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Investor Bulletin, July 25: Initial Coin Offerings

sec.gov

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Re: Investor Bulletin, July 25: Initial Coin Offerings

#31

Post by Snackchez »

dgfgfdagasdfgfa wrote: post #19
itsnotlupus wrote: post #14

Earlier quoted context omitted.

Annoyingly enough, that's not sufficient to make those ICOs scam. The easiest counterexample would be Ethereum itself, who had a teenager as its public face, and raised large amounts of funds on top of mostly just a whitepaper, yet turned out to actually deliver all the crazy stuff they promised.

> deliver all the crazy stuff they promised. I dunno; I'm still trying to figure out whether it's a great idea or the worst idea. I don't want to have to do a code review on my investments; at large enough scale, lawyers are way cheaper than losing money.

... This is exactly what you are supposed to do. In the ICO world, this is part of your due diligence if you're thinking of investing / speculating.

Re: Investor Bulletin, July 25: Initial Coin Offerings

#32

Post by Snackchez »

aaron-lebo wrote: post #7
anton_tarasenko wrote: post #5

The SEC uses quite a mild language here. Issuers often avoid mentioning even what they sell: revenue flow, profit, or just hashes. White papers has no traces of legal entities involved, dispute resolution jurisdiction, financial statements. A proper prospectus: - https://www.sec.gov/Archives/edgar/data/1447599/000119312515... And how ICO white papers look like: - https://detectortoken.com/docs/DetectorToken_White_Pap…

The cryptocurrency community is hilariously bad (well, it would be funny if people weren't getting fleeced) about putting blog posts through Latex and acting like they've written a "paper". The people who have written dozens of real papers that end up in a dustbin somewhere are jealous. The funny thing is most of these docs would be more accessible as blog posts, but those don't provide the same faux-academic thing c…

The reason some ICOs release a white paper in LaTeX is that there is often a lot of math to be written out. Take for example IOTA's white paper: https://iota.org/IOTA_Whitepaper.pdf

Often, it's easy to spot the ones that are doing the faux-academic thing.

Re: Investor Bulletin, July 25: Initial Coin Offerings

#33

Post by thrill »

TheSpiceIsLife wrote: post #24
itsnotlupus wrote: post #14

Earlier quoted context omitted.

Annoyingly enough, that's not sufficient to make those ICOs scam. The easiest counterexample would be Ethereum itself, who had a teenager as its public face, and raised large amounts of funds on top of mostly just a whitepaper, yet turned out to actually deliver all the crazy stuff they promised.

> Ethereum .. turned out to actually deliver all the crazy stuff they promised I'm just a bystander in all this but I distinctly remember the phrase the code is law bandied about, followed by a hard fork.

The exception proves the rule here. The only way to override the "code is law" model was to create a new coin, using the fact that a majority of miners voting for a particular new model means that becomes the new model - the creators just used their community weight to keep the old name. They most explicitly were not able to change the values in the old blockchain without the fork.

Re: Investor Bulletin, July 25: Initial Coin Offerings

#34

Post by tekromancr »

Snackchez wrote: post #32
aaron-lebo wrote: post #7

Earlier quoted context omitted.

The cryptocurrency community is hilariously bad (well, it would be funny if people weren't getting fleeced) about putting blog posts through Latex and acting like they've written a "paper". The people who have written dozens of real papers that end up in a dustbin somewhere are jealous. The funny thing is most of these docs would be more accessible as blog posts, but those don't provide the same faux-academic thing c…

The reason some ICOs release a white paper in LaTeX is that there is often a lot of math to be written out. Take for example IOTA's white paper: https://iota.org/IOTA_Whitepaper.pdf Often, it's easy to spot the ones that are doing the faux-academic thing.

IOTA's paper was what I was thinking about while reading OPs remark about blogpost to LaTeX conversion.

I'm not sure if I'm dumb, or its dumb (trinary, whaa?) but I had a really hard time getting through it without rolling my eyes a whole bunch. I still have 77 MegaIOTA, just in case someone ever figures out a use for it.

Re: Investor Bulletin, July 25: Initial Coin Offerings

#35

Post by omarchowdhury »

ttul wrote: post #28
TheAceOfHearts wrote: post #17

I don't have anything to add to this discussion, but I just wanna say that I'm impressed by the bulletin's clarity. I'm used to reading government information that's difficult to parse and dive into. It's easy to fall into a belief that government agencies don't really know what they're doing, and it's just a bunch of monkeys banging at typewriters, but seeing clearly written posts discussing current and relevant eve…

$1.7B has been raised so far this year... it's a big deal.

There are single Silicon Valley startups that have raised that much though.

Re: Investor Bulletin, July 25: Initial Coin Offerings

#37

Post by the_stc »

itsnotlupus wrote: post #14
Animats wrote: post #4

Earlier quoted context omitted.

Not prescient, real. There have been ICOs where the blockchain wasn't running yet. That's just a "send us your money" scam.

Annoyingly enough, that's not sufficient to make those ICOs scam. The easiest counterexample would be Ethereum itself, who had a teenager as its public face, and raised large amounts of funds on top of mostly just a whitepaper, yet turned out to actually deliver all the crazy stuff they promised.

Have there been serious contracts without major flaws? Not just basic token contracts, which would be better served with something other than a Turing-complete half-broken language.

We were considering implementing some of our blockchain IPO and corporate governance via a smart contract, but decided to punt on it. It's flashy, it'd help us raise more money, but it just does not seem like a smart idea at the moment. We'll use a basic ERC20 contract to account for who owns shares (and pay dividends) but nothing more involved than that for now.

Re: Investor Bulletin, July 25: Initial Coin Offerings

#40

Post by andrew311 »

Animats wrote: post #22
andrew311 wrote: post #20

I wrote an in-depth analysis of this bulletin and its associated report on The DAO: https://medium.com/@andrew311/thoughts-on-the-secs-initial-c... In the post, I explore what constitutes a security by examining case law and draw comparisons to other means of raising money for companies that are typically outside the purview of securities (gift cards, Kickstarter). Hopefully this helps provide perspective.

Not written by a lawyer. This really needs an analysis from a securities lawyer. The SEC concluded that the DAO was a security, but that they were not going to take action on it. That's within their discretionary authority. They may simply decided that they weren't going to go after this issue retroactively. They've now published some guidance on the subject, so future issuers can't claim there were no rules in that…

Correct, the analysis comes with the disclaimer that I am not a lawyer, and it is not legal advice. I am active in the space and have consulted leading lawyers for my own activities, so I come with some knowledge, but obviously this is a quickly evolving space.

For anyone buying tokens and considering SAFT offerings, this is a good read from a securities lawyer, albeit an English one (not US):

https://prestonbyrne.com/2017/08/04/thoughts-on-the-saft/

This is also a great post in terms of highlighting pitfalls and challenges:

https://medium.com/@twobitidiot/losing-alpha-why-most-new-cr...

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