Topic: Are Most Cryptocurrencies Doomed to Collapse — because they’re “ICO-issued”? - page 2. (Read 3462 times)

Sounds interesting, if you've found a salvable, decentralized method of investing from an anastomosis, keep us updated.

Btw, you're doing a fine job elucidating what you've found (I'd chime in more on securities law, I've been studying commercial law for 5 years, yet these days I'm extremely busy) and have clearly done extensive research into the subject of ICO securities; I do feel bad for the newer investors in these ponzis', unfortunately the coming pogrom will in majority effect the later investors, unless of course the government ends up initially pursuing the original issuers to mitigate the damage (which they well may).

Regardless, people have been warned countless times over these pestiferous ICO launches; yet greed, being greed alone, keeps them coming back for more.

A quick resource that may be of use to your research: The Public Library of Law
Here you can search for actual case law (Similar to the $200 a month WestLaw, but free) to add more resources to recapitulate your position with rulings from judges; I'd bet there are even more cases to add to your position than Howie).

I tthink China recent ICO ban is a good thing for the space long term, because there is no way you can totally ban all the crypto community, and that means those that are now interested will be buying at premium prices

I have to think about the dev's long term plans.
If it involves getting a currency adopted by the large world public of average people then yeah.. ICO's are a problem.
It's one thing to make a currency like Bitcoin then an ICO.

Most of earth will not want to participate in a crooked shady scheme coin system.
They are all doomed not to collapse but by being choked by a glass ceiling.
Sure they can play with them for profits on centralized exchanges but that amounts to nothing accomplished.

Doesn't matter though because none of the scammy assholes here are interested in looking at these issues.
They see dollar signs and want to cash out... BITCOIN.
They see the ICO as a way to get their hands on the NON-ICO coins.  

I do not admonish you with an intent to be disrespectful or unappreciative. I guess I am glad you raised this point although it has been raised numerous times all over the forums and refuting and correcting it every time will become tiring and impossible for an expert. Thus the community will become highly misinformed and idiotic as a result. It behooves all of you to be more astute and stop spreading incorrect information. And to try to help spread correct information.

Unfortunately readers here such as yourself make comments while being inadequately informed about the details, thus your statements are most often highly incorrect because "the devil is always in the details". This is why statements by people who have not studied an issue carefully, are worse than worthless. Statements from uninformed people, can be misleading and contain the opposite of the truth.

In this case, you are not emphasizing a very important detail which can mislead readers of your comment, which is that equity crowdfunding (as opposed to preselling production or other forms of non-securities crowdfunding a la Kickstarter) afaik has not been grandfathered in any way that allows them to be not classified as securities.

Thus all equity crowdfunding has remained subject to securities regulations, and thus all the pitfalls I detailed about not being able to trade the securities (i.e. shares or tokens) applies to all equity crowdfunding that occurred prior to the Regulation CF and Regulation A+ legislation. Essentially the main change in those new equity crowdfunding rules is that it is easier to sell equity to up to 1000 non-accredited investors subject to certain stipulations and regulatory compliance requirements (but only for a USA corporation!).

But they are all still securities. And as I explained already, a token being a security is a kiss of death, because it can not be legally traded P2P nor on unregulated exchanges (and afaik no crypto exchanges are registered with the SEC yet and no tokens are registered with the SEC).

Even if ICO issued tokens are properly registered and compliant in the future (in every fucking jurisdiction! which is an implausible clusterfucked mess of unresolved legal crap!), still they will be delisted from unregistered exchanges and illegal for use as a currency or utility token, because P2P trading of even registered securities is illegal.

Bottom line is that raising equity is entirely incompatible with creating an unencumbered token.

And there is no way currently to legally raise equity with a global sale to non-accredited investors all over the globe. For legal reaons, equity must be raised separately in each jurisdiction, e.g. USA, Canada, UK, Singapore, etc..

Also I do not think any equity crowdfunding was grandfathered. Rather the equity crowdfunding sites were working with the SEC on the new Regulation A+ and CF rules. And any equity crowdfunding that was sneakily done on non-equity crowdfunding sites (such as Rimbit's scam on Indiegogo which was linked in the linked blog of the OP of this thread) is still culpable (and will eventually haunt the participants unless it is just too small for the regulators to bother going after).

Readers are apparently very slow minded and/or just uninformed (and not well read) and thus having much difficulty in grasping these facts.

Ponder the many days and dozens of hours or more I have expended to become somewhat knowledgeable on this issue. And every issue I am involved in, ranging from deeply technological issues to these organizational and political economic issues requires deep study. That is why I am often on the computer 16 hours a day, which is a very unhealthy level of exposure to blue light and lack of exposure to the sunshine and exercise.

The soundbite Twitter tl;dr generation expects everything to be easy. But then they do not give appreciation and respect to those who do the hard work to explain for them. How do they expect that to end up then?

I wish someone even more expert than myself on this issue would enter this thread and help analyze. Unfortunately that does not seem to happen on BCT.

One thing that has not been mentioned is that regulators like the sec can grandfather existing instruments when a new regulation comes out.

This situation reminds me a lot of crowdfunding. People did crowdfunding even though it was not permitted by securities law. In the us, the sec got involved and issued regulation. The existing crowdfunding arrangements were grandfathered, afaik. Even thoug they were securities.

Even we can survive without China trader but this will be hard time for us. Everything will need long time for recover

China just want to make a bluff of it.. I dont think peoples in china will stop buying and selling crypto. Who cares about china. Not like china own this crypto market. With this strong community. i believe with or not china in crypto doesnt make crypto world destroy. For me it just more a rumor then a true fact. who can stop peoples from buying crypto? Just think.

I'm disappointed to see proof-of-work issued tokens declining along with ICO issued tokens, because I think Bitcoin, Litecoin, Bitcoin Cash will not ever be encumbered as securities. But I think this might be a short-term aberration as China has apparently threatened to close all exchanges even for Bitcoin. Eventually I think the ICO issued coins will be recognized to be the losers and investment will shift to the bona fide proof-of-work tokens I named (Dash not being one them because of it's fraudulent instamine arguably making it a security in some future regulatory environment).

But I think it is impossible that China will remove themselves from the cryptocurrency markets. They will shoot themselves and their high tech economy in the foot if they do so. Japan and South Korea have fast growing exchanges. Let China leave and let the door hit them in the ass on the way out. Yet I think China will not. Just rumors that will end up being not true.

But afaics ICO issued tokens are eventually doomed. Not sure how many months or years until they are clearly doomed though. It's also not 100% clear how all the various jurisdiction issues will play out and the timing thereof, but it's such a jumbled jurisdictional mess, I really do not understand why anyone who is not desperate would be touching ICO issued tokens. What is the use of greed if in the end one's life is destroyed by the lack of caution. We are headed into a tempest of sovereign debt crisis and global monetary and governance upheaval. I do not think it is wise to incriminate ourselves with a very uncertain regulatory mess of a future ahead. Some others are defiant, and I am pondering they must be desperate or not very wise investors. In order to preserve investment gains over decades and generations, one must not walk on hot coals and unnecessarily incur the wrath of the authorities.

I consider myself to be a high risk taker, yet I think miring myself in legal culpability that could come back to haunt me even 10 and 20 years from now, seems unwise. Especially when I can restructure my activities to avoid the unnecessary risk. And the tokens which are not securities, should eventually outperform over the long run because they are not encumbered and afflicted by the issues discussed in this thread.

It's depend on fund flow.

If fund flow move out, the value of all cryptocurrency is droped too

I am trying to create an alternative to an ICO. Details will be forthcoming. I also have a consensus algorithm which fixes all the problems with proof-of-work and proof-of-stake and which (in theory) scales to on the order of millions of real-time transactions per second (actually unlimited) and remains decentralized. It is named Proof-of-the-Transacting-Majority.

I am very busy trying to bring this to fruition (and trying to rehabilitate my messed up liver). There might be an opportunity to invest, but it will not be an ICO. Instead investors would receive dividends from the income of apps in the system, which return non-securitized tokens as dividends. The investment in the company will be legally issued securities (i.e. shares in the company). The tokens will not be encumbered as securities because they will not be issued by (any of obfuscation) which sells them to investors in order to raise funding for development. There will also be a meritorious and fair distribution of the tokens (which is orthogonal to the investment in the company), that does not just end up in the hands of nerds who mine. This will be a novel plan. I have so many paradigm shifts I am trying to bring to market.

Having some difficulty at the moment getting organized but trying to overcome the challenges. Really need to partner with some top quality people. Trying to find these people. Unfortunately, I approached Charles Hoskinson at IOHK.io but apparently he ignored me. I suppose they'd rather me compete with them than work with them.

More details and discussion was here:

https://bitcointalksearch.org/topic/m.21773902

Of course they are doomed to collapse. The SEC vs Howie clearly outlines that any product/security being issued to investors solely on the promise of profits via future investors from the efforts of a 3rd party promotor (centralized entity) are securities.

This isn't rocket science. These ICO idiots aren't doing anything new, they just think they're being 'sneaky'; Forming a corporation then selling an interest in your product/coin/company is the fucking definition of a security. These 'offerings' have nothing to do with being a 'currency'.

I agree, the cookie will crumble once the governments start going after these centralized exchanges trading these illegal coins.

Let's see how long Ethereum lasts once Poloniex, etc are under court order from the DOJ to freeze all assets without possibility of retrieval.

Ethereum itself is the biggest offender, and the sooner that scamcoin dies the sounder the overall bitcoin/crypto markets will become.

ICOs' are nothing but a thorn in the side of legitimate crypto like bitcoin, and deserve to burn.

How in the hell does an 'Initial Public Offering' and 'currency' even remotely belong in the same sentence? Hint: It doesn't.

Good work Iamnotback.

Oh, it gets even better....once the DOJ goes after the real American founders (US citizens) of Ethereum (see my sig) for creating a for-profit foreign entity to illegally bypass US & Swiss securities & tax regulations it's going to be like the 4th of July.

Truly rapacious scumbags issue and participate in the majority of these ICO launches, they are nothing but a modern ponzi scheme; the only ones defending them are the idiots temporarily profiting in the ponzi; they deserve to burn, and they surely will.

So many readers conflate the legal issue with the judgement of whether the project has any merits or is a scam or not.

The merits of an "ICO issued token" is entirely irrelevant to the legal issue. The problem is that securities will be illegal to trade and will be delisted, thus destroying their market price. Regardless of whether the project has any merit.

Please read again more carefully:


So what exactly do you disagree with in the above factual statements?

Are you claiming that most major countries of the world won't end up banning trading of ICO issued tokens? Or are you claiming that it won't crash the price of these tokens because they will still be tradeable in some obscure countries in the world (yet illegal for people from affluent countries to use those illicit exchanges)?

One can claim or argue that securities regulation in many countries of the world will not be harmonized with the common sense regulation in the USA, China, Canada, UK, etc..., and thus that the exchange markets (and legal use of those exchanges by most affluent people in the world) for ICO issued tokens will not be significantly destroyed, but we already have an example where the USA was able to force it's FATCA regulation to be enforced on USA persons in every country of the world. And for securities regulation, we already have several major countries warning of possible regulation of ICO issued tokens coming, including (as the linked blog in the OP states) USA, UK, Canada, Russia, China, Singapore, South Korea, and Hong Kong.

IMO, the G20 is getting organized on harmonizing their enforcements against financial crimes and tax evasion, per their agreement at a prior G20 summit to begin this coordination as of January 2017. Thus it is just a matter of time until all those who in the past were trading and/or promoting ICO issued tokens will retroactively have their fingertips burned up to their armpits by the authorities via a combination of delisting of tokens crashing their prices irrevocably and also fines, clawbacks, and potential jail time against some individuals.

The public are never going to touch these ICO issued tokens after the authorities start to declare them illegal for trading. Thus their prices will collapse because those tokens have no future.

Those who are netting gains from trading in ICO issued tokens may be feeling happy and smug, but will they regret it later when the clawbacks, fines, and other punishment is greater than the gains they netted. Potentially ruined lives because of illegal activity. IMO, it is not worth it unless you are desperate.

I do not agree with the statement that if a coin was released through the ICO, then it is doomed and is not promising. Of course, a significant part of it since the release was already lifeless, because the purpose of ICO was to raise funds, and not the reputation of the coin. However, some of them have existed for a long time and quite successfully, especially if they are actively used in narrow areas - gambling, medicine, banking, security, etc.

Yes you're right. I forgot what my point was.

As you may know, I was in the BCT thread in 2014 where he defending his stance towards the SEC inquiry.

But the linked Trilemma blog post above is inapplicable to this issues raised in this thread, other than the point that the SEC has no legal jurisdiction in Romania.

That blog post is correct that Bitcoin was issued (via proof-of-work that was not an obfuscated instamine like Dash or Steem) such that it is not a security and thus the SEC has no jurisdiction over BTC tokens. But the analysis of the OP's linked blog concludes that ICO issued tokens are securities. Obfuscated instamines (such as Dash and Steem) are economically the same as ICO issued tokens (i.e. the insiders end up with nearly free tokens which they sell to speculators to raise funds), thus are likely to be also judged to be securities.

Also the author of that quoted linked blog post is entirely unconcerned about whether BTC would become delisted from every exchange in major nations. Whereas, those who are speculating on ICO issued tokens, do very much need the liquidity of the the exchanges and need for those tokens to be legally tradeable in major nations, so they have a steady supply of greater fools to buy these ICO issued (scam) tokens.

EDIT (after the reply that follows from @Last of the V8s): Additionally the exchange and securities issuance practiced by the author of that blog (unrelated to the issuance of the Bitcoin tokens), was limited to offerings to high net worth individuals who were sophisticated investors, thus even if he was selling such securities to USA persons, he was likely under a Regulation D, 506 Rule exemption. And afaik, never did such blog author's securities trade to on unregulated exchanges to non-accredited investors.


Bitcoin is not a security because it was issued by competitive proof-of-work ongoing over decades. Meaning there is no issuer who was able to obtain the tokens for nearly free and sell them to raise funding for the developing Bitcoin.

Also be aware that the IMF is proposing to eventually make the global currency using blockchain technology:

https://www.armstrongeconomics.com/markets-by-sector/foreign-exchange/the-coming-one-world-currency/

https://steemit.com/money/@anonymint/get-ready-for-a-world-currency

http://trilema.com/2014/interacting-with-fiat-institutions-a-guide/

Any token which is a security, is illegal to trade on public markets (i.e. including non-accredited investors) which are not registered with the securities regulator in the applicable jurisdiction.

This means that tokens which were issued via ICO are not legal for spending as a cryptocurrency, nor for trading on the unregistered exchanges that exist now.

Eventually numerous major countries will ban the trading of these tokens per the requirements stated above. When that happens, there will be no more mainstream speculation market for these tokens.

Additionally ICO issued tokens which were not registered (with the securities regulators in each jurisdiction where the people who will trade them reside) nor issued only to accredited investors (which is the case for every ICO issued token project thus far), can't even be traded on regulated exchanges nor in private transactions between accredited investors.

Additionally those who are trading and/or promoting ICO issued tokens are potentially incriminating themselves, for future action by authorities at some later time. Remember the national securities agencies of at least the G5 are saving everything you do on the Internet for future analysis. And remember VPNs and Tor are honeypots and do not protect your anonymity.

If that is "pathetic" or "overblown", then do not cry to me later when you suffer major losses, fines, or jail time. I tried to warn you.


As @cryptohunter first pointed out many months ago and admitted by Byteball’s creator @tonych, Byteball was distributed to those who had access to BTC. Thus the exchanges and other ICOs enterprises received (as for example ICONOMI admitting on a Medium blog that they received 8.8% of first round) a huge chunk of the distribution, since they were holding BTC for those who are trading on the exchanges. Thus I presume there’s a possibility some kickback deals were made between the Byteball dev and the major exchanges and other groups that held a lot of BTC, which would thus be an obfuscation of the economics of an ICO issued token (which makes the tokens securities) in that the developer would obtain tokens nearly for free and sell those to speculators to raise funds. Or at best, the distribution was highly skewed non-meritoriously to undeserved whales.

As for Dash, anyone who still doesn't understand that Dash is not only a scam but derelict technology, is willfully ignorant and should be allowed to remain so in purgatory. Meaning I am not going to bother linking you to the information that you have been linked to 100 times already and continue to ignore.


And obfuscated instamines such as Dash and Steem also have such non-meritorious distribution regardless of whether they are also illegal securities due to the fraudulent way they were issued.

I consider there is a share of truth in the article.
There are possible risks of the ICO-issued cryptocurrencies as,
(i) some ICOs are scams developed to raise funds and could not be trusted because of the lawfully unregulated nature;
(ii) without the investment potential and customers engagement into ICO-issued cryptocurrency community, the cryptocurrency itself would have no value, and
(iii) even if a part of ICO-issued cryptocurrencies collapses, let's remember that it's a personal choice of everyone, including all risks that may be.

I think this article is too pathetic. Yes, cryptocurrencies become more and more active as transaction services, but it's not all-around. I agree that maybe it would be right to choose the stablest ones which are backed with the real world assets and close all others in order to prevent scam or bankruptcy cases and save our funds 

Okay, as iamnotback reasonably states, NEO is really getting its price from icos and  thus is now doomed. Then there's a point about the coins having to be legally issued and traded. Even btc is not that legal, is it? But yeah, this point was rather about the icos that have to be launched legally. The article is mostly about security problems with illegal coins and to which punishments from the law system it may lead and thus how it will affect the market. I guess iamnotback is usually right. I agree especially that icos are really dangerous and it's better to stay away from them. Yet I don't think byteball and dash is a scam.