If you have a ICO startup it would be pretty stupid to be in the USA.
Why? Just follow the law. You can easily launch a Reg D 506(c) offering.
SEC tightens the noose on ICO-funded startups
81–90 of 164 posts
Re: SEC tightens the noose on ICO-funded startups
#82In 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…
As an individual, the only chance you'd have to invest in a hot startup is to be an angel investor, or else close family or really good friends with the founders or VCs. Even accredited investors with 10s of millions got turned away from hot startups like Spotify and Snapchat (back when it was the big kahuna).
And let's be clear: you can still invest in a startup as a non-accredited investor. There is no prohibition on that, or else startups couldn't give equity to employees, contractors, or others (see, e.g., pre-IPO Facebook and Google, and the many famous stories of dotcom millionaires from their respective IPOs).
Re: SEC tightens the noose on ICO-funded startups
#83In 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…
As an individual, the only chance you'd have to invest in a hot startup is to be an angel investor, or else close family or really good friends with the founders or VCs. Even accredited investors with 10s of millions got turned away from hot startups like Spotify and Snapchat (back when it was the big kahuna). And let's be clear: you can still invest in a startup as a non-accredited investor. There is no prohibition…
A year ago, I watched YC lecture for raising capital where Sam Altman or somebody else recommended startup founders NOT raise any capital from unaccredited investors because it may create problems with raising next rounds. In other words, current regulatory environment also promotes discrimination of unaccredited investors.
Employee compensation is different.
P.S. It's amazing how much Hacker News readers are against cryptocurrency, in favor of very big government, very high taxes up to 70% as their Piketty, Krugman suggest to enforce equality of outcome. This community became total opposition of what Paul Graham might thought back in 2007. The only thing is left is to change Hacker News icon to Che Guevara emblem.
Re: SEC tightens the noose on ICO-funded startups
#84Earlier quoted context omitted.
Oh, I probably overstated a little bit. But I'm confident that 90%+ of them were scams. Re: Tezos - "Inside the Crypto World's Biggest Scandal" https://www.wired.com/story/tezos-blockchain-love-story-horr...
I'm aware with situation with Tezos (btw, which had been resolved) because I'm with them from very beginning. That's my whole point. The government tries to protect me because it thinks I'm too stupid. And you tell me that such opportunities for small investors doesn't exist anyway. But opportunities do exist, I just showed. Another example. I watched interview of Revolut founder. He said they sold some of their equi…
There's still a token handful of us around who believe in individual rights first and foremost. Not many, but we do exist. And we will win in the end because we have better principles. Don't despair.
Re: SEC tightens the noose on ICO-funded startups
#85There's an argument to be made that it was irresponsible for the SEC to wait this long to clarify their position on enforcement. My guess is they want to deflate this nonsense slowly instead of pop it. It metastasized into a somewhat 'too big to fail' situation before they had time to react properly.
>It metastasized into a somewhat 'too big to fail' situation before they had time to react properly.
What harm could come from indicting scammy ICO pushers too quickly, or those who had crowdsourced too much money?
Re: SEC tightens the noose on ICO-funded startups
#86Earlier quoted context omitted.
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…
As a society we believe that allowing people of modest means to be swindled out of their savings is an unacceptable outcome and have enacted a large battery of laws to avoid it. These laws came about from very real and serious experiences that were, in fact, catastrophic for many communities. It's a real live problem, and it goes back a long way. If you want to argue about the details that's great, but any discussion…
I'm not sure that OP was referring to people being swindled, specifically, so you speaking on behalf of society (the "we" stuff) probably wasn't needed.
I think it is understood that the regulations are in place to mitigate risk for the most vulnerable. Whether this has been the right implementation (income vs some other means) is what I think OP was getting at.
Re: SEC tightens the noose on ICO-funded startups
#87The SEC seems to be sorting the list of ICOs by level of criminality and size, and working down the list. First they went after the ones which were large, obvious, out and out criminal enterprises. As in [1], or "they really didn't have the real estate and diamonds they said they had." And [2], or "they really didn't have deals in place with PayPal, Boeing, and Disney". Then the SEC went after the ones that were mere…
"that wasn't some other cryptocurrency/blockchain based thing."
This is probably intentional on the part of all of the promoters, investors, and potential users. The idea of the cryptocurrency world is to completely replace the existing global financial system; if a company uses an ICO to build a business that then takes payment in dollars, they've lost, and their backers will be very angry. The whole point is for the ICO token to be the primary means of payment for services within the company's ecosystem, and the backers are rewarded by having an advance claim on those services by virtue of owning the tokens.
The question I'd look at to see whether an ICO is a scam or not is "Are goods or services of non-monetary value being exchanged for tokens?" I suspect the answer to this is negative for the vast majority of tokens, but it's also pretty early in the development cycle: most ICO-funded companies are <1 year old, while it typically takes 2-3 years to build something somewhat useful.
Re: SEC tightens the noose on ICO-funded startups
#88Had 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'…
You're saying if somebody is an engineer at a company that helps launches ICOs they should be worried?
Ethics aside, yeah they should be worried. The "I was only following orders" claim usually only applies when those orders were lawful.
Re: SEC tightens the noose on ICO-funded startups
#89Had 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'…
You're saying if somebody is an engineer at a company that helps launches ICOs they should be worried?
Did you only take money from them? I mean, were you similar to a simple contractor who was paid money for code? If so, you won't be referred to DOJ. (You still may have some administrative troubles with SEC, but at a time like this, I'd count only being in trouble with the SEC as a "win". Fines, fees, and/or work restrictions are preferable to prison in my own opinion.)
If you got a small piece of the ICO itself as remuneration, then it's time for you to "shut up and lawyer up."
I am not a lawyer myself, but I'd imagine that one thing a lawyer would advise you to do in that situation is to stop talking about your potential involvement in that activity on law enforcement accessible internet forums.