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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

#321

Post by rficcaglia »

siliconviking wrote: post #307
taysic wrote: post #188

Earlier quoted context omitted.

Are you genuinely asking what the value of the SEC is? I generally am pro low taxes but the crypto environment right now is so flush with scams that it explains itself

Philosopjically, why not let people make their own decisions?

philosophically, because the working "mass" (to quote Alexander Hamilton in the Federalist Papers, 68, I believe) would not have the leisure time to be informed enough to make sensible decisions. i came from a blue collar family where everyone worked 2 FT jobs to make ends meet and making savvy investment decisions was hardly possible. ignoring the lack of financial education and experience, a good sales scam promising you riches after your 16 hour workday with 4 hours of household chores still to do, kids screaming, and no hope in sight, can be highly effective.

that said, look where the electoral college got us!!

so philosophy and reality are different.

in principle i agree, let people decide. in reality that leads to housing bubbles, global warming, donald trump...

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

#322

Post by EGreg »

Animats wrote: post #140
EGreg wrote: post #110

Earlier quoted context omitted.

Can you elaborate on the details of these laws? For example can Israel's Securities Authority retroactively go after companies by classifying ICOs as securities? Or in this case, ALL securities can still currently be sold by Israeli companies to foreigners? Also, what are the rules for Cyprus and Bulgaria? Where do you get the information about their popularity and their applicable securities laws?

No, but if you want, I can refer you to a good securities lawyer at Wilson Sonsini.

Sure! Please email me.

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

#323

Post by Jabanga »

regulation_d wrote: post #247
Jabanga wrote: post #239

Earlier quoted context omitted.

The Howey Test defines an investment contract more narrowly than you imply. People lose absolutely staggering amounts of money each year on bad investments. Money is like water. It flows around these regulations. The detours just add friction that slows innovation, and diverts capital to fees for legal/accounting professionals.

> The Howey Test defines an investment contract more narrowly than you imply I mean, maybe? An investment of money, managed by somebody else, with the expectation of profits. I feel like that covers most things we would typically consider to be investments. Aside from something like, "I bought this piece of art... as an investment." Maybe I'm just missing some obvious examples?

Case law defines each of those points. This elaborates more on that:

http://coinbase.com/legal/securities-law-framework.pdf

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

#324

Post by Jabanga »

dgacmu wrote: post #269
Jabanga wrote: post #242

Earlier quoted context omitted.

>You realize that's not in the slightest bit true, don't you? What isn't true? >For example: Under contract law, there are certain rights that _you are legally not permitted to give away_. You can't actually sell yourself into slavery. A court will void contractual provisions like this, based on a comprehensive body of case law that establishes what constitutes consent. This is a universe away from what you're defend…

You wrote: > Of course. We don't restrict the rights of the entire population to engage in voluntary interactions to preempt crime. I gave one example of many of the ways in which we absolutely do restrict the rights of the entire population to engage in voluntary interactions to preempt crime. We limit the types of contracts that everyone can engage in, to prevent a subset of them that would be used abusively. As an…

>I gave one example of many of the ways in which we absolutely do restrict the rights of the entire population to engage in voluntary interactions to preempt crime.

Yes I can see how you interpreted my comment that way. I meant we should not do that. In writing it, I was thinking along the lines of "you don't do [some unethical thing]" as a normative statement, not a description of what you don't do. The wording I chose doesn't make that at all clear, so your interpretation is understandable.

>We limit the types of contracts that everyone can engage in, to prevent a subset of them that would be used abusively.

Like I said: A court will void contractual provisions like this, based on a comprehensive body of case law that establishes what constitutes consent. This is a universe away from what you're defending here, which is a federal agency prosecuting individuals because they entered into some investment transaction without 'permission' from said regulatory agency.

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

#325

Post by Jabanga »

will_brown wrote: post #249
Jabanga wrote: post #244

Earlier quoted context omitted.

It's a decentralized and autonomous application. How could an autonomous application on the blockchain be an LLC?

I actually addressed this question a year and a half ago as well [1], where I defined the DAO as blockchain based Investment Club Software. In otherwords what you are calling the "autonomous application", that wouldn't be the LLC but the Software that manages the Investment Club LLC. Note: the Wikipedia article for "investment club software" that I originally linked to no longer appears to exist. [1] https://news.yco…

So it's the shareholders who are responsible for forming an LLC? How can they prevent non-members from becoming partners in the DAO, given the software is autonomous and has no permission controls?

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

#326

Post by Jabanga »

kenko wrote: post #282
Jabanga wrote: post #207

Earlier quoted context omitted.

That's not an externality. An honest business is not entitled to any customer's business. If the customer wants to squander their money away at the casino, leaving them with no money to spend at the honest business, they have that right. It's their money, and they are not obligated to spend it at the honest business. And in any case, the market for lemons is a theoretical exercise. It does not actually happen in real…

> And in any case, the market for lemons is a theoretical exercise. It does not actually happen in real markets, because there are various market mechanisms that emerge to address it. The "market mechanisms" you speak of are government regulations establishing minimum standards and forms of redress (e.g., and most on the nose, lemon laws).

No, there are market mechanisms that address this as well. Government restrictions are not market mechanisms.

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

#327

Post by Jabanga »

throwaway2048 wrote: post #246
Jabanga wrote: post #207

Earlier quoted context omitted.

That's not an externality. An honest business is not entitled to any customer's business. If the customer wants to squander their money away at the casino, leaving them with no money to spend at the honest business, they have that right. It's their money, and they are not obligated to spend it at the honest business. And in any case, the market for lemons is a theoretical exercise. It does not actually happen in real…

the point isn't about anyone's "rights" about having money spent on them/spending their money. The point is that everyone is worse off in a situation like this, both customer and (legitimate) business. It is a type of market failure, everyone loses.

Everyone is not worse off. We have seen rapid innovation in the Bitcoin market, toward far better risk management and security practices, in the absence of regulatory restrictions. Some speculative claim that everyone is worse off if they're free doesn't justify robbing someone of their rights.

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

#328

Post by Jabanga »

openasocket wrote: post #250
Jabanga wrote: post #209

Earlier quoted context omitted.

You're not even representing my view accurately. My view is that scammers should be punished, not the entirety of the population on the premise of preempting crime. Rejecting a person's argument on the grounds that it's "extreme [insert label]" that "everyone rejects" is not constructive.

What punishment is being met out on the population?

A couple examples: restricting them from soliciting investment without going through a $6 million compliance process for gaining approval to do an IPO. Restricting people from engaging in anonymous securities transactions with each other.

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

#329

Post by will_brown »

Jabanga wrote: post #325
will_brown wrote: post #249

Earlier quoted context omitted.

I actually addressed this question a year and a half ago as well [1], where I defined the DAO as blockchain based Investment Club Software. In otherwords what you are calling the "autonomous application", that wouldn't be the LLC but the Software that manages the Investment Club LLC. Note: the Wikipedia article for "investment club software" that I originally linked to no longer appears to exist. [1] https://news.yco…

So it's the shareholders who are responsible for forming an LLC? How can they prevent non-members from becoming partners in the DAO, given the software is autonomous and has no permission controls?

First LLC's don't have "shareholders" the owners/equivalent of an LLC is a Member.

The process would basically be as follows:

Say you form an Investment Club LLC, you create a smart contract/ICO with up to 99 tokens, and purchasers of the ICO tokens become a "member" of the LLC.

Thereafter, the Investment Club LLC members could create a smart contract/investment opportunity, but you would only be able to vote/invest if you are a token holder...you say there are no permission controls but this was exactly how the DAO was marketed to function, buy a Token for DAO and you could participate/vote on future DAO investment opportunities.

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

#330

Post by will_brown »

runeks wrote: post #315
will_brown wrote: post #284

Earlier quoted context omitted.

Im curious why would the price of tokens (which are not equity backed securities) rise? If I understand it right, your hypothetical is just a kickstarter project where a funding level reward is a "virtual token" and just as say a reward of a t-shirt this token doesn't represent equity in the project? Would anyone expect the value of the t-shirt to go up? Is it possible, yeah actually, imagine if Apple originated thro…

As far as I can see from observing the market, the expectation that literally any token will rise in price is evidenced in the market. If you doubt this just go to https://coinmarketcap.com/all/views/all/ which lists over 1000 different tokens, the first 300 of which have a market cap of over one million USD (e.g. HTMLCOIN). In other words, tokens do tend to increase in price after their launch, but only because peop…

Housing prices weren't increasing because people expected the prices would increase...home prices were increasing because the supply of money/loans for houses exponentially increased.

In other words NINJAs (no income, no job applications) were being rubber stamped for million dollar plus homes with $0 down and 103% financing. And so prices continued to go up because the next NINJA would be approved to buy yesterday's million dollar house of 2 million today.

The same conditions don't exist with ICO tokens.

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