SEC tightens the noose on ICO-funded startups • Hacker News Board

Re: SEC tightens the noose on ICO-funded startups

#61

Post by CryptoPunk » Wed, Oct 10, 2018, 8:05 PM UTC

gfodor wrote: post #7

The "utility token" meme was hilarious in the community basically talking itself into the idea that the SEC was going to write a bunch of new laws and/or interpret the existing ones in the most favorable light to those raising ICOs. Playing with fire.

The SEC doesn't create law. Courts do. It can claim anything it wants, but until its argument is tested by a court, it's not law.

There continue to be strong legal arguments for utility tokens not being securities:

https://www.coinbase.com/legal/securities-law-framework.pdf

This attitude of deferring to regulatory agencies, which have their own set of institutional biases, on the question of the applicability of securities laws to smart-contract executed issuances of digital tokens that confer zero legal title to a common enterprise, is dangerous to liberty and innovation.

Re: SEC tightens the noose on ICO-funded startups

#62

Post by s73v3r_ » Wed, Oct 10, 2018, 8:13 PM UTC

sharemywin wrote: post #49

charlesdm wrote: post #16

Earlier quoted context omitted.

Isn't this just an interpretation of the law? Yes, the SEC may try to enforce their view of the law, but is it actually the correct one? It only takes one SAFT token company to take things to court, and have a judge rule in their favour, to basically legitimise all tokens - no? (Note: I have no clue who is right here, but just because it's the SEC doesn't mean they are automatically right. Same applies to the IRS etc…

or go to prison if you lose.

The SEC does not have the authority to bring criminal cases; only civil. They can refer to the DoJ for criminal prosecution.

Re: SEC tightens the noose on ICO-funded startups

#63

Post by CryptoPunk » Wed, Oct 10, 2018, 8:14 PM UTC

empath75 wrote: post #58

CryptoPunk wrote: post #52

The laws need to change. The SEC should only get involved when someone defrauds another party through misrepresentation. Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract. That the poorest households spend 9% of their income on state-run lotteries, yet people can't try their hand at investing their own money in businesses/projects that haven't bee…

> The SEC should only get involved when someone defrauds another party through misrepresentation. So basically ICOs, then.

If you can prove a token sale organizer defrauded token buyers by misrepresenting facts, then they should face legal consequences.

But painting an entire category of financial transactions as fraudulent, based on crude generalizations, is not just.

Re: SEC tightens the noose on ICO-funded startups

#64

Post by s73v3r_ » Wed, Oct 10, 2018, 8:20 PM UTC

CryptoPunk wrote: post #52

The laws need to change. The SEC should only get involved when someone defrauds another party through misrepresentation. Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract. That the poorest households spend 9% of their income on state-run lotteries, yet people can't try their hand at investing their own money in businesses/projects that haven't bee…

"Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract."

No, they don't. This is like saying the 13th Amendment infringes on your right to sell yourself into slavery.

Re: SEC tightens the noose on ICO-funded startups

#65

Post by anotheramala » Wed, Oct 10, 2018, 8:22 PM UTC

CPLX wrote: post #4

> All of this SEC action may sound like very bad news for ICOs, but many in the industry have a more optimistic take: regulatory clarity will bring growth It will be an interesting test I suppose. If ICO’s are in fact a novel technology that offers some kind of advantage, then this statement will be correct. If the entire and total value of ICO as a concept was that it was a means to sidestep existing regulations by…

Recently congress members have written to the SEC asking for clarity on crypto: https://www.chepicap.com/en/news/4016/15-members-of-congress...

They want to draft legislation for regulatory clarity. So we can be sure ICO's will be addressed in that.

Re: SEC tightens the noose on ICO-funded startups

#66

Post by hihi123456 » Wed, Oct 10, 2018, 8:23 PM UTC

Before we say everyone is going to jail and add to the fear-mongering. Like any tech company who are placed on the fringe-- DLT/ Blockchain included -- get a good GC/Lawyer. They can easily shepherd you through the ever changing matters of remaining compliant.

Re: SEC tightens the noose on ICO-funded startups

#67

Post by monochromatic » Wed, Oct 10, 2018, 8:25 PM UTC

CryptoPunk wrote: post #61

gfodor wrote: post #7

The "utility token" meme was hilarious in the community basically talking itself into the idea that the SEC was going to write a bunch of new laws and/or interpret the existing ones in the most favorable light to those raising ICOs. Playing with fire.

The SEC doesn't create law. Courts do. It can claim anything it wants, but until its argument is tested by a court, it's not law. There continue to be strong legal arguments for utility tokens not being securities: https://www.coinbase.com/legal/securities-law-framework.pdf This attitude of deferring to regulatory agencies, which have their own set of institutional biases, on the question of the applicability of secu…

Chevron deference.

Re: SEC tightens the noose on ICO-funded startups

#68

Post by wpietri » Wed, Oct 10, 2018, 8:26 PM UTC

s73v3r_ wrote: post #60

olivermarks wrote: post #20

Earlier quoted context omitted.

Malta have very well defined laws about ICO's on the books from November 1st, the UK and USA have been disasterously vague about guidance for what constitutes a security so far, which doesn't help anyone except the bankers.

No they haven't. They've said from the beginning that if it looks like a security, smells like a security, walks like a security and talks like a security, then it's a security. It's people trying to play the, "Well, it's different cause it's on a computer!" game that are muddying the waters.

That's my impression too.

Emily Post had this great rant on how people act like every new technology is exempt from the rules. Her examples at the time was the cellphone in movie theaters. Everybody knew not to talk loudly in the movie theater before the arrival of cellphones, but suddenly plenty of people thought it was ok to a) have a ringing phone, and b) answer it. Eventually everybody got it together again and nobody does that anymore. People figured out how to generalize politeness for the new technology.

It seems like the same deal here. Investment regulation applies when you're selling a piece of your operation. It still will.

Re: SEC tightens the noose on ICO-funded startups

#69

Post by abugheratwork » Wed, Oct 10, 2018, 8:26 PM UTC

CryptoPunk wrote: post #61

gfodor wrote: post #7

The "utility token" meme was hilarious in the community basically talking itself into the idea that the SEC was going to write a bunch of new laws and/or interpret the existing ones in the most favorable light to those raising ICOs. Playing with fire.

The SEC doesn't create law. Courts do. It can claim anything it wants, but until its argument is tested by a court, it's not law. There continue to be strong legal arguments for utility tokens not being securities: https://www.coinbase.com/legal/securities-law-framework.pdf This attitude of deferring to regulatory agencies, which have their own set of institutional biases, on the question of the applicability of secu…

"This attitude of deferring to regulatory agencies ... is dangerous to liberty and innovation."

I'm just checking that that's really what you meant to say.

Re: SEC tightens the noose on ICO-funded startups

#70

Post by jarsin » Wed, Oct 10, 2018, 8:36 PM UTC

empath75 wrote: post #58

CryptoPunk wrote: post #52

The laws need to change. The SEC should only get involved when someone defrauds another party through misrepresentation. Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract. That the poorest households spend 9% of their income on state-run lotteries, yet people can't try their hand at investing their own money in businesses/projects that haven't bee…

> The SEC should only get involved when someone defrauds another party through misrepresentation. So basically ICOs, then.

Exactly. The average ICO made buzzword promises much more insane and fraudulent than even Theranos.

As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day.