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Topic: The altcoin topic everyone wants to sweep under the rug (Read 24373 times)

jr. member
Activity: 42
Merit: 4
And the ICO cease & desist orders begin:

https://techcrunch.com/2017/12/12/sec-shuts-down-munchee-ico/

And the European regulator is coming:

http://archive.is/heVFi

G20 coordinated regulation coming:

The international mood toward Bitcoin has continued to tighten, particularly with US Treasury secretary Steven Mnuchin stating that the G20 nations will begin working together to make sure that Bitcoin and other cryptocurrencies are properly regulated.
newbie
Activity: 56
Merit: 0
The altcoin topic everyone wants to sweep under the rug

Latest update.
member
Activity: 98
Merit: 10
After all my ranting about the illegality of ICOs, I stumbled today on the idea that forking and airdrop may be a way to convert an ICO issued token into a non-security.

Thus in theory for example the EOS tokens would end up living on (as re-issued in an air drop) outside the jurisdiction of any securities regulators in the world.

Hahaha. The regulators suddenly become irrelevant and can be ignored?

Disclaimer: IANAL. This is not legal advice.
member
Activity: 98
Merit: 10
WARNING: those who are trading and promoting ICO issued tokens to non-accredited investors in G20 nations (even via an exchange) may be incriminating themselves. Even the European Union has a criteria for accredited investors (and even Ethereum didn’t restrict its ICO accordingly):

https://en.wikipedia.org/wiki/Accredited_investor#European_Union

These guys could possibly end up in a pickle (they’re in Hong Kong and Cayman Islands):

https://bnktothefuture.com/icos

Every major nation has securities regulation law which applies to ICOs (including even Japan and India), and eventually the authorities will crackdown and enforce the laws:



With the recent bans, and news of crypto tightening regulations, some coins (mostly those which are modeled as a security) are beginning to move more into an accredited investor/institutional investor-only ICO.

Unless they identify and verify accredited investor status and file the appropriate paperwork in every jurisdiction where those accredited investors reside, then they’re still illegally issued securities, e.g. EOS’ checkbox for “I’m an accredited investor” is not legal issuance. Anyone promoting or trading these (including the owners of the exchanges!) may be incriminating themselves.

Do you guys see it as ICOs/blockchain defeating its own purpose by being open only to individuals with the big bucks, a needed measure, or there is way for us to agree on a middle ground?

Tokens issued under an accredited investor exemption must only be traded to other verified accredited investors. If the issuers/promoters/investors reasonably expect these tokens to be listed on public exchanges then they are probably committing a crime. An attorney pointed this out.

Fundraising via tokens is a giant mess that should be entirely avoided by everyone (at least until the authorities provide some new legal framework which might be many years from now, especially since it will require globalized harmonization of law in order to allow trading across nation-state borders). ICO issued tokens are doomed and will likely become illegal to trade and thus worthless. Expect exchanges to start voluntarily delisting ICO issued tokens once they realize the deep shit they are in. You’re investing in empty bags that have never produced any real world use or than facilitating selling empty bags to greater fools.
newbie
Activity: 37
Merit: 0
Re: Is Fraud and Scam killing the Altcoins?

Today the SEC sent an alarm again about ICO pumps and scams: https://www.coindesk.com/sec-warns-public-companies-using-icos-pump-stocks/

As a day trader, I can see it everyday, scam after scam, the altcoins are in suicide mode.

Today we reached the higher capitalization ever, thank to ETH going up to $360, but on the altcoin side, there is nothing happening, no money to make. Why?



Reiterating that although no one can predict with certainty, a crackdown by SEC against ICOs could plausibly coincide with another bear market in crypto similar to 2014.

Perhaps the authorities could freeze/confiscate ICO tokens on centralized exchanges within their jurisdictions.

A new treaty went into effect in 2017 and all G20 nations  are required to share financial data on the people in their jurisdictions with each. Perhaps some coordination on freezing ICO tokens at exchanges all over the world is coming. Or just a freeze in the USA or other significant jurisdictions might be sufficient to spook the trading markets.

ETH has become the Pink Sheets listing system for scammy crypto ICOs. Could ETH be also frozen and confiscated on exchanges?

On top of this we have a bubble forming in cryptocurrencies in general, potentially ripe for a massive correction as we reach some nosebleed level.

Additionally new laws may be coming which prevent you from crossing a border legally without declaring all your cryptocurrency wealth.

read that there are some ICO regulations issue in China... who knows something more about it?

NEO's first ICO Red Pulse just tweeted two hours ago that they won't be selling to Chinese investors.  I had 5 NEO and just sold them.

Wrote an article about this, feedback from experienced crypto enthusiast is welcome

http://usethebitcoin.com/regulations-in-china-regarding-icos-affect-neo-price/

If the department overseeing illegal fundraising activities found a fundraising without proper permission, or a fundraising that violates the relevant provisions of the State, and if one of the following circumstances is found, the department shall launch an administrative investigation. Other relevant departments shall cooperate with the investigation.
….
(2) to raise funds in the name of issuing or transferring equity, raising funds, selling insurance, or engaging in asset management activities, virtual currency, leasing, credit cooperation and mutual funds..."
hero member
Activity: 568
Merit: 703
https://www.coindesk.com/icos-eu-will-slow-giant-regulate-tokens/

EDIT:
https://bitsonline.com/sec-dao-icos-securities-law/


EDIT (07/29):

How do you answer this:

"It’s important to ask the question of whether there is an expectation of profit by the buyer of a token. If so, there’s trouble" ?

There are some instances where this is very obviously the case - especially with tokens that promise to pay dividends or invest in subsequent projects (especially things like real estate, etc.). ICOs/tokens like this fail the Howey Test right off the bat.

Tokens that have a utility, like those where it's necessary to use have tokens to use a service, are on the other end of that spectrum. The buyer motivation is function, not investment or gains on the value of the token.

* Crowdfunding publicly catches the attention of the SEC. Interestingly, a private ICO does not.

EDIT:
How many ICOs are complying with legal disclosures?

EDIT (08/28):
https://bitcointalksearch.org/topic/m.21285511
full member
Activity: 266
Merit: 100
Just wanted to remind you all again i don't think law / regulation = death of crypto.
There is laws for the New York Stock Exchange right ? Well they still trade "penny stocks"

And they are all scams too. I created miningstocks.com in 2007 and so I know something about this.

They trample innovation because only the scammers have the connections, resources, and time to waste getting listed. And they place onerous restrictions on the way a coin could be structured, distributed, etc.. It would absolutely kill the Steem concept, which I think is going to be critical (with significant tweaks, e.g. no voting) to attaining mass adoption.

I hope you also understand that the required underwriting for IPOs is a scam that enables the investment bankers such as Goldman Sachs to take all the early stage gains of an IPO.

Regulation is scam, because the regulated are in bed with the regulators. The regulations end up being a way to keep all the non-scammers out of the profits.

I grow tired of pointing out the hypocrisy.

I could not agree more with you, but there are still many ICO's with legit people willing to do something.
Yeah we grow tired of your hypocrisy.

Why don't you just admit human nature instead of lying to yourself?
sr. member
Activity: 336
Merit: 265
I want to acknowledge that @Skalpell has a valid point about needing to accelerate by getting others involved.

I also agree with him that if open sourced too early, then the momentum can be diluted by copycats. However once a clear lead, economies-of-scale, and ecosystem adoption are achieved, open source is best. There is a hen-egg dilemma to overcome and @Skalpell's point about capital driven momentum is a valid one to consider. Then again, if one isn't concerned about exclusivity and only about the maximization of the idea, then open source is probably best, but this possibly may also cause an idea's development to suffer via fractious power vacuum of competing offerings which may open the door for top-down controlling strongman.

At the moment, I am trying to get off this forum and get back to coding and technical work. And I am trying to get the cobwebs out of my brain from several years of suffering a chronic illness (apparently disseminated TB) which had the symptoms of autoimmune disease and even some of those mimicking multiple sclerosis. So at this moment, I don't YET always have the energy I need to assimilate as much information as I would like to. I am not really rolling yet where I have enough momentum to know where and how to efficiently deploy a large amount of capital.

I think at the nascent stage, a very tightly wound focus is best. I need to focus on the core concepts which are unique in the work I am doing and since only I am intimate with my ideas, it is more efficiently for me to develop from those concepts into something that others could concretely appreciate. For me to try to bring other developers up to speed (i.e personalized hand holding) would be inefficient at this point. Later when those initial concepts have become concrete in some code, then others can autonomously bring themselves up to speed (decentralized competition of open source will filter out who can and who can't without a requirement for my hand holding).

Regarding ICOs, one of the aims of my project that is different from Ethereum is that via the distribution model, I intend (i.e. hope to) provide a way for the derivative "smart contract" (or apps) projects to monetize their business model without creating a useless token and ICO lie. I am attempting to change the entire paradigm to not only a legal but also a viable one. @Skalpell although you make reasonable arguments in some respects, you seem to have a blindspot on the fact that these ICO tokens are completely unrealistic in that the world won't be using 100s of colored coins with a separate coin for each "smart contract" or app. The world will rally around one or at most a few leading units-of-exchange and units-of-account. The ICO model is not viable long-term. It is a FOMO delusion that works for now because speculators haven't yet learned that 100s of tokens isn't going to work.

I don't know if I can achieve this. I go forward step-by-step, just as I did when I thought I had no good health future over the past years of being ill. I just went step-by-step and worked my way towards a solution. In hindsight, if I had known to get a TB test 4.5 years ago, then I would not have lost 4 years. So if there is some analogous insight which could help accelerate my plans now, then I hope I am able to realize it as the recurrent fatigue and cognitive deficiencies clear out (16 more days to go on the 4-drug medication, then 16 more weeks on the 2-drug regimen).
sr. member
Activity: 336
Merit: 265
When I started reading your message, it sounded like a fight. By the time I got to the end, I realized you are just really hoping I won't throw away my chance. You should worry less.

As for getting the tokens into hands of speculators, that will happen. But you really don't understand enough about my design and its very unique distribution mechanism (something along the lines of Steem's "blogging is the new mining") and thus you make some false assumptions.

Actually the worst thing I could do right at the moment is burden myself with a lot of money to manage. What I need to do immediately is code. Later when money could be more effectively deployed, the ability to raise money will be there because of the work done interim.

Can you imagine Satoshi considering not to release the BTC software at all because of fear about future AML regs and to avoid the use of his currency for nefarious purposes such as the purchase of drugs and the legal problems that this use could bring to miners and to himself!? GTFO!

Bitcoin's launch and design is apparently not in violation of the Howey test.

Satoshi disappeared as Bitcoin moved into mass awareness.

The main point is not what could happen to me, but what could happen to all the token holders when the token is stomped on at the regulated exchanges by the authorities. And authorities don't crack down only in cases where someone complained. They also have someone complain when they want to crackdown.

If the former (I start to have serious doubts whether you have what it takes to pull this off

Now that I am NOT doing an ICO, then I don't have to care what you think. All that matters is my actual accomplishments in the real market. And so I don't have to cater and attend to all these people that will waste my time with their unsolicited armchair expertise and advice.

When I need to raise money, I can raise it (and have been). I don't need to sell an ICO to raise money. The more code I have accomplished, the more I can raise.

ICOs are selling out the forward value too cheap, unless you manipulate your ICO (as everybody does!) buying your tokens from yourself. And I refuse to do that fraud.

It is much better to sell 1 million tokens for $100 than for $1, wouldn't you agree? The more scarce the supply of tokens for speculators, the higher the price will be.

while distributing as widely as possible the tokens and kickstart the network effect

The protocol I want to implement will distribute tokens to millions of people.
sr. member
Activity: 336
Merit: 265
Should devs be held accountable

No. As long as it opensource software - no, they not. If you like idea and have some free time you can improve coin by yourself, this is how open source software supposed to be developed. If devs not sold something on "ICO" they can do whatever they want.

If it is opensource and not an ICO (and not a Dash-like obfuscation of a commercial enterprise), then there is no one set of developers. Anyone can hack on it. Token holders could fork if they want.

So yeah in that case devs don't have any obligation.

But maybe some devs have good reputations, then it probably will help confidence in that open source repo.

I am not anonymous. I am a dev.

W.r.t. to ICOs, they are illegal, so I have no interest in them.



And so now we have Roger Ver associated with DASH and QTUM, so that is allegedly two scams already.
sr. member
Activity: 336
Merit: 265
did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

they wrote some technical jargon such as tail emission instead of infinite supply.

What does this have to do with the topic of this thread which is about SEC regulation?

The Dash scammer shills are spamming this thread because they can't respond to specific allegations in their own shill thread.

You retards don't even know the difference between an asymptotic limit and an actual money supply. An "infinite money supply" can't ever exist. Duh. Dashtards.
legendary
Activity: 1456
Merit: 1000
did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

they wrote some technical jargon such as tail emission instead of infinite supply.
legendary
Activity: 1120
Merit: 1000
I suggest you guys watch new name (soon) WBB very closely now and for coming months!!!
newbie
Activity: 27
Merit: 0
did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt
sr. member
Activity: 336
Merit: 265
Coinbase's Securities Law Framework applied to every ICO


Resisting the ICO gold rush
Or: Why you should take the noodles

I’m here today to make the hard sell. I’m telling you to take the noodles. The ICO, or “initial coin offering”, is way more glamorous. It tastes way better. But there’s a catch. Until investment laws change, the ICO route is just too risky.



Founders beware

Until the legal framework is in place, giving in to the seduction of ICOs puts you and your company at risk of a regulatory crackdown. Founders and non-ICO investors could lose everything to a big penalty.
And that risk doesn’t stop at the company level. Founders and directors could be personally responsible to investors, or even face criminal charges.

So far regulators have taken a light touch, but since The DAO debacle we know the SEC is paying attention to the crypto-equity world, and it’s safe to assume that someone, somewhere is going to get hit with the regulatory hammer. Don’t let it be you.


However, there’s already indications that at least the US Securities and Exchange Commission (SEC), which is responsible for overseeing the nation's securities laws, is paying attention.

Consensus amidst crisis

Last month, the deputy director of the SEC’s trading and markets division, Gary Goldsholle, pointed to the hack as illustrative of his concerns over consumer protection in similar instances in the future, according to a Wall Street Journal report.

To minimize the negative impact the hack might have on those consumers, Jentzsch said a series of measures have been organized within the community.


Watch Out, the ICOs Are Coming

Companies behind these ICOs are promising the moon and the stars, putting out polished websites, white papers, advisory boards, Slack channels, GitHubs, peppering with some legalese language, and topping it with the full dressing support enchilada they can think of; in order to appear as legitimate, as hard-working, as smart and as credible as possible.

Startup diligence is pretty light

Diligence is tilted towards appearances, parabolic claims, white papers, a minimum of legal and lots of online dressing-up. There is relatively little involvement from traditional venture capitalists who typically dispense startup investment. VCs aren’t always right, and granted their model is being disrupted by the ICOs, but they generally have a sense about startups anatomies.

Previously, you were funded because your ideas, teams and initial product progress were worthy of it, at least someone thought so. Now, companies publish a paper making the case for their idea, open some docs for reviews, and ask for money in return for a promise to deliver something maybe in one or two years, that may or may not be accepted by the market.

Along the way, they drag a crowd of investors who buy into it, without necessarily being well informed, nor having used the product. During that process, there isn’t much talk about execution abilities, operational experience, or the rest of the team that will end-up being hired. Much of the analysis is on the surface, often tough to prove or disprove, in part due to a rushing and artificial urgency.

The 3 typical characteristics, team, product and market seem to have taken a secondary position to the 3 new magical words: tokens, blockchain and decentralization.

Token utility linkage is not always there

The assumption that everything with a potential network effect is going to work with a decentralization starting point is not entirely true. The blockchain is not for everything.

The solution or product being developed needs to have a solid business model linkage that has a particular value when decentralization and/or tokenization of actions take place. The promise of a new model needs to be very compelling.

In the name of decentralization, the promises are big. You can’t just slap a token to anything, and expect magic to happen.

The token is not the business model. The value proposition or utility that is enabled by the token is the business model, and that linkage needs to be there early on. If the direction is not right, the chosen path will not lead to a good place.

The marketing hype is frightening

Some ICOs are being marketed like a rocket ship, but in reality, no startup is a rocket ship. A lot of the communication is biased towards the most optimistic assumptions, but nothing goes up in a straight line.

With an ICO, 3 asynchronous periods seem to have blurred and collapsed into one: early stage, go-to market, product-to-market fit. Just because it makes sense in theory doesn’t mean that it will make sense when the market realities enter the picture.

True that some level of speculatory fever can help to fund projects and give them a longer runway life, but if the expectations get far ahead of reality, the gaps may be harder to bridge, resulting in a downward spiral snap.

For good or bad reasons, raising lots of money can hide a lot of mistakes along the way, and there is some of that going on.

Financial engineering has its traps

A rule of thumb for many ICOs has been to allocate 85% of the tokens to the market, and keep 15% for developers and company, but this is a risky ratio. It is equivalent to raising all your funding at once. In the best cases, companies assume that the token will go up in price, which would enable the company (or protocol operator) to never need to raise money again. But not every company is like Bitcoin or Ethereum, just as not every startup is like Facebook or Twitter.

Of course, a smart company would not release more funding to itself until milestones are reached, but few will exercise that type of discipline. Fewer ICOs make a provision for subsequent funding events beyond the ICO.

All and all, funding a startup is not a one shot deal. Too much financial engineering is just that. I would urge anyone planning an ICO to re-read the excellent Security Laws Framework for Blockchain Tokens paper, especially the Appendix.

The legal grounds are still shaky

Despite appearances of success in circumventing legal or regulatory hurdles, some practices just don’t make sense.

Why are tokens allowed to trade before the protocol or product is even out in the marketplace? Heightening expectations with the hope that token prices rise months and years ahead of going to market can go so far before the regulators start raising their eyebrows on that practice. Not all companies can survive the price fluctuations, volatility and speculative waves that will be expected when there is nothing but speculation and trading that drives your token price. Look at the volatility of BTC, ETH and STEEM, and these are examples with actual products that work and have thousands of users.

Crashing the party or priming a launch

Yes, I want the ICO party to continue, but I’m seeing participants that are just there for the ride. I’m seeing companies and ideas getting ICO-funded on a wing and prayer chance of being successful. Some others who have even previously failed to raise in private circles, are now opting for the ICO route. As I said earlier, here comes everybody. When the party gets overcrowded and unwanted visitors want it louder and bigger, events can turn to the unpredictable.

In technology, nothing great is often achieved without irrational exuberance, but when the pendulum swings too far, there will some damage. In the long term, we hope that benefits far outweigh the pitfalls that are encountered along the way, and maybe that is the only way that good things happen.

ICOs are supposed to be like an IPO with a cryptocurrency, but in reality, these are early-stage funding bets. Most of these companies won’t stand the scrutiny of public markets (which they entered, whether they like it or not), while they wished they had the private lives of early stage startups.

An ICO is the beginning and the means to an end, not the end itself. The ICO is not the great enabler of business models and incredible innovation. The blockchain is. An ICO is an alternative funding, operational and ownership model. You still need to bolt a sound business to it. You don’t get a pass there, and you need to get a few things right.
Take everything with a grain of salt, two pinches of hype, and three sprinklings of wishful thinking.


The psychology behind ICO funding
ICONOMI ICO fundamentals — 3 of 4

Rationality and the economics of interest

To address the “irrational” part, we need to talk about crowd mentality and group psychology (suggested reading: a very good paper on the investor psychology).

If a team has built up a lot of hype about a project, it will create a sense of FOMO — fear of missing out. From this point, the project can continue on one of two trajectories. A quality project combined with a lot of initial interest and a high, yet reasonable cap on the fundraise will quickly drive the crowd to fill the ICO. In a nutshell — everybody loves a winner!
sr. member
Activity: 336
Merit: 265
Re: Vitalik and Tual going to end up in jail?

Still think they're going to jail?

I think they are very likely culpable under securities law.

However, given Vitalik's rich father's political connections, I would doubt he will go to jail. We live a corrupt world.

Ostensibly, TPTB will allow these scams and ICOs to continue for as long as they can make more money allowing it than by attacking it.

I can't predict the chaotic future (as in the pendulum in chaos theory), but I can imagine scenarios wherein the party in ICOs come to its natural end. I offered already the idea that the ICOs might become too numerous and fracturing the economies-of-scale for stealing, thus sending the gains to too many individuals and away from the TPTB. At that point, TPTB might kill its own scam (Ethereum) while shorting it to the ground as they announce regulatory actions.

Who knows. My popcorn is ready.
sr. member
Activity: 336
Merit: 265
Someone made an important point to me in a private message, which is that even if the regulated exchanges don't have to confiscate or freeze the tokens subjected to a regulation action, then even just delisting would be enough to cause liquidity and prices to crash.

So all investors globally are affected, not just USA investors.

There are no unregulated exchanges of any significant volume. And appears there won't ever be.

ICOs quack like investment securities. The USA Supreme Court ruled under the Howey test (numerous times) that obfuscations of the economic reality of the situation are not a valid excuse.

But that legal position seems to meet (i.e. be regulated by) the Howey test in the case where the ICO investors are clearly buying tokens with the expectations that the developers are going to deliver certain actions with certain timelines as reinforced by the concept of escrow agents, published timelines, and perhaps even an oversight foundation

...

In short, if there is centralized control of the flow of money from investors to the activities that token investors base their investment expectations on, then the Howey test seems to be met.
sr. member
Activity: 420
Merit: 250
@CryptoOz
Hi all,

It is good to see some conversation going on.

Some of my tweets maybe wrong, as I do not have all the answers, but I keep watching and learning.

Not all can be judged by the same, but there is definitely some patterns that do repeat.

legendary
Activity: 1540
Merit: 1011
FUD Philanthropist™
I am glad to you considering what might happen shorter term.
I am pretty sure there will be legal surprises for us all as we continue on.
This needs to be highlighted to "investors"
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