it seems like there can be no bad news to crypto. any piece is taken as good for the space but they should read the fine print, the SEC is putting an end to all ICO
SEC tightens the noose on ICO-funded startups
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Re: SEC tightens the noose on ICO-funded startups
#42Had an interesting conversation if you have been involved in any ICO sales and live in North America, seek legal counsel immediately. Do not listen to idiots telling you this is good for the space, they don't know just how much reach SEC has when it comes to securities fraud. The investigation will likely span many years but they will eventually get to your ICO and will hit you with wire fraud and felony, which won't go away and it will impact your employment and possibly overseas travel.
If you were one of those companies that helped ICO launches, there's a good chance you will see jail time accordingly.
Remember, the SEC has the manpower and allegedly a technology to uncloak elaborate laundering on the open ledger, which opens up a whole new can of worms called anti-money laundering orgs that become activated.
Im glad I walked away from ICOs.
Re: SEC tightens the noose on ICO-funded startups
#43From the article:
> subpoenas... focusing on those that failed to properly ensure they sold their token exclusively to accredited investors...
The idea of an accredited investor in this context seems either a little silly or like a major philosophical problem for tokens, depending how you view it. What does it mean to be an accredited investor, anyway? From Matt Levine[1]:
> Under U.S. law, some financial products, like hedge funds and private-company shares, are generally available only to "accredited investors." There's no actual accreditation -- there's no test -- it's just that if you have enough money you're "accredited." The theory is partly that if you have a lot of money you can afford to lose some of it on dumb private investments, and partly that if you have a lot of money then probably you know things about money and won't make dumb private investments. Both of these are terrible theories: If you have a lot of money, you still can't afford to lose all of it in dumb private investments, and there are plenty of rich dentists who don't know much about investing. The result is that it is both too easy to be an accredited investor, in that unsophisticated investors can be accredited, and too hard, in that fancy investing products are available only to the rich. (Rich-ish: The threshold is basically $200,000 in annual income or $1 million in assets.)
1: https://www.bloomberg.com/view/articles/2015-12-21/fraud-bon...
Re: SEC tightens the noose on ICO-funded startups
#44> All of this SEC action may sound like very bad news for ICOs, but many in the industry have a more optimistic take: regulatory clarity will bring growth It will be an interesting test I suppose. If ICO’s are in fact a novel technology that offers some kind of advantage, then this statement will be correct. If the entire and total value of ICO as a concept was that it was a means to sidestep existing regulations by…
As someone whose generally bearish on crypto currencies, I do see one clear benefit to ICOs over traditional exchanges. Namely the fact that you can trade them 24 hours a day, 7 days a week, from anywhere in the world with an internet connection, in any currency (theoretically) and on no fixed exchange (although it's likely that the number of exchanges will be limited to reduce price instability).
you just described the FX derivatives market, which btw cannot work without regulation and enforcement and monitoring bodies with real consequences for bad actors.
Re: SEC tightens the noose on ICO-funded startups
#45In 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…
Realistically, I don't think intelligent people with no connections can buy into startups or pre-ICOs (the ICO itself is now a scam) anyway. These investments are all arranged privately.
Re: SEC tightens the noose on ICO-funded startups
#46Earlier 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.
again, the only place ICO would be safe is those under the rule of Russia or China, otherwise all other countries face extradition to the US.
US has proven again and again they will touch anyone anywhere (except china and russia), and its a losing battle to go up against an organization that has unlimited resources with capabilities that grow constantly.
Re: SEC tightens the noose on ICO-funded startups
#47In 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…
Even without the SEC, you would not have been able to invest in Spotify. They had zero interest in taking your money when they could raise money much more easily from professional investors capable of writing 8 figure checks.
It's very important to understand this and the adverse selection problem that would emerge if laws were changed. There's a reason that only scammers did ICOs.
Re: SEC tightens the noose on ICO-funded startups
#48Earlier quoted context omitted.
> 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 t…
If you have the means to do proper due diligence, then you can find a way to get your investment dollars into the hands of someone who can invest for you, even if you can't meet the requirements to be an accredited investor. While we have many laws that propagate classism in the US, I have a hard time thinking this particular law doesn't overwhelmingly protect those who might otherwise jump on a "stock tip" their buddy told them about.
Re: SEC tightens the noose on ICO-funded startups
#49Cooley's invention of the Simple Agreement for a Future Token (SAFT) [1] was genius. Not only did they earn fees on selling people the boondoggle, they'll also cash in on defending every company, and every employee at said company, who unlawfully sold these securities. [1] https://saftproject.com/static/SAFT-Project-Whitepaper.pdf
Isn't this just an interpretation of the law? Yes, the SEC may try to enforce their view of the law, but is it actually the correct one? It only takes one SAFT token company to take things to court, and have a judge rule in their favour, to basically legitimise all tokens - no? (Note: I have no clue who is right here, but just because it's the SEC doesn't mean they are automatically right. Same applies to the IRS etc…
or go to prison if you lose.
Re: SEC tightens the noose on ICO-funded startups
#50From the article: > subpoenas... focusing on those that failed to properly ensure they sold their token exclusively to accredited investors... The idea of an accredited investor in this context seems either a little silly or like a major philosophical problem for tokens, depending how you view it. What does it mean to be an accredited investor, anyway? From Matt Levine[1]: > Under U.S. law, some financial products, l…
The point is not to protect individuals, but to protect society from the blowout of every possible stupid investor getting wrecked all at the same time, by limiting the pool of stupid investors. With enough advertising, working and middle class people can be convinced to mortgage their house, their property, their cars, etc. to shovel debt into a stock market that would never go down because the advertisers told them so. That's how the Great Depression started, and this has repeated itself in every market that didn't restrict some investments to accredited investors.
Is it blunt? Sure. But it's better than repeating 1929.