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Bankruptcy doesn’t mean what it used to; no longer the end

(FINANCE NEWS) With the way the world works now, bankruptcy doesn’t necessarily mean game over.

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When it’s over, it’s over. Perhaps you heard your best friend utter this phrase after a bad break-up. It’s true, most things that end, end for good. Except in this case, when it comes to the retail business.

We have seen a record number of retailers declare bankruptcy this year. Beloved teen retailers like Wet Seal have closed down their stores and malls have become ghost towns.

Reuters estimates that nineteen major retail chains have already shut down for good. While you may not miss the tight, neon dresses sold at Bebe, closures of all of these retailers result in a tremendous loss of jobs.

And it is not only job losses from the store in your hometown, often it is hundreds of locations across the nation.

For most of these retailers, bankruptcy was the definitive end to the business. After filing, most companies choose to close all locations and liquidate the assets. This is the most common path to take, until now.

Even with the surge of bankruptcy, those behind the business are finding alternative paths to keep the business alive.

Behind the scenes, there are three core groups invested in every business: the company’s creditors, vendors, and landlords. All of these groups have a vested interest in keeping the company alive even if they are in debt.

The most recent trend for bankrupt businesses has been to keep stores open and negotiate debt loans rather than shutting down everything. The truth is that a lot of these businesses still attract customers and have a large cash flow, even if they are technically bankrupt.

For instance, Toys ‘R’ Us manages to take in $800 million each year on average which makes it a viable business. Of course, they are $5 billion in debt, but with an extension and restructuring of their business, they could one day turn a profit. However, this will only happen if they are given the chance to keep their doors open.

There are other options to lending helping hands to bankrupt businesses. After the popular teen retailer Rue21 declared bankruptcy landlords agreed to reduce their rents 20% on average. Though these situations are not ideal, this mentality gives businesses a life beyond bankruptcy and save thousands of jobs in the process.

Natalie is a Staff Writer at The American Genius and co-founded an Austin creative magazine called Almost Real Things. When she is not writing, she spends her time making art, teaching painting classes and confusing people. In addition to pursuing a writing career, Natalie plans on getting her MFA to become a Professor of Fine Art.

Business Finance

Credit card companies crap on cryptocurrencies

(FINANCE NEWS) Credit card companies are now trying to make customers slow their roll when purchasing crypto – and it’s kind of shady.

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Visa and Mastercard and now making it more difficult for their customers to purchase cryptocurrency by slapping additional fees on transactions. This month, Bitcoin investors using Coinbase noticed additional fees on bank statements and were like, wait what?

Turns out, the credit card companies decided to reclassify cryptocurrency transaction type from “purchase” to “cash advance.”

Coinbase confirmed the change in an email to its customers, noting “the MCC code for digital currency purchases was changed by a number of the major credit card networks.”

A Mastercard spokesperson claimed the change “provides a consistent view of such purchases for both merchants and issuers.”

This means an additional five percent fee is slapped on to every transaction from the credit card company in addition to the four percent credit card processing fee Coinbase already passes on to its users.

Right now, if you want to buy Bitcoin or other cryptocurrencies instantly, your only option is using a credit or debit card. Transferring funds from your bank can take days, and since crypto prices can change in an instant, this isn’t a great option. Although there are lower fees for transferring funds via ACH, investors may get stung by fluctuating prices.

So basically, you’re going to use a credit or debit card for efficiency, but Visa and Mastercard want to make this harder on you. Unlike purchases, transactions labeled as “cash advances” don’t fall under an interest-free grace period. As soon as the purchase goes through, it accrues and compounds daily, so that’s pretty neat.

In addition to the new fee, cash advances carry higher interest rates as well.

Adding insult to injury, using a card for crypto purchases does not earn credit card points.

The card companies are equivocating bitcoin to withdrawing money from an ATM. This conflicts with the IRS’s stance that bitcoin is not currency, but rather taxable property.

Until everyone gets their stories straight, investors get stuck in the middle with more barriers to purchasing crypto, and conflicting regulation and processes.

And for Visa and Mastercard, that’s kind of the point. Their aim is to slow the rush of investment, even at the risk of losing potential millions in additional revenue. Assuming Bitcoin and other cryptocurrency don’t total crash and burn, eventually financial middlemen like credit card companies will be cut out of the picture.

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Business Finance

Don’t mess with Texas – especially when it comes to crypto

(FINANCE NEWS) The State of Texas is cracking down on crypto companies, and this won’t be the last cease and desist issued.

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After a one month undercover sting of crypto-currency startup DavorCoin, the Texas State Securities Board (TSSB) issued another cease-and-desist letter, ordering the cryptocurrency company to stop all operations in the state immediately; this is the state’s fourth emergency cease-and-desist in just one month regulating cryptocurrency companies.

Jason Rotunda, director of enforcement division at the TSSB told CNBC, “We confirmed our suspicion that they were being marketed toward retirees. [DavorCoin] was not disclosing the information that needs to be disclosed to an investor.”

Other cryptocurrencies being issued cease-and-desists include companies r2b coin, BitConnect, and USI-Tech Limited. All of these companies either were promising implausible or impossible returns on investment, low risk investments coming from Bitcoin mining–without the evidence to back it up, or not disclosing information required by state law.

After the TSSB pulled the plug on BitConnect, they started their investigation of DavorCoin for promising extremely similar ROI. DavorCoin also has another strike against it, a potentially more serious one: Investment fraud. DavorCoin, according to CoinDesk, has “intentionally hidden material information of its business–including its principles and business location, as well as how it plans to realize investment promises for investors.”

The lack of transparency on not just the basic information regarding the business itself, but also an investor disbursement plan violates sections of the Texas Securities Act.

Texas currently is leading the way regarding the regulation of cryptocurrenty investment opportunities, in which other states as well as the federal government are following suit. Other states filing formal complaints against cryptocurrency companies include Florida, North Carolina, Massachusetts, and Kansas.

The U.S. Securities and Exchange Commission, as well as the U.S. Commodity Futures Trading Commission, is taking note of the heightened amount of activity surrounding cryptocurrencies as well. Rotunda, also in his role as the vice chair of North American Securities Administrators Association, is trying to encourage regulatory agencies to adapt to this new way of doing business and investing.

“In both of those roles we’ve been monitoring cryptocurrencies quite a bit,” said Rotunda. “I think what we’re doing right now is we’re adapting to a new way of selling securities.”

The old adage is, after all, “don’t mess with Texas.” Especially when it comes to potentially defrauding investors through cryptocurrencies — but that’s kind of a mouthful.

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Business Finance

Fake crypto scam sends ransomware, then malware once you pay

(FINANCE) Buying unheard of ICOs just got much riskier as scammers find new ways to scam people out of their crypto investments while stealing their identities. Great.

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Cryptocurrency is hot right now. And while cryptocurrencies like Bitcoin are supposedly more secure than regular currency, that doesn’t mean that hackers aren’t looking for ways to take advantage of the trend.

A newly discovered ransomware scam banks on people’s desire to get rich quick by buying cryptocurrencies. The scam advertises a new cryptocurrency called SpriteCoin.

SpriteCoin isn’t a real currency; it’s just a ruse to get people to install ransomware. Often, SpriteCoin ads appear on forums where people learn about and discuss other cryptocurrencies, making SpriteCoin seem like the real deal (hence why social media sites are opting to nix all ads about cyrpto).

The ransomware is disguised as a wallet containing SpriteCoin. While your computer appears to be downloading the blockchain for your SpriteCoin, it is actually encrypting all of your files, while also raiding Chrome and Firefox for your stored passwords. Next, you receive a ransom note demanding that you pay up in order to get a decryption key, or else your files will be locked forever.

The ransom note demands payment in Monero, a cryptocurrency, to the tune of about $100. The note claims that “only we can decrypt your files. Don’t worry, we’ll give you your files back if you pay.”

To add insult to injury, once the Monero ransom has been paid, the hackers install additional malware that harvests personal data and gives hackers the power activate your webcam.

This ransomware scam was discovered by cyber security company Fortinet. Fortinet’s experts think that this scam, which is demanding a (relatively) inexpensive ransom, could be a pilot program for hackers to test out new delivery mechanisms for ransomware and malware. They want to see how many people will fall for the scam before scaling up.

Fortinet also explains that Monero is becoming the new cryptocurrency of choice amongst thieves using ransomware, because Bitcoin transaction fees have gone up and there is typically a delay on payments.

Cryptocurrencies could be a good investment – but make sure you do your research and only buy legit cryptocurrencies, lest you fall victim to such a vicious and repetitive scam.

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