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Initial Coin Offerings Horrify a Former S.E.C. Regulator

nytimes.com

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Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#41

Post by kirillseva »

mrwong wrote: post #30
gxs wrote: post #11

What's old is new again - this is why the SEC was created if I'm not mistaken. People were losing their shirts investing in shady companies so the government stepped in to protect people from themselves. For this reason it won't be surprising at all when we start seeing some attempts to enact regulation.

Why dont we regulate everything like that. Why do we allow people to spend 2M$ on a Car or 6k$ on a bag? Why do we allow people to buy unlimited lottery tickets or gamble everything away in the casino? Those examples have cleary less benefit for society then the dumbest investment strategy. Let people invest, sure tons if people will lose their shirt but they will learn from it and stay away. Everyone else in the soc…

> Why do we allow people to spend 2M$ on a Car or 6k$ on a bag?

Soviet Union famously regulated this very well. These luxury goods were only available to accredited investors aka the Party elite.

It seems to me that back then this behavior was condemned by the people of the Land of the Free.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#42

Post by wpietri »

mrwong wrote: post #14

There will be enough marketplaces in the world that will provide a solid legal structure for ICOs. The US certainly wont be a part if them. Switzerland, Singapore and Japan already moved ahead with the legal structure. The world is global, money is global.

Not as much as you'd think. The US stock market is 39% of all publicly traded stocks. The US market is bigger than the next 8 countries put together. [1] This is in part due to the US's stringent regulations on stock market listings and accounting for publicly held firms. The more transparent and effective the market, the safer it is for investors to put their money in.

[1] https://www.indexmundi.com/facts/indicators/CM.MKT.LCAP.CD/r...

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#43

Post by dpiers »

lanius wrote: post #22

>I.C.O.s represent the most pervasive, open and notorious violation of federal securities laws since the Code of Hammurabi Can someone explain this statement to me? Is he saying I.C.O.s are the most flagrant violations occurring since the Code of Hammurabi was written, or is the Code of Hammurabi itself a violation?

I believe the intention is the former; the Code of Hammurabi is one of the oldest known sets of written laws, and almost half of it deals with contracts.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#44

Post by stale2002 »

mrwong wrote: post #30
gxs wrote: post #11

What's old is new again - this is why the SEC was created if I'm not mistaken. People were losing their shirts investing in shady companies so the government stepped in to protect people from themselves. For this reason it won't be surprising at all when we start seeing some attempts to enact regulation.

Why dont we regulate everything like that. Why do we allow people to spend 2M$ on a Car or 6k$ on a bag? Why do we allow people to buy unlimited lottery tickets or gamble everything away in the casino? Those examples have cleary less benefit for society then the dumbest investment strategy. Let people invest, sure tons if people will lose their shirt but they will learn from it and stay away. Everyone else in the soc…

The problem is not people spending money on "worthless/ frivolous" things.

Investor protection are about Fraud protection. NOT, because it is good or bad to spend money on something.

If you spend 2 Million dollars on a car, you are getting exactly what you were sold. If you buy a lottery ticket, you are getting exactly the odds that were promised to you.

But investments are a different story. Someone is trying to promise you that your investment will go up. They are making claims that they cannot guarantee.

That is why investments are regulated.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#45

Post by xadhominemx »

grzm wrote: post #32
xadhominemx wrote: post #24

Earlier quoted context omitted.

What is "wallstreet"?

> "Wall Street is an eight-block-long street running roughly northwest to southeast from Broadway to South Street, at the East River, in the Financial District of Lower Manhattan in New York City. Over time, the term has become a metonym for the financial markets of the United States as a whole, the American financial services industry (even if financial firms are not physically located there), or New York-based fina…

I know what Wall Street is

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#46

Post by nostrademons »

Alex3917 wrote: post #21
tlb wrote: post #2

They horrify me too. Some are plain fraud. Investors will lose, scammers will profit and/or go to jail. Some are promising startups, that will raise far more money than is healthy for their stage, and will die from too much money. If you don't have enough money (true for nearly everyone) it might be hard to imagine, but I've seen it when VCs give a startup too much. It makes them grow before they've found product-mar…

The key difference is that the companies raising money via ICOs are co-ops, not startups. The reason startups go bankrupt when they have too much money though is because they're forced to spend money before they have product-market fit. And in the same way that the value created by good software scales exponentially as more dollars are invested, the costs of bad software scale exponentially as more dollars are invest…

Co-ops disintegrate when the people involved can't agree on the way to spend the money. Fights break out, trust declines, and eventually the co-op breaks up in a series of acrimonious disputes (oftentimes including lawsuits and/or shady behavior).

So far, this seems a common failure mode for ICOs as well. So yeah, like co-ops.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#47

Post by brndnmtthws »

leereeves wrote: post #38
narrator wrote: post #18

The funny thing about ICOs is that anyone in the world can invest anonymously AND GET PAID BACK anonymously even if they have no money, don't have a bank account, are a fugitive, in Iran or North Korea, are in prison, have unpaid child support obligations, have large unpaid IRS tax liabilities, or government fines and penalties or are using stolen funds. All the little knobs and levers that governments use to financi…

That's certainly one big reason why they're popular. Many of the most popular uses for cryptocurrencies are strictly illegal.

I really doubt that. It's definitely a thing that people parrot around, but it's not likely to make up more than 5% of the actual use.

Transacting in cash USD is still the preferred currency of the cartels.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#48

Post by rjknight »

stale2002 wrote: post #37
rjknight wrote: post #15

The interesting unasked question here is why he seems to like FileCoin (the reference to decentralised storage markets) - what does he think that FileCoin gets right that others are getting wrong?

File coin requires you to be an accredited investor. Grandmas and Joe smoes are not being scammed. You can only lose money from file coin if you are in the top 1% already, and therefore probably don't need the government to protect you.

If only accredited investors can buy FileCoin then only accredited investors can access the storage market. This does not seem feasible!

And, indeed, it isn’t. FileCoin has only done a pre-sale so far, selling securities (SAFTs) to accredited investors. They haven’t explained (afaik) how the tokens will be issued and make their way into the hands of the public. That’s why I was curious to see Grundfest citing them.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#49

Post by conanbatt »

narrator wrote: post #18

The funny thing about ICOs is that anyone in the world can invest anonymously AND GET PAID BACK anonymously even if they have no money, don't have a bank account, are a fugitive, in Iran or North Korea, are in prison, have unpaid child support obligations, have large unpaid IRS tax liabilities, or government fines and penalties or are using stolen funds. All the little knobs and levers that governments use to financi…

Yes!

This is a great example of how costly regulation actually is. I am horrified at the SEC, not at ICO's. Figure how all that moeny could be going, for example, to YC startups, for a fraction of what they give investors.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#50

Post by LeoPanthera »

tlb wrote: post #2

They horrify me too. Some are plain fraud. Investors will lose, scammers will profit and/or go to jail. Some are promising startups, that will raise far more money than is healthy for their stage, and will die from too much money. If you don't have enough money (true for nearly everyone) it might be hard to imagine, but I've seen it when VCs give a startup too much. It makes them grow before they've found product-mar…

"Some" - Most, surely.
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