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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

#101

Post by [deleted] »

CamelCaseName wrote: post #84
jerf wrote: post #34

Earlier quoted context omitted.

Before they can stop it, they need to learn enough to learn how to correctly characterize it, without hitting non-fraud in the process. That's easy to do in an HN comment box, with nothing at stake if you get something wrong, and all the ambiguity of English working for you. It's somewhat harder to do when you require legal precision and are interacting with trillions of dollars worth of existing market.

I agree with you, however, why not stop it all immediately and then work through it case by case, creating a definition along the way? By allowing it to go on, the problem simply becomes worse and worse, and more money gets tied up. I ask this genuinely because I am not familiar with the philosophical aspects of law. I understand that regulators would rather not take an action to harm someone innocent, but it seems t…

[deleted]

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

#102

Post by Alex3917 »

nostrademons wrote: post #66
Alex3917 wrote: post #55

Earlier quoted context omitted.

> 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…

Isn't a co-op that's run as a dictatorship basically a corporation? The whole point of having wealth is that you can choose how you spend it. If one person chooses how to spend it, you don't actually have the wealth, they do, and it's not much of a co-op. If multiple people choose how to spend it, then you run into all the coordination-of-disparate-interest problems common to co-ops, communes, clubs, and other social…

> Isn't a co-op that's run as a dictatorship basically a corporation?

In double-entry land, the ownership of labor is diluted every time new capital is contributed. Obviously people contributing capital should get rewarded, but the fact that causality only runs in this direction is super broken. Whereas in triple-entry land, capital can get diluted every time you add new labor. This works because the technology allows labor to be viewed as an asset rather than as an expense.

Accounting innovations like this are kind of boring, but economically it's probably still the most important invention since double-entry was popularized in 1494.

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

#103

Post by JumpCrisscross »

xadhominemx wrote: post #96
JumpCrisscross wrote: post #81

Earlier quoted context omitted.

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.

> "knowledgeable employees" of private investment firms are allowed to participate in PE deals even if they are not accredited investors.

These people almost always earn more than $200,000 a year and so qualify as "accredited investors" under the SEC's definition. Keep in mind, too, that start-ups can compensate their unaccredited employees with equity just the same.

Disclaimer: I am not a lawyer. This is not legal nor securities advice.

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

#104

Post by kovek »

leereeves wrote: post #77
emodendroket wrote: post #69

Earlier quoted context omitted.

The question isn't what percentage of black-market sales are BTC; it's what percentage of BTC sales (excluding speculation) are black-market.

And a related question, which I'd love to know the answer to: What are the other major uses (excluding speculation) of BTC?

Sending funds to family in a different country. It's a use case I have not had experience with but which I think makes sense.

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

#105

Post by alphydan »

stale2002 wrote: post #44
mrwong wrote: post #30

Earlier quoted context omitted.

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 pro…

> promise you that your investment will go up.

I challenge you to find a single ICO which says that (or something very similar) in their terms and conditions, homepage, or white/yellow papers. So far, every single one I have read about said it was a risky investment with no guaranteed return.

Now check out lottery advertisement for a different message: https://i.pinimg.com/736x/c8/95/f6/c895f66260e1517e2b2437d8a...

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

#106

Post by tombot9000 »

leereeves wrote: post #77
emodendroket wrote: post #69

Earlier quoted context omitted.

The question isn't what percentage of black-market sales are BTC; it's what percentage of BTC sales (excluding speculation) are black-market.

And a related question, which I'd love to know the answer to: What are the other major uses (excluding speculation) of BTC?

The valuation of BTC is also a derivatives market of illegal activity, something which is not illegal itself.

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

#107

Post by wtfrmyinitials »

Chirael wrote: post #59
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 no…

I don't need the government to protect me from myself. Adults should be able to make their own decisions

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

#108

Post by age_bronze »

I don't get why regulation is needed. The whole thing is by definition very high risk investment, and I think it'd be silly for any "scam-victim" to claim he didn't know he's entering a high risk, and also high chance of scam, deal.

In the end of the day, why is it the government's job to protect idiot people's money? And that's coming from the country where gambling is legal? The whole thing is based upon get-out-of-our-way-government exactly because of these ridiculous regulations.

If someone got money to waste, and decided to bet on some ICO horse, I wish him luck. If he doesn't have money to waste, it doesn't stop him from gambling on a real horse (which is still legal, and yet has 0 meaning whatsoever), so why are we so bothered about him gambling on this new virtual horse?

Sure, arrest those ICOs that are actually 100% clear scam because they left misleading expectations which they never had an intent of fulfilling.

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

#110

Post by ringaroundthetx »

cortesoft wrote: post #100
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 re…

> 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.

We had no say in this.

The SEC unilaterally created modern day (1970s onward) accredited investor rules, although I'm sure they had their routine public comment period as if that made a difference.

The 1930s Congress and public had no idea that exemption from their protection would take shape this way.

Former accredited investor-like rules relied on financial literacy tests. These were predictable discriminatory and even the most compliant financial firms found them to be too vague. The SEC switched to the money tests to solve the lack of clarity and discrimination problems, LOL OOPS.

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