Agency (FSA) said that Valu tokens did not fall under FSA authority according to current securities regulations. Bloomberg quotes a lawyer who says the scandal is evidence that Japan’s recently-implemented financial services law has created a “relatively easy environment for a new FinTech startup.”
Indeed, the U.S. SEC already shuttered an initial coin offering similar to Valu. Like its Japanese counterpart, Protostarr offered users the opportunity to invest in the careers of YouTube celebrities, although it promised them dividends from advertising revenue raised by the celebrity’s channel. Nevertheless, it is hard to believe the SEC would allow a platform like Valu to operate apart from extreme regulatory scrutiny.
In any case, the scandal exposed how easily the Valu token exchange could be manipulated, so the company has updated its terms of service in response. Now, share sales can only amount to 10% of a stock’s market cap in a single day. Transactions are also limited to 30 per user per day, and the platform automatically caps single-day price swings when they reach a decline of 50% or an increase of 200%.
