Bitcoin Forum

NO

bitcoin was already vat (or as the yanks call sales tax) free.. it has been for 6 years, what has happened is that they have ruled that they wont suddenly make it a VAT inclusive product, and thus keep it at its currency status..

just remember everything is free until its ruled to not be. so dont assume the courts or governments make it free.. they simply decide not to be greedy

In terms of VAT, because bitcoin is regarded to as a currency by the ECJ. As for capital gains, I think there is still tax for that.

Isn´t everything effectively controlled by a group? At least by the users, even if there is no "leadership" or "company" behind it.

...versus to a normal PoW system where the payer's signature is autonomous from the network. The latter is the end-to-end principle because the intermediaries—between the originator and the construction of a transaction to the destination—are incapable of harm, substitutable, and fungible. Put more abstractly, the intermediaries are idempotent, referentially transparent, transitive, and commutative.

ICOs seem like the most obvious and highest risk (the securities law issues arise before the coin launches at all). Trying to call it a crowdfunded product seems quite weak when there is obvious intent and expectations by nearly all participants to treat it as an investment (i.e. economic reality trumps fine print). I'm looking at you Ethereum.

In general I don't think stepping aside helps much. Whatever you did before you stepped aside is probably enough for culpability if money changed hands.

WHERE THE TERM ‘SECURITY’ COMES FROM
A security implies an investment method or instrument that is secured against something else.

BUT IF CURRENCY CAN BE A SECURITY, THEN BITCOIN IS A SECURITY BECAUSE IT’S A TYPE OF CURRENCY, RIGHT?
Wrong. Bitcoin is not really a type of currency, at least not of the type recognized as securities. No entity or assets back up Bitcoin value. Bitcoin value is entirely virtual—a Bitcoin is only worth what another person thinks its worth. This is different than currency issued by countries.

Bitcoin is backed by no entity, no commodity, no organization.

SO, WHAT IS A SECURITY UNDER FEDERAL LAW?
The SEC v. W.J. Howey Co. involved the sale of units of a Florida citrus grove coupled with a service contract for farming those units. The U.S. Supreme Court ruled that this arrangement amounted to an investment contract. Investment contracts are included in the definition of securities in both the Securities Act of 19331 and the Securities Exchange Act of 19342 and are therefore subject to SEC regulations. The Court defined an investment contract as:


The court in Glenn Turner borrowed a California test for determining whether something classified as a security—the risk capital test. The test looks at whether the investor subjects his money to the risk of an enterprise over which he exercises no managerial control. The idea behind the test is that investments of this type are the basic economic reality of a security transaction.

The test looks at whether the subjection of the investor’s money to the risk of an enterprise over which he exercises no managerial control is the basic economic reality of a security transaction.

It appears that securities regulation in the EU is limited to shares in companies (and certain bonds), but if you are selling coins which you used to fund development activities and you are controlling the coin ongoing, one might argue this is equivalent to a company operating an exchange which trades the shares it issued. In other words, you didn't register your company but it is still operating as a company. Thus I do think offering ICOs in Europe are potentially culpable especially as EU totalitarianism proceeds with the sovereign debt collapse the push to federalize the governance and taxing power to Brussels as a "solution" to the ("incorrigible nations") debt crisis, i.e. the member nation debts need to be consolidated thus fiscal policy and thus law needs to be consolidated (the Euro was the Trojan horse to full integration of sovereignty). Does anyone think this interpretation of potential risk is ludicrous and if so then why?

Perhaps a securities case will be brought as part of a class action lawsuit, such as if Ethereum investors become disgruntled.

http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1472&context=ilj#page=9

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31989L0298:EN:HTML

smooth your opinion is appreciated, but I would like to point it seems to be entirely based on opinion; whereas, I cited the law (in the USA and in the EU).

The case law says that as long as the user has managerial control then whether you sold a product enabling the user to take control, then as long as the developer has had no control, then the user entirely culpable thus the shares in the product that was sold at ICO are not a security, because there is nothing backing it. It appears you are wrong in the case that the developer steers far from any managerial control throughout the entire process.

It is labeled as opinion and I wouldn't portray it otherwise. It is based on having digested reasonably credible analysis though. I don't feel like digging up actual links. You have a lot more patience for that than I do.

Thus, it can certainly be reasonably disregarded for failure to provide supporting background material. However, if something about what I wrote seems totally unsupported (as opposed to being one of several differing views), you're probably missing something.

It appears that whether the users think it is an investment or not, has nothing to do with the classification as a security.

You are, I think, attempting to thread a needle here where the "developer" is an employee or contractor for another entity where the other entry has all the control. The could certainly happen in some cases, but remember economic reality has a lot of weight, and can trump organization paperwork.

No.

One and only one link on this thread. I'm getting back to work now.

"According to the Howey test, an instrument is only a security if it involves an investment of money or other tangible or definable consideration used in a common enterprise with a reasonable expectation of profits to be derived primarily from the entrepreneurial or managerial efforts of others."

http://www.legalandcompliance.com/securities-resources/securities-glossary/howey-test-to-determine-if-an-investment-is-a-security/

That is why crowdfunding a movie does not violate securities law, or even a toy, watch, etc. where you get the item as a reward. Coins not so much.

The red bolded phrases are the salient part of the test I am referring to. To be an investment security requires an ongoing "common enterprise" where the buyer "reasonably expects profits" due to the ongoing "entrepreneurial or managerial efforts of others" in that enterprise. When the developer sells some software and tokens encoded in a genesis block of the protocol of that software, there is no enterprise. The users take that and decide whether to make it an enterprise. For example, they could throw away the genesis block if they wanted to and were able to organize themselves to do so.

"Ongoing enterprise" is not part of the definition. Selling interest in a time- or scope-iimited project still counts. That's still a common enterprise.

If someone privately finances development and then sells it when compete, with no further efforts, then that could possibly work. But realistically what buyers are going to buy that? At best, they will do so only at a very discounted price.

As far as users voting to tell the developer what to do (during ongoing maintenance), seems like a very gray area to me. Giving general guidance is probably not good enough as success depends "primarily" on the decisions made by developer. As a practical matter, making all the important design, development, and delivery decisions by voting of generally unskilled users seems unworkable (and possibly even voting by skilled experts). You may comply with securities law but you will violate the laws of successful software development.

You are correctly pointing out that making a coin that is not yet mostly finished

remove things from the protocol that force users to rely on the managerial control of the core devs, such as that forced hard fork every 6 months

Your crowdfunding argument does not work because a commitment to pay by sponsors is itself valuable consideration. It is used by the developer to backstop development and reduce risk (and can be used in other ways, such as to support raising capital from others).

https://en.wikipedia.org/wiki/Consideration#Option_contracts_and_conditional_consideration

I'm also not sure that the definition of crowdfunding necessarily means the developer doesn't get the money until the project is complete. If that's what you mean you should be clear on that, but from an investment contract point of view, it probably doesn't matter.

A crowdfund can be configured to allow every potentially interested buyer to remove his offer to buy at any time.

Okay that is a somewhat unconventional definition. If no one commits to anything then I agree you are likely outside the definition.

But this is getting quite contrived in my view:

1. No commitment for funding.

2. No efforts post-sale by the developer to fix the damn thing if it breaks

3. No efforts by the developer to refine post sale (at least none that are important to success)

Maybe you can avoid problems with securities law, but in practical terms the project seems like a mess of other problems.

The developer can pledge to be available for ongoing work for donations as desired by any investors that wish to donate to him. He would not violate the Howe test.

A developer can make a proposal to do some work. Users can vote by making donations on that specification and other proposals if there are any from any others contractors that wish to do some work. Not all the users have to agree. If the contractor has enough donations to meet his desired remuneration, then he proceeds. The users later decide whether to adopt that work in the common enterprise which only they manage.

A developer can also volunteer work, as he might be a holder of the coin too who wants to exert some of his control over his investment.

I guess this is yet another gray area but I'm not really sure what "mostly finished" means here.

If it has all features appears to be "done" but it turns out to crash such that no one other than the original developer can or will fix it then everyone is going to lose all their money. So the developer's efforts or lack thereof may still be critical. I guess that is a market value question too. If the developer says "I won't fix it if it breaks" then what will the ICO price be vs. the case where the developer will fix it? I think very, very different, which argues for the importance of the developer's efforts even after launch, but who knows I might be wrong.

There is nothing in the protocol for that. If no further updates are released (or if users don't install the updates), nothing will happen after six months. It will just keep going forever (assuming people continue to use it and it doesn't crash). The idea of the six month window is to continue to add them on a rolling basis with updates, so no one is surprised. (Off topic for this thread though, if you want to discuss it you know where the Monero thread is.)

You pretty much know if you have commitments to funding. You talk to people. You gauge market sentiment and the competitive landscape.

I specifically wrote refutations to #2 and #3 up thread.

Only the developers truly have the influence to alter the protocol and have it widely adopted. So in my mind the test is whether the developers are acting like an organized controlling manager of the coin.

IANAL, but I spent a lot of time on the meetings with lawyers, including securities lawyers (but not related to cryptocoins).


A) under common law systems:

Your idea of "managerial control" is way to narrow. You've completely neglected the promotion and sales of securities and "managerial control" of said sales and promotion.

Therefore most of your analysis in invalid. One could probably come up with a case where the "security" itself is valid, but was promoted and sold in an invalid way.

B) under civil law systems:

The story is completely different. Under those systems the securities law tends to root in the Roman law concept of "depositum irregulare".

One more thing you seem to be neglecting is that the current prevailing common law definition of "conspiracy" doesn't require a proof of communication between the distributed co-conspirators. It is sufficient for prosecution to show that all "conspirators" acted in furtherance of their common goal.

Then you are putting yourself in jeopardy on economic reality grounds. Even if the fine print says people can cancel, if everyone understands that it isn't really going to happen, then it isn't real.

I understand. I nevertheless consider them to be issues of significant concern, especially when all is taken together.

I hope you can see that can't have a promotion of a security, if it never is a security.

In civil law you only need to prove the preponderance of the evidence and not beyond any reasonable doubt. But at least that removes the criminal liability.

False. "Pork belly" is not a security. "Pork belly futures/options/participation shares" were securities subject to the regulation and oversight.

http://www.lextechnologiae.com/2011/06/26/why-bitcoin-isnt-a-security-under-federal-securities-law/

Miscommunication. You seem to be thinking of USA exclusively. I'm writing to a worldwide audience because this forum is not limited to the "American" readers.

https://en.wikipedia.org/wiki/List_of_national_legal_systems
https://en.wikipedia.org/wiki/Common_law
https://en.wikipedia.org/wiki/Civil_law_(legal_system)

Is this topic related to bitcoin? I assume no, so it should be moved to the Altcoin Discussion.

Sorry those are securities as defined under the law:

Well almost anything one can do in life could make one culpable to multiple jeopardy  when considering the vagaries of a multiple of legal systems and common laws. My point was to address the reasonably well defined securities regulatory law where it is so encoded. I considered the USA and EU (not each EU country) for starters.

It seems to me that if what you've done is reasonably in line with the very strict USA securities law, you've done good disclosure (i.e. enumerated risks, what you provide and don't provide, etc), and you've done a fair deal and not egregiously harmed any one, then the risks are about the same as committing 3 felonies a day (http://www.wsj.com/articles/SB10001424052748704471504574438900830760842) just by breathing.

Are you seriously trying to cite an "invitation for comments" from some law firm as a legal precedent having valid legal standing in USA law?

Much better divagations were posted by John Nagle in 2011:

https://bitcointalk.org/index.php?topic=46486.0

I’m going to be specific about what I mean by “ego” now, because otherwise much of this essay may seem vague or wrongheaded. I specifically mean psychologial egotism, not (for example) ethical egoism as a philosophical position. The main indicators of egotism as I intend it here are are loud self-display, insecurity, constant approval-seeking, overinflating one’s accomplishments, touchiness about slights, and territorial twitchiness about one’s expertise. My claim is that egotism is a disease of the incapable, and vanishes or nearly vanishes among the super-capable.

It’s not only scientific fields where this is true. For various reasons (none of which, fortunately, have been legal troubles of my own) I’ve had to work with a lot of lawyers. I’m legally literate, so a pattern I quickly noticed is this: the B-list lawyers are the ones who get all huffy about a non-attorney expressing opinions and judgments about the law. The one time I worked with a stratospherically supercompetent A-list firm (I won’t name them, but I will note they have their own skyscraper in New York City) they were so relaxed about recognizing capability in a non-lawyer that some language I wrote went straight into their court filings in a lawsuit with multibillion-dollar stakes.

d) you seem to be searching for a https://en.wikipedia.org/wiki/Affirmative_defense loophole to https://en.wikipedia.org/wiki/Securities_Act_of_1933#Regulation_S

c) you are misapplying reasoning rooted in https://en.wikipedia.org/wiki/Inquisitorial_system to an old case from 1946 https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.
 (https://en.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.)

The AdSurfDaily case he mentioned ended in imprisonment of Bowdoin in 2012. It would be a much better source for a precedent involving cryptocurrencies in 2015 than some old cases from the 1st half of the 20th century.

The Indictment alleges that Mr. Bowdoin perpetrated a scheme to defraud the members of ASD. Specifically, it alleges that Mr. Bowdoin solicited prospective customers to ASD based upon, among other things, his promise to use their funds to operate what was represented to be a profitable Internet advertising company capable of providing high returns on the funds they paid to ASD. Over the course of two years, Mr. Bowdoin is alleged to have made numerous misrepresentations and omissions in order to raise funds including: claiming to be operating a legitimate Internet advertising company; asserting that ASD had independent revenue to pay members the returns promised; representing that Mr. Bowdoin’s only run-in with law enforcement consisted of a traffic ticket, when he had been convicted already of criminal securities violations; representing that the revenue methodology and numbers ASD published in support of its payouts were true and accurate, when ASD was really managing its revenue to ensure that it only paid out about one percent (1%) of a member’s investment each weekday and one-half a percent (.5%) on the weekends; representing that ASD was not required to register with the United States Securities and Exchange Commission (SEC); and representing that Mr. Bowdoin was operating ASD in a far different manner than that which he followed.

I was citing the Supreme Court case of SEC vs. Howe. Even I see Nagle doesn't quite understand (or articulate) the generative essence of that case. And you were so far off in the thread, I just smiled.

Your appeals to authority are for b-listers who get their nose bent out-of-joint:

http://esr.ibiblio.org/?p=1404


I'll get back to your unspecific strawmen in due time. You are may or may not have a point, yet avoid making a specific point and toss around vagaries instead. Make your case with specifics. I did.

If you find that I am annoyed, then yes because I expect you to cite for me specific case law and give examples and show that you know what the fuck you are talking about, and not just spout off appeals to authority, insults, and vague intersections of general concepts. So far, I've seen you commit logic errors in this thread, and on quick glance maybe more in that thread with Nagle.

You can very well be trained in many concepts and be able to spout off babble, but can you elucidate convincingly.


Sigh. Demonstrating how one is not involved in an "investment security" per the Howe test precedent is not an affirmative loophole defense. It is a defense against the alleged crime. The prosecution must prove the defendant has met the test under the Securities Act and subsequent clarifying case law of what an "investment security" entails.

And you are totally off in left-field again (as you were in the thread with Nagle) in that Regulation S safe harbor is not the defense I was citing. I was citing the defense that no investment security was ever created per the Howe test which defines what constitutes an investment security.


You cite that as a precedent but it is entirely inconsistent with the genre of scenario I was describing in this thread.

http://networkmarketinglaw.com/securities-law/v-bowdoin-dc-cir-march-18-2011/


First of all, the defendant was managing a common enterprise using the advertiser's funds and make representations to them. I already pointed out in my scenario up thread, that there would never be any operating common enterprise where funds were received and investors were waiting on returns from the common enterprise being managed by the developer.

Your cited case law is inapplicable and I refer back to SEC vs. Howe until you can find another case which overturns it w.r.t. to my scenario.

Otherwise please take your amateurish snobbish crap and very low powers of logic and discernment else where, because you are wasting my precious and scarce time.

The courts have rejected attempts to narrow the definition of a security. As one opinion put it, “In searching for the meaning and scope of the word ‘security’ . . . form should be disregarded for substance and the emphasis should be on economic reality.”

Courts have frequently examined the promotional materials associated with an instrument in determining whether it is a security.  If the materials promise things like great returns or guaranteed income, the court will almost certainly find the instrument to be a security, and therefore subject to federal securities regulations.

A common enterprise is a venture ‘in which the “fortunes of the investor are interwoven with and dependent upon the efforts and success of those seeking the investment . . . .”’  It is not necessary that the funds of investors are pooled; what must be shown is that the fortunes of the investors are linked with those of the promoters, thereby establishing the requisite element of vertical commonality. Thus, a common enterprise exists if a direct correlation has been established between success or failure of the promoter’s efforts and success or failure of the investment.

I think you clearly plan to promote and distribute a security in the USA but you plan to sidestep the registration requirements by claiming that your security is not a security.

The reason you're not getting feedback is because the question is confusing. This poll is too complicated and seems to require supplemental reading just to understand what you're asking.

Your other points continue to belie the ability to separate concerns that are clearly delineated in the law as orthogonal. I will respond to those in detail in a future post, but really if you don't have anything new and just repeating the same myopia, eventually I am going to see this as a waste of time. But I'll go one more round (or so) to see if you can (or have) presented any new point. That you apparently don't realize that you continue repeating the same point is instructive of your inability to extract the generative essence from orthogonal concerns which was quite apparent to me in the way you were responding in Nagle's thread.

One very incriminating question is whether Evan (and any others) conspired to instamine what I understand was basically greater than 50% of the money supply as of the time that the masternodes were created. And thus given the recent chart showing Dash's protocol is paying up to 50% per annum return on the coins locked up while running a masternode, then it means basically their conspiratorial group could control greater than 50% of the masternodes and money supply right now, and thus very much control the coin. If it ever goes to court then most certainly forensic evidence will be applied and I understand some others are fairly certain they can prove beyond any reasonable doubt the culpability. I haven't dug into that evidence so I can't offer my opinion on the veracity of those claims. And going off on that tangent of proving something about Dash is off-topic to this thread.

Notwithstanding even if it was impossible to prove sufficient control over the masternodes by Evan and other conspirators, it would still be the case that Evan and his group used funds extracted from the common share of the tokens in managing the common enterprise and the community follows their managerial control. Thus per my understanding of USA securities law, Evan's group is managing unregistered investment securities and thus are liable to be in prison for a long time. I really pity him at this point. Perhaps he got himself into something he didn't realize and now can't easily extract himself from it. Evan stated that he comes from the financial industry (https://youtu.be/0Jw5Gk-iuy0?t=122), so one would ponder that maybe he should have known better.

Unless Evan has connections with the SEC and others in the financial industry that can protect him, based on my recent research linked from the OP of this thread, I think he has a world of hurt ahead of him. I do believe the authorities are just letting these scams pile up on top of each other, so they can bring a wave of massive regulation once the economy turns down hard in 2017 or 2018. The authorities will become very motivated once the economy goes south.

I don't personally have any vendetta nor need to bury Dash with my words. You raised the issue, so I am responded honestly as to what I believe to be the facts as I know them.

Only Bitcoin is an investment security, it leverages the most zero to one growth and innovation, plus Bitcoin is anti-fragile like any currency.

Unless they qualify for an exemption, securities offered or sold to the public in the U.S. must be registered by filing a registration statement with the SEC. Although the law is written to require registration of securities, it is more useful as a practical matter to consider the requirement to be that of registering offers and sales. If person A registers a sale of securities to person B, and then person B seeks to resell those securities, person B must still either file a registration statement or find an available exemption.

The United States Securities Exchange Act of 1934 defines a security as: "Any note, stock, treasury stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease, any collateral trust certificate, preorganization certificate or subscription, transferable share, investment contract, voting-trust certificate, certificate of deposit, for a security, any put, call, straddle, option, or group or index of securities (including any interest therein or based on the value thereof), or any put, call, straddle, option, or privilege entered into on a national securities exchange relating to foreign currency, or in general, any instrument commonly known as a "security"; or any certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant or right to subscribe to or purchase, any of the foregoing; but shall not include currency or any note, draft, bill of exchange, or banker's acceptance which has a maturity at the time of issuance of not exceeding nine months, exclusive of days of grace, or any renewal thereof the maturity of which is likewise limited."

With respect to investment schemes that do not fall within the traditional categories of securities listed in the definition of a security (Sec. 2(a)(1) of the 33 act and Sec. 3(a)(10) of the 34 act) the US Courts have developed a broad definition for securities that must then be registered with the SEC. When determining if there is an "investment contract" that must be registered the courts look for an investment of money, a common enterprise and expectation of profits to come primarily from the efforts of others. See SEC v. W.J. Howey Co..

SECURITIES AND EXCHANGE COMMISSION v. W. J. HOWEY CO., (1946)

...

The term 'investment contract' is undefined by the Securities Act or by relevant legislative reports. But the term was common in many state 'blue sky' laws in existence prior to the adoption of the federal statute and, although the term was also undefined by the state laws, it had been broadly construed by state courts so as to afford the investing public a full measure of protection. Form was disregarded for substance and emphasis was placed upon economic reality. An investment contract thus came to mean a contract or scheme for 'the placing of capital or laying out of money in a way intended to secure income or profit from its employment.' State v. Gopher Tire & Rubber Co., 146 Minn. 52, 56, 177 N.W. 937, 938. This definition was uniformly applied by state courts to a variety of situations where individuals were led to invest money in a common enterprise with the expectation that they would earn a profit solely through the efforts of the promoter or of some one other than themselves.

In other words, an investment contract for purposes of the Securities Act means a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party, it being immaterial whether the shares in the enterprise are evidenced by formal certificates or by nominal interests in the physical as ets employed in the enterprise. ... It embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits.

...

A common enterprise managed by respondents or third parties with adequate personnel and equipment is therefore essential if the investors are to achieve their paramount aim of a return on their investments. Their respective shares in this enterprise are evidenced by land sales contracts and warranty deeds, which serve as a convenient method of determining the investors' allocable shares of the profits.

Thus all the elements of a profit-seeking business venture are present here. The investors provide the capital and share in the earnings and profits; the promoters manage, control and operate the enterprise. It follows that the arrangements whereby the investors' interests are made manifest involve investment contracts, regardless of the legal terminology in which such contracts are clothed. The investment contracts in this instance take the form of land sales contracts, warranty deeds and service contracts which respondents offer to prospective investors.

...

The test is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others.

Certain facts bear repeating, both now in this thread and in the past in the other threads.

You and other people tend to be missing the fact that most successful securities prosecutions in the USA were against promoters and sales agents. The courts spent very little time considering the nature of the underlying security. Most of the time was spent analyzing the "economic reality" of the promoter who sold "something" to the buyers and the promoter gained money while buyers lost money.

One thing that you have in common with all the others successfully prosecuted in the USA is your plain and innate desire for attention and self-promotion. Conceivably you could be raising about the same money working quietly behind some figureheads (either persons or organizations). This is how the traditional securities industry is organized: the responsibility is spread over multiple layers underwriters, syndicators, sales brokers, etc. It seems like you abhor working with other professionals on the equal terms and always want to do it alone. In particular I clearly sense that you didn't even go to a friendly lunch with some securities lawyer. Your style of argumentation shows that you can't distinguish between "arguing the case" and "arguing with a person". Theoretically you could change and obtain a securities counsel and listen to his advice. But I feel that that would completely go against your personality and your goals in life.

TL;DR: Yup, it is the promoters that most often get prosecuted in the securities litigation.

Does it really matter if users accidentally misspell it 'clicks' or 'clickz' (or 'fucks' hehe), if they are using the same protocol when doing it.

Note it is actually quite desirable to present this project of as "less serious" to investors (although I am very serious about targeting large markets with my software) and solely targeted towards users so that I can't be accused of promoting some investment security (https://bitcointalk.org/index.php?topic=1218269.msg12795383#msg12795383). I am trying to create software that targets large markets, because I want to use the software. I am not targeting investors. I only want to be funded for my efforts to create this user software (not investment focus) because I do have bills to pay. And there are other users who may also want this software and protocol and want to crowdfund me to create so they can use the software and protocol too. Any expectation of gains in exchange value to fiat or whatever is your own to make and I offer no such representations and I will disclaim profusely that these tokens are for investors. These clickz tokens are targeted for users of the software and protocol. If I do a crowdfunding, it will be explained clearly that these tokens are for users and no gains in exchange value should be expected.

I want to speak to people who think ion is a better name than clickz. Why?

Who are we creating this altcoin for? As a pump & dump (targeting only the readers of this forum and Reddit) for starry-eyed, crypto-nerd investors who think ions are so "ray gun" cool? Or as a serious attempt to go spread microtransactions to a billion users on the internet?

Ion means nothing to your sister, mother, and your grandma. Go ask them. Feedback to me your market canvassing results.

For the men you ask (who don't read this forum), ask them what type of internet services, function, or product an ion would connote for them. I doubt any of them will say money, microtransactions, social networking, or any answer related to any of our target markets.

Erik Vorhees got of relatively easy because he astutely traded the Bitcoins raised by his issues and (after advice of his counsel) preempted prosecution by simply rebuying/repaying all the holders of his securities. Because the buyers had no loss to show the SEC had very weak case that basically consisted of "missing paperwork".

If you can design your "cryptographic protocol" in such a way that its users/buyers are highly unlikely to lose money and the managers/sellers are highly unlikely gain the money at the expense of the former, then it is the best defense against any prosecution in any jurisdiction.

If you review the thread I linked to, which has more details on what the legislation and case law has stated, I think the conclusion is that the determination of whether an implicit "investment contract" has been formed is tied into whether there are those who are selling (and/or offering for sale, including reselling) shares in a "common enterprise" wherein they are "promoting the reasonable expectation of profits/gains" and another condemning characteristic is when those who have those reasonable expectations, are depending on the efforts and/or promotion of those aforementioned promoters or trusted controllers of the common enterprise. So it appears that when the developers of the coin have created a community promotion wherein there is a reasonable expectation of profits backed by the efforts and promotion of those developers who are in control of the common enterprise, then a security (dependency on the developers to deliver gains) has been formed and thus these shares need to be registered and regulated under the law. IANAL, but that is my interpretation.

I have proposed that no security would be created if the developer of a crypto-token protocol and implementing software instead does a crowdsale (and/or just launches with distribution via mining debasement) where it is made very clear in the pronouncements and actions of the developer that the tokens created by this protocol and software are being offered to users of the tokens for using the protocol network, and disclaims prominently and profusely that no one obtaining these tokens should have any expectations of future gains based on any exchange value. The developer should not be targeting his marketing (such as forum activities, naming, etc) to individual public investors and rather to selling his software and protocol to users, for example via a crowdfunding to gain funding to complete or repay loans he incurred to do the programming. He should not make public announcements of the available of tokens to  investors. One way perhaps to make this very clear, is to limit the maximum size that any one person can donate at the crowdfunding to perhaps $500 or what ever would be considered too small to be a reasonable worthwhile investment in the first world. In other words, there are many users of a new technology (even include other developers who can work on ecosystem projects) who have an interest in using the real world product (thus they need some tokens to use it) who have an interest in its success and in interacting with the product, that have nothing to do with a reasonable expectation of profits on those tokens. Whereas if you are constantly trolling in these forums acting as if you want to funnel all the speculators to your coin, then ostensibly you are not targeting usership but rather speculation and thus arguably (and implicitly) promoting a security.

One issue I am still trying to work out is how accepting placements from angel investors would mesh with the crowdfunding direction for funding programming of software and protocols for users?

Apparently there are several types of exceptions to requirements to register securities in the USA, which seem to revolve around accredited and/or sophiscated investors:

http://thismatter.com/money/stocks/exempt-securities.htm

These all appear to place restrictions on when the shares of the angel investors can be sold and also require subsequent registration. Apparently sales to non-USA angel investors is complete exception to all requirements (but may trigger requirements in the non-USA angel investor's domicile or tax jurisdiction).  What is worrisome is that such may trigger all shares (even those sold to users and not investors) to be classified as security especially if these shares are divisible and fungible (become mixed up) as is the case for crypto-currencies.

Thus it appears one would be best pay their angel investors back in cash (with any agreed interest rate or equation of return), classifying these as loans are investments in the programmer, and not in the final protocol and software which is sold and provided to users, not investors. Angel investors who wanted to convert this cash to shares would have to do so on some open exchange market (and again with disclaimers from the developer in force that no reasonable expectations of gains should be expected and shares should be obtained for use and not for investment and if they choose to ignore that, there is nothing the developer can do to prevent markets from forming). This has been a very important epiphany for me.

I argue the powers-that-be do hope you are so willfully ignorant of the law, so they can entrap you. I reviewed the EU legislation and they are very busy advancing the securities law and the definitions are sufficiently broad that they could start to interpret securities law very similar to USA courts do in some EU court that gains powers as the EU is federalized (reducing national sovereignty) as this sovereign debt smashup crisis comes crashing down 2016 - 2018. The powers-that-be appear to have planned it out very well to trap you Europeans who boast to yourselves how you don't have to pay taxes on income abroad and yet the powers-that-be are busy formulating a G20 coordination on unified taxing so that no one escapes paying taxes and regulation. The global economic collapse is the way they will get all the nations to accede to this coordination to hunt down all capital.

You are just buying a little time before your demise.

I don't think you understand the key essence of the thread.

The Howey decision clarifies the "investment contract" clause of the Securities Act, that promoting a reasonable expectation of gains where the investors have any reason to base their decisions to purchase on those pronouncements has converted what they are promoting into an "investment security", because of the implicit "investment contract" created by those pronouncements and the resultant "reasonable expectations" of investors.

My interpretation is that you are overemphasizing the "common enterprise" because Howey decision and court decisions hence have stated all special cases will still apply to the economic reality that the Securities Act's (stated) purpose is to protect unsophisticated (unaccredited) investors from losses due to faulty disclosure.  Just because the shares are coordinated in a decentralized protocol, doesn't mean the promoters have not created an implied investment contract with the buyers. The "common enterprise" is the mutual participation in the decentralized system of shares. Participation as a user does not in my view cause the shares to be "investment securities", as any game token wouldn't be an investment security if the tokens are not promoted to investors (and especially if there are disclaimers from the "controlling or influential entities" stating no investment gains should be expected at all and that the tokens are intended for users only). Rather it is the promotion of the shares to investors that does. And IMO it is much more likely to be prosecuted when those doing the promoting are "controlling or influential entities" in that "common enterprise", i.e. the developer(s) who can introduce new features and whose reputation drives investor confidence and ditto influential community members or foundation, especially those endorsed by the lead developer(s).

In my reading and remember the disclaimer that IANAL, the existence of a "centralized issuer" (or assumption that "issuer" must directly receive the buyer's funds) does not appear to be the key finding of the 1946 SEC vs. Howey Supreme Court decision which clarified the meaning of "investment contract" from the original Securities Act of 1933.

It appears that the implicit "investment contract" (which is created when the shares are offered and/or issued) is created when the investor is able to form "reasonable expectations" of future profit or gain that depend on or are based on the promotion or efforts of the entity which is in the position to create this level of expectation. In other words, if there are shares issued (by any means) and there are individuals or legal entities who for what ever reason are interpreted by investors to be capable of creating a reasonable expectation of future gains or profits from the said shares, then those shares are now securities because in effect the investors's capital (and expectations thereof) are being secured by these "promotion or efforts". This is all of course w.r.t. to a "common enterprise" meaning for example in our case a cyptocurrency, but the decision specifically disavows that any particular circumstances would weaken the general rule, so the cryptocurrency's protocol and issuance between decentralized or centralized is irrelevant. What is relevant is whom do investors believe is in control and who was actually in control? Evidence that can be presented would include the ability to move prices in small markets with their pronouncements (a form of promotion), being a lead developer or in the lead developers' primary channel of public communication and making representations to potential investors in the coin.

In short, my interpretation is that if you want your cryptocoin to not be an illegal unregistered, investment security (due to an implied investment contract), then the developers and affiliates or close associates and key community members, should make no discussions at all about investment in the coin except to state that the coin is not for investors and losses should be expected. And to instead communicate with users and potential users of the coin. And if any money is raised from the community, make sure this clearly selling software to users where the tokens are required to use the software and protocol (or donations for development of the software with no tokens given in return) and that the project is for users of the software. Avoid any association with investing, except of course for free market activities that no one can control, e.g. that investors buy your tokens on a decentralized exchange. And all public communication should disclaim any investing purpose nor expectation of gains.

What is not clear to me is that if when the shares are created (i.e. issued) there is no implied investment contract and thus the shares do not fall under any regulation of the Securities Act, but later some outside party is able to create "promotions or efforts" that cause new buyers of those existings shares to have "reasonable expectations" of gain, do those pre-existing shares become securities. So far until I see case law otherwise or other convincing arguments, I assume the courts would rule that only the state at the time of issuance matters. But as in most things, it will probably depend on the specific circumstances. For example, if the developer is not able to squelch such outsider from creating such expectations amongst the investment community by for example threatening to do actions would could destroy the perceived control of the outsider (e.g. threatening to quit developing so the outsider's promotion is ignored and refuting the claims of the outside promoter), then perhaps it can be said the developer has been derilict in maintaining the perception that the software is not for investors. And note that the typical lockup period for shares that are unregistered, legal securities is 1 year, so after 1 year I think the developer wouldn't have to do anything assuming that the original issuance (and perhaps also the entire 1 year hence) was devoid of any implied investment contracts on those shares.

Again to make sense of this, refer to my reply to americanpegasus (https://bitcointalk.org/index.php?topic=1218399.msg12817022#msg12817022), wherein I explained that when shares are issued/created and they are securities (due to for example an implied investment contract), then all those shares transferred (by any means including mining) that did not comply with the exemptions to registration, are ostensibly ILLEGAL forever (but I have yet to verify this except the law doesn't seem to make sense otherwise). Any one who touches those (especially those promoting them to other investors) is apparently committing wire fraud and other crimes, but please check with an attorney to verify. Whereas, when shares are issued/created and there is no implied investment contract (only a relationship with users of the software in our crypto-token application as I suggest), then my interpretation is these are not securities and thus not illegal even if they are transferred in any quantity to users (of our software our case) who would otherwise be non-accredited and non-sophisticated investors if there did exist an implied investment contract.

Once the cryptocurrency has become bigger and uncontrollable by any group (and assuming the original issuance did not create illegal, unregistered securities) and no one believes any one can effect the price appreciably with any efforts or promotion, then investing discussions can be freely held without any risk of creating an implied investment contract as specified above. I do believe Bitcoin has reached this level. The altcoins not yet. And the way the altcoins are being managed, all of them so far are probably unregistered, ILLEGAL, investment securities.

Under Howey, it doesn't matter whether the investment capital comes in the form of legal tender, digital currency, or some other valuable asset. Bitcoin ponzi schemer Trendon Shavers found that out (http://www.lawfareblog.com/wp-content/uploads/2013/10/SEC-v.-Bitcoin-Savings-and-Trust.pdf) the hard way.

SECURITIES AND EXCHANGE COMMISSION, Plaintiff, Appellant,
v.
SG LTD. et al., Defendants, Appellees.

Nos. 01-1176, 01-1332.
United States Court of Appeals, First Circuit.

Heard August 2, 2001.
Decided September 13, 2001.

Relying upon a dictum from Howey discussing "the many types of instruments that in our commercial world fall within the ordinary concept of a security,", the district court drew a distinction between what it termed "commercial dealings" and what it termed "games." Characterizing purchases of the privileged company's shares as a "clearly marked and defined game," the court concluded that since that activity was not part of the commercial world, it fell beyond the jurisdictional reach of the federal securities laws. Id. In so ruling, the court differentiated SG's operations from a classic Ponzi or pyramid scheme on the ground that those types of chicanery involved commercial dealings within a business context. Id.

We do not gainsay the obvious correctness of the district court's observation that investment contracts lie within the commercial world. Contrary to the district court's view, however, this locution does not translate into a dichotomy between business dealings, on the one hand, and games, on the other hand, as a failsafe way for determining whether a particular financial arrangement should (or should not) be characterized as an investment contract. Howey remains the touchstone for ascertaining whether an investment contract exists — and the test that it prescribes must be administered without regard to nomenclature.

A fairly recent Supreme Court opinion demonstrates that the "commercial world" to which the Howey Court alluded actually encompasses the total universe of financial instruments available to investors, rather than the subset of financial instruments envisioned by the district court (i.e., "commerce" as opposed to "games"). In that case, Justice Marshall wrote:


The Howey Court established a tripartite test to determine whether a particular financial instrument constitutes an investment contract (and, hence, a security). This test has proven durable.


The Supreme Court has long espoused a broad construction of what constitutes an investment contract, aspiring "to afford the investing public a full measure of protection." The investment contract taxonomy thus "embodies a flexible rather than a static principle, one that is capable of adaptation to meet the countless and variable schemes devised by those who seek the use of the money of others on the promise of profits."

The Howey test has proven to be versatile in practice. Over time, courts have classified as investment contracts a kaleidoscopic assortment of pecuniary arrangements that defy categorization in conventional financial terms, yet nonetheless satisfy the Howey Court's three criteria.

A. Investment of Money.

The first component of the Howey test focuses on the investment of money. The determining factor is whether an investor "chose to give up a specific consideration in return for a separable financial interest with the characteristics of a security."

B. Common Enterprise.

The second component of the Howey test involves the existence of a common enterprise. Before diving headlong into the sea of facts, we must dispel the miasma that surrounds the appropriate legal standard.

1. The Legal Standard. Courts are in some disarray as to the legal rules associated with the ascertainment of a common enterprise. See generally II Louis Loss & Joel Seligman, Securities Regulation 989-97 (3d ed. rev.1999). Many courts require a showing of horizontal commonality — a type of commonality that involves the pooling of assets from multiple investors so that all share in the profits and risks of the enterprise.

Other courts have modeled the concept of common enterprise around fact patterns in which an investor's fortunes are tied to the promoter's success rather than to the fortunes of his or her fellow investors. This doctrine, known as vertical commonality, has two variants. Broad vertical commonality requires that the well-being of all investors be dependent upon the promoter's expertise.

In contrast, narrow vertical commonality requires that the investors' fortunes be "interwoven with and dependent upon the efforts and success of those seeking the investment or of third parties."

We hold that a showing of horizontal commonality — the pooling of assets from multiple investors in such a manner that all share in the profits and risks of the enterprise — satisfies the [Howey] test. Adopting this rule also aligns us with the majority view and confirms the intimation of Rodriguez. Last, but surely not least, the horizontal commonality standard places easily ascertainable and predictable limits on the types of financial instruments that will qualify as securities.

C. Expectation of Profits Solely From the Efforts of Others.

The final component of the Howey test — the expectation of profits solely from the efforts of others — is itself divisible. We address each sub-element separately.

1. Expectation of Profits. The Supreme Court has recognized an expectation of profits in two situations, namely, (1) capital appreciation from the original investment, and (2) participation in earnings resulting from the use of investors' funds. These situations are to be contrasted with transactions in which an individual purchases a commodity for personal use or consumption. The SEC posits that SG's guarantees created a reasonable expectancy of profit from investments in the privileged company, whereas SG maintains that participants paid money not to make money, but, rather, to acquire an entertainment commodity for personal consumption.

In Forman, apartment dwellers who desired to reside in a New York City cooperative were required to buy shares of stock in the nonprofit cooperative housing corporation that owned and operated the complex. Based on its determination that "investors were attracted solely by the prospect of acquiring a place to live, and not by financial returns on their investments," the Forman Court held that the cooperative housing arrangement did not qualify as a security under either the "stock" or "investment contract" rubrics. The Court's conclusion rested in large part upon an Information Bulletin distributed to prospective residents which stressed the nonprofit nature of the cooperative housing endeavor.

We think it noteworthy that the Forman Court contrasted the case before it with Joiner. In that case, economic inducements made by promoters in conjunction with the assignment of oil well leases transformed the financial instrument under consideration from a naked leasehold right to an investment contract. The Joiner Court found dispositive advertising literature circulated by the promoters which emphasized the benefits to be reaped from the exploratory drilling of a test well. Id. ("Had the offer mailed by defendants omitted the economic inducements of the proposed and promised exploration well, it would have been a quite different proposition.").

The way in which these cases fit together is instructive. In Forman, the apartment was the principal attraction for prospective buyers, the purchase of shares was merely incidental, and the combination of the two did not add up to an investment contract. In Joiner, the prospect of exploratory drilling gave the investments "most of their value and all of their lure," the leasehold interests themselves were no more than an incidental consideration in the transaction, and the combination of the two added up to an investment contract.

Seen in this light, SG's persistent representations of substantial pecuniary gains for privileged company shareholders distinguish its StockGeneration website from the Information Bulletin circulated to prospective purchasers in Forman. While SG's use of gaming language is roughly analogous to the cooperative's emphasis on the nonprofit nature of the housing endeavor, SG made additional representations on its website that played upon greed and fueled expectations of profit.

This is not to say that SG's gaming language and repeated disclaimers are irrelevant. SG has a plausible argument, forcefully advanced by able counsel, that no participant in his or her right mind should have expected guaranteed profits from purchases of privileged company shares. But this argument, though plausible, is not inevitable. In the end, it merely gives rise to an issue of fact (or, perhaps, multiple issues of fact) regarding whether SG's representations satisfy Howey's expectation-of-profit requirement.

2. Solely from the Efforts of Others. We turn now to the question of whether the expected profits can be said to result solely from the efforts of others. The courts of appeals have been unanimous in declining to give literal meaning to the word "solely" in this context, instead holding the requirement satisfied as long as "the efforts made by those other than the investor are the undeniably significant ones, those essential managerial efforts which affect the failure or success of the enterprise." This liberal interpretation of the requirement seemingly comports with the Supreme Court's restatement of the Howey test. (explaining that "the touchstone is the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others").

We need not reach the issue of whether a lesser degree of control by a promoter or third party suffices to give rise to an investment contract because SG's alleged scheme meets the literal definition of "solely." According to the SEC's allegations, SG represented to its customers the lack of investor effort required to make guaranteed profits on purchases of the privileged company's shares, noting, for example, that "playing with [the] privileged shares practically requires no time at all." SG was responsible for all the important efforts that undergirded the 10% guaranteed monthly return. As the sole proprietor of the StockGeneration website, SG enjoyed direct operational control over all aspects of the virtual stock exchange. And SG's marketing efforts generated direct capital investment and commissions on the transactions (which it pledged to earmark to support the privileged company's shares).

Bitcoin had the best model to be honest. It got launched, everyone was free to access the software and start mining. Sure, the creator mined some, but who in hell would know that they would be worth anything? It was worth 0 back then. That's the main difference. Never will be the same post-Bitcoin. The scenario cannot be recreated. Now everyone is looking for "that coin". When people was back in the day playing with Bitcoin, they did it out of curiosity. The early investors mined and bought something that was basically worthless. They deserve a lot more Bitcoin than a guy that comes years later when it's stablished and very promising technology.

An "investment of money" under Howey means the investor must have committed his assets to the enterprise in such a manner as to subject himself to financial loss. SEC v. Pinckney, 923 F.Supp. 76, 80 (E.D.N.C.1996).

Cryptoequity may not meet the common enterprise requirement, either. Courts have interpreted a common enterprise to exist when an investor's gain is tied directly to the success of the promoter (or a third party), or at least generally dependent on the promoter's efforts. Applying this "vertical commonality" requirement to cryptoequities, however, indicates they are not securities due to the potentially massive gap between the success of a platform (i.e., the promoter) and an individual token holder.

Individual developers and entrepreneurs may fail using an otherwise successful platform. The converse may be true as well. Tokens may be interoperable so that holders can use them on multiple platforms, or export their underlying applications or projects to other platforms. The fact that Ethereum's platform was recreated on the Bitcoin platform suggests that very little intrinsic relationship exists between the success of a token holder and any particular platform, and certainly not something like a passive investor's relationship to a single company's management. And depending on how they develop their applications, individual token holders may find their purchase to be worthwhile or a waste of money. This potentially different payoff undermines the common enterprise in the "horizontal" sense (i.e., among token holders).

investment contracts may be found where the investor has duties that are nominal and insignificant or where the investor lacks any real control over the operation of the enterprise

Jet Set is a nonprofit corporation, organized under the laws of Washington in 1970 for the purpose of owning and operating an airplane in order to provide vacation travel for its members. The club scheduled flights to fixed destinations. Members were permitted to reserve space on any flight on a first-come, first-served basis; however, scheduled flights were often canceled if there were insufficient reservations. Members, in addition to membership fees, paid approximately one-half the cost of commercial airline fares for their flights. Flights were limited to particular dates and destinations. Membership also included participation in certain social activities sponsored by the club, including parties, ground accommodation packages and social activities at some destinations. Memberships in Jet Set were transferable.

After Jet Set was incorporated in 1970 "select memberships" were sold for a price of $1,000. The proceeds from the sale of these memberships were placed in escrow until Jet Set secured the use of an airplane. Approximately $70,000 was raised from the sale of these memberships, which were lifetime and nontransferable in nature, and entitled the holder to fly on any Jet Set flight for $20. These memberships were also subject to monthly dues.

Likewise, what cryptoequity holders actually purchase with their funds may undermine the sale from being classified as a securities offering. The expectation of profits requirement does not exist when a buyer receives a good, service, or property. This is why crowdfunding platforms like Kickstarter are not subject to federal regulation. It is also why courts, including the U.S. Supreme Court, hold that shares in housing cooperatives or condos are not securities, even when they come with a reduction in rent or income from renting common areas. If cryptoequity is viewed as conferring a right to use "real estate" on a ledger, then, like housing shares, they may not qualify as regulated agreements.
The active involvement of cryptoequity holders--either as developers or entrepreneurs--may limit the applicability of federal law as well. Passive parties that rely on managers to generate a profit are the hallmark of securities investors. On the opposite extreme are partners that equally manage a business: the law presumes that partnership interests are not securities. This is because a partner, as opposed to a mere investor, does not rely on the efforts of others and does not need to be protected by the securities laws in doing so. (The same approach applies to LLCs managed by its members.) Buyers of Ethereum's tokens may be viewed as active participants because they promised their purchase was to use and develop on its software platform (and not as an investment). According to Howey, a purchase motivated to actively "develop" property is not a securities investment.

Finally, based on the 1990 Supreme Court case of Reves v. Ernst & Young, cryptoequities may not be regulated because they closely resemble commercial contracts that are obviously not securities. The Reves court held that promissory notes secured by home mortgages or business assets were obviously not securities, and neither were agreements that resembled them. The commercial nature of cryptoequity tokens in providing access to software and fundraising platforms may lead a court to hold the same.

I think as Bitcoin becomes bigger the "invest to get it" step will not be as needed because people will see benefits in getting paid for Bitcoin by services. For example I know a lot of coders doing freelance jobs for Bitcoin which allow them to get payments from anywhere in the world while also remaining anonymous and they trust a legit escrow more than paypal.

When this get bigger a real economy will flourish where people work for Bitcoin instead of having to buy it all the time. I know people who own 100% stacks of Bitcoin which are from jobs (and small extra of sig campaigns).

I see this very long thread just got moved from the Bitcoin Discussion forum to the Altcoin Discussion forum. Moving an established thread is very disruptive.

The moderators are really paranoid. This thread discusses how Bitcoin relatives to securities law. The mods have deprived the Bitcoin Discussion readers the information about Bitcoin's legality.

Any way no problem. More motivation.

More likely the reason they moved it is your prominent reference to "Which crypto-tokens" meaning you are discussing various coins, not just Bitcoin specifically.

A thread about the legality of Bitcoin specifically would probably stay there, or in the Legal subform. However, there are probably existing threads that cover this, so you might just reply to one of those and reduce duplication.

This thread discusses the legality of all crypto-tokens (including and specifically Bitcoin is discussed) w.r.t. securities regulation (with a focus on USA law but some mentions of EU law).

How can we put discussion of Bitcoin into the Altcoin Discussion thread when Bitcoin is not an altcoin?

Even though all crypto-tokens are discussed, for as long as Bitcoin is also prominently discussed, then it can't fit into the Altcoin subset.

How do we unconflate a general legal discussion that affects Bitcoin and altcoins and which prominently mentions issues that are specific to Bitcoin?

Seems to me the thread must go in either Bitcoin Discussion or Legal.

I had made another thread in the altcoin discussion forum to reference this thread, to be more specific to altcoin readers and posters. This thread was moved from Bitcoin Discussion to Altcoin Discussion thus creates a duplicate thread in the Altcoin Discussion forum. And I was trying to be somewhat careful to keep the thread at Bitcoin Discussion more general and also with specific interpretations for Bitcoin.

It makes me look silly (as if I was trying to create multiple threads in the same forum but I didn't) with two threads on similar issue both in the Altcoin Discussion forum.

Logic fail. Bitcoin is a subset of crypto-tokens. Bitcoin is not an element of set altcoins.

Your somewhat slanderous implication of a redundant thread in the Legal subforum requires a citation on your part, otherwise it can be taken as veiled slander.

I don't believe there is such a thread, as I googled this entire site (site:bitcointalk.org securities) before I started my thread.  :P

There is no forum for discussing both together, but the topic of alts is barely tolerated at all by the forum mods and operator; they certainly don't want this in the Bitcoin section, and never have.

But you should limit (or at least focus) the discussion there to the properties of Bitcoin itself.

In terms of legalities, I would consider it illegal if you were selling an ICO and then promptly dumping all ICO coins, releasing firmware with wallet stealing virus's.

We have consulted some of the biggest law firms in New York, Washington and Virginia.

  I'll refer you to the following white paper.

Members of policy group Coin Center, law firm Perkins Coie as well as Harvard and MIT have released a new working paper that aims to illuminate legal questions surrounding the non-financial use of the bitcoin: 
   

...and this higher level Coindesk article:  Token Security Research Analyzes Blockchain US Law (http://www.coindesk.com/token-security-research-analyzes-blockchain-us-law/)

These top tier firms explicitly considered Howie and what we and others are doing. Quoting from the above Working Paper:

Cryptonomex does not issue tokens or operate any blockchain.

We publish and maintain open source accounting software that others are free to use for public and private applications.

We also provide consulting services to help others develop public and private blockchains with all kinds of different specs for their own purposes.  This is no different than companies that sell accounting software to banks and firms on wall street.  It is those banks and firms that are regulated.

There are multiple independent software providers contributing to the body of open source software and multiple organizations using it for their own businesses.  We do not restrict, nor are we able to control, what others do with that public domain software.

We scrupulously adhere to this bright line limitation to our activities.

People who use the public domain software are naturally presumed to comply with all applicable regulations in their various jurisdictions.

Selling ICO coins in "presale" where the code isn't fully developed and the ICO funds are allegedly going to be used to pay for development, and where the buyers reasonably expect to make a profit on the ICO once the coin launches (assuming all goes well), is very clearly going to fall within the scope of securities law. Anyone who denies this is delusional.

Dumping or not dumping is completely irrelevant.

As you get farther away from this pattern, the conclusions may (or may not) differ, but the fact that some very high profile projects have done this and gotten away with it (so far) does not change that as a starting point it falls squarely within the scope of securities law.

enforcing worldwide spread is not easy, and perhaps not doable.
They tried doing it with porn in the 90's, file sharing in 2000's and so on...
and servers kept over heating and got fried up :)

I still dont understand why your'e calling waves a scam only cuz it made an ico (like everyone now).
Its devs are legit, real names with real work behind them.
So they thought charles and kushti are friends which will support them, and were wrong, apologized and moved on.
everyone got their asses covered legaly ofc..
so if you think all ico's are scams, you got lots of work now not just on waves bro :)

Please clearify. tnx

As an example: I can show that dash is an oligarchy, whether intentional or not, due to the way their paynode scheme works. These systems are designed to work trustlessly, so any hiccups (intentional or not) should be invalidated by the design, not left-up to the good or bad intentions of those who are engaged with it.

No one can fork Monero without the support of the decentralized miners. The distinction from the Dash masternode scam, is that a masternode is staked only once with DRK (Dash tokens) and earns 50+% ROI per annum forever after for the largest holders of Dash tokens, thus further centralizing the coin meaning there is a centralized oligarchy which the investors are relying on for their future expecation of profits which afaics fulfills the Howey test for what is an investment security that is regulated by the Securities Act. A decentralized PoW miner is constantly expending on electricity in a competitive free market. Owning a lot of Monero doesn't give you any leverage as a miner.

New post to better articulate why permissioned ledger, closed entopy systems likely have no value:

Let's psychoanalyze those want to troll me with a thread like this. Actually I have no censorship motivated objection about making a thread about me (I wish so much, it was possible to do something great without attaining any personal fame), it just feels really stupid because I (the idealist in me) think the technology is more important than the person, which is one of the main reasons I hate vaporware ICOs.

The salient quote is of course:


I've had that in my mind for a loooong time. Liquidity is absolutely necessary for the design, marketing, and distribution of crypto-currency, if you want to succeed.