Topic: DNotes 2.0 - Staking, CRISP Interest, DNotes Pay - page 236. (Read 148868 times)

Thanks for replying !

As you know, cryptocurrencies including bitcoin are hot potato in korea.

There are some major exchanges like Bithumb, Upbit, Coinone.

In my opinion important key point is marketing in korean exchanges as follwing.

They are interested in innovative technology also, but more enthused by marketing, promotion, and something like event.

For example NXT coin has been really hot recently, because can get free ignis coin just by owning NXT.

I wish Dnotes to be one of popular coins in korean market ASAP !

Welcome Peter.P, thanks for joining us on the DNotes forum. If you have any suggestions on which Korean exchanges would be a good fit for DNotes, once we release DNotes 2.0 please let us know.

Yes, we are pursuing listing of DNotes on various exchanges worldwide. That will happen after DNotes 2.0 is launched to the satisfaction of those exchanges that DNotes 2.0 is stable based on their evaluation.

I will be gone most of the day.

Just a brief response. DNotes is a “C” corporation. All its authorized and issued shares are common stock shares just like that of Google or IBM. Blockchain is still an experiment, so we do not plan to have the shares on the blockchain any time soon.

DNotes, on the other hand, are sometimes labeled as crypto-shares of a Decentralized Autonomous Organization (DAO). The 25% (subject to dilution) will most likely be held in a trust for the benefits of all DNotes stakeholders. We are still working with our Attorney to determine the best option. This ownership will remain the same with no planned distribution. It is meant to provide DNotes currency with some intrinsic value. In an efficient market, the value of this ownership will be reflected in the market price of DNotes. It should have a positive impact on DNotes’ price stability, essential in mass adoption of DNotes in Global commerce.

Hello DNotes team & all members.

First of all congratulation on parternering with Geneca

It's glad to me DNotes is seen to have a bright future.

I've had some dnotes coin from May, Poloniex and now Cryptopia cause of delisting.

Isn't there any news about listing on other exchanges such as bittrex or Korean exchanges?

I wish anyone who has an idea replies.

Thanks all.

I'm assuming here that there is a difference between 10,000,000 DNotes Global shares and 10,000,000 DNotes (the coin). The shares would essentially be created similarly to any other company stock once your registration filing is qualified by SEC, or are they also on a block chain? The 10,000,000 DNotes Coins you plan to keep indefinitely.

If DNotes, the coin, owns 25% of DNotes Global how will that ownership be demonstrated? Are there shares that will automatically show up in your wallet based on how many DNotes you have, or do the coins themselves represent a type of share as well?

I think I'm mentally falling over the logistics...

Wiser, thank you for helping us to think through this. The Mini-IPO will only be selling up to 10,000,000 DNotes Global, Inc’s. shares at a fixed price of $5 per share, allowing us to raise up to $50 million using Reg. A+ Mini-IPO Title IV Tier 2. No money can be accepted until our registration filing is “qualified” by the SEC. It is a long and expensive process but far less costly and burdensome than the traditional IPO. We expect it to take six months at a cost of $500,000.

We have no intension of selling the DNotes any time soon. There are many reasons for the ownership. Strategically, it gives DNotes Global strong self-interest to make DNotes an immense success. Because of that it creates shareholder value for DNotes Global and stakeholder value for DNotes. And since DNotes own 25% of DNotes Global (subject to dilution) a more valuable DNotes Global also makes DNotes the digital currency more valuable with more intrinsic value in support of it.

The business models that we have been building are simply amazing. They are viable for our industry to follow one day, though not easy to replicate.

The whole DNotes model is extremely complex in many respects. As we attempt to merge the old world of centralized control with the leaderless decentralized new world there are many challenges we seek to overcome. We intent to be as transparent as possible and trust that we all can learn together.

Its going to be a very busy day for me. I will check in when I have a chance. Have a wonderful day. 

Would it make any difference how you were to sell those DNotes? For example, would dumping them on an exchange at market price be any different legally than putting them up for sale directly to investors, most likely for fiat money?

I'm thinking that putting them up on an exchange would be legal, though not recommended at this time. You own the coins. You have the right to sell them.

But promoting the coin directly to investors as something that could be profitable would then qualify the coin as a security which means you'd better be properly registered and vetted first.

What if you put the coins up on an exchange *and* also promote it?

"Does this mean that DNotes Global Inc. would be seen as breaking SEC regulations if it ever sold any of the potentially postmined 10,000,000 DNotes2.0 being considered?"

That is a valid question. If we use the 10,000,000 DNotes as a token sale to raise money for DNotes Global before being qualified by the SEC as registered or exempted that would be illegal under U.S. security laws. I would not be surprised that we need to file a disclosure statement with the SEC in the future if we intent to sell any of the DNotes.

Alan thanks for taking time out of your hectic schedule to answer my questions, you've given me more perspective on the matter. It will certainly be a tough balancing act for the SEC, between protecting investor's assets, while still effectively enforcing the law. Perhaps the government can create a bailout token to reimburse investors who were the victims of fraud . At any rate, I'm interested to see how they proceed.

Does this mean that DNotes Global Inc. would be seen as breaking SEC regulations if it ever sold any of the potentially postmined 10,000,000 DNotes2.0 being considered?


Wiser, I completely agree with you and would love to see a 1:1 spend on financial education : financial regulation.

I believe that more proactive and consistent enforcement of existing laws would also solve a lot of the problems. When an ICO posts a whitepaper that claims it has a team of 10 programmers with a combined 100 years of experience. I'd like to see some complaint against them when it all falls over taken seriously and an investigation into the real number of year's experience of the programming team. If it doesn't match the information in the white paper, jail the participants for fraud. If a whitepaper claims they've completed the working software and they're running the ICO for marketing funds, then it turns out that they don't have working software, jail them for fraud. Not so hard and no new laws required. Same goes for creating or falsely embellishing identities.

And finally, I don't see why filling out forms to provide concise information about your organisation or ICO should incur an expensive fee. Maybe they should offer a two tier system. Tier 1 would gather and publish information after verifying it was signed by an identified responsible party. Then tier 2 could charge a fee for having their claims checked by the SEC and marked as verified. Investors could then decide on the risk they are willing to accept.

Massachusetts Securities Regulator Offers Stern Criticism of Bitcoin

https://dcebrief.com/massachusetts-securities-regulator-offers-stern-criticism-of-bitcoin/

I don't think there is a law against anyone launching a new coin and making it available for everyone to participate in - the way our industry got started. The SEC takes issue when someone pre-mined an amount and sell them for money without SEC registration or exemption.

My relentless commitment to help DNotes succeed by doing the right things is to ensure that DNotes can benefit a lot of people who do not have the means to participate in investments that are designed for accredited investors. So, we share a lot of investment sentiments in favor of the small investors.

It is certainly true that the lower entry barrier for investing is true without ICOs. As you said people can buy DNotes or any other cryptocoin directly from an exchange. I've bought into one or two ICOs and for the most part I've learned that the coin tends to lose value as soon as it starts getting traded on exchanges. It may or may not appreciate in value later, but you have time to study it and watch the market to find a good entry point. So if I'm interested in a coin, I often will just wait until its ICO is done and it goes on the exchange and then wait some more. If I still want it, then I'll buy it, but I'll admit a lot of times I sort of forget about it.

Since a lot of exchanges host ICOs, my hope is that increased regulation (or crack down) of ICOs doesn't jeopardize people's ability to acquire ordinary cryptocoins on exchanges.

I appreciate that required registration is how you get full disclosure and continue reporting information. It can also be prohibitively expensive for new entrepreneurs. I can understand why some of those people are excited about the ICO concept. I'd like to see the best of both, where there is proper disclosure and information to help investors make informed decisions but the cost isn't prohibitive for the startup, and the investor can participate with amounts as low as $10 (and not be required to invest some prohibitively high amount), and where people of all means can participate, not just "accredited investors."

Excellent job, team. This is giving us great exposure. We will be dialing up our PR machine by a few notches in 2018.

 Wiser, I agree with you that “much lower entry barrier for those of modest means to invest in something that very well could improve their financial lives in a way that wouldn't be possible otherwise” is a wonderful thing made possible in our industry. However, that fact remains that it is possible with or without ICOs. For example, once an account is set up, anyone can invest $5 in DNotes - $1 today will buy you 20 DNotes. Of course, once it is discovered and fully valued the potential for appreciation is reduced.

The SEC has a mandate to promote capital formation. It promotes various legal crowdfunding platforms such as CF (crowdfunding) Reg. D - 506 (c), Reg. A+ Mini-IPO and others. I bet if our law makers can figure how to make the sale of ICO legal, SEC will promote it as a tool for capital formation.

Furthermore, it is important for us to understand that the required registration is their means of getting full disclosure and continued reporting information so that the consumers can make informed investment decision.

For full disclosure, I am not an attorney but just someone who has been an entrepreneur for a long time and familiar with some of the legal concepts.

Regarding your first question: “1) What sort of protections is a corporation legally required to offer investors that LLC, LLP, and others don't? Do you think these easy to attain forms of ownership are being employed strictly for appearance of legitimacy, even when unnecessary?”

They all offer their investors some level of protection to the extent of the entity’s total asset. To that extent, it shields the owners with limited liabilities. You cannot lose more than your entire company, LLC, LLP or other registered legal ownership with limited liabilities. They all have advantages and disadvantages – each more suitable in certain situations than others. They protect you and your investors and as such legitimate and necessary.

In the case of DNotes Global, Inc. we have the company incorporated in the State of Delaware, and registered to do business in the State of Illinois, as our corporate Headquarters. Additionally, it is incorporated as a “C” corporation –  with virtually no limit in the number of stakeholders we can have. This is extremely important in our case. We eventually could have a full-blown IPO attracting a very large number of shareholders worldwide.

"2) What is the difference between owning a cryptocurrency, and buying into an ICO in terms of ownership rights? If you had to apply it to existing legal framework, how would the law view the distinction? Would it be fair to make the (overly dramatic) comparison that this is like owning your home outright, vs having to pay the mortgage on an incomplete home?"


This is a tough one to answer, Brandon. Technologies often get ahead of regulations. If there is a legal challenge regarding ownership right, the final court ruling will set a precedent for others to follow.

When you buy 1000 DNotes from Cryptopia Exchange no one else but the owner of that 1000 DNotes received the proceeds from that sale. If the 1000 DNotes was sold in an ICO that proceeds would end up in another entity. Yet they all could end up being traded on the same exchange. The first case is an exchange in kind (DNotes for Bitcoin). The second case meets the hallmark of selling a security under U.S. law. (DNotes for US$). And that is illegal unless registered or exempt with the SEC.

"3) Are US investors who buy into unregistered ICO's committing a crime in the US, or does ownness fall solely on the issuer?"

One of the SEC mandates is consumers/investors protection. That is the reason that the SEC has been warning the consumers to be very careful when investing in ICOs. I personally don’t believe that they will go after the investors. Technically, they are the victims. But, when and if, the SEC go after the issuers of ICO tokens, it will probable cause serious loses to investors’ asset value; depending on the enforcement remedies used. An extreme case of a cease and decease order with return of all funds could be very damaging.

Legalities aside, the thing I like about cryptocurrencies in general and to some extent applicable to ICOs is the much lower entry barrier for those of modest means to invest in something that very well could improve their financial lives in a way that wouldn't be possible otherwise.

If I only have $100 to invest, I can buy an undervalued cryptocurrency and maybe I'll end up sitting on something worth $10,000 or more. Cryptocurrencies basically make investments fungible enough for poor people to participate. $100 too much for you? You can also just invest $10 or $5. Remember in the early days of CryptoMoms when we were encouraging each other to give up your Starbucks Latte and use the money you save to buy DNotes? Well, with DNotes and some other coins, that kind of small investment really could make a big difference.

So when I hear about the SEC cracking down more on ICOs and other things related to cryptocurrency I worry that this door for poor people might get slammed shut. I hope that doesn't happen, and I'm grateful that this door was open for me.

That said, I also believe that people and entities promoting investments need to be honest about what they are promoting. Many ICOs have been shady and those poor people who have little or those middle class people who give up their weekly lattes at the very least deserve to know that what they are putting their money into has every reasonable chance of being successful (though one can never guarantee such things). There should be some protection from charlatans running ICOs that do nothing but scam people out of their money--at least in the form of full disclosure about fundamentals so that an informed investor of any social or economic class can make a good decision.

I just hope that the protection afforded investors does not also make it more difficult or impossible for people to participate. For example, I really hate how so many investments in the US are only available to accredited investors. You can invest in this wonderful promising startup and possibly get rich. Oh wait. You already have to be rich in order to get the chance.

I hope we can maintain the fungibility of cryptocurrencies and ICOs where investors can buy any amount, no amount too small, while still building in some reasonable standards of solid fundamentals that those seeking to raise funds for their ventures have to follow.

At the end of the day, though, the responsibility to spend one's own money wisely has to lie with each one of us, regardless of how much we have. There's only so much regulation can do to save us from our own poor financial choices without becoming overly burdensome. I wonder if it wouldn't be a better use of national resources if more funds weren't put towards the proper financial education of children (and adults) instead of towards trying to overregulate entrepreneurs who want to raise funds in the easiest way possible. If the majority of the population were properly educated on financial matters, wouldn't that in and of itself make it more difficult for the charlatans to raise funds?

Great breakdown of this issue, thanks for updating us. Since the first ICO was issued in 2013, relatively little has changed in the way the majority of the operate, aside from becoming sleeker, increasingly sophisticated, and more readily deployable through ICO facilitators like Ethereum.


A few questions on this matter, everyone feel free to chime in:

1) What sort of protections is a corporation legally required offer investors that LLC, LLP, and others don't? Do you think these easy to attain forms of ownership are being employed strictly for appearance of legitimacy, even when unnecessary?

2) What is the difference between owning a cryptocurrency, and buying into an ICO in terms of ownership rights? If you had to apply it to existing legal framework, how would the law view the distinction?

3) Are US investors who buy into unregistered ICO's committing a crime in the US, or does ownness fall solely on the issuer?

Why Reg. A+ Mini-IPO Title IV Tier 2 verse ICO?

Unfortunately, ICOs are still going on at a fast pace, despite being warned by the SEC that they are securities and cannot be sold legally without being registered or exempt with the SEC.

From my prospective, with out a doubt, there are no known ICO tokens sold that can be correctly characterized as a “utility token”. As SEC Chairman Jay Clayton pointed out recently, “Merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security. Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others continue to contain the hallmarks of a security under U.S. law.”

What is most troubling is when he added that, “Investors should understand that to date no initial coin offerings have been registered with the SEC.”

The author of the article below raised an interest point, “Regardless, none of this has left token issuers with much in the way of defined guidelines on how to conduct a legally compliant ICO.”

That is correct, unless our law makers change the existing security laws on the book to accommodate the brave emerging decentralized world there are no provisions to conduct ICO efficiently and legally.

I understand that it is very frustrating, as ICOs can be an amazing contributor to capital formation. Granted that being the case, it is still a bad idea to engage in ICOs that are clearly deemed illegal unless registered or exempt with the SEC. This could end badly. I fear that this is the greatest risk confronting our industry.

What is DNotes doing differently? A lot, in almost every respect. But for now, let us focus on an alternative to ICO and do it legally.
For those who are new to our industry, it is helpful to understand that the tokens (coins) sold in ICOs are created or issued by leaderless decentralized entities not controlled by any individual, or group of individuals.

Real world entities in the form of incorporated companies, LLC, LLP, and proprietorship or others forms of ownerships are created with a purported mission of advancing the coins’ projects outlined in their “white papers”. Coins are pre-mined and sold, bring in millions of dollars (in some cases hundreds of millions of dollars). They now belong to the entities mentioned earlier. These entities have full discretion to use the funds, often with no limitation, transparency, or accountability. That should not come as a surprise as the “investors” have been advised that they do not have any ownership or voting rights in the entity that received the funds. It would be less confusing if those entities are registered as “charities” and the investment labeled as “donations”.

I wish that ICOs can be structured and conducted in manners that meet existing security laws, either through registration or exemption. Unfortunately, without significant changes to existing laws, it is simply not possible. To date, the issuers of ICO tokens are exclusively decentralized entities without any central authority. However, the money collected goes to individuals, partnership or incorporated companies purportedly are working on some great ideas presented in a white paper. The investors have no ownership or voting rights in the private entity that received the investment.

Other than consumer or investor protection, the SEC plays a key role to maintain a fair, orderly and efficient market. It is also given the mandate by our law makers to facilitate capital formation. To that extent, our government has an invested interest in capital formation that leads to job and wealth creation. There are distinct options of raising funds by selling securities in support of the token or coin legally as mentioned in the article. In the case of DNotes, we believe that Reg. A+ Mini-IPO Title IV Tier 2 is the ideal option for us. And we have been planning for it for over two years using an incorporated company, DNotes Global, Inc.

To protect consumers the SEC, requires the filing of a registration statement with full disclosure of all relevant information along with two years audited financial statements - subject to on-going reporting as the means of making available all information for investors to make an informed investment decision. We believe that as much as this is burdensome, it is also essential to protect investors.

Enjoy the article below and feel free to ask any questions.
  
ICOs are STILL Not Taking Compliance Seriously in Search for Big Money

The initial coin offering (or ICO) explosion accelerated by Ethereum smart contract technology has resulted in over $3 billion in raised capital in 2017 and garnered the attention of governments worldwide.  The US Securities and Exchange Commission (SEC) has taken note.  In their statement on the DAO, which was an ICO that raised $117 million, the SEC stated that the sale constituted an offering of a security by applying the “Howey Test”.  Since then, the SEC has increased its attention on these sales and last week SEC Chairman Jay Clayton issued a statement urging investors to be cautious and issuers to analyze the offering under applicable securities laws.

Regardless, none of this has left token issuers with much in the way of defined guidelines on how to conduct a legally compliant ICO.  Although the CFTC has stated that it believes most tokens to constitute commodities, the SEC has indicated that they believe token sales generally fit into two categories: utility tokens, and security tokens. However, in Chairman Clayton’s opinion, most, if not all token sales are actually securities offerings.

To date, most token sales have been done without regards to securities laws under the guise that the token is not a security, but rather a utility token, that has a specific use and functionality within the offerers network and ecosystem.  However, although this theoretically does exist, to fall within this category, the token must meet a number of loosely defined characteristics.  The token must have an immediate use within the issuer’s network and cannot be sold with a future utility in mind.  The token should be purchased for the purpose of using that utility and not for speculation.  The value of the utility and its potential for increase in value cannot be the primary motivator and its value should not depend on the work of others to grow.  Many issuers and their counsel are applying the Howey Test, which is a test developed for investment contracts.  But this is not the only way that regulators could analyze these offerings.

Read more: https://www.crowdfundinsider.com/2017/12/126395-icos-still-not-taking-compliance-seriously-search-big-money/