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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

#51

Post by conanbatt »

unabridged wrote: post #31

The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early. The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.

+1000

This is right on the mark. Remove accredited investor requirements, and all that money will go to better options, like for example, YC startups. Nothing could do more damage to the investor monopolies of the world than opening this funding venue.

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

#52

Post by jstewartmobile »

unabridged wrote: post #31

The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early. The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.

Speculate and day trade, just like 1999! Only it's people talking about their cryptocoins instead of their AOL.

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

#53

Post by jonmc12 »

FreeRadical wrote: post #16
sschueller wrote: post #10

I am horrified by what was/is allowed legally at wall street. Not that ICO's are any better.

What is allowed that horrifies you?

Robert Reich's "Saving Capitalism" documentary on Netflix does a pretty good job to answer this question.

TLDR; Wall Street is part of an industrial/political system that extols "free market" capitalism, publicly, when in fact, "free markets" and "free market meritocracy" is a myth, and they know it. Privately, these same people hire lobbyists and otherwise influence the political system to craft regulation & policy around property, monopoly, contracts, bankruptcy, and enforcement. These regulations protect and enhance the benefit of the few.

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

#54

Post by vostok »

sschueller wrote: post #25
FreeRadical wrote: post #16

Earlier quoted context omitted.

What is allowed that horrifies you?

One that bothers me the most is automated high frequency trading. They can cause the entire market to crash because of one mistake.

A human trader can also cause the entire market to crash because of one mistake. See Waddell trading 75k e-minis or PVM trading 7 million barrels of brent while drunk.

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

#55

Post by Alex3917 »

nostrademons wrote: post #46
Alex3917 wrote: post #21

Earlier quoted context omitted.

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.

> Co-ops disintegrate when the people involved can't agree on the way to spend the money.

That's because currently most co-ops are either run by hippies, or else exist only as tax dodges. But there's no reason they can't be run as dictatorships, the only real requirement is that the majority of the wealth generated gets captured by the people creating it. As the tools for running co-ops get better, we'll see more examples of ones that are better run.

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

#57

Post by wpietri »

unabridged wrote: post #31

The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early. The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.

Anyone could speculate and day trade before just as long as there was enough information available for retail investors to do so safely. That is, on the public markets.

Private markets introduce much higher degrees of information asymmetry. Maybe you'll get rich, but your odds of losing your money are also much higher. The basic theory of accredited investors is, "Unsophisticated players aren't allowed to gamble unless they can afford to lose."

I'm fine with that. I don't want to pay for the retirement of somebody who got talked into sinking their retirement funds into something that was fucked from the start. If we want to give people a cut of the proceeds of innovation, let them put their money in funds that in turn invest a reasonable proportion of the money in high-risk areas like VC. There the asymmetries are drastically reduced.

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

#58

Post by tlb »

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…

We'll see. It will take a lot of discipline, with $$$ sitting in the bank, to stay small and keep iterating until the product takes off. I suspect ICO investors will apply at least as much pressure to spend the money faster in order to grow as VCs do.

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

#59

Post by Chirael »

unabridged wrote: post #31

The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early. The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.

I think the idea of accredited investors is that those investments are very risky, and it limits them to people who can "afford" the risk. An accredited investor may be able to bear the brunt of 9 investments being a total loss, to get to the 10th that hits it out of the park, while a non-accredited investor may have her/his life savings (or a substantial enough part of it) wiped out on the first 1 or 2 deals. I'm not saying it's perfect - there's certainly an element of "the rich get/stay richer" too - but just that there's some kind of rationale for the rules (as I understand it anyway).

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

#60

Post by wolco »

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.

Strictly legal? What about semi legal (legal but not everywhere) or shaming purchases (sex dolls) or discounted purchases
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