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SEC tightens the noose on ICO-funded startups

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Re: SEC tightens the noose on ICO-funded startups

#21

Post by will_brown »

olivermarks wrote: post #20
wmf wrote: post #5

Earlier quoted context omitted.

I was really pessimistic about security tokens because no exchange could legally trade them, but now a few exchanges are getting certified so it may be possible to dump these tokens. How many buyers there will be is still in question.

Malta have very well defined laws about ICO's on the books from November 1st, the UK and USA have been disasterously vague about guidance for what constitutes a security so far, which doesn't help anyone except the bankers.

I think the issue of what constitutes a security is very well defined in the US...it’s just no one has framed their token in such a way it’s not a security (despite all the claims to the contrary) and otherwise the ICOs have not complied with securities laws because...well move fast break things.

I’m not sure why a company doesn’t just come out and do an ICO: a) with a token that’s not a security or b) a token that is a security and comply with securities laws.

Re: SEC tightens the noose on ICO-funded startups

#22

Post by Animats »

s73v3r_ wrote: post #11

And by "tightens the noose", they mean, "Advise to follow existing securities law, like everyone else".

Yes.

"From the SEC’s perspective, there is no lack of clarity. The sniff tests are the same as they have been for decades. The SEC is applying the same securities laws to ICOs that it always applies."

“Everybody’s holding their breath for the SEC to create some kind of coin rule, and they’re not going to,” says a securities attorney at one high-profile Silicon Valley firm. “They’re applying the same laws, the same statutes, the same rules, to stocks and bonds and everything else.”

In other words, "what part of "no" did you not understand."

It's hard to find a successful ICO, in the sense that they did whatever they said they were going to do, and did it profitably. From Medium's list of "successful ICOs:"

ICONOMI is held up as a successful example, but they're a "digital asset management platform". They probably should have a broker/dealer license.

Solve.care claims "Solve.Care makes healthcare affordable and easy for everyone". All they have is some kind of "physician wallet".

Truegame is gambling.

Play2Live is like Twitch.tv, except that it costs to watch.

StopTheFakes.io: "Token sale is finished. Thank you for your participation". It's like Mechanical Turk looking for copyright infringement. On their actual site, "http://web.stopthefakes.co/", no new tasks since 2017.

This is pathetic.

Re: SEC tightens the noose on ICO-funded startups

#23

Post by thinkmassive »

will_brown wrote: post #21
olivermarks wrote: post #20

Earlier quoted context omitted.

Malta have very well defined laws about ICO's on the books from November 1st, the UK and USA have been disasterously vague about guidance for what constitutes a security so far, which doesn't help anyone except the bankers.

I think the issue of what constitutes a security is very well defined in the US...it’s just no one has framed their token in such a way it’s not a security (despite all the claims to the contrary) and otherwise the ICOs have not complied with securities laws because...well move fast break things. I’m not sure why a company doesn’t just come out and do an ICO: a) with a token that’s not a security or b) a token that i…

They have, see https://coinlist.co/

Re: SEC tightens the noose on ICO-funded startups

#25

Post by Karunamon »

CPLX wrote: post #15
seibelj wrote: post #9

The great hope of the JOBS act was to allow unaccredited ("mom and pop") investors to get exposure to early-stage startups, in a safer way, so that the huge gains went to average people instead of well-connected rich people and VC's. The problem currently with crowd-funded securities offerings is the overall cost of capital (legal and regulatory), lack of liquidity post-raise, and that most of the good opportunities…

> Obviously there are tons of issues (breaking securities laws, sketchy companies, bubble mentality, and why actually do any work when you already have the money, among many others). But this shows that demand for small seed-stage companies is there. It’s worth noting that absolutely nobody is confused about there being demand for highly speculative investment in small sketchy seed stage companies. That demand has be…

Disastrous for anyone other than those who jumped in without doing their due dilligence?

My main gripe with the whole "accredited investor" thing is that its literally legalized classism (and I'd argue a violation of the equal protection doctrine, but that's another theory), as the income requirements eliminate a huge swathe of investing for anyone but the 1%.

Nothing is stopping an uninformed investor from loading their net worth into a single reuglar stock (you know, those perfectly safe instruments that never ever lose their value and leave you with nothing), so I really, truly don't see what these requirements are protecting anyone from, or why that protection is necessary.

If it's really about protection, then education and nondiscriminatory licensing based on testable knowledge would fill that goal, but instead we have income minimums.

Re: SEC tightens the noose on ICO-funded startups

#26

Post by pyython »

seibelj wrote: post #9

The great hope of the JOBS act was to allow unaccredited ("mom and pop") investors to get exposure to early-stage startups, in a safer way, so that the huge gains went to average people instead of well-connected rich people and VC's. The problem currently with crowd-funded securities offerings is the overall cost of capital (legal and regulatory), lack of liquidity post-raise, and that most of the good opportunities…

I continue to believe that knowledgeable professionals being locked out of investments (sometimes for projects they have meaningfully contributed to!) because they aren't literally millionaires (per US accredited investor reqs) is a much bigger scandal than any shitty ICO.

Here's hoping some version of the Jobs Act 3.0 passes the Senate (before getting stuffed with a bunch of bs)...

Re: SEC tightens the noose on ICO-funded startups

#27

Post by jhabdas »

seibelj wrote: post #9

The great hope of the JOBS act was to allow unaccredited ("mom and pop") investors to get exposure to early-stage startups, in a safer way, so that the huge gains went to average people instead of well-connected rich people and VC's. The problem currently with crowd-funded securities offerings is the overall cost of capital (legal and regulatory), lack of liquidity post-raise, and that most of the good opportunities…

> One is the change to accredited investor laws to allow people to prove investor competence without meeting arbitrary income / asset requirements.

No one, absolutely no one should sit on their thumbs waiting around for regulatory clarity from a slow moving ship unless they have too much to lose. It's time to up the ante and move out of the US. If they keep adding laws instead of deleting them the exodus of seed stage companies is a near-term likelihood.

Re: SEC tightens the noose on ICO-funded startups

#29

Post by hal9000xp »

In the eyes of SEC, ICOs are nothing more than equity crowdfunding. It means that SEC doesn't like any sale of unlisted assets to unaccredited investors.

By SEC definition accredited investor is an investor who has either $1M of liquid net worth or stable income not less than $200k per year.

Original intent of the government was to bar unsophisticated investors from high risk investments.

While I understand logic of the law - many people are completely financially irresponsible and are not capable of critical thinking (that's what politically correct term "unsophisticated investor" actually means), I find this law extremely frustrating.

For example, I had no chance to buy Spotify when it was well under $1B valuation because the government baby-sitting me by excluding me from opportunity to invest into early-stage startups.

If you want to downvote me on "not capable of critical thinking" and at the same time support barring people from making their own financial decisions, please think twice because it's clear contradiction.

There is a compromise: Why not lower entry level of becoming accredited investor? For example, you could be semi-accredited investor with lower capital but with limits on investments. Or making some government exams on risk taking and investing? Or having special government-approved platform for early-stage investments for unaccredited investors. There are lots of combinations.

Right now, there is a huge hunger among people for early-stage investments. And if you are not making it legal, it just go underground and as a result with more dangers for unsophisticated investors.

Re: SEC tightens the noose on ICO-funded startups

#30

Post by vkou »

will_brown wrote: post #21
olivermarks wrote: post #20

Earlier quoted context omitted.

Malta have very well defined laws about ICO's on the books from November 1st, the UK and USA have been disasterously vague about guidance for what constitutes a security so far, which doesn't help anyone except the bankers.

I think the issue of what constitutes a security is very well defined in the US...it’s just no one has framed their token in such a way it’s not a security (despite all the claims to the contrary) and otherwise the ICOs have not complied with securities laws because...well move fast break things. I’m not sure why a company doesn’t just come out and do an ICO: a) with a token that’s not a security or b) a token that i…

> a token that is a security and comply with securities laws

Because if you do that, there's no point having an ICO. Just do an IPO - the token is an expensive, pointless distraction from their mission to democratize the world's dogsitters, or whatever they want to do.

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