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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

#91

Post by conanbatt »

emodendroket wrote: post #67
conanbatt wrote: post #49

Earlier quoted context omitted.

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.

The SEC came into being because without it a bunch of people were being scammed. Which is exactly what we're seeing with ICOs. I don't see what's horrifying.

Are you sure they are the same people. That is the people being scammed and the people asking for the SEC?

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

#92

Post by cortesoft »

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 difference is that no one buys a $2 million car because they think it will be worth $3 million in a year.

The only example of yours that is close to equivalent is a casino gambler, and even then, we DO heavily regulate the casino industry. It is either outright banned in many places, or there is some agency that is in charge of making sure the gambling is legit (i.e. the rate of return for a slot machine is what it is supposed to be, and isn't simply taking money)

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

#93

Post by CPLX »

Alex3917 wrote: post #55
nostrademons wrote: post #46

Earlier quoted context omitted.

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 exa…

> That's because currently most co-ops are either run by hippies, or else exist only as tax dodges.

There are over 7,000 Co-Op buildings in New York City representing many, many billions of dollars in real estate asset value.

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

#94

Post by pkaye »

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…

It would be more akin to spending $2M on a car and not getting the car because the dealer fled with your money.

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

#95

Post by conanbatt »

notyourday wrote: post #88
conanbatt wrote: post #51

Earlier quoted context omitted.

+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.

Accredited investors requirement is what allows one not to be a subject to Blue Sky laws. We did not have it before Blue Sky laws were added. Let me assure you civilized societies need to have a separation between 82 year old grandma Suzi and Paris Hilton.

Are you account for the damage done by restricting investment into this?

They say as much money moved into ICO's in the last 6 months as VC funding in the valley. To the very least, thats double the funding for tech startups: higher wages, more founders and higher absolute investment returns.

The tragedy is that scam ICO's make it because they cant put it into better investments due to regulation. Its the classic case of a damaging restriction.

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

#96

Post by xadhominemx »

JumpCrisscross wrote: post #81
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 agree there should be a competency exemption to the SEC's "accredited investor" requirement [1]. FINRA already loves administering exams [2]. That said, contrast the S&L crisis [3] with Bernie Madoff's fraud [4]. The former lost $160 billion of regular Joes' money (along with wealthy investors'). $132 billion of taxpayer money had to be spent, alongside countless hours of regulators', judges' and lawmakers' time, a…

There are competency exemptions. For example, "knowledgeable employees" of private investment firms are allowed to participate in PE deals even if they are not accredited investors.

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

#97

Post by notahacker »

emodendroket wrote: post #65
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…

> This is probably why they are so popular even though the risks are ludicrous. I'm thinking a lot of investors don't care about this and just have dollar signs in their eyes.

Yup. Whether the transaction is anonymous or not should make no difference to your decision to not to stick your capital into something which looks and quacks like a scam. Just because your circumstances deprive you of (tax free) access to investment products with market returns doesn't mean you have to roll dice on riskier negative sum bets than whatever you currently hide your wealth in. The average person chucking large sums of money at dodgy ICOs is a libertarian cryptobull with a contemptuous attitude towards the idea of legally enforceable contracts and securities laws, not a North Korean without access to a banking system.

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

#98

Post by JumpCrisscross »

mrwong wrote: post #17
sschueller wrote: post #10

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

Wallstreet has a monopoly on IPOs, they are clearly threatened by the ICO boom. Its just the internet all over again. Candlemakers wanted to ban light bulbs. Newspaper wanted to regulate online media. They all failed. So will wallstreet. Its just a matter of time, the forcing function is way to strong.

> Wallstreet has a monopoly on IPOs, they are clearly threatened by the ICO boom

For a longest time, Wall Street had three tricks: securitization (breaking cash flows into securities), portfolios (putting securities in a box) and leverage (borrowing and lending). (One could argue swaps are a fourth.) That's it! IPOs? Securitise a company. CDO? Portfolio mortgage securities. Mortgages? Securitise them!

Now there are blockchains. A whole new thing! If there's a group thrilled shitless about blockchains and ICOs, it's Wall Street. Best part: when the whole thing goes south, they get to blame Silicon Valley.

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

#100

Post by cortesoft »

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.

An accredited investor is just a term for someone allowed to invest in things not regulated by the SEC. If you think that EVERYONE should be able to invest in things not regulated by the SEC, you are basically saying that being regulated by the SEC should be completely voluntary (i.e. a company can choose to be regulated or not).

You can argue that it should work like that, but we intentionally decided to make SEC regulation the rule, and only grant exceptions for investors who have demonstrated they can handle the risk.

There is nothing saying that a non-accredited investor can't invest when a valuation is low. The investment just has to be regulated by the SEC.

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