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SEC blocks the Telegram ICO – what this means, and what happens now

davidgerard.co.uk

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Re: SEC blocks the Telegram ICO – what this means, and what happens now

#61

Post by jki275 »

nl wrote: post #46
snagglegaggle wrote: post #42

Earlier quoted context omitted.

It's not. They have access to lawyers, but can they outspend the SEC or any other agency that wishes to participate? One of the best predictors of whether a lawsuit succeeds is money spent.

Another good predictor of lawsuit success is what the law says, and in this case it's pretty clear Telegram is in the wrong.

That's an essentially totally misinformed view of the law -- especially civil law -- in the US.

It's all about how much money you can spend on lawyers and experts, not whether you're right or not.

Hell, the government doesn't even know what the laws they write say, and they rarely agree on what they mean.

Re: SEC blocks the Telegram ICO – what this means, and what happens now

#62

Post by JumpCrisscross »

snagglegaggle wrote: post #49
nl wrote: post #46

Earlier quoted context omitted.

Another good predictor of lawsuit success is what the law says, and in this case it's pretty clear Telegram is in the wrong.

Ehh, no; and frankly, it's like you've not even read my comments at all. If you have please speak to some specific argument they bring up. Otherwise, repeating the opposing argument serves no point. It's almost always about money. On the defensive side, there are enough ways to stall that you can almost always outspend someone to win. On the offensive side, you can spend more time investigating and almost assuredly t…

> It's almost always about money

As someone who as gone through a fair deal of litigation and arbitration, this is wrong (or at the very least, inapplicable). It’s a common armchair lawyer’s myth.

If your opponent has more than $100,000 the tables are fairly even; more than $1 million, totally even. There is a ceiling to court costs, and a finite amount of time before judges issue rulings. (Spending to try and get an outcome predictably pisses off judges.) Getting to a judge costs money; once you’re there, American courts are robust.

At an individual level, these thresholds are prohibitive. At a corporate level, they’re not. Exhibit A for you should be the SEC’s win-loss record, even against individuals. (It’s mixed.)

Re: SEC blocks the Telegram ICO – what this means, and what happens now

#63

Post by cwyers »

H8crilA wrote: post #39
aakilfernandes wrote: post #36

The author of this article is turning inches into miles. SAFTs aren't dead. The SEC is alleging Telegram has failed to deliver the promises it has made, so the SEC is pre-emptively stating they need to halt delivery. Presumably, once they complete their promises they'll be able to deliver Grams. From the SEC Complaint: The Whitepaper spoke of potential future products and services that investors could use in connecti…

Indeed what they want is an S-1 or an F-1 form filling. A security registration. That's it. The SEC has no opinion on the offering other than they think it's a security (this claim itself could also be challenged), and as such has to be registered under the 1933 act.

What are the odds that Telegram, despite believing they didn't need to do an S-1 or F-1 form filing, complied with the letter of everything that the form filing is intended to determine? They would likely have to materially change the offering so that the form filing didn't invite another action.

Re: SEC blocks the Telegram ICO – what this means, and what happens now

#65

Post by ggreer »

JumpCrisscross wrote: post #62
snagglegaggle wrote: post #49

Earlier quoted context omitted.

Ehh, no; and frankly, it's like you've not even read my comments at all. If you have please speak to some specific argument they bring up. Otherwise, repeating the opposing argument serves no point. It's almost always about money. On the defensive side, there are enough ways to stall that you can almost always outspend someone to win. On the offensive side, you can spend more time investigating and almost assuredly t…

> It's almost always about money As someone who as gone through a fair deal of litigation and arbitration, this is wrong (or at the very least, inapplicable). It’s a common armchair lawyer’s myth. If your opponent has more than $100,000 the tables are fairly even; more than $1 million, totally even. There is a ceiling to court costs, and a finite amount of time before judges issue rulings. (Spending to try and get an…

Do you think there are any viable financial instruments that would allow the little guy to not be bossed around by the threat of ruinous legal fees? eg: Insurance that would cover up to $100,000 in legal fees in the event that you are sued. (If everyone were required to have such insurance, it would be quite cheap.) Another option could be to allow the defendant to "double the stakes" and say, "If I lose, I will pay 2x the amount you are asking for. If I win, you must pay the amount you are asking for... to me." That would allow innocent-but-nonrich people to secure loans for legal fees. Heck, some firms might even "invest" in the defendant by charging a percentage of the winnings (if they are judged not guilty).

Re: SEC blocks the Telegram ICO – what this means, and what happens now

#66

Post by davidgerard »

aakilfernandes wrote: post #36

The author of this article is turning inches into miles. SAFTs aren't dead. The SEC is alleging Telegram has failed to deliver the promises it has made, so the SEC is pre-emptively stating they need to halt delivery. Presumably, once they complete their promises they'll be able to deliver Grams. From the SEC Complaint: The Whitepaper spoke of potential future products and services that investors could use in connecti…

(author here) nah, pretty sure SAFTs are dead. The whole point of the SAFT rigmarole was to sell tokens as securities but not have them be securities on delivery, pretty much as Telegram was planning to do here - the point was not to be considered securities by the SEC.

This complaint demonstrates what the SEC think of the idea, i.e. they don't care and will look at how your token actually works and whether this is an investment contract under the Howey test.

But as I said - maybe Telegram will prevail in court! Do you feel lucky?

Re: SEC blocks the Telegram ICO – what this means, and what happens now

#67

Post by davidgerard »

DaiPlusPlus wrote: post #57
schmichael wrote: post #25

With each new cryptocurrency drama due to flouting AML/KYC regulations, flouting securities regulations, collapsing/exit-scamming exchanges, murders, drugs, sex trafficking, let's not forget: PoW is an ecologically irresponsible algorithm.[1] Altogether cryptocurrency is such a terrifyingly irresponsible ecosystem, I'm surprised anyone wants to be involved in it. [1] https://www.sciencedirect.com/science/article/pii/…

Besides proof-of-work and proof-of-stake, I’m surprised the more ecologically-friendly proof-of-space system isn’t being looked at harder. FileCoin uses it (it’s integral to the system to prove you have the space you’re selling) but it could also be used by other distributed Blockchains to prove that a node’s operator has invested in the ecosystem (by buying lots of storage) - I’d say I’d prefer to run out of HDD sup…

Proof-of-space rapidly goes to the price of the cheapest bulk storage, which is who can rent space on AWS cheapest, per David S. H. Rosenthal:

https://blog.dshr.org/2018/03/proofs-of-space.html

https://blog.dshr.org/2018/09/chia-network.html

> Note also that it is possible at low cost to rent very large amounts of storage and computation for short periods of time in order to mount a 51% attack on a PoSp/VDP network in the same way that "mining as a service" enables 51% attacks on alt-coins.

> For example, a back-of-the-envelope computation of a hour-long Petabyte attack at Amazon would start by using about 7 days of AWS Free Tier to write the data to the sc1 version of Elastic Block Storage. The EBS would cost $35/PB/hr, so the setup would cost $2940. Then the actual hour-long attack would cost $35, for a total of just under $3000.

> I'm skeptical that the low-reward approach to maintaining decentralization is viable.

Re: SEC blocks the Telegram ICO – what this means, and what happens now

#68

Post by woah »

DaiPlusPlus wrote: post #57
schmichael wrote: post #25

With each new cryptocurrency drama due to flouting AML/KYC regulations, flouting securities regulations, collapsing/exit-scamming exchanges, murders, drugs, sex trafficking, let's not forget: PoW is an ecologically irresponsible algorithm.[1] Altogether cryptocurrency is such a terrifyingly irresponsible ecosystem, I'm surprised anyone wants to be involved in it. [1] https://www.sciencedirect.com/science/article/pii/…

Besides proof-of-work and proof-of-stake, I’m surprised the more ecologically-friendly proof-of-space system isn’t being looked at harder. FileCoin uses it (it’s integral to the system to prove you have the space you’re selling) but it could also be used by other distributed Blockchains to prove that a node’s operator has invested in the ecosystem (by buying lots of storage) - I’d say I’d prefer to run out of HDD sup…

If Filecoin works (still haven’t shipped), then it’s unclear whether it’s less wasteful than PoW. This is because coins are mined by using up hard drive capacity, whether or not useful data is stored. The theory is that it will be better to store useful data for people because miners will get paid for that in addition to the mined coins. You could have a situation where 99 percent of the storage used in Filecoin is storing junk.
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