U.S. regulator stands by decision to block Winklevoss bitcoin ETF

NEW YORK/WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission on Thursday stood by a decision blocking an exchange-traded fund that would have tracked bitcoin, citing concerns about market manipulation.

Brothers Cameron (L) and Tyler Winklevoss talk to each other as they attend a New York State Department of Financial Services (DFS) virtual currency hearing in the Manhattan borough of New York January 28, 2014. REUTERS/Lucas Jackson

The securities regulator found "unpersuasive" arguments that the bitcoin ETF proposed by Cameron and Tyler Winklevoss, the twin brothers who founded crypto exchange Gemini Trust Co LLC, would be sufficiently protected from manipulation, it said in a 92-page analysis bit.ly/2K3GoWG posted on its website.

“Regulated bitcoin-related markets are in the early stages of their development,” the SEC said, saying that it “cannot...conclude that bitcoin markets are uniquely resistant to manipulation.”

But the agency did not completely shut the door to such products coming to market once the bitcoin market has matured, offering some hope for at least five other bitcoin ETF proposals that are still pending before the regulator.

Bitcoin BTC=BTSP turned negative after the SEC"s ruling, and last traded down 2.9 percent.

The virtual currency can be used to move money around the world quickly and with relative anonymity, without the need for a central authority, such as a bank or government. A fund holding the currency could attract more investors and push its price higher.

The SEC said there was not enough evidence that efforts to thwart manipulation of the ETF’s price or that of the underlying bitcoin market would be successful.

The SEC had blocked the Winklevoss ETF from coming to market in March 2017, but then faced an appeal from CBOE Holdings Inc’s (CBOE.O) Bats exchange, which applied to list the ETF.

The parties can appeal the SEC’s decision in federal court.

CBOE and Gemini did not immediately respond to requests for comment.

The Winklevoss twins are best known for their feud with Facebook Inc (FB.O) founder Mark Zuckerberg over whether he stole the idea for what became the world’s most popular social networking website from them. The former Olympic rowers ultimately settled their legal dispute, which was dramatized in the 2010 film “The Social Network.”

The SEC’s decision to block the ETF was voted for 3-1 by its sitting commissioners, with Republican commissioner Hester Peirce voting against. In a statement, Peirce said she believed the product met the legal standard.

“More institutional participation would ameliorate many of the Commission’s concerns with the bitcoin market that underlie its disapproval order,” she said, adding that the ruling “sends a strong signal that innovation is unwelcome in our markets.”

Reporting by Trevor Hunnicutt in New York and Michelle Price in Washington; additional reporting by Anna Irrera in New York; editing by Phil Berlowitz and Leslie Adler

Our Standards:The Thomson Reuters Trust Principles.

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Justice Department urges judge to block AT&T-Time Warner merger

WASHINGTON (Reuters) - President Donald Trump’s administration urged a federal judge on Thursday to block AT&T Inc’s proposed $ 85 billion merger with Time Warner Inc, saying the deal would hand the company a “weapon” to harm competition and raise consumer prices.

Time Warner CEO Jeff Bewkes arrives ahead of arguments in the trial to determine if AT&T"s merger with Time Warner is legal under antitrust law at U.S. District Court in Washington, U.S., March 22, 2018. REUTERS/Aaron P. Bernstein

During opening statements in one of the most closely watched U.S. antitrust trials in years, Justice Department lawyer Craig Conrath said the deal would hike prices by more than $ 400 million annually, or an average of $ 0.45 a month for pay TV subscribers.

Conrath said AT&T would be able to use content from movie and TV show maker Time Warner including its Turner unit to prevent innovation. The merger will hurt 90 million U.S. pay TV subscribers, Conrath added.

“This is a weapon to harm competition,” Conrath told U.S. District Judge Richard Leon, who will decide the case.

The Justice Department filed suit in November to stop AT&T, which has some 25 million pay-TV subscribers, from closing the deal. AT&T says a merger would benefit consumers by creating efficiencies. AT&T is the biggest pay-TV provider via subsidiary DirecTV.

Opening statements were delayed one day by bad weather in Washington.

Conrath suggested that AT&T would be able to hike fees that Turner charges for its content by about 10 percent if the merger were approved and that the company could withhold content from rival distributors. He referenced an internal email from Turner executives that Dish Network Corp’s Sling service would be “crap” without Turner content, as he paraphrased the stronger language in the email.

A pedestrian walks past an AT&T store in Boston, Massachusetts, U.S., April 26, 2017. REUTERS/Brian Snyder

Trump publicly criticized the deal as a candidate and as president, and the Republican president often has excoriated Time Warner’s CNN news network.

If the administration loses, that could open up the field for similar tie-ups between distributors and content providers. But a win could strengthen the hand of antitrust regulators looking at other, similarly structured mergers.

AT&T and Time Warner are not direct competitors, making the deal a so-called vertical merger between companies on the same supply chain. The vast majority of challenged mergers involve one rival buying another.

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The merger would hand AT&T, if it becomes the new owner of Time Warner, the motive and opportunity to refuse to license March Madness NCAA basketball tournament games, along with premium cable channel HBO and other content, to pay-TV rivals and online distributors, the Justice Department has said.

AT&T lawyer Daniel Petrocelli had asked for access to communications between the White House and Justice Department about the deal, but the judge denied the request.

If the government loses, Verizon Communications Inc and Charter Communications Inc could strike deals to buy movie or television makers and squeeze smaller pay-TV providers.

AT&T has said the merger would result in more than $ 2.5 billion in annual cost savings by 2020. It argues that the deal is crucial to compete with companies like Facebook Inc, Alphabet Inc, Amazon.com Inc and Netflix Inc.

The internet companies pose two challenges to pay TV. They either compete with cable and satellite television for ad dollars or provide cheaper online video that has hurt pricey pay-TV. Some do both.

Reporting by Diane Bartz and David Shepardson in Washington; Editing by Will Dunham

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