Really? Can you point to a single security token issuance that was an exit scam?
Are you honestly trying to say that there have not been ICO scams? That this has not happened? https://techcrunch.com/2018/04/13/exit-scammers-run-off-with... https://techcrunch.com/2018/04/18/another-day-another-50-mil... https://cointelegraph.com/news/unpacking-the-5-biggest-crypt... Do you need more?
I am not familiar with any exit scam that was done based on issuing crypto-powered company shares, which is the topic of discussion. None of the ones you mentioned seem to fall into that category. Most are MLM type stuff.
Where you got the idea that I'm denying the existence of ICO scams, I'll never know.
My plan to sidestep these regulations is to take an existing cheap chain and launch a product on it, without consent or communication with stakeholders. I will buy a large percentage of the chain before doing this, of course. Maybe plug it into zrx so the conversion is automatic for the end user. Just another launch cost and I can avoid the SEC entirely.
But then you don't get any funding? Unless you pump the coin in which case the SEC will still be coming.
I generally don't seek funding for my apps. I instead just build them with a monetization path attached.
What I would aim to do is to boost a crypto community coin with adoption. My monetization would be to sell the ownership I have of the coin when the dapp is in use.
I don't know if it's legal according to the SEC. I would love some clarity.
That's incorrect. Tokens can prevent their transfer to parties that don't have the proper KYC. The smart contract decides that.
That's a cool point. I wonder what can be done to bypass such a restriction? Maybe if you had a contract like WETH that wrapped accredited-only tokens in a proxy token.
Pay someone from another country to do KYC for your address.
Presumably the part where you fraudulently faked KYC stuff.
So a checkbox or screenshot for KYC is going to fly with the SEC? They aren't going to go after retail investors.
> They aren't going to go after retail investors
I work in the securities business. We once had someone send in a suspected altered document. Their state AG was notified, the U.S. Treasury and Homeland Security were notified, the SEC and FINRA were notified, and then we got some questions from Interpol, in Europe, and the UK's financial crimes investigator (through federal law enforcement). Fraudulently opening a securities account rings red-hot alarm bells because the automatic suspicion is nobody would be that brazenly stupid unless their expected pay-off was huge, i.e. terrorism or large-scale money laundering.
My point is, for anything like a crypto-security, you have to integrate with meatspace, which requires the introduction of legal agreements (because there's nothing about 0s and 1s in ledger that can compel company representatives to act in a certain way). At that point you've completely gotten rid of decentralization, and you might as well use a more robust, faster, and environmentally friendly centralized option.
Conventional paper-type legal agreements exist already for this kind of thing, and will mature further as jurisprudence and experience are developed. They don't introduce much centralization that I can think of. They are mostly P2P agreements about the guarantees given to token holders. On top of that, smart contract mediated investments can have much more additional guarantees. Projects like Aragon are creating DAO…
You're missing the point. Blockchain tokens are worse than centralized alternatives in most ways, so if the integrity of a financial security is codified through law then there is no need to pay the expensive costs to also have it codified as a blockchain token, especially because the law is the ultimate arbiter of the security's qualities and capabilities not a blockchain. A blockchain is useful when it can establish consensus rules around a system that is not controlled by a centralized authority, but if a centralized authority is already necessary to recognize the asset, the cost of decentralized consensus is unnecessary and thus wasted.
Conventional paper-type legal agreements exist already for this kind of thing, and will mature further as jurisprudence and experience are developed. They don't introduce much centralization that I can think of. They are mostly P2P agreements about the guarantees given to token holders. On top of that, smart contract mediated investments can have much more additional guarantees. Projects like Aragon are creating DAO…
You're missing the point. Blockchain tokens are worse than centralized alternatives in most ways, so if the integrity of a financial security is codified through law then there is no need to pay the expensive costs to also have it codified as a blockchain token, especially because the law is the ultimate arbiter of the security's qualities and capabilities not a blockchain. A blockchain is useful when it can establis…
There is not much that is centralized about "the law", and "the law" isn't really a mechanism for modeling and trading securities. To some extent, by the same logic, the Internet is inherently a centralized platform (because it's governed by law as well) and would therefore be better if replaced by AOL.
I looked at your comment history and it seems you are assuming that people with a so called "pro blockchain" angle are all missing the point. I assure you not everyone in the space is an idiot, and you might be missing some points yourself.