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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

#291

Post by scott00 »

vasilipupkin wrote: post #274
scott00 wrote: post #270

Earlier quoted context omitted.

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

The analogy is necessarily inexact,ICOs are a new beast. But they don't have to be owners. Too many bond holders can make you public as well. If the tokens are securities and the sponsor/inventor/whatever is considered the issuer, lots of token holders is a problem for the issuer.

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

#292

Post by EGreg »

vasilipupkin wrote: post #263
EGreg wrote: post #234

Earlier quoted context omitted.

https://www.sec.gov/rules/final/2008/34-58465.pdf

Sure, that refers to foreign issued equity securities listed on foreign exchanges as securities, not tokens claiming not to be securities

So once they realize they are securities this applies?

The main question is, are the exchanges considered foreign if the ICO is of a foreign company? How do you trade stuff if the securities are not transferrable?

Perhaps the ICOs don't pass the Howey test!

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

#293

Post by maehwasu »

ThrustVectoring wrote: post #218
wuliwong wrote: post #195

Earlier quoted context omitted.

I would say yes. :)

Keep in mind that having this right available will kill people.

Anything looks horrible if your analysis includes all costs and excludes all benefits.

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

#294

Post by maehwasu »

hudon wrote: post #283
vasilipupkin wrote: post #264

Earlier quoted context omitted.

If you read the sec document carefully enough, they singled out the DAO because it's unambiguously a security. Shares in a thingymajig blockchain blah blah corp are still shares, therefore, securities. Most tokens are not shares and have uses other than profit motive, therefore, they are not securities

More like, if you read the SEC document carefully enough, you'll see that they applied the 4 prongs of the Howey test to theDAO token and defended each prong with arguments and evidence. They'll probably do the same thing for Ethereum (but not necessarily come to the same conclusion on each prong). Saying "it has other uses than profit" is not sufficient since you'd have to back it up with meaningful evidence (what a…

> Saying "it has other uses than profit" is not sufficient (does not address all 4 criteria) and you do not back it up with evidence (what are the actual uses that investors are getting out of it?)

This true, but the 4 criteria are an AND, not an OR.

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

#295

Post by joosters »

DennisP wrote: post #221
joosters wrote: post #146

Earlier quoted context omitted.

What efforts are these? All I've seen are checkboxes on their web site making the user tick a box confirming that they aren't a US citizen. Geo-blocking US IP addresses won't work either, because an ethereum contract can't refuse a transaction based upon its source IP address (it doesn't know it). So if an ICO publishes their ethereum contract address online (e.g. via a twitter post), they are implicitly advertising…

The most serious effort I've seen had a geoblocked website that worked with a Chrome plugin. You could get around it, without even using a proxy, but only if you could understand the smart contract code and figure out how to prepare the data it required. To my way of thinking, if you're sophisticated enough to do that, you're sophisticated enough in blockchain matters to make your own investment decisions.

It's a common fallacy that people think "I'm good at X, so I must also be good at Y" It seems to afflict techies the most, somehow we think just because we can understand computers, we must therefore be skilled in other domains too, like investments...

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

#296

Post by ChrisClark »

jameskegel wrote: post #202
darawk wrote: post #75

Earlier quoted context omitted.

You're right, but in the case of things like Storj and Sia, for instance, the ICO token is used to pay for the services offered by the network. What it really is, is a tradable pre-sale. It's as if you could trade the perks offered by a Kickstarter. I'm not sure if that would make it exempt or not, but it is an interesting legal question.

Sia is NOT ethereum. Don't call it a token

The term token is a generalized term to talk about the tradable asset on a blockchain. Bitcoin is the token on the Bitcoin blockchain. Ether is a token on the Ethereum blockchain, currently at a lower level than any of the ERC20 smart contract based tokens, but it's still referred to as a token.

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

#297

Post by 52-6F-62 »

hudon wrote: post #225
52-6F-62 wrote: post #217

Earlier quoted context omitted.

I think there might be a gotcha there. SEC rulings only apply to dealings within the United States. Being that Ethereum is [at least in general, if arguably not] decentralized, and largely pegged to a Canadian, and started in Switzerland it might not be so simple. The Ethereum Foundation itself is a Swiss nonprofit. Of course, it remains to be seen what this will turn into. Even if it comes crashing down in the Unite…

It doesn't matter if Ethereum is a crypto-decentralized-blockchain-p2p-network-thingamagig. If the Ethereum Foundation sold their thing to US residents, it is under the purview of the SEC. The only question is if the Ethereum Foundation's token sale passes the Howey Test. An analysis of this must be done like was done in their report of the DAO. I'm not qualified to do this analysis, which is why I ask. I know they s…

Again, the Howey test and SEC rulings only apply to American entities/business. So, if it may impact the status of the Ethereum Foundation (barring all other questions) in the United States, but it won't impact it elsewhere at all except maybe in sentiment. Lately the United States' power of influence in economic matters has decreased, so I don't see that being a major deficit in the long run with regard to a technology that's being investigated and accepted internationally otherwise.

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

#298

Post by hudon »

52-6F-62 wrote: post #297
hudon wrote: post #225

Earlier quoted context omitted.

It doesn't matter if Ethereum is a crypto-decentralized-blockchain-p2p-network-thingamagig. If the Ethereum Foundation sold their thing to US residents, it is under the purview of the SEC. The only question is if the Ethereum Foundation's token sale passes the Howey Test. An analysis of this must be done like was done in their report of the DAO. I'm not qualified to do this analysis, which is why I ask. I know they s…

Again, the Howey test and SEC rulings only apply to American entities/business. So, if it may impact the status of the Ethereum Foundation (barring all other questions) in the United States, but it won't impact it elsewhere at all except maybe in sentiment. Lately the United States' power of influence in economic matters has decreased, so I don't see that being a major deficit in the long run with regard to a technol…

> SEC rulings only apply to American entities/business

This is wrong. SEC rulings apply as soon as your investors are US residents. [1] I know neither of us are lawyers, but at least back up what you claim if it might put people's money at risk.

[1] https://www.sec.gov/divisions/corpfin/internatl/foreign-priv...

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

#299

Post by 52-6F-62 »

hudon wrote: post #298
52-6F-62 wrote: post #297

Earlier quoted context omitted.

Again, the Howey test and SEC rulings only apply to American entities/business. So, if it may impact the status of the Ethereum Foundation (barring all other questions) in the United States, but it won't impact it elsewhere at all except maybe in sentiment. Lately the United States' power of influence in economic matters has decreased, so I don't see that being a major deficit in the long run with regard to a technol…

> SEC rulings only apply to American entities/business This is wrong. SEC rulings apply as soon as your investors are US residents. [1] I know neither of us are lawyers, but at least back up what you claim if it might put people's money at risk. [1] https://www.sec.gov/divisions/corpfin/internatl/foreign-priv...

I tried to be clear, but I can see where there is possible ambiguity. I said business, not businesses.

The impact would be on their existence within the US, but not internationally. Not with regard to the SEC alone.

edit: Okay, you started as snark, then tightened it up a bit after an edit, but my point still stands.

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

#300

Post by [deleted] »

52-6F-62 wrote: post #299
hudon wrote: post #298

Earlier quoted context omitted.

> SEC rulings only apply to American entities/business This is wrong. SEC rulings apply as soon as your investors are US residents. [1] I know neither of us are lawyers, but at least back up what you claim if it might put people's money at risk. [1] https://www.sec.gov/divisions/corpfin/internatl/foreign-priv...

I tried to be clear, but I can see where there is possible ambiguity. I said business, not businesses. The impact would be on their existence within the US, but not internationally. Not with regard to the SEC alone. edit: Okay, you started as snark, then tightened it up a bit after an edit, but my point still stands.

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