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Ponzi Schemes Using Virtual Currencies (2014) [pdf]

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61–67 of 67 posts

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

#61
this is just the latest instalment in a never-ending series of mechanistically declaring illegal anything the kids like.

renting out your flat to tourists for profit? upsets the neighbours, doesn't comply with arbitrary laws written centuries ago -- illegal. using cabs that you order through an app? threatens our cronies with something they are not prepared to handle -- competition -- so must be illegal. buying and selling magic internet money for fun and profit? could be interpreted as a security, hence must comply with arbitrary rules that didn't prevent the biggest financial crisis in history, but are otherwise supposed to be good for you -- ILLEGAL.

at least one can take pleasure in the knowledge that the same people who enable and support these kinds of policies cry themselves to sleep with a (paper) issue of the WSJ every night, wondering why there is no growth, no inflation, 'millennialls' not buying diamonds, or cars, or houses, not having kids, and most of all, not sufficiently paying into the ponzi scheme that is their retirement plan, as well as any number of other issues more or less related to, or caused by, their own stupidity and boundless self-interest.

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

#62
post #23

Earlier quoted context omitted.

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

Perhaps then it makes more sense to regulate those seeking money instead of those investing?

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

#63
post #62

Earlier quoted context omitted.

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

Perhaps then it makes more sense to regulate those seeking money instead of those investing?

The regulation does regulate those seeking money.

Non-accredited investors are still perfectly entitled to invest their money in their friends and family's startups and/or more heavily-regulated IPOs, but startups aren't allowed to solicit the investments from the public, and have limitations on how much they can take from how many non-accredited investors.

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

#64

Earlier quoted context omitted.

Same. A quick chat with an attorney who is an SEC specialist basically said "if it breathes" i.e. involves money that ICO is seen as a security. The SEC putting together the digital division which covers cryptocurrency tokens is part of what led to him saying this. Basically fish in a barrel. It is in my opinion that any US-based ICO is now in a lottery as to whether they get the SEC visit. Not legal advice at all, j…

Can you ask him how a virtual currency can also be a security? Tulips could be a security, OK; but, didn't the Securities Exchange Act of 1934 exempt currencies from being considered a security?

Found this interesting, and relatable:

https://www.sec.gov/news/press-release/2014-111

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

#65

Earlier quoted context omitted.

Same. A quick chat with an attorney who is an SEC specialist basically said "if it breathes" i.e. involves money that ICO is seen as a security. The SEC putting together the digital division which covers cryptocurrency tokens is part of what led to him saying this. Basically fish in a barrel. It is in my opinion that any US-based ICO is now in a lottery as to whether they get the SEC visit. Not legal advice at all, j…

What was your decision? Did you stay or leave?

Pass.

Not sure why this isn't discuss more, but Erik Vorhees was fined for not registering as a security back in 2014: https://www.sec.gov/news/press-release/2014-111

Although it was just fines, not worth the exposure just for merely operating an above-board business. With SEC now having Cyber Unit, in theory their regulating now increases.

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

#66

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…

As a crypto-developer working in the blockchain space, my primary company has opted to do an ICO as part of its operations. The company has existing VC backing of between 4-10 million, and the project would benefit from blockchain - for one aspect. By no means is a new token necessary, but that fact seems to have been side-stepped. The product exists, and perceivably the token could be usable upon issuance... I enjoy…

I’d suggest reading The Colony blog for an idea of what lawyers are saying.

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

#67
post #58

Earlier quoted context omitted.

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.

Shell companies are used to optimize taxes and cap liabilities (note the recent legislation on passive foreign investment companies), they don't have much to do with protecting against investment risks.
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