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Initial Coin Offerings Horrify a Former S.E.C. Regulator

nytimes.com

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Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#141

Post by JumpCrisscross »

xadhominemx wrote: post #137
JumpCrisscross wrote: post #135

Earlier quoted context omitted.

> most people who co-invest under the knowledgeable employees exemption are PE associates who have been on the job for less than two years Source? (Private equity associates are entry-level number crunchers. Their fraction of carry is a rounding error, if positive.)

I don't have a source, but most capital deployed by private investment firms (ie, the firms where the exemption is relevant) is deployed by traditional PE shops. And in my direct experience, the employees at traditional PE shops who invest via the exemption are almost always associates. And also in my direct experience, the vast majority of PE associates are on the job for two years, three max. Private equity associa…

> Private equity associates very rarely don't get carry, which is why they co-invest instead

The vast majority of partner co-investment vehicles I've come across contain partners' capital. A rounding error may be from associates, who are usually counted against the limited number of unaccredited investors such funds can, with great legal liability, be marketed to.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#142

Post by thesehands »

arkades wrote: post #125
Alex3917 wrote: post #102

Earlier quoted context omitted.

> Isn't a co-op that's run as a dictatorship basically a corporation? In double-entry land, the ownership of labor is diluted every time new capital is contributed. Obviously people contributing capital should get rewarded, but the fact that causality only runs in this direction is super broken. Whereas in triple-entry land, capital can get diluted every time you add new labor. This works because the technology allow…

You are making references - “triple entry” - that seem to take for granted familiarity with certain concepts. Can you unpack that a bit?

I would assume double entry land to refer to the current system we operate today, and triple entry land would refer to a system where transactions occurred in crypto currency. Triple entry is well laid out here: http://iang.org/papers/triple_entry.html And point to the fact that transactions between two parties are digitally signed by a third party, thereby creating a third record

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#143

Post by conanbatt »

cortesoft wrote: post #100
unabridged wrote: post #31

The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early. The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.

An accredited investor is just a term for someone allowed to invest in things not regulated by the SEC. If you think that EVERYONE should be able to invest in things not regulated by the SEC, you are basically saying that being regulated by the SEC should be completely voluntary (i.e. a company can choose to be regulated or not). You can argue that it should work like that, but we intentionally decided to make SEC re…

Founders, employees, institutional and retail investors got together and voted for the SEC?

Are you sure about that?

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#144

Post by exogen »

conanbatt wrote: post #140
exogen wrote: post #123

Earlier quoted context omitted.

Who's losing their life savings or ending up in financial ruin in this scenario? Also I've never even heard of a "predatory investor", I'm pretty sure you just made that up.

If you are an investor, accreditation rules eliminate 95+% of the population as competition for your investment. That means you will get higher returns and better negotiation terms. Even founders cant invest in their own bethren! Think about that. YC startup founders could get together, talk to each other, and NOT be able to invest in each other. Neither could employees that have access to internal financials. You co…

Yes, that all sounds fine. Protect average people, not startups trying to get rich. Yes. Yes. Yes. Life does not revolve around startups. Yes.

Also, the people applying for home loans weren't compulsive gamblers. The banks literally told them they were qualified.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#145

Post by mindcrime »

BearGoesChirp wrote: post #132
banderman wrote: post #118

Earlier quoted context omitted.

The track record of humanity's decision making indicates that your statement is not accurate for a significant portion of the population.

Where do we draw the limit at limiting adults for their own good?

Initiation of force or fraud.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#146

Post by nrhk »

leereeves wrote: post #121
kovek wrote: post #104

Earlier quoted context omitted.

Sending funds to family in a different country. It's a use case I have not had experience with but which I think makes sense.

Is it really cheaper or easier to buy BTC, transfer them, then sell them than to transfer money through a traditional service?

Faster and cheaper with segwit not sure what its like currently. I transferred 5k to someone in 40 seconds for like a 20 cent fee with Eth a few months ago, it could be 100k and the fee would stay the same too.

You also get the money immediately without it going through the ACH network.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#147

Post by summer_steven »

Chirael wrote: post #59
unabridged wrote: post #31

The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early. The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.

I think the idea of accredited investors is that those investments are very risky, and it limits them to people who can "afford" the risk. An accredited investor may be able to bear the brunt of 9 investments being a total loss, to get to the 10th that hits it out of the park, while a non-accredited investor may have her/his life savings (or a substantial enough part of it) wiped out on the first 1 or 2 deals. I'm no…

The point of accredited investing is to lock the middle class out of the market.

If the law was really about "protecting people", then gambling and the lottery would also be illegal.

Also, why can't I sign a paper saying I accept the risk of investing? Why can't I become an accredited investor by passing a class? I can pass a series of classes to become an EMT and be trusted with peoples lives, but no classes are sufficient to educate me about investing in startups.

When you look at how the accredited investor laws are structured, its clearly meant lock the middle class out of the market

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#148

Post by Alex3917 »

mikeash wrote: post #133
Alex3917 wrote: post #55

Earlier quoted context omitted.

> Co-ops disintegrate when the people involved can't agree on the way to spend the money. That's because currently most co-ops are either run by hippies, or else exist only as tax dodges. But there's no reason they can't be run as dictatorships, the only real requirement is that the majority of the wealth generated gets captured by the people creating it. As the tools for running co-ops get better, we'll see more exa…

Is that really true? Searching around, I can't find anything talking about what a co-op is that doesn't mention member control as a big part of it.

So that's correct to the extent that when most people think of co-ops, they think of the seven principles or whatever. Which makes sense, because the labor movement has had a huge influence over what co-ops today look like.

I think though that an equally valid alternative vision is what's laid out by the Howey Test, where the value of a token needs to come from the network participants rather than from a central party or a promoter. This naturally leads to a situation where the most successful co-ops are the ones that best incentivize their members to create value, e.g. by giving them ownership for creating value. This is the great race that's currently happening in the space as companies are fighting to figure out how to best do this, since every single industry is ultimately going to get reimagined and every sector of the economy is up for grabs.

Over time we'll likely see a hybrid between the minimalist game-theory driven co-ops (e.g. FileCoin) and the principles of labor-movement-style co-ops, as they make sense and as they're (re)proven to actually incentivize people.

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#149

Post by mindcrime »

regulation_d wrote: post #111
age_bronze wrote: post #108

I don't get why regulation is needed. The whole thing is by definition very high risk investment, and I think it'd be silly for any "scam-victim" to claim he didn't know he's entering a high risk, and also high chance of scam, deal. In the end of the day, why is it the government's job to protect idiot people's money? And that's coming from the country where gambling is legal? The whole thing is based upon get-out-of…

I mean, we need regulation because 1929. We need regulation because regulation promotes confidence in the market which increases participation in the market. Security regulation is among the easiest government regulation to justify from a market perspective.

It isn't the government's job to "increase participation in the market".

Re: Initial Coin Offerings Horrify a Former S.E.C. Regulator

#150

Post by ghaff »

smokeyj wrote: post #139
ghaff wrote: post #76

Earlier quoted context omitted.

That and a lot of people really aren't qualified to judge the risk and fall victim to "You can't lose!" scams. Being rich is no guarantee of financial sophistication of course but there's some correlation. And, as you say, they're less likely to be wiped out even if they lose their investment. I agree it's not a perfect system and people who want to can find other ways to throw away their money. But we're probably no…

> I agree it's not a perfect system I think it's a great system. But I also hate poor people and don't want them to have the same opportunities I have. Let them play the lottery instead right?

For me personally, state lotteries work great. They're a very regressive tax. I also don't like them much and appreciate that, at least in my state, advertising and promotion was largely phased out.

[ADDED: In case anyone missed the sarcasm I'm not a huge fan of state lotteries because they target the people who can least afford them. That said, I realize many buyers would go the less regulated route if they didn't exist.]

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