Are bitcoin based securities illegal?

[markm]

This makes some sense. Unfortunately that is virtually impossible to work and pretty soon it would be a complete cesspool.

Well look how well it worked for the utubes and file-download sites of the world.

New laws got passed that basically assume guilt until proven innocent or some such weirdness, in the sense that nowadays you might not anymore be able to just say you will remove any copyright-violating or intellectual-property violating or illegal material upon receipt of a court order? Instead now folks can just demand you remove it without even first having a judge ascertain they are within their rights to have it removed?

Or are the new "takedown notice" things actual real court orders?

Because allowing OTdemo Open Transactions server to demo the ability of anyone to issue any asset at any time seems likely to lead to some pornographic, hate-literature, racist, unregulated, illegal, intellectual property violating, copyright-infringing, rights of publicity infringing, etc etc etc assets, I am trying taking the position that as I am not a lawyer, and trolls making false accusations are extremely common and likely, it makes little sense for me to do a takedown that isn't court-ordered unless I am moved by some whim or mood or quirk of fate or act of deity or force majeure etc to do so.

I really am not educated enough in all the laws of this planet's various jurisdictions to determine which exactly among numerous pseudonymous identities are or are not permitted to play ruler of a nation or CEO of a corporation or interplanetary securities dealer or whatever their game is in which games where when and how.

However I do know that DeVCoins are intended to help raise money for software development so I don't really see yet any good reason why they should not be used to encourage playtesting of the Open Transactions platform by having them be used to reward players for playing, such as buying and selling various virtual articles with them. If people come up with interesting and potentially useful new free open source contracts for example are they not contributing thereby to free open source development?

Bitcoins though, hmm, are bitcoins really so very different that they ought not be permitted?

-MarkM-

[Deprived]

Cant you setup an investment club then pool your money in hardware ?

As long as you appoint officers and hold meetings etc I dont see an issue.

Yes you can - provided you mean certain criteria (which may vary depending on your country).

Typically those criteria include some of the following:

1.  Personally knowing the investors (and not advertising the investment).
2.  Only using Accredited investors (definiton of which varies from country to country - think US is based only on net-worth/income, UK/EU it also means they have significant financial knowledge/experience).
3.  A max invetsment size,
4.  A max number of investors.

I used to be in a mining company that did just that. In fact it was the first ever mining co op 

What do you consider advertising ?  Posting on the forum to get expressions of interest ?

This wasnt a registered investment group by any means just a way to pool our resources.

Posting on a public forum would 100% be considered advertising - that was, after all, the whole purpose of it

It all depends, again, on the specific rules of your own country.  Certainly in the UK the single biggest op-out from having to be regulated is that you are not doing it "by way of business".  Even if the intent is to make profit that is not, of itself, sufficent to mean you have to be regulated.  If nefario was working full-time on GLBSE then claiming it wasn't being run "by way of a business" pretty much went out of the window.

If anyone's concerned about a specific situation then they really need to seek expert legal advice.  I have some knowledge and experience of specific areas (in particular, of relevance to GLBSE at present, compliance with the Data Protection Act - having been compliance officer for it for a company in the past) but am by no means an expert on securities.  In the UK if you do something as a hobby with only friends/acquaintances involved then you're generally fine (even if it's technically against some rule noone really gives a shit).  Once you start tryng to do it full-time (for a living) you'd best get everything right.  GLBSE went from hobby to full-time without (apparently) bothering to find out from a solicitor or the FSA or even the internet how things are actually supposed to be done.

There's some cut-off point (in terms of size of "crypto company") below which any LE are going to laugh at anyone who reports you, above which they may start to take a complaint seriously.  If you're not going to run a "proper" company then my best advice is to stay small enough that no LE/regulators will take a complaint against you seriously.  And make sure any "investors" clearly understand whatever risks there are in "investing" - as there's no minimum size for fraud (where you deliberately leave out information causing them to suffer an unexpected loss).

[Deprived]

The issue here is the requirement for sophisticated investors. In the US that means a net worth of >$2.5 million  $1M excluding your residence:
http://www.sec.gov/answers/accred.htm
You wont find too many of those on these forums.

Yeah in the UK there's also a requirement that they have to have significant financial experience (work in finance or already done X investments in the last Y years - can't be bothered to look it up).  Think the asset requirement is lower though (like £250k excluding pensions funds or similar).  There's different exclusions for owning shares in a private company though - but one of the requirements (from memory, which may be faulty) is no advertisement of it: i.e. you can't solicit strangers to invest.

[matthewh3]

Cant you setup an investment club then pool your money in hardware ?

As long as you appoint officers and hold meetings etc I dont see an issue.

In the United States Investment club partnerships must file Form 1065 and Schedule K-1s with the IRS each year, and with states that require partnership filings.  In the United Kingdom investment clubs and their members are required to submit form 185(new) to HMRC each year.  Investment club accounting software can facilitate the management of a club's books and the preparation of tax filings.

[legolouman]

Cant you setup an investment club then pool your money in hardware ?

As long as you appoint officers and hold meetings etc I dont see an issue.

In the United States Investment club partnerships must file Form 1065 and Schedule K-1s with the IRS each year, and with states that require partnership filings.  In the United Kingdom investment clubs and their members are required to submit form 185(new) to HMRC each year.  Investment club accounting software can facilitate the management of a club's books and the preparation of tax filings.

I'll take that as a no.

[markm]

There seems to be a fuzzy area though.

People can only not be strangers if their existence has somehow been advertised/transmitted to each other, whether by birth contractions to their mother, by their mother or by the photons or noises they emit or by their tactile properties if encountered in the dark silently to their father, and on throughout life.

So one fuzziness is at what point can one put aside the original advertisement of the presence/existence of another human being and the subsequent process of getting to know each other as "water under the bridge" and move onward to "now we all know each other, has anyone any suggestions as to anything that might be fun or interesting or profitable to do together" followed by "why yes as a matter of fact, I was thinking we could all pool our resources and accomplish such and such a thing" ?

...Followed by "but here are lots of other things" ...Followed by "okay so how about some of us pool resources to accomplish one thing and others of us pool our resources to accomplish another thing and so on for many things" ...Followed by "Hey can I pool some of my resources into one thing and some into another thing and if so over how many things, such as can I put some into each and every thing we come up with to pool resources into"...

-MarkM-

[Bitcoin Oz]

There seems to be a fuzzy area though.

People can only not be strangers if their existence has somehow been advertised/transmitted to each other, whether by birth contractions to their mother, by their mother or by the photons or noises they emit or by their tactile properties if encountered in the dark silently to their father, and on throughout life.

So one fuzziness is at what point can one put aside the original advertisement of the presence/existence of another human being and the subsequent process of getting to know each other as "water under the bridge" and move onward to "now we all know each other, has anyone any suggestions as to anything that might be fun or interesting or profitable to do together" followed by "why yes as a matter of fact, I was thinking we could all pool our resources and accomplish such and such a thing" ?

...Followed by "but here are lots of other things" ...Followed by "okay so how about some of us pool resources to accomplish one thing and others of us pool our resources to accomplish another thing and so on for many things" ...Followed by "Hey can I pool some of my resources into one thing and some into another thing and if so over how many things, such as can I put some into each and every thing we come up with to pool resources into"...

-MarkM-

I consider the people who joined the particular venture to be friends, and still are. One could argue that if you reach a certain post count level you are no loner an unknown entity you are in fact a "community" or "tribe".

One could argue further about this since all the people involved are on bitcoin-otc so are not "the public" per se but already known individuals.

At least in my country things are considered hobbies untill you get more than $75 000 a year turnover.

[stochastic]

Cant you setup an investment club then pool your money in hardware ?

As long as you appoint officers and hold meetings etc I dont see an issue.

I once was on a investment club board, and under US security law there can only be 100 partners of the investment club.  Also, there cannot be any 'public' requests for investments.

I also like the idea of just renting mining power.  People rent server space all the time for a fee and make money off their websites.  I don't see why people can't rent something that mines bitcoins.

[Bitcoin Oz]

Cant you setup an investment club then pool your money in hardware ?

As long as you appoint officers and hold meetings etc I dont see an issue.

I once was on a investment club board, and under US security law there can only be 100 partners of the investment club.  Also, there cannot be any 'public' requests for investments.

I also like the idea of just renting mining power.  People rent server space all the time for a fee and make money off their websites.  I don't see why people can't rent something that mines bitcoins.

Maybe bfl should let you rent minirigs