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Author Topic: Why do you chose a fake sec. in fake Co? What about crowd funding?  (Read 1561 times)
EskimoBob
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October 13, 2012, 08:50:00 AM
 #1

Why are you people so happy buying fake and illegal securities in non existing (fake) entities?
Why even issue this illegal stuff and call yourself a corporation, while you know, you are not representing any legally existing Co.
If your company is registered, and you offer shares to general public - you are breaking the laws in most of the countries that have internet access.

Obviously this opens the ugly door of SEC/FSA/OSC/... etc, who will start cracking down on this sooner or later and make everyone's life really miserable.

Why not get over the egotrip and start calling it what it is: crowd funding with BTC/LTC/PPC etc.


While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
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October 14, 2012, 12:59:06 PM
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Yea I never figured out why everything had to sound so *legal* when dealing with something not. Crowd funding sounds much less threatening to big wigs, and just plain more accurate. 
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October 14, 2012, 03:40:34 PM
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I wondered this as well. I assumed that the sites were initially setup to service actual companies but then people discovered that they could use the IPO functions as a Kickstarter-esque platform. Took me a bit to figure out that what I were buying most of the time weren't really bonds/stocks but were mostly vouchers sold on the open market that gave a reward of some sort in trade for upfront capital.

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October 14, 2012, 06:32:14 PM
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Why are you people so happy buying fake and illegal securities in non existing (fake) entities?
Why even issue this illegal stuff and call yourself a corporation, while you know, you are not representing any legally existing Co.
If your company is registered, and you offer shares to general public - you are breaking the laws in most of the countries that have internet access.

Obviously this opens the ugly door of SEC/FSA/OSC/... etc, who will start cracking down on this sooner or later and make everyone's life really miserable.

Why not get over the egotrip and start calling it what it is: crowd funding with BTC/LTC/PPC etc.


Because when something is offered as a dividend-paying investment it falls under securities legislation and not crowdfunding legislation.

You're offering an investment. It's a security, regardless of what you call it.
Attempts to hide unlicensed securities behind crowdfunding legislation (eg, https://bitcointalk.org/index.php?topic=102010.0) wouldn't stand up for even a minute in court.
EskimoBob
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October 14, 2012, 07:10:34 PM
 #5

Why are you people so happy buying fake and illegal securities in non existing (fake) entities?
Why even issue this illegal stuff and call yourself a corporation, while you know, you are not representing any legally existing Co.
If your company is registered, and you offer shares to general public - you are breaking the laws in most of the countries that have internet access.

Obviously this opens the ugly door of SEC/FSA/OSC/... etc, who will start cracking down on this sooner or later and make everyone's life really miserable.

Why not get over the egotrip and start calling it what it is: crowd funding with BTC/LTC/PPC etc.


Because when something is offered as a dividend-paying investment it falls under securities legislation and not crowdfunding legislation.

You're offering an investment. It's a security, regardless of what you call it.
Attempts to hide unlicensed securities behind crowdfunding legislation (eg, https://bitcointalk.org/index.php?topic=102010.0) wouldn't stand up for even a minute in court.

Can you elaborate?

While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
stochastic
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October 14, 2012, 07:26:10 PM
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Why are you people so happy buying fake and illegal securities in non existing (fake) entities?
Why even issue this illegal stuff and call yourself a corporation, while you know, you are not representing any legally existing Co.
If your company is registered, and you offer shares to general public - you are breaking the laws in most of the countries that have internet access.

Obviously this opens the ugly door of SEC/FSA/OSC/... etc, who will start cracking down on this sooner or later and make everyone's life really miserable.

Why not get over the egotrip and start calling it what it is: crowd funding with BTC/LTC/PPC etc.


Because when something is offered as a dividend-paying investment it falls under securities legislation and not crowdfunding legislation.

You're offering an investment. It's a security, regardless of what you call it.
Attempts to hide unlicensed securities behind crowdfunding legislation (eg, https://bitcointalk.org/index.php?topic=102010.0) wouldn't stand up for even a minute in court.

Can you elaborate?

If someone gets some kind of income or return on their capital input then that is not crowdfunding (for now).  The JOBS Act that contains the crowdfunding provision does not kick in until Jan 1, 2012, and I believe the SEC will find a way to postpone the implementation or put up some arbitrary rules to slow its implementation until they have enough time to assess what way to better implement this law.

If you give some kind of capital input to a upstart business and they give you ownership percentage that has the potential for capital gains or they give you dividends or other kinds of income, then that is not allowed under SEC regulations under some specific rules.  You can't publicly solicit funds, you have to have a certain kind of investor, that they know the risks, such as have experience investing in risky investments, and that the total number of investors is not more than a certain amount.  This is because they may potentially soliciting the public for funds. (you could make an argument that the bitcoin community is not the public at large)  If the upstart business gave the person a frying pan then that would not be under SEC rules.

I have invested in Cooperations (not corporations) before which was completely outside SEC jurisdiction and still legal.  It is regulated by the state level as the cooperation does not allow ownership rights to citizens outside of the state where it is found.  I think they publicly raised over $200,000 and have been around for over 2 years.

Introducing constraints to the economy only serves to limit what can be economical.
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October 14, 2012, 07:49:24 PM
 #7

If someone gets some kind of income or return on their capital input then that is not crowdfunding (for now).  The JOBS Act that contains the crowdfunding provision does not kick in until Jan 1, 2012, and I believe the SEC will find a way to postpone the implementation or put up some arbitrary rules to slow its implementation until they have enough time to assess what way to better implement this law.

If you give some kind of capital input to a upstart business and they give you ownership percentage that has the potential for capital gains or they give you dividends or other kinds of income, then that is not allowed under SEC regulations under some specific rules.  You can't publicly solicit funds, you have to have a certain kind of investor, that they know the risks, such as have experience investing in risky investments, and that the total number of investors is not more than a certain amount.  This is because they may potentially soliciting the public for funds. (you could make an argument that the bitcoin community is not the public at large)  If the upstart business gave the person a frying pan then that would not be under SEC rules.

I have invested in Cooperations (not corporations) before which was completely outside SEC jurisdiction and still legal.  It is regulated by the state level as the cooperation does not allow ownership rights to citizens outside of the state where it is found.  I think they publicly raised over $200,000 and have been around for over 2 years.

Thank you for the answer. I guess you are talking about the 1933 Act?

Quote
If the upstart business gave the person a frying pan then that would not be under SEC rules.

This is exactly what growdfunding uses (and we do too) only the "frying pan" is virtual good.
As I understand it, BTC is as much as money as frying pan or a Pokemon card in USA or anywhere else in this planet.

While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
samson
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October 14, 2012, 09:34:16 PM
 #8

This is exactly what growdfunding uses (and we do too) only the "frying pan" is virtual good.
As I understand it, BTC is as much as money as frying pan or a Pokemon card in USA or anywhere else in this planet.

A good point however it would be interesting to explore if anyone knows which countries (if any) have completely unregulated financial markets favourable to GLBSE type BTC funded operations ?

Perhaps some of the smaller countries in existence with undeveloped markets could provide a friendly environment for offering services such as those offered on the now closed GLBSE.

TradeFortress
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October 14, 2012, 10:04:01 PM
 #9

Why are you people so happy buying fake and illegal securities in non existing (fake) entities?
Why even issue this illegal stuff and call yourself a corporation, while you know, you are not representing any legally existing Co.
If your company is registered, and you offer shares to general public - you are breaking the laws in most of the countries that have internet access.

Obviously this opens the ugly door of SEC/FSA/OSC/... etc, who will start cracking down on this sooner or later and make everyone's life really miserable.

Why not get over the egotrip and start calling it what it is: crowd funding with BTC/LTC/PPC etc.


Because when something is offered as a dividend-paying investment it falls under securities legislation and not crowdfunding legislation.

You're offering an investment. It's a security, regardless of what you call it.
Attempts to hide unlicensed securities behind crowdfunding legislation (eg, https://bitcointalk.org/index.php?topic=102010.0) wouldn't stand up for even a minute in court.

Can you elaborate?

If someone gets some kind of income or return on their capital input then that is not crowdfunding (for now).  The JOBS Act that contains the crowdfunding provision does not kick in until Jan 1, 2012, and I believe the SEC will find a way to postpone the implementation or put up some arbitrary rules to slow its implementation until they have enough time to assess what way to better implement this law.

If you give some kind of capital input to a upstart business and they give you ownership percentage that has the potential for capital gains or they give you dividends or other kinds of income, then that is not allowed under SEC regulations under some specific rules.  You can't publicly solicit funds, you have to have a certain kind of investor, that they know the risks, such as have experience investing in risky investments, and that the total number of investors is not more than a certain amount.  This is because they may potentially soliciting the public for funds. (you could make an argument that the bitcoin community is not the public at large)  If the upstart business gave the person a frying pan then that would not be under SEC rules.

I have invested in Cooperations (not corporations) before which was completely outside SEC jurisdiction and still legal.  It is regulated by the state level as the cooperation does not allow ownership rights to citizens outside of the state where it is found.  I think they publicly raised over $200,000 and have been around for over 2 years.

Don't pay dividends then, or anything close to dividends. Offer rewards.. like a cat or something.
stochastic
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October 14, 2012, 10:53:01 PM
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Quote
If the upstart business gave the person a frying pan then that would not be under SEC rules.

This is exactly what growdfunding uses (and we do too) only the "frying pan" is virtual good.
As I understand it, BTC is as much as money as frying pan or a Pokemon card in USA or anywhere else in this planet.


Good idea.  Users would have to understand this and agree too.

Introducing constraints to the economy only serves to limit what can be economical.
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October 15, 2012, 06:40:46 AM
 #11

Don't pay dividends then, or anything close to dividends. Offer rewards.. like a cat or something.

Doesn't matter.  The securities laws don't use the words money or currency or legal tender.  They use the word "value".

If cats, or pokemon cards, or BTC have value and you "pay dividends" (profit share) using those things that have value, then you are operating a security.

The intrastate trading bit is interesting.  But you know that most states are going to have laws very similar to the federal laws.

I'm not a Coinbase fan -- I placed a buy order, they took the funds out of my account, then a week later the price went up and they canceled the buy and closed my account.  You've been warned.  Use a different exchange.
CharlesPonzi
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October 15, 2012, 06:42:19 AM
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Don't pay dividends then, or anything close to dividends. Offer rewards.. like a cat or something.

Doesn't matter.  The securities laws don't use the words money or currency or legal tender.  They use the word "value".

If cats, or pokemon cards, or BTC have value and you "pay dividends" (profit share) using those things that have value, then you are operating a security.

The intrastate trading bit is interesting.  But you know that most states are going to have laws very similar to the federal laws.

Is it a security if you hire a bfl minirig and it produces bitcoins ?

I landed in this country with $2.50 in cash and $1 million in hopes, and those hopes never left me.
burnside
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October 15, 2012, 06:53:51 AM
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Don't pay dividends then, or anything close to dividends. Offer rewards.. like a cat or something.

Doesn't matter.  The securities laws don't use the words money or currency or legal tender.  They use the word "value".

If cats, or pokemon cards, or BTC have value and you "pay dividends" (profit share) using those things that have value, then you are operating a security.

The intrastate trading bit is interesting.  But you know that most states are going to have laws very similar to the federal laws.

Is it a security if you hire a bfl minirig and it produces bitcoins ?

I'm not sure.  The definition of a security is pretty broad.  My guess is no.  Unless your arrangement is transferable without the knowledge or permission of the owner of the minirig, then yes it could be a security.

(1) The term "security" means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, 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 interest or instrument commonly
known as a "security", or any certificate of interest or participation
in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any
of the foregoing.

I'm not a Coinbase fan -- I placed a buy order, they took the funds out of my account, then a week later the price went up and they canceled the buy and closed my account.  You've been warned.  Use a different exchange.
EskimoBob
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October 15, 2012, 07:12:05 AM
 #14

...

I'm not sure.  The definition of a security is pretty broad.  My guess is no.  Unless your arrangement is transferable without the knowledge or permission of the owner of the minirig, then yes it could be a security.

(1) The term "security" means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement
, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, 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 interest or instrument commonly
known as a "security", or any certificate of interest or participation
in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any
of the foregoing.


This is where they grab your balls and squeeze hard. I guess the option is: now promise of profit sharing.

While reading what I wrote, use the most friendliest and relaxing voice in your head.
BTW, Things in BTC bubble universes are getting ugly....
burnside
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October 15, 2012, 07:29:23 PM
 #15

...

I'm not sure.  The definition of a security is pretty broad.  My guess is no.  Unless your arrangement is transferable without the knowledge or permission of the owner of the minirig, then yes it could be a security.

(1) The term "security" means any note, stock, treasury
stock, security future, security-based swap, bond, debenture,
evidence of indebtedness, certificate of interest or participation
in any profit-sharing agreement
, collateral-trust certificate,
preorganization certificate or subscription, transferable share,
investment contract, voting-trust certificate, certificate of deposit
for a security, fractional undivided interest in oil, gas, or
other mineral rights, any put, call, straddle, option, or privilege
on any security, certificate of deposit, 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 interest or instrument commonly
known as a "security", or any certificate of interest or participation
in, temporary or interim certificate for, receipt for, guarantee
of, or warrant or right to subscribe to or purchase, any
of the foregoing.


This is where they grab your balls and squeeze hard. I guess the option is: now promise of profit sharing.


In the case of a straightforward equipment lease, I don't think there's profit sharing going on.  You lease a piece of equipment, you get 100% of the profit from it.  You use that profit to pay the lease.

Now if you pool funds to pay the lease, and split the profits, then you're definitely in securities territory.

Or if you lease fractions of a piece of equipment, then there is the potential that the lessor is in securities territory.

I don't think anyone is going to consider these lease situations a security though unless the lease contracts are transferable.  (thus, resembling a "share")


I'm not a Coinbase fan -- I placed a buy order, they took the funds out of my account, then a week later the price went up and they canceled the buy and closed my account.  You've been warned.  Use a different exchange.
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