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Ponzi Schemes Using Virtual Currencies (2014) [pdf]

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51–60 of 67 posts

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#51

Earlier quoted context omitted.

To further elaborate - a young student putting in $1000 in facebook seed round would now be a millionaire. Not unthinkable for someone like a young Warren Buffet. The government has successfully regulated the future to the top 1%, while claiming it's for the public good.

OK sure, but it assumes that young student would be able to discriminate a money-making investment from a money-losing one-- something the best VC's in the business, who vet tech deals all day every day, struggle to do. Imagine you repeal all accredited investment regs overnight. Which of these seems likely: - everyone in america invests $1000 in a future facebook, ten years later we're a nation of millionaires. - 10…

> something the best VC's in the business, who vet tech deals all day every day, struggle to do.

You just answered the rebuttal, which is supported by data. VCs don't outperform the S&P 500. Trying to support that everyone outside a specific industry is too dumb to be able to be risk-on just ignores too much.

I think this argument and rebuttals are red herrings. The SEC tried non-net-worth tests, before settling on the net-worth tests, they were intelligence (financial literacy) tests which were also a nightmare for the entire industry and perpetuated rampant discrimination across socioeconomic and racial lines.

Still, this current outcome should not be seen as the end all be all, and it merely hasn't been challenged adequately because the people rich enough to challenge it aren't affected by it, and the poorer classes barely know they are being so blatantly discriminated against because the private investments were prohibited from advertising to them at all!

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#52

"No minimum investor qualifications. Most legitimate private investment opportunities require you to be an accredited investor. You should be highly skeptical of investment opportunities that do not ask about your salary or net worth." This is a ridiculous regulation that prohibits class mobility as software eats the world. Apparently being middle class means you are too stupid to realize you are being scammed, but i…

If you're middle class, being hurt by a stupid investment could mean losing your house & retirement savings and yes, the state globally won't benefit from that.

Besides, historic numbers [1] show that passive ETFs outperform actively managed funds as a trend, so the original idea behind accredited investors was "if you want to play the high-risk game, at least don't put your last chip on the table".

[1] http://www.investopedia.com/articles/investing/030916/buffet...

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#53

"No minimum investor qualifications. Most legitimate private investment opportunities require you to be an accredited investor. You should be highly skeptical of investment opportunities that do not ask about your salary or net worth." This is a ridiculous regulation that prohibits class mobility as software eats the world. Apparently being middle class means you are too stupid to realize you are being scammed, but i…

Yes and no. You are right it limits positive mobility. But there are really two kinds of people here. One kind expects to be handed success to them without them doing any work. It is correct to protect these people as much as possible. They'll probably still end up losing their money, though.

The second group of people know that they need to work, learn and plan to succeed. These are the people that may be slowed down by the regulation. But they are able to overcome any given set of static rules anyways, so it's only a slowdown at best.

In the end any kind of rules are not just there to protect the stupid, but also to establish the people currently at the top. It's selfish, but when you end up at the top, would you do it otherwise? I probably wouldn't.

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#54

Ponzi aside, let's say it's the greatest cryptocurrency idea. The SEC has right to use their Howey Test to determine whether it's a security. Based on 1,2,4 below, is this not ICO's? Under the Howey Test, a transaction is a security (or investment contract) if: 1. It is an investment of money 2. There is an expectation of profits from the investment 3. The investment of money is in a common enterprise 4. Any profit c…

1. is not money, but any money-like value, I believe.

And if 4ths is big enough in your plan so you can't even argue it doesn't play a role, then you probably have a shitty business plan, I'd argue. The profit of course should come from selling some service or product.

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#55
post #53

"No minimum investor qualifications. Most legitimate private investment opportunities require you to be an accredited investor. You should be highly skeptical of investment opportunities that do not ask about your salary or net worth." This is a ridiculous regulation that prohibits class mobility as software eats the world. Apparently being middle class means you are too stupid to realize you are being scammed, but i…

Yes and no. You are right it limits positive mobility. But there are really two kinds of people here. One kind expects to be handed success to them without them doing any work. It is correct to protect these people as much as possible. They'll probably still end up losing their money, though. The second group of people know that they need to work, learn and plan to succeed. These are the people that may be slowed dow…

[deleted]

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#56
post #53

"No minimum investor qualifications. Most legitimate private investment opportunities require you to be an accredited investor. You should be highly skeptical of investment opportunities that do not ask about your salary or net worth." This is a ridiculous regulation that prohibits class mobility as software eats the world. Apparently being middle class means you are too stupid to realize you are being scammed, but i…

Yes and no. You are right it limits positive mobility. But there are really two kinds of people here. One kind expects to be handed success to them without them doing any work. It is correct to protect these people as much as possible. They'll probably still end up losing their money, though. The second group of people know that they need to work, learn and plan to succeed. These are the people that may be slowed dow…

[deleted]

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#57

"No minimum investor qualifications. Most legitimate private investment opportunities require you to be an accredited investor. You should be highly skeptical of investment opportunities that do not ask about your salary or net worth." This is a ridiculous regulation that prohibits class mobility as software eats the world. Apparently being middle class means you are too stupid to realize you are being scammed, but i…

If you're middle class, being hurt by a stupid investment could mean losing your house & retirement savings and yes, the state globally won't benefit from that. Besides, historic numbers [1] show that passive ETFs outperform actively managed funds as a trend, so the original idea behind accredited investors was "if you want to play the high-risk game, at least don't put your last chip on the table". [1] http://www.in…

The rich can be destroyed by investing more than they can afford as well.

Index funds beating managed hedge funds has nothing to do with inability to invest disposable income in startups.

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#58

Earlier quoted context omitted.

If you're middle class, being hurt by a stupid investment could mean losing your house & retirement savings and yes, the state globally won't benefit from that. Besides, historic numbers [1] show that passive ETFs outperform actively managed funds as a trend, so the original idea behind accredited investors was "if you want to play the high-risk game, at least don't put your last chip on the table". [1] http://www.in…

The rich can be destroyed by investing more than they can afford as well. Index funds beating managed hedge funds has nothing to do with inability to invest disposable income in startups.

> The rich can be destroyed by investing more than they can afford as well.

They have shell companies that protect them from this.

Re: Ponzi Schemes Using Virtual Currencies (2014) [pdf]

#60
post #23

Earlier quoted context omitted.

OK sure, but it assumes that young student would be able to discriminate a money-making investment from a money-losing one-- something the best VC's in the business, who vet tech deals all day every day, struggle to do. Imagine you repeal all accredited investment regs overnight. Which of these seems likely: - everyone in america invests $1000 in a future facebook, ten years later we're a nation of millionaires. - 10…

You already have the opportunity to bankrupt yourself with lottery tickets and casinos, yet most people don't.

Casinos offer better odds than early stage startups you have no connection with or control over, and aren't allowed to market themselves as investment opportunities either
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