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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

#121

Post by CryptoPunk »

wpietri wrote: post #68
s73v3r_ wrote: post #60

Earlier quoted context omitted.

No they haven't. They've said from the beginning that if it looks like a security, smells like a security, walks like a security and talks like a security, then it's a security. It's people trying to play the, "Well, it's different cause it's on a computer!" game that are muddying the waters.

That's my impression too. Emily Post had this great rant on how people act like every new technology is exempt from the rules. Her examples at the time was the cellphone in movie theaters. Everybody knew not to talk loudly in the movie theater before the arrival of cellphones, but suddenly plenty of people thought it was ok to a) have a ringing phone, and b) answer it. Eventually everybody got it together again and n…

The scale of filesharing was irreversibly expanded by the internet, and in particular, by BitTorrent. Some technologies fundamentally change the difficulty of enforcing prohibitions against particular types of activity.

Re: SEC tightens the noose on ICO-funded startups

#122

Post by andreygrehov »

wmf wrote: post #99
andreygrehov wrote: post #81

Earlier quoted context omitted.

Why? Just follow the law. You can easily launch a Reg D 506(c) offering.

If you "just" use Reg D, then you can't take money from non-accredited suckers so you'll raise far less money and your security token can't trade on any exchange (yet).

Well, there is no dependency between being able to take money from non-accredited "suckers" and the total amount one can raise. You can raise a shit ton of money with accredited investors only. It's just more complicated.

Re: SEC tightens the noose on ICO-funded startups

#123

Post by arcaster »

Animats wrote: post #74

The 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…

Was Lunyr (the creator of the MUN token) ever federally investigated? I haven't heard much from them for about a year.

Re: SEC tightens the noose on ICO-funded startups

#124

Post by icostoss »

bilbo0s wrote: post #102
jimmaswell wrote: post #91

Earlier quoted context omitted.

So every single employee of a corporation is expected to triple check that everything they're told to do is legally bulletproof, having to duplicate the work of the entire legal department? That's ridiculous, especially with how many laws and regulations are unpredictable, unexpected, unintuitive, hard to understand, etc.

Employees are not responsible for every legally questionable thing their company does. That said, I mean, of course a person is responsible for any crimes they may have personally committed. It doesn't matter that your company told you to do it. To believe the law would work any other way is incredibly naive. If this really is how people are thinking about ICO's, then I would strongly urge anyone with possible involv…

It is true that "employees are not responsible for every legally questionable thing their company does".

However, a person need not commit a crime personally to be held accountable. Conspiracy charges merely require that a person engaged in otherwise legal actions (e.g. coming up with a list of potential investors, working on code for a demo, etc) had known that the project may circumvent the law in any respect. The bar for prosecution for federal conspiracy charges is extremely low.

Re: SEC tightens the noose on ICO-funded startups

#125

Post by EGreg »

wmf wrote: post #75
CryptoPunk wrote: post #61

Earlier quoted context omitted.

The SEC doesn't create law. Courts do. It can claim anything it wants, but until its argument is tested by a court, it's not law. There continue to be strong legal arguments for utility tokens not being securities: https://www.coinbase.com/legal/securities-law-framework.pdf This attitude of deferring to regulatory agencies, which have their own set of institutional biases, on the question of the applicability of secu…

Utility tokens aren't securities, but the problem is that there are no utility tokens. Everything calling itself a utility token isn't, because they're all marketed as investments (maybe with the exception of SiaCoin).

MaidSAFE is making a utility token

Re: SEC tightens the noose on ICO-funded startups

#126

Post by lozaning »

nostrademons wrote: post #87
Animats wrote: post #74

The 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 th…

I think the larger issue here will eventually be that the concept of 'the code is law' breaks down when you need to rely on the actual law and law enforcement to to enforce your 'code law'.

Re: SEC tightens the noose on ICO-funded startups

#127

Post by tptacek »

Karunamon wrote: post #25
CPLX wrote: post #15

Earlier 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…

It's a form of classism that mostly serves to ensure that it's the rich who get fleeced with wealth management and hedge fund schemes, most of which underperform broad market investment vehicles that have never been cheaper for retail investors.

Re: SEC tightens the noose on ICO-funded startups

#128

Post by stale2002 »

CryptoPunk wrote: post #109
jarsin wrote: post #70

Earlier quoted context omitted.

Exactly. The average ICO made buzzword promises much more insane and fraudulent than even Theranos. As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day.

>>As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day. I don't like people promising the moon to hype up speculative investments, but there are non-government solutions to this, like reputation markets. In fact we see these non-government solutions working already: token investors today are unrecognizable fro…

I mean, ok. But you are basically arguing that fraud should be allowed, because it is between "consenting adults".

If that's what you want, fine. But you should be open and honest about the fact that you believe that financial fraud should be legal.

And I'd like to point out that fraud is not a new concept. It is something that has been explored in many aspects of society, and most people oppose fraud. Fraud on a Blockchain is still fraud.

Re: SEC tightens the noose on ICO-funded startups

#129

Post by Svexar »

gamblor956 wrote: post #79
CryptoPunk wrote: post #61

Earlier quoted context omitted.

The SEC doesn't create law. Courts do. It can claim anything it wants, but until its argument is tested by a court, it's not law. There continue to be strong legal arguments for utility tokens not being securities: https://www.coinbase.com/legal/securities-law-framework.pdf This attitude of deferring to regulatory agencies, which have their own set of institutional biases, on the question of the applicability of secu…

Courts don't create the law, they interpret it (...except in India, where the Supreme Court actually does make laws). The Legislature writes the law. A security doesn't require a common enterprise, it simply requires that one thing represents an interest in something else. The underlying asset is usually financial or intangible in nature, but that isn't required. There are more specific rules and exceptions, but thos…

Courts don't create laws. They just come up with new rules that you can't break without going to prison. No laws, though.

Re: SEC tightens the noose on ICO-funded startups

#130

Post by pitaj »

bobthepanda wrote: post #50
Nav_Panel wrote: post #43

From 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…

Personally, I think we should stop sheltering people from being able to make stupid mistakes. Then maybe people will learn to be a little more skeptical about everything.
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