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SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

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Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#271

Post by wmf »

sillysaurus3 wrote: post #248
mifeng wrote: post #228

If you read the actual report ( https://www.sec.gov/litigation/investreport/34-81207.pdf ), you may notice that the SEC is careful to apply securities law DAO specifically. In particular, they apply the security test: "did investors invest money with a reasonable expectation of profits derived from managerial efforts of others?" Since DAO was a wisdom-of-crowd VC fund, the answer is a clear YES. On the other hand, th…

Is it still ok to use ICOs as as glorified Patreon or Kickstarter without worrying you'll run afoul of the securities laws? As long as no one is expecting profits from the tokens they buy from you. Where it gets strange is if your tokens are picked up by an exchange. What happens if someone buys your tokens with the expectation that they can sell them to someone else? Then the price of your tokens might rise, and the…

Is there any advantage of using ICOs as as glorified Patreon or Kickstarter compared to just taking orders in ETH? Why are you issuing a token to begin with?

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#272

Post by zallarak »

I'm uncertain of how much value the SEC provides. Problems they fail to solve:

* High brokerage fees

* Poor-outcome annuities

* Penny stock trading

* Risky options trading

Tokens are fraught with fraud, but the impetus for research is upon the individual. I fear that regulating this will stifle innovation with little benefit to end-consumers in terms of safety, because people will still get swindled out of their money by other legalized means.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#273

Post by mifeng »

sillysaurus3 wrote: post #248
mifeng wrote: post #228

If you read the actual report ( https://www.sec.gov/litigation/investreport/34-81207.pdf ), you may notice that the SEC is careful to apply securities law DAO specifically. In particular, they apply the security test: "did investors invest money with a reasonable expectation of profits derived from managerial efforts of others?" Since DAO was a wisdom-of-crowd VC fund, the answer is a clear YES. On the other hand, th…

Is it still ok to use ICOs as as glorified Patreon or Kickstarter without worrying you'll run afoul of the securities laws? As long as no one is expecting profits from the tokens they buy from you. Where it gets strange is if your tokens are picked up by an exchange. What happens if someone buys your tokens with the expectation that they can sell them to someone else? Then the price of your tokens might rise, and the…

I predict that CoinList will create some type of exchange only for accredited investors and use an SPV to exceed 99 investor limit.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#274

Post by vasilipupkin »

scott00 wrote: post #270
vasilipupkin wrote: post #267

Earlier quoted context omitted.

Secondary sales involve person A selling to person B. At that point it's person A's problem, not the issuer's. The exchange, however, could get into trouble for trading securities without being registered

This is not really true. Once a company exceeds a certain threshold of non-accredited owners, it automatically becomes a public company, and faces the same disclosure and controls requirements as a company that became public via IPO. That is why all competently written private stock offerings sell stock with heavy transfer restrictions, so that shareholders can't force management to take the company public.

Yes, but token buyers are not owners, presumably

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#275

Post by jesseclay »

mifeng wrote: post #228

If you read the actual report ( https://www.sec.gov/litigation/investreport/34-81207.pdf ), you may notice that the SEC is careful to apply securities law DAO specifically. In particular, they apply the security test: "did investors invest money with a reasonable expectation of profits derived from managerial efforts of others?" Since DAO was a wisdom-of-crowd VC fund, the answer is a clear YES. On the other hand, th…

Jesse from CoinList & Protocol Labs here -- completely agree that following securities regulation is an especially great idea. Unfortunately doing that correctly can be really challenging. Despite several misleading doom-and-gloom articles written today (http://fortune.com/2017/07/25/sec-says-digital-tokens-are-se...) the SEC has not said that all tokens are securities. Rather, application tokens are a promising new technology that enable all kinds of use-cases, each one unique from the next, and each having a unique 'regulation profile'. It would be very short-sighted to apply broad sweeping legislation and with this ruling, it's clear that the SEC also feels the same.

Just like mifeng mentioned, it really is a facts and circumstances determination per token. Given we had to build all of the token sale scaffolding (legal, tech, etc.) for Filecoin, it made sense to open this up to other technologists as well. Our hope with CoinList is that creators can focus on building awesome tech and expanding the valuable uses for application tokens while reducing the amount of time and resource they need to spend making sure they stay within the parameters of the law. Filecoin may be limited to accredited investors for this particular sale, but that's not to say other tokens that use the platform in the future would be required to do the same. Ultimately the decision is up to the creators, but they should be very well educated on the implications of what those choices could mean.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#276

Post by Gargoyle »

brooklyntribe wrote: post #155
josh2600 wrote: post #142

Earlier quoted context omitted.

Comments like this are ludicrous. Do you really think the SEC doesn't understand distributed ledgers or ethereum contracts? Second, do you think anyone has technical staff that are capable of writing safe contracts in Solidity (Parity wallet would suggest not...). In short, the idea that people must be incompetent because they're in the government is pretty ludicrous. The SEC is consistently one of the best technical…

Actually hung out with a JP Morgan Chase banker the other day. Big into crypto. He said the SEC had no clue what was going on. They leave at 5 PM, and head home to wife's and kids, and mortgages. While the "kids" are hacking, micro-dosing, and working 100 weeks. And they are all of 17. It's not in their world. A 55 year old banker is not hacking solidity contracts at 3 AM. No way.

The SEC has been dipping into crypto regulation since at least 2013 when they shut down BTCT for running an exchange that traded shares in various bitcoin mining companies. There are people there who have been working in the field for years now and understand it quite well.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#277

Post by will_brown »

mifeng wrote: post #228

If you read the actual report ( https://www.sec.gov/litigation/investreport/34-81207.pdf ), you may notice that the SEC is careful to apply securities law DAO specifically. In particular, they apply the security test: "did investors invest money with a reasonable expectation of profits derived from managerial efforts of others?" Since DAO was a wisdom-of-crowd VC fund, the answer is a clear YES. On the other hand, th…

I am curious, if the SEC investigated and issued a report on DAO...why not investigate the Ethereum Foundation/Blockchain itself for the ICO of Ether? I'd like to see the SEC issue a written finding on the factual distinction and legal analysis how one is a security and the other is not, it may be as simple as the way the DAO tokens were marketed vs how the Ether ICO token was marketed.

The FileCoin ICO will be the first CoinList ICO, seeing as it was set for 2 days from now I wonder if it will be effected. All the major crowdfunding websites seem to offer equity funding options now, and I'm curious about how they pull that off legally, but if they do, I imagine CoinList will jump through the hoops so FileCoin is compliant.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#278

Post by sillysaurus3 »

wmf wrote: post #271
sillysaurus3 wrote: post #248

Earlier quoted context omitted.

Is it still ok to use ICOs as as glorified Patreon or Kickstarter without worrying you'll run afoul of the securities laws? As long as no one is expecting profits from the tokens they buy from you. Where it gets strange is if your tokens are picked up by an exchange. What happens if someone buys your tokens with the expectation that they can sell them to someone else? Then the price of your tokens might rise, and the…

Is there any advantage of using ICOs as as glorified Patreon or Kickstarter compared to just taking orders in ETH? Why are you issuing a token to begin with?

People love feeling like they have something. Karma points, for example.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#279

Post by mifeng »

will_brown wrote: post #277
mifeng wrote: post #228

If you read the actual report ( https://www.sec.gov/litigation/investreport/34-81207.pdf ), you may notice that the SEC is careful to apply securities law DAO specifically. In particular, they apply the security test: "did investors invest money with a reasonable expectation of profits derived from managerial efforts of others?" Since DAO was a wisdom-of-crowd VC fund, the answer is a clear YES. On the other hand, th…

I am curious, if the SEC investigated and issued a report on DAO...why not investigate the Ethereum Foundation/Blockchain itself for the ICO of Ether? I'd like to see the SEC issue a written finding on the factual distinction and legal analysis how one is a security and the other is not, it may be as simple as the way the DAO tokens were marketed vs how the Ether ICO token was marketed. The FileCoin ICO will be the f…

In my limited and non-lawyer understanding, that's not the SEC's modus operandi for investigations like this.

They want to leave themselves room to study the market and issue definitive guidance later. Also, these investigations cost time and money. So to discourage bad actors, they go after the most obvious offenders but it's not really in their best interest to present a positive counterpoint.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#280

Post by dnautics »

KirinDave wrote: post #184
Romanulus wrote: post #158

Earlier quoted context omitted.

... and currency can be created at the cost of the future unborn generations. Your move, KirinDave.

I do not understand. Sorry.

He's talking about how the government systematically Rob's from the future through inflation - in particular hurting the poor the hardest and creating lost decades and millennials along the way.
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