I really wish the crypto community would spend some more time performing due diligence and analyzing ICO's and token releases more critically.

Just as you would if someone asked you for your hard earned money to invest in their business - you should have the same level of scrutiny when putting cash into a new coin.

I spent some time listening to Trevor Koverko speak.  He was an early investor in Bitcoin, Ether, and SALT - like ICO stage early.  He's very well spoken and knowledgeable about macro trends in crypto.  No doubt, he's got big capital from his early investments.  Him and his team have built solid in-roads into the crypto community, as he's known many of the well publicized  players for quite some time now (Charlie Lee, Roger Ver, Brock Pierce, etc.).  I think there's a good formula for short term success, because there's high potential for the marketing effort to drive interest, but the long term plan is where things fizzle out.

When asked about US specific regulations (SEC), he has always dodged the question.  It is clear they haven't figured this out.  I'm not surprised - it's complex.  Look at AngelList, one of the most prolific structured syndicates.  They haven't figured out the best way to address investments into companies as a result of SEC regulations, a struggle they call the 99 Investor Problem.

I prefer to index towards CEO's and founders that are highly technical, like Vitalik.  The guys that can author the protocol in low-level code, from the ground up.  In the same sense, I am more careful with CEO's that are great salesman, like Brock Pierce, Roger Ver, Justin Sun and Trevor.  These guys associate with people like the guy that shows off his garage full of books and Lambo's (you guys know who I'm talking about).  I'd rather see them have intellectual conversations on Medium with Joseph Poon or Jimmy Song. 

It is clear too, that Korea, China and possibly Japan will join the list of countries that ban ICO's.  These are some of the largest crypto markets, when added with the US, that is basically 85% of all crypto volume.  If they can figure out a way around this, this can be a successful coin.

Raising in the U.S. through Reg A+ requires registration with the SEC.  Is Polymath registered with the SEC?  If not, then it falls under Rule 501 Reg D.
The ST-20 token in itself doesn't provide the additional liquidity - it is the second hand market that does that, whether it be an exchange or other medium to freely trade the tokens.  Having the token by itself with no market to trade in, is the same is having a piece of paper with shares of ownership.

I think in addition to the above, the many other things I've highlighted need to be addressed in order for Polymath to see wide-scale, meaningful adoption.  That doesn't mean the company will not have the ability to generate value in the token from hype or marketing, just look at Tron.

I spent some time reading the deck and whitepaper as a potential investor.  I thought I would share this with the forum to help democratize access to sometimes difficult analysis or information.  

There are a few issues:

Two Token Types

There are two token classes, one for the platform user (called POLY tokens) and one for the issuance of securities in the underlying investment (called an ST-20 token).

• The ST-20 tokens can only be purchased by accredited investors and subject to AML/KYC.  In the US this means $1M net worth, and $200k income in the last two years as per Rule 501 Reg D of the CFR.
• The POLY tokens should be tradable by non-accredited investors, since they are used for payments made on the platform to service providers.

Token Liquidity and Value Problem

• The ST-20 market is expected to be fairly illiquid, because there are an extremely limited number of individuals that would qualify.
• Tokens issued to US holders are non-transferrable for 1 year, and thereafter can only be transferred to a US person, and all tokens must be transferred (i.e. cannot fractionize or retain partial ownership of ones tokens, it's an all or none deal)
• The POLY token market would be near worthless to anyone that is not a service provider on the platform.
• The whitepaper negates to discuss if these tokens can be converted to other currencies like ETH.  I assume they can, otherwise the devs that build the ST-20 tokens, would not be able to spend their earnings to pay for living wages, etc.

The Whitepaper attempts to address ST-20 token liquidity by saying they are based on ERC-20 tokens and the protocol is open therefore it can be listed on any exchange.
However the protocol also governs the exchange of tokens to AML/KYC and SEC (or other regulating body) verified addresses only.
This creates a problem with a traditional exchange, since many wallets and addresses are dynamically generated.  Even if they are prefixed, it would require a "KYC Provider" to verify each address for each accountholder, to provide the necessary permissions to allow the protocol to send the tokens.  So each wallet address would have to go through an outside approval process to be generated.  Further to this, the exchange would have to prevent trading of the ST-20 tokens until this is done.  So the UI would have to gray it out and a business rule built into the exchange to make sure they're not accidentally allowing trading of the regulated ST-20 token.
Every exchange would have to set this up for every ST-20 token company issuance, since the KYC/regulation parameters will vary based on the company location and local laws, plus the local laws of the investor.

Do you think an exchange that is accustomed to trading hundreds of millions per coin, will go through the trouble of all of this effort to open up a market to a very very small group of qualified investors for each ST-20 token out there?  And if you're a US investor, then you're out of luck, because you can't sell partial shares.  You have to sell the whole lot, so the exchange would be useless.

Other Flaws

The whitepaper says that the Polymath platform doesn't "see" who the investors are.  The KYC Provider is the one who will have access to this information.  However, for proper notices, like Change of Control or other information that needs to be conveyed to investors as per local regulation, the individuals themselves need to be contacted.  If the tokens are trading hands, who keeps track of who owns what and how many shares, especially if you have a free market of service providers, some that might come and go as they please.

Poor Use Case for Blockchain Technology

What is the advantage of creating an ERC-20 token and have the transactions recorded in the blockchain?  Blockchain is great for verification of transactions and the movement of assets or data.  But if the market is expected to be illiquid, and the protocol needs to know who each individual is for the above reasons, then the platform is almost utilizing none of the benefits of the blockchain.  In fact, a better way would be to centralize the issuance so that all investors are known, KYC/AML can be verified by a single body, and the capitalization table is always up-to-date.  

Also, for securities sales, the SEC limits the maximum number of investors to be 99 individuals.  In fact, organizations like AngelList have written about this issue.  They called the "99 Investor Problem"  You can't have more than 99 investors at any point of time in a private offering without structuring multiple entities.  So basically you need a very few people to own and trade very large amounts of money, to make this work.  


I Could Be Wrong

Despite my expertise in this field, I could still be wrong.  I could be incorrect in my interpretation of the whitepaper.  I could be incorrect on the possibility of a secondary market.  I could be wrong on the information I have to derive my analysis.  Polymath could still choose to illegally allow for second hand trading, allowing more than 99 individuals, etc.  Many companies already are operating outside the bounds of regulation in the token market.  Polymath could also ignore the regulated markets entirely, especially the U.S. and choose to only allow its platform to function for companies and investors in specific, whitelisted countries.