Topic: DNotes 2.0 - Staking, CRISP Interest, DNotes Pay - page 61. (Read 148848 times)

The Risk Capital Test is used to determine security designation at a State level, in 16 different US States.

https://www.theselc.org/which_states_apply_the_risk_capital_test_when_deciding_what_is_a_security

The Risk Capital Test
In 1959, some enterprising developers bought land in Marin County to develop a country club. To pay for some of the costs of building the club, they sold charter memberships in the club. The members would not share in the profits or ownership of the club but would have the right to use club facilities. Under the federal definition, these memberships would not be securities because the members joined the club to get the benefits of membership, not for a financial return. But the California Supreme Court, in a landmark case called Silver Hills Country Club v. Sobieski,[22]found that these memberships were securities.

The court formulated a new test for whether something is a security, called the risk capital test, which considers:
•  Whether funds are being raised for a business venture or enterprise;
•  Whether the transaction is offered indiscriminately to the public at large;
•  Whether the investors are substantially powerless to effect [sic] the success of the enterprise; and
•  Whether the investor’s money is substantially at risk because it is inadequately secured.

...

The risk capital test has been adopted in some form in 16 jurisdictions (in addition to California):
•  By the Supreme Court of Hawaii (1971);
•  By the Supreme Court of Arkansas (1987);
•  By the District Court of Guam (Appellate Division, 1981);
•  By the Court of Appeals of Ohio (10th District, 1975);
•  By the Supreme Court of Oregon (1976);
•  By statute in Alaska, Georgia, Michigan, North Dakota, Oklahoma, and Washington;
•  Through regulatory rule in Illinois, New Mexico, North Carolina, Wisconsin, and Wyoming.
_______________________________________________________________________________

How does DNotes fare against this test?

1) Funds are being raised for a business venture or enterprise
2) The transaction is offered indiscriminately to the public at large
3) The investors are substantially powerless to effect the success of the enterprise
4) The investor’s money is substantially at risk because it is inadequately secured.

Why DNotes is not a security:

1) No development funds were raised by selling newly issued DNotes cryptocurrency; all development has been funded by private parties.
2) Although DNotes was distributed to and is held by the public at large, transactions occur voluntarily between two parties the same way as cash transactions do.
3) Every individual who recieves DNotes from another individual has an opportunity to contribute to the success of DNotes.
4) Organizations who support DNotes have provided plenty of resources showing individuals how to secure their cryptocurrency, and DNotesVault offers simple user friendly storage where deposits are backed by a guarantee fund.

*This is not legal advice, I am not a lawyer. These are simply my views based on publicly available information and prior DNotes/cryptocurrency knowledge.

Thanks Chase, good to see you! Hope you are doing well.

Great find, that certainly gives it a little more clarity.

Dnotes has big objectives on security of its platforms/ services and their customers.
I bought more Dnotes this week, and believe that I will have chance to take profit soon.

What constitutes a security:
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 comes from the efforts of a promoter or third party

Why DNotes is not a security:
1) DNotes currency can only be purchased from existing DNotes stakeholders who are willing to sell; no money is invested in DNotes as a result of these transactions.
2) It has been made quite clear that the free market dictates the price of DNotes, and that no investment is a sure thing. DNotes is only worth the price people are willing buy or sell it for on the open market.
3) Since all DNotes transactions are independent deals conducted by a willing buyer and seller on the open market, there is no investment taking place.
4) Any profit generated by third parties participating in the DNotes cryptocurrency network is theirs to keep.

It looks like a lot of people and organizations are having difficulty trying to interpret the security regulations of their own countries, never mind how regulations from foreign countries may affect them. As far as being classified as a "financial instrument" in Malta, I found this article from the Malta Times that sheds a bit of light on the question:

Financial Instruments Test Guidelines – getting tested

"Definition under MiFID excludes Instrument of Payment and therefore if DLT asset satisfies this definition it is not deemed to be a Financial Instrument."

https://www.timesofmalta.com/articles/view/20181007/business-news/financial-instruments-test-guidelines-getting-tested.690971

The guideline also states that if it is not a financial instrument, it must be determined whether or not it is electronic money. The answer to this would be no.

"The value of electronic money is established by its fiat currency which makes it different from emerging cryptocurrencies. Electronic money is backed by the central bank system. However, In the United States, only a small fraction of the currency is utilized in physical form. The remaining percentage of it is held in bank vaults and also against collateral."
Electronic Money https://www.investopedia.com/terms/e/electronic-money.asp#ixzz5WTCWWeUF

As far as I know, DNotes is one of the only cryptocurrency / token / etc.. that has held steadfast in it's promise to deliver (and has a record of delivering) a global digital currency ("instrument of payment") that is available to everyone.

That's quite rich, considering these 5 exchanges demanding legal opinion on DNotes are all selling unregistered securities already, and are likely doing so without a broker/dealer. I say DNotes has a better chance of bringing down and exposing all the corrupt exchanges, than we do of getting a fair deal from any of them.

Yep, they want not only a legal opinion regarding the US securities laws, but also "legal opinion letter from a Maltese law firm confirming that the token is a Virtual Financial Asset (VFA) and not a financial instrument". Which at the surface level seems a bit confusing, because if it's not a financial instrument nor a security, then what is it. I'm no lawyer though, so there may be a more nuanced answer for these questions. Many of our top picks, including: Bittrex, Binance, Kucoin, Poloniex, Kraken, all ask for a US securities legal opinion. We are working on it and so far the discussion with legal seems pretty positive, but we have to wait and see.

A couple of other options could be: Bibox, Upbit, Digifinex, Gate.io, Lbank, and as you suggested LAToken. Many of those do not ask for a legal opinion, have decent volume for a variety of coins, and at least a good deal of traffic.

It seems that Bittrex currently do not charge a listing fee (https://twitter.com/BittrexIntl/status/1058497751498002432). But I do not know if you want to or can fill in all required data (https://support.bittrex.com/hc/en-us/requests/new?ticket_form_id=114093958872).

"The SEC’s director of Corporate Finance, William Hinman said earlier in the week that the enforcement agency would release ‘plain English’ guidelines to classifying digital securities, including those that are already issued and trading. If this clarification broadly captures all, or nearly all ICOs as investment contracts the way the law was designed to, then many exchanges and their founders could be looking at a challenging couple of years ahead."

The police have arrived at the party. It is quite interesting that the first exchange to be charged was a decentralized one. It appears that the SEC is taking the position that you are still responsible for what happens on software that you create, if you build it without limitations to its use. Napster and the Silk Road faced similar legal arguments (which don't seem to apply to Google or Facebook -- though they appear to be tightening their use policies). This would suggest to me that many ICO products and centralized exchanges that listed them (along with their founders) may be in for a bad time.

SEC Charges EtherDelta Founder For Operating Unregistered Exchange


https://dcebrief.com/sec-charges-etherdelta-founder-for-operating-unregistered-exchange/

Thanks AlCamus, I've had a conference call with them in the past and was unable to come to an agreement beneficial to both parties. I have emailed them now to revisit the listing of DNotes.

LATOKEN (https://latoken.com/) seems solid.

Any solid exchange recommendations would be helpful. We are looking for exchanges that have volume in more than just a handful of markets, ones with real and verifiable people behind them and real company information, and not only volume but web traffic as well. A good example would be Liquid exchange, which I have just recently identified as a good candidate for our list. They have decent volume, corresponding web traffic, and it is easy to find the people who run the exchange and information about them. Not that these are strict guidelines, but helpful in determining which ones to work with.

Also, any effort to request DNotes at these exchanges would show community support, which is often one of the factors that is important to the exchanges. I know our community has supported us significantly before, and a major factor for getting us listed on exchanges like PoloniEx, Cryptsy, Mintpal, and CryptoRush. These were significant exchanges at the time and DNotes was in the millions of daily volume, it is very unfortunate that they are mostly no longer around, with the exception of PoloniEx, and I think CryptoRush may have made an effort to re-launch. We are now limited in volume comparatively and I believe most of that is related to our exchange presence.

I did recently receive word that BlockBid is progressing, slower than anticipated as is usually the case with any project, but I expect we could be listed there soon.

Nice to hear about reaching out to exchanges Getting listed on larger exchange would be a big step forward Let us know if we, as a community can help you with that matter

It is amazing what we have been able to accomplish and you are right it will only accelerate from here as we build new partnerships and reach new people. All we have done has been accomplished very resource efficient and that is a trend that will continue once we have secured funding.

We have started another round of reaching out to the exchanges selectively in an effort to be listed on larger exchanges as well and to improve our exposure.

NZDT Token to Return to Cryptopia


https://dcebrief.com/nzdt-token-to-return-to-cryptopia/

First Official Registered Crypto Exchange in UAE to Launch in Dubai

https://dcebrief.com/first-official-registered-crypto-exchange-in-uae-to-launch-in-dubai/

That was a nice surprise. They did a great job.

I am travelling the rest of the week. Thanks for all the support.

Wery well written indeed. Btw. that's the first time I heard about LifeBoat Foundation, I must say that it deals with very interesting topics, at lest the way I see it