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SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

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Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#71

Post by iMuzz »

> The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws. The Report confirms that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies.

> The agency has decided not to bring charges in this instance, or make findings of violations in the Report

So they aren't going to bring charged to the creators of The Dao. What about the other dApp's based in the US that have already ICO'd (BAT, Augur etc.)? Also, if a company successfully files/gets approved by the SEC, does that mean that NASDAQ can now list tokens?

AFAIK the SEC only cares about securities sold in the U.S. I'd imagine this incentivizes a lot of Token issuers to leave the U.S?

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#72

Post by Jabanga »

vkou wrote: post #62
Jabanga wrote: post #51

Earlier quoted context omitted.

Then we should limit who people can vote for, since voters are so easy to manipulate into voting against their own interests. The basic principles of liberal democracy assume that a person has an absolute right to make decisions for their own life. These kinds of restrictions are unconscionable restrictions on the right of free people to their personal autonomy.

We aren't allowed to murder people either, but for some reason, most of us don't consider that to be the antithesis of liberal democracy.

The basic principle of liberal democracy is that we have an absolute right to personal autonomy unless we violate other people's equal right to the same.

Making it illegal to offer a digital token for sale to other consenting adults, without approval from a central authority, is unconscionable.

Before endorsing yet another law that restricts our right to engage in voluntary interactions, consider this: https://www.theatlantic.com/politics/archive/2016/06/enforci...

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#73

Post by Jabanga »

Cshelton wrote: post #69
Jabanga wrote: post #43

Earlier quoted context omitted.

>but to protect U.S. citizens from being scammed all the time. US citizens shouldn't be treated like children that need to protected from their own stupidity.

Very smart people are scammed and conned all the time.

Of course. We don't restrict the rights of the entire population to engage in voluntary interactions to preempt crime. We punish actual criminals to deter other would-be criminals, and leave everyone else to be free.

We don't require a publishing license because someone might use their right to free speech to libel someone else. We punish the libeler.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#74

Post by zazpowered »

brucephillips wrote: post #56
zazpowered wrote: post #48

Earlier quoted context omitted.

Most ICOs already try to block US contributors but it's usually only based on IP which can easily be gamed

Interesting. Do you know why they were doing this? Just in anticipation that the SEC would crack down?

Yeah it seems like people already knew it was a gray area so they did it as a precaution. I don't think this SEC notice changes very much.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#75

Post by darawk »

Animats wrote: post #9
robbiet480 wrote: post #4

This appears to only applies to ICOs that offer something that is like a security, such as the DAO, not voucher based ICOs like Primalbase or Storj EDIT: Added appears to since IANAL

Assuming that would be unwise. In general, US securities laws cover anything that looks or works something like a security. There have been clever attempts to get around this before. They didn't work.[1] [1] https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co .

You're right, but in the case of things like Storj and Sia, for instance, the ICO token is used to pay for the services offered by the network. What it really is, is a tradable pre-sale. It's as if you could trade the perks offered by a Kickstarter. I'm not sure if that would make it exempt or not, but it is an interesting legal question.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#76

Post by joeyspn »

EGreg wrote: post #64
vasilipupkin wrote: post #55

Earlier quoted context omitted.

it's not just US persons. Germany has securities laws, France has securities laws, etc. I mean that German equivalent of SEC can go after those selling securities to Germans without following German securities laws

Serious question: Do you know any countries AT ALL that have no securities commission, or one that doesn't strictly regulate sale of securities, while at the same time the country allows formation of a company? Being that token sales are international, it would seem there is absolutely nothing illegal about opening a company in that country and offering securities. Even if the owners of the company are US citizens. T…

> or one that doesn't strictly regulate sale of securities

There's a reason why some crypto-companies (and not crypto actually) are based in the Cayman Islands (BitMEX), British Virgin Islands (Bitfinex), etc... Crypto Valley [0] in Switzerland is also gaining momentum. BTW, Fred Wilson wrote an interesting piece about this recently [1].

But the issue here is that if you plan to sell "tokens" to US nationals, you now know that you must play by the SEC rules. That or you shouldn't offer them to US individuals. Nothing rare about it, for instance CFDs [2] are financial instruments banned in the US, but traded without problems in the rest of the world. My guess is that ICOs will be like CFDs, offered around the world, but not to US citizens.

[0] https://cryptovalley.swiss/

[1] http://avc.com/2017/07/jurisdictional-competition/

[2] https://en.wikipedia.org/wiki/Contract_for_difference

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#77

Post by Cshelton »

iMuzz wrote: post #71

> The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws. The Report confirms that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. > The agency has decided not to bring charges in th…

The SEC cares about U.S. citizens. If you marketed and/or sold to a U.S. investor, you are now under the SEC's jurisdiction.

There are countries you can go to of course, but not many left. Grand Caymans... Switzerland is no longer a safe haven from U.S. jurisdiction either.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#78

Post by carohuud »

Cshelton wrote: post #77
iMuzz wrote: post #71

> The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws. The Report confirms that issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies. > The agency has decided not to bring charges in th…

The SEC cares about U.S. citizens. If you marketed and/or sold to a U.S. investor, you are now under the SEC's jurisdiction. There are countries you can go to of course, but not many left. Grand Caymans... Switzerland is no longer a safe haven from U.S. jurisdiction either.

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Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#79

Post by pishpash »

brucephillips wrote: post #15
smokeyj wrote: post #10

Earlier quoted context omitted.

This literally changes nothing. Regulated companies already knew what the findings would be. Unregulated companies still don't care.

What is an "unregulated company"?

There are unregulated exchanges, usually small.

Re: SEC Issues Report Concluding DAO Tokens, a Digital Asset, Were Securities

#80

Post by xorcist »

armenarmen wrote: post #45
dmitrygr wrote: post #5

Good. This should help bring some sanity and accountability. they were both quite needed

There's no room for buyer beware? I mean c'mon. People participating in ICOs are still pretty sophisticated technically. Seems like we're regulating interactions between well informed consenting adults.

Every one of these scams that have imploded, including the DAO itself, have had participants crying out for interventions. That should speak volumes about the amount of consent involved (and indeed the sophistication).
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