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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

#131

Post by awad »

pitaj wrote: post #130
bobthepanda wrote: post #50

Earlier quoted context omitted.

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.

On balance, it's everyone's right to be stupid and burn their money to the ground. But realistically, in the interconnected world we live in, that will often involve burning other people as well and that's not something that should be OK. The housing crisis had greedy unchecked bankers, but it also had greedy unsophisticated (in a financial sense) individuals over-leveraging themselves and we all paid the price as taxpayers. Some people lost their homes and some people merely got a slap on the wrist, and however you feel about each, we ALL paid for it.

Re: SEC tightens the noose on ICO-funded startups

#132

Post by asdfasgasdgasdg »

pitaj wrote: post #130
bobthepanda wrote: post #50

Earlier quoted context omitted.

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.

I will refer you again to 1929, before people were sheltered from making "stupid" mistakes. That lack of shelter did not prevent the great depression.

Re: SEC tightens the noose on ICO-funded startups

#133

Post by Animats »

arcaster wrote: post #123
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.

Yes. They shut down the ICO within hours of being contacted by the SEC and gave all the money back.[1] The SEC was satisfied with that.

[1] https://www.sec.gov/litigation/admin/2017/33-10445.pdf

Re: SEC tightens the noose on ICO-funded startups

#134

Post by awad »

Plenty of real companies making real revenue offer JOBS Act compliant equity crowdfunding, such as https://invest.hylete.com/ though they don't come with the promise of the moon or Lambos or any implied notion of anything at all besides an opportunity to invest in a business. But you do get a real equity claim that's worth something.

But, as per usual, human greed trumps all, and many latched onto incredibly terrible ideas created by woefully unqualified individuals because of a bull market, cognitive dissonance out in full force. History sure has a way of repeating itself.

Re: SEC tightens the noose on ICO-funded startups

#135

Post by nostrademons »

lozaning wrote: post #126
nostrademons wrote: post #87

Earlier quoted context omitted.

"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'.

I think that's most likely true, but the wildcard is that "actual law" is breaking down for an increasing number of people. There is an increasing perception that existing government institutions and law enforcement are a tool for the wealthy & powerful to oppress the poor, and - whether I agree with that perception or not - when it comes to government legitimacy, perception is reality. This trend comes from outside of cryptocurrency, and is driven by things like international terrorism, perpetual war, drug cartels, state corruption, Occupy Wall Street and the continuing anger that few if any of the Wall Street Bankers that got us into the global financial crisis were punished for it, the Tea Party, police brutality, a legal system that's unaffordable for anyone that's not rich, increasing political polarization, filter bubbles, and the rise of authoritarian governments. Cryptocurrency's just stepping into the void left behind when institutions fuck themselves up; if they continue fucking up, it's only a matter of time before you start seeing crypto-legal systems with automated drone enforcement.

If you suggested in the late 1990s that people would be spending real money for cryptocurrency, I'd think you were crazy. (Actually, Cryptonomicon did suggest exactly that, and I thought that particular plot point was crazy.) Now, I'd give it maybe an 85% chance of being a crazy passing fad and a 15% chance of being the social organizing principle of the 22nd century.

Re: SEC tightens the noose on ICO-funded startups

#136

Post by api »

nostrademons wrote: post #135
lozaning wrote: post #126

Earlier quoted context omitted.

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'.

I think that's most likely true, but the wildcard is that "actual law" is breaking down for an increasing number of people. There is an increasing perception that existing government institutions and law enforcement are a tool for the wealthy & powerful to oppress the poor, and - whether I agree with that perception or not - when it comes to government legitimacy, perception is reality. This trend comes from outside…

> crypto-legal systems with automated drone enforcement.

Or read Snow Crash by Neal Stephenson and experience it today. :)

Re: SEC tightens the noose on ICO-funded startups

#137

Post by nostrademons »

api wrote: post #136
nostrademons wrote: post #135

Earlier quoted context omitted.

I think that's most likely true, but the wildcard is that "actual law" is breaking down for an increasing number of people. There is an increasing perception that existing government institutions and law enforcement are a tool for the wealthy & powerful to oppress the poor, and - whether I agree with that perception or not - when it comes to government legitimacy, perception is reality. This trend comes from outside…

> crypto-legal systems with automated drone enforcement. Or read Snow Crash by Neal Stephenson and experience it today. :)

I was thinking more Diamond Age, but yes.

Re: SEC tightens the noose on ICO-funded startups

#138

Post by CaptainZapp »

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…

A security doesn't require a common enterprise, it simply requires that one thing represents an interest in something else.

True, it even works with past and future music royalties.

David Bowie (together with his financial manager and an investment banker) was probably the first to come up with securisation of non-tangible assets.[1]

It's a fascinating story.

[1] https://www.bbc.com/news/business-35280945

Re: SEC tightens the noose on ICO-funded startups

#140

Post by CryptoPunk »

stale2002 wrote: post #128
CryptoPunk wrote: post #109

Earlier quoted context omitted.

>>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 Blo…

Fraud by definition is non-consensual, since it means someone not consenting to a material fact that was withheld from them about the interaction. It's fundamentally theft through misrepresentation of facts and should always be illegal.

Someone saying "We believe this token will go up 200% in two years" is probably not a misrepresentation of facts, and thus not fraud, and should probably be allowed, and they should suffer the reputational damage when their predictions don't pan out.

But if we created laws that did prohibit people from hyping up the investment potential of a token they put for sale, or laws that require token sale organizers to disclose the general risks around investing in speculative assets, like requiring them to include a statement on their website like "this is a highly speculative asset that has not been registered with the SEC. Speculative investments have a high likelihood of losing all of their value. It is recommended that you get professional investment advice before making an investment into a speculative instrument like this, and that you avoid investing a large portion of your wealth in them", that would probably be fine. It wouldn't be a major impediment to voluntary exchange.

Like I said though, what the SEC is seeking to do goes far beyond barring token sale organizers from hyping their project's profit potential, or requiring such warning messages on their websites. If that's all the SEC wanted to do, I wouldn't be nearly as opposed, if at all.

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