The altcoin topic everyone wants to sweep under the rug

[TPTB_need_war]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

[1714902963]

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[1714902963]

1714902963

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[maokoto]

As for me, I do not understand those terms. Too technical for me. Also, I am not in the US and cannot really give an opinion.

Hope your topic gets more public, though.

[TPTB_need_war]

Also, I am not in the US and cannot really give an opinion.

I presented details on why I think Europeans and others also are affected. I don't know why Europeans think (if they do so or if not why they are often say it is only a USA problem) they are immune to securities regulation?

[tokeweed]

OP..  Are you a lawyer?

[TPTB_need_war]

OP..  Are you a lawyer?

No. And I am hoping to get some feedback from those who are. My father is and I spent a fair amount of time reading legal briefs stacked around the house, but I don't claim to have any formal training in law.

[tokeweed]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

It's probably because no one gives a shit.

[TPTB_need_war]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

It's probably because no one gives a shit.

Yeah I understand the "middle finger" attitude towards government, but what about those of us who don't want to go to prison or get slapped with fines down the line?

[tokeweed]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

It's probably because no one gives a shit.

Yeah I understand the "middle finger" attitude towards government, but what about those of us who don't want to go to prison or get slapped with fines down the line?

Stay away from crypto.

[TPTB_need_war]

Hahaha. Probably reasonable advice. Thanks for the humor and bluntness. Others of us would like to find another answer though, if there is one.

Are you implying you think everyone in crypto is either naive or of a criminal mindset? Or are you implying people are ready to fight their government and are fed up to the point of proactively not caring?

[Thenoticer]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

2 complex for the average newb like me. You need to dumb down your argument for us average and below average humans.

[TPTB_need_war]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

2 complex for the average newb like me. You need to dumb down your argument for us average and below average humans.

I think the latest exchange between smooth and I there really made it more clear. Try to read again near the end of the thread. We got more directly to the point. Yeah legalese can make a reader dizzy. I think we homed in well on the key two sentences of the Howey test.

[tokeweed]

Hahaha. Probably reasonable advice. Thanks for the humor and bluntness. Others of us would like to find another answer though, if there is one.

Are you implying you think everyone in crypto is either naive or of a criminal mindset? Or are you implying people are ready to fight their government and are fed up to the point of proactively not caring?

If you do not want to get in trouble, just stay away.  It's as simple as that.

[rdnkjdi]

I have a few random thoughts on this.  

First the government doesn't really seem that interested or get involved to the level of paranoia people have unless people... And a lot of people are outright raped with things that are illegal regardless of crypto classification.  Paycoin, BFL and mtgox.  Their actions seem to indicate that they are interested in prosecuting people for the most famous outright scams to try to encourage a tiny bit of accountability.

I have been overseas for six months in three very different countries and I have an entirely new respect for how the government protects the dollar and attacks those who threaten it.  Foreign entities with monetary policies and domestic entities trying to remain private.

If the government is as bad as you say then if and when they take aim at crypto - the swipe of a pen by some appointed official can and will make things in crypto they want to be against the law illegal regardless of what is / isn't legal now.  You may have the chance to abide by the new rules (report all your Bitcoin keys, etc), exit crypto and pay taxes or become a target.  I'm not sure abiding by current rules is going to save or help much with a government that already is in violation of its own constitution and numerous other laws on a consistent basis.  If they decide to attack crypto on a whole - today's legal standing will not matter.  Crypto will exist inside of their new rules or be strong enough to stand outside of them.  I do not perceive existing laws to be any type of protection against fighting against the USD if the government decides their is a big conflict of interest.

At this stage I think tracking the blockchain provides them with far more value than threats when it comes to illegal activity (or that is their impression)

[TPTB_need_war]

Hahaha. Probably reasonable advice. Thanks for the humor and bluntness. Others of us would like to find another answer though, if there is one.

Are you implying you think everyone in crypto is either naive or of a criminal mindset? Or are you implying people are ready to fight their government and are fed up to the point of proactively not caring?

If you do not want to get in trouble, just stay away.  It's as simple as that.

Well everyone in the USA is on average committing 3 felonies a day just by breathing.

Life is about weighing relative risk vs. reward probabilistically.

Also there is the concept of near-term and long-term. Long-term legal risk is much higher than short-term, but at age 50 I care much less about my long-term risk because I might be dead or too old any way. Also there is the concept/option of changing citizenships after some time. Etc..

As for users of crypto, I would track your capital gains when you are holding it in large enough quantities (e.g. over $600 worth in the USA) and also your income. Report everything on taxes as you are obligated to in your jurisdiction.

But this thread was more about how to single out which coin models are at very high risk of being classified as "investment securities".


Edit: also the law exists to protect the "public interest" (although it may be gamed by the powers-that-be, I am referring to the official raison d'être for law), thus doing acts that harm others in unjustified ways, then expect to incur the wrath of the law. Whereas, if you try your best to really help others and be very thorough with disclosure, then risks of unjust legal culpability decline.

[TPTB_need_war]

Guess I missed that one Likewise my feelings are amicable and you caught me in a different frame of mind yesterday as I'd got caught up arguing with fools and had let myself get brought down to their level.

Emotions affect everyone and it seems they are always flying high on these forums and the shit is flying all over the place (the more dung the merrier right). Any way, I try as much as possible to keep myself focused on extracting the factual conclusions of discussions, i.e. the useful information that can aid my work.

You'd pointed to Dash specifically at one point and I'd still argue the infeasibility of prosecution on that kind of scale, its at most 3.2k responsible for decision making at the moment but add third party services that allow any amount to take part in an MN and it's potentially every user in the system, add the complications of worldwide distribution, anonymity and hosting in countries with no such laws and its completely impractical to enforce.

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, 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.

Again, the SR case was a good example. That was a one-off, the cost of enforcing the law was way too high in both funds and revealing methods so it was more a face-saving exercise than procedure and the penalties and questionable legalities of the case where evidence of that.

What is the "SR case"?

[TPTB_need_war]

Sorry, the silkroad tor marketplace.

Prosecuting Silk Roads was an effective action of warning people that they will be caught doing these things.

The legal specifics of "unregistered investment securities" is much different than the laws that were employed to prosecute "Silk Road".

Proprietors of these suspected or alleged (i.e. not proven in court action) "unregistered investment securities" crypto-coins are much easier to track down and many are already public, such as Evan from Dash and Daniel Latimer from Bitshares. I am not aware of good forensic data on the Protoshares and Bitshares saga (apparently Chinese were involved).

If your point is the users can always move on to another illegal platform since open source is like a virus that can't be destroyed and that it is impractical for the authorities to bring actions against all millions of individuals, I think the authorities want a much more efficient solution and will rather go for some scenario where they just automatically fine your bank account or access you some tax FINRA fine, and if you don't pay they just keep raising the fees and penalties until it is worthwhile to sell you to a Haliburton prison where they are paid by inmate by the government so have a financial incentive to increase inmates and pay off the court system to send them more prosecutions. Westerners are not at all prepared for the reality payback for socialism that is going to slam the door to freedom in their face over the coming years.

[TPTB_need_war]

stan you are conflating issues and glossing over the relevant definition of a "security" in the other thread linked from the OP of this thread. Try to read again my posts more slowly and carefully. I will also make a few more clarifying posts in that other thread.

(not to be condescending, but also no time to repeat myself again)

[CoinHoarder]

Asking for legal advice on Bitcointalk forums is not a road I'd suggest traveling down.

[2112]

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.

The simpler explanation is that "the authorities" already have a mole and simply continue to gather evidence. I know very little about Dash, but I remember what happened during the days of "Bitcoin Consultancy" operating in Europe and Bitomat.pl acquisition by Mt.Gox. At that time not even "the authorities" would gather evidence, the regular private gumshoes did, the circle of users was so small.

When both Bitcoin Consultancy and Bitomat disappeared the gathered information was used to close down and prosecute some controlled-substances distribution rings in Europe. Bitcoin acted as a sort of honey-pot, as it tended to attract businesspeople who weren't well-served by the regular banking transfer network SEPA.

Further back in history I remember that some early arrests of Al-Quaeda functionaries were thanks to the secret cooperation of the employees of Swisscom EasyROAM subsidiary.

[TPTB_need_war]

Asking for legal advice on Bitcointalk forums is not a road I'd suggest traveling down.

I hope you were not implying I was asking for legal advice?

I am certain that if you review my posts you will find I am discussing my non-expert (layman's) interpretation of securities law as it applies to crypto-tokens with (so far ostensibly although open to further analysis) non-experts. Maybe you are perplexed as to what my purpose could be if not just to waste my time or ask for advice?

Consider that I am talking to users of crypto-currency. Consider I have to build a reputation. Consider I have an incentive to raise awareness on this issue for numerous reasons (one my reputation, two competing coins are mostly all culpable under securities law, etc). Go from there in several directions of motivations...

If your only point was that we are unlikely to get expert advice here in these forums, then my apology for overreacting if you weren't implicating me.

[CoinHoarder]

If your only point was that we are unlikely to get expert advice here in these forums

That was my only point. I find your project Ion (that name is better imo) interesting, and I hope you follow through with it.

Cheers

[tokeweed]

Hahaha. Probably reasonable advice. Thanks for the humor and bluntness. Others of us would like to find another answer though, if there is one.

Are you implying you think everyone in crypto is either naive or of a criminal mindset? Or are you implying people are ready to fight their government and are fed up to the point of proactively not caring?

If you do not want to get in trouble, just stay away.  It's as simple as that.

Well everyone in the USA is on average committing 3 felonies a day just by breathing.

Life is about weighing relative risk vs. reward probabilistically.

Also there is the concept of near-term and long-term. Long-term legal risk is much higher than short-term, but at age 50 I care much less about my long-term risk because I might be dead or too old any way. Also there is the concept/option of changing citizenships after some time. Etc..

As for users of crypto, I would track your capital gains when you are holding it in large enough quantities (e.g. over $600 worth in the USA) and also your income. Report everything on taxes as you are obligated to in your jurisdiction.

But this thread was more about how to single out which coin models are at very high risk of being classified as "investment securities".


Edit: also the law exists to protect the "public interest" (although it may be gamed by the powers-that-be, I am referring to the official raison d'être for law), thus doing acts that harm others in unjustified ways, then expect to incur the wrath of the law. Whereas, if you try your best to really help others and be very thorough with disclosure, then risks of unjust legal culpability decline.

Well, then go dabble in crypto then.  Why even worry about it too much.  Everyone in the USA is on average committing 3 felonies a day just by breathing.

[TPTB_need_war]

stan you are conflating issues and glossing over the relevant definition of a "security" in the other thread linked from the OP of this thread. Try to read again my posts more slowly and carefully. I will also make a few more clarifying posts in that other thread.

(not to be condescending, but also no time to repeat myself again)

I have tried to clarify what I think the USA law says a security is:

https://bitcointalk.org/index.php?topic=1218269.msg12795383#msg12795383

Can anyone tell me after that post why Monero is not an unregistered investment security under USA law?

[TanteStefana2]

As for me, I also don't understand what you're asking, nor why you made a second thread because you didn't get enough attention on your first thread.

But what I do want to know, Anonymint, is what your new name stands for?  TPTB_need_war  = what?  I don't get it?  Of course I'm not a genius like you are, so???

[hashtag101]

As for me, I also don't understand what you're asking, nor why you made a second thread because you didn't get enough attention on your first thread.

It is really starting to look like many of the cryptos out there can be classified as securities.

People, like yourself, don't seem to understand. Before, I didn't think they were securities, either. He is bringing up an extremely important point for discussion. He is trying to understand as well. And yes, he made a new thread to hopefully be more successful than the first one.

Do you think if we just stay quiet it will go away?

Its a great point. And what is the response.

What, you think you're a lawyer? Etc.

Fucking ridiculous, lol.

[TanteStefana2]

As for me, I also don't understand what you're asking, nor why you made a second thread because you didn't get enough attention on your first thread.

It is really starting to look like many of the cryptos out there can be classified as securities.

People, like yourself, don't seem to understand. Before, I didn't think they were securities, either. He is bringing up an extremely important point for discussion. He is trying to understand as well. And yes, he made a new thread to hopefully be more successful than the first one.

Do you think if we just stay quiet it will go away?

Its a great point. And what is the response.

What, you think you're a lawyer? Etc.

Fucking ridiculous, lol.

Nope, I'm not a Lawyer, not sure why you'd think that?  I'm still wondering what  TPTB_need_war  means, I really am curious   Actually, I just saw a thread I liked deleted for unknown reasons, and I thought it was odd that this one stays, even so it's only here to bring attention to another thread.

Anyway, I'm not good at acronyms, and can't figure out  TPTB_need_war ?  The last part sounds intriguing and since I don't understand the first part, I can't figure out what needs war?

[generalizethis]

As for me, I also don't understand what you're asking, nor why you made a second thread because you didn't get enough attention on your first thread.

It is really starting to look like many of the cryptos out there can be classified as securities.

People, like yourself, don't seem to understand. Before, I didn't think they were securities, either. He is bringing up an extremely important point for discussion. He is trying to understand as well. And yes, he made a new thread to hopefully be more successful than the first one.

Do you think if we just stay quiet it will go away?

Its a great point. And what is the response.

What, you think you're a lawyer? Etc.

Fucking ridiculous, lol.

Nope, I'm not a Lawyer, not sure why you'd think that?  I'm still wondering what  TPTB_need_war  means, I really am curious   Actually, I just saw a thread I liked deleted for unknown reasons, and I thought it was odd that this one stays, even so it's only here to bring attention to another thread.

Anyway, I'm not good at acronyms, and can't figure out  TPTB_need_war ?  The last part sounds intriguing and since I don't understand the first part, I can't figure out what needs war?

The Powers That Be. Why doesn't your internet have search? Is it broken or something? 

[1aguar]

stan you are conflating issues and glossing over the relevant definition of a "security" in the other thread linked from the OP of this thread. Try to read again my posts more slowly and carefully. I will also make a few more clarifying posts in that other thread.

(not to be condescending, but also no time to repeat myself again)

I have tried to clarify what I think the USA law says a security is:

https://bitcointalk.org/index.php?topic=1218269.msg12795383#msg12795383

Can anyone tell me after that post why Monero is not an unregistered investment security under USA law?

There is no "promise of profits".
There is no "enterprise" because there is no business or company.
Furthermore, there is no investment at all but only exchange between bankers.
A crypto-currency is nothing more than a network of bankers that will accept and use a token.
Did you not see on blockchain.info how it says "be your own bank"?
BANK: the store of money or tokens held by the banker in some gambling or board games.

[TanteStefana2]

I finally googled, 'cause I really was curious.  TPTB = the powers that be

Ah well, I thought it was something else  LOL.

I'm going to suggest, for you tptb, that you think on the intent of the law.  Instead of trying to fit the development teams of crypto, and the vast voluntary force that also help direct the way crypto projects go, into some kind of traditional management team, think also about why there are laws on securities.  Mainly, to enforce the disclosure of financial information, etc... of a company that issues those securities.  In the case of open source cryptos, those are completely known and ... well... open.  There are so many reasons why crypto currencies do not fit the mold of securities, and you seem to choose one, a management team, which in and of itself does not define a security.  You're trying to force a square peg (cryptos) into a round hole (securities) and I don't know why other than to cause consternation.  

I know you are a brilliant man, but honestly, I think you direct your energies in the most unproductive directions.  Your view is so narrow, you can't see the forest for the trees.  I honestly think you need to develop your lateral thinking.  Or for better productivity, team up with someone who has the opposite problem?

[rdnkjdi]

trees.  I honestly think you need to develop your lateral thinking.  Or for better productivity, team up with someone who has the opposite problem

He would need to find someone he respects and views as his equal for that to work.

[Snail2]

Also, I am not in the US and cannot really give an opinion.

I presented details on why I think Europeans and others also are affected. I don't know why Europeans think (if they do so or if not why they are often say it is only a USA problem) they are immune to securities regulation?

Of course we are not, but (apart from a few Eastern European countries) taxing and tax collection seems to be more relaxed over here, in addition until I don't cash out in fiat I don't have to worry. If I convert it to fiat then I have to pay a CGT but that's all.

[TPTB_need_war]

stan you are conflating issues and glossing over the relevant definition of a "security" in the other thread linked from the OP of this thread. Try to read again my posts more slowly and carefully. I will also make a few more clarifying posts in that other thread.

(not to be condescending, but also no time to repeat myself again)

I have tried to clarify what I think the USA law says a security is:

https://bitcointalk.org/index.php?topic=1218269.msg12795383#msg12795383

Can anyone tell me after that post why Monero is not an unregistered investment security under USA law?

There is no "promise of profits".
There is no "enterprise" because there is no business or company.
Furthermore, there is no investment at all but only exchange between bankers.
A crypto-currency is nothing more than a network of bankers that will accept and use a token.
Did you not see on blockchain.info how it says "be your own bank"?
BANK: the store of money or tokens held by the banker in some gambling or board games.

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 a 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.

[TPTB_need_war]

Also, I am not in the US and cannot really give an opinion.

I presented details on why I think Europeans and others also are affected. I don't know why Europeans think (if they do so or if not why they are often say it is only a USA problem) they are immune to securities regulation?

Of course we are not, but (apart from a few Eastern European countries) taxing and tax collection seems to be more relaxed over here, in addition until I don't cash out in fiat I don't have to worry. If I convert it to fiat then I have to pay a CGT but that's all.

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.

[hashtag101]

As for me, I also don't understand what you're asking, nor why you made a second thread because you didn't get enough attention on your first thread.

It is really starting to look like many of the cryptos out there can be classified as securities.

People, like yourself, don't seem to understand. Before, I didn't think they were securities, either. He is bringing up an extremely important point for discussion. He is trying to understand as well. And yes, he made a new thread to hopefully be more successful than the first one.

Do you think if we just stay quiet it will go away?

Its a great point. And what is the response.

What, you think you're a lawyer? Etc.

Fucking ridiculous, lol.

Nope, I'm not a Lawyer, not sure why you'd think that?  I'm still wondering what  TPTB_need_war  means, I really am curious  Actually, I just saw a thread I liked deleted for unknown reasons, and I thought it was odd that this one stays, even so it's only here to bring attention to another thread.

Anyway, I'm not good at acronyms, and can't figure out  TPTB_need_war ?  The last part sounds intriguing and since I don't understand the first part, I can't figure out what needs war?

Sorry. I should have been more careful with how I wrote that.

I was referring to some of the responses tptb has been getting. Wasn't asking you if you were a lawyer.

At the same time, rereading your original comment, you weren't so innocent. You were being a dick. But better late than never to become more civil and backpedal. Good to hear you don't want your original comment to be taken as a slight anymore. And let it be, don't, just don't keep......thanks.

[hashtag101]

What I am getting from all of this is that the laws are written in a way that they COULD be interpreted as tptb is stating.

If they chose to do so, they would most likely pull it off.

So the exercise here, as I understand it, is for us to discuss ways that the developers could fund the creation of a platform/coin in a way that would make it impossible for it to be characterized as a security.

[1aguar]

stan you are conflating issues and glossing over the relevant definition of a "security" in the other thread linked from the OP of this thread. Try to read again my posts more slowly and carefully. I will also make a few more clarifying posts in that other thread.

(not to be condescending, but also no time to repeat myself again)

I have tried to clarify what I think the USA law says a security is:

https://bitcointalk.org/index.php?topic=1218269.msg12795383#msg12795383

Can anyone tell me after that post why Monero is not an unregistered investment security under USA law?

There is no "promise of profits".
There is no "enterprise" because there is no business or company.
Furthermore, there is no investment at all but only exchange between bankers.
A crypto-currency is nothing more than a network of bankers that will accept and use a token.
Did you not see on blockchain.info how it says "be your own bank"?
BANK: the store of money or tokens held by the banker in some gambling or board games.

If you review the thread I linked to

I did review the thread; nowhere did I see how a cryptocurrency (a network of bankers that will accept and use a token) can be considered a "common enterprise" because a cryptocurrency is essentialy a resource (bank). The promoters do not operate a business; no one can expect anything of them.

Yes, the courts could classify your crypto as a security, but take a look at the TOS page on banx.io regarding BANX shares and you will see that these crypto-shares are really just 'donations to a for-profit company'. As far as other cryptos go, it is quite a stretch to say that they represent interest in a company, business, or enterprise.

[TPTB_need_war]

I did review the thread; nowhere did I see how a cryptocurrency (a network of bankers that will accept and use a token) can be considered a "common enterprise" because a cryptocurrency is essentialy a resource (bank). The promoters do not operate a business; no one can expect anything of them.

Yes, the courts could classify your crypto as a security, but take a look at the TOS page on banx.io regarding BANX shares and you will see that these crypto-shares are really just 'donations to a for-profit company'. As far as other cryptos go, it is quite a stretch to say that they represent interest in a company, business, or enterprise.

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).

[americanpegasus]

Ok TPTB, your concerns have caused me to do a search of the SEC website to determine my best interpretation of current law and guidance as issued by the SEC themselves.  I'll quote what I think are the most interesting sections of each.  tl;dr: As long as none of the 'insiders', as you call us (mods, devs, public personalities) are directly offering these assets for sale, are calling them "investment opportunities", or claiming they carry no risk I think everyone is in the clear.  I would expect non-'insiders' would be even further in the clear as the SEC has firmly established by precedent that as long as cryptocurrencies don't claim to represent ownership in any venture, they are exempt from classification as securities. 
 
To the details, I found this "concern" letter published: https://www.sec.gov/comments/s7-06-13/s70613-504.pdf 
 

Obviously, clearly, cryptocurrency technology shows us the future of all financial securities and issuers.
The definition of “issuer” today revolves around promises to investors that if they buy securities issued
by the issuer that they will share equitably and materially in the future financial gain (or losses) created
by the issuer. The SEC has declared that cryptocurrency might be deemed a “security” based on facts
and circumstances in each instance, but that if the cryptocurrency is not being offered as a security then
the fact that it may be created, issued and verified technically by a single party does not cause the issuer
of the cryptocurrency to be deemed an “issuer” of securities. One of the practical implications of being
an “issuer” of securities rather than an issuer of cryptocurrency is that anyone who buys directly from
an issuer must “qualify” as a buyer (e.g. an “Accredited” investor, or pursuant to JOBS Act Rules) or
the buyer must legitimately be “friends and family” of the securities issuer. Another key difference is
the requirement for the direct buyers to comply with Rule 144 and/or Rule 145 prior to future resales of
the securities in the public secondary market. Issuers of cryptocurrency can create their own self-hosted
or cloud-hosted public secondary market, whereas “issuers” of “securities” must (currently) rely on the
existing public financial markets created by brokers, exchanges and alternative trading systems (ATS).

 
 
Here's a direct link to Rules 144 and 145 elaboration: http://www.sec.gov/info/smallbus/secg/rules144-145-secg.htm 
 
Second, here's an article directly written by the SEC warning investors of Ponzi schemes conducted with cryptocurrencies.  The smoking gun here is that by the SEC's own language they make clear distinctions in the language they use between cryptocurrencies and the "investments" that can be made with these currencies:  http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf 
 

 
We are concerned that the rising use of virtual currencies
in the global marketplace may entice fraudsters to lure
investors into Ponzi and other schemes in which these
currencies are used to facilitate fraudulent, or simply
fabricated, investments or transactions. The fraud may
also involve an unregistered offering or trading platform.
these schemes often promise high returns for getting in
on the ground floor of a growing Internet phenomenon.
Fraudsters may also be attracted to using virtual
currencies to perpetrate their frauds because transactions
in virtual currencies supposedly have greater privacy benefits
and less regulatory oversight than transactions in
conventional currencies. Any investment in securities in
the United states remains subject to the jurisdiction
of the SEC regardless of whether the investment is made
in U.S. dollars or a virtual currency. In particular, individuals
selling investments are typically subject to federal or state licensing requirements

 
 
From what I can tell here, as long as you are a promoting an actual cryptocurrency which acknowledges the risks you face, doesn't claim to represent ownership in anything, and doesn't propose to be its own trading platform you are good.  Especially considering they have already released guidance on this (so if you run a Bitcoin ponzi now you have no excuse; you will face charges) then it would seem they have established legal precedent for people innocently speculating in actual currencies themselves. 
 
I can't find any dangerous language there; everything makes me feel like everyone involved in building and promoting a cryptocurrency is on legally solid ground. 
 
Finally, another link where the SEC has moved to prosecute someone who ran an exchange that sold crypto-stocks (not the raw currencies): http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370543655716 
 
This further draws the line in the sand between what is defined as a security and what is not.  The fact that US based exchanges such as Poloniex and Coinbase have not had to register as securities exchanges is enough to draw conclusions to this fact, and consistent language like we see here just solidifies the case. 
 
I feel confident and comfortable that no rational decision by the SEC can come to the conclusion that the currencies I'm involved with: Monero or Aeon are anywhere near a Security.  For sure no other users are affected and should feel free to speculate as much as they like, but I'm not a lawyer so this is a non-professional opinion.  As I have said, going forward I personally will abide by some self-imposed rules (even though I suspect I would be fine even if I did not).  I will not refer to either of these as an "investment opportunity" or being "without risk" and will publicly disclose that I own significant amounts (if I can ever *acquire* significant amounts of either!  ).  I also will not be offering any cryptocurrency for sale. 
 
I think if the SEC wanted to put their foot down and classify any of these as securities they would have done it already, and their 6-year hesitance will cost them the ability to pursue that route even if they ever tried it. 

[TPTB_need_war]

In my opinion, you have some egregious errors in your analysis, presumably because you are moving too fast trying to digest a few google searches and haven't taken the time to read carefully the other thread in the Bitcoin Discussion forum that is linked from this thread?

Ok TPTB, your concerns have caused me to do a search of the SEC website to determine my best interpretation of current law and guidance as issued by the SEC themselves.

 

In your first quote, that is not the SEC's opinion, but rather a letter to the SEC. You misunderstood the SEC's guidance in second quote you provided.

tl;dr: As long as none of the 'insiders', as you call us (mods, devs, public personalities) are directly offering these assets for sale, are calling them "investment opportunities", or claiming they carry no risk I think everyone is in the clear.

See the SEC vs Howey Supreme Court decision (which I covered in detail in the other thread in the Bitcoin Discussion forum that is linked from this thread); if you create an implicit investment contract where investors have reasonable expectations of future gains secured by your (collectively the insider group's) efforts and promotions, then you have caused the cryptocurrency be a security which is secured by you all. The implication on you if you are not the "issuer" (and the SEC has more leeway as to definition of "issuer" than you are thinking due to your misunderstanding of the SEC guidance you quoted), then you can't sell the restricted coins for 1 year. However, what you are failing to grasp is that Rule 144 only applies to restricted, unregistered securities, i.e. those sold to accredited investors or one of the other exemptions from registration. If any of the unregistered securities (the coins) were sold to non-accredited investors (and did not qualify for any other exemption from registration) and thus are in an illegal state, then afaik purchasing and reselling these implicates you in many forms of fraud, such as wire fraud. Rule 144 applies to restricted securities that were sold only under the allowed exemptions and not securities that were sold without an exemption and thus are entirely illegal. If you perpetuate that crime (even you were not the issuer) especially with your willful promotion and efforts securing the gullible investors' expectations and the investors lose money, you are possibly in for a whole lot of hurt in the future. IANAL, I suggested you consult with an attorney. This is no matter that you can be certain from 15 minutes of googling.

I would expect non-'insiders' would be even further in the clear as the SEC has firmly established by precedent that as long as cryptocurrencies don't claim to represent ownership in any venture, they are exempt from classification as securities.

Afaik, the SEC has not issued any such guidance. You misread what you quoted below. The SEC vs. Howey Supreme Court decision and case law hence specifically disavow any schemes employed to obfuscate the actual implied investment contract.

To the details, I found this "concern" letter published: https://www.sec.gov/comments/s7-06-13/s70613-504.pdf  
  

Obviously, clearly, cryptocurrency technology shows us the future of all financial securities and issuers.
The definition of “issuer” today revolves around promises to investors that if they buy securities issued
by the issuer that they will share equitably and materially in the future financial gain (or losses) created
by the issuer. The SEC has declared that cryptocurrency might be deemed a “security” based on facts
and circumstances in each instance, but that if the cryptocurrency is not being offered as a security then
the fact that it may be created, issued and verified technically by a single party does not cause the issuer
of the cryptocurrency to be deemed an “issuer” of securities. One of the practical implications of being
an “issuer” of securities rather than an issuer of cryptocurrency is that anyone who buys directly from
an issuer must “qualify” as a buyer (e.g. an “Accredited” investor, or pursuant to JOBS Act Rules) or
the buyer must legitimately be “friends and family” of the securities issuer. Another key difference is
the requirement for the direct buyers to comply with Rule 144 and/or Rule 145 prior to future resales of
the securities in the public secondary market. Issuers of cryptocurrency can create their own self-hosted
or cloud-hosted public secondary market, whereas “issuers” of “securities” must (currently) rely on the
existing public financial markets created by brokers, exchanges and alternative trading systems (ATS).

Haha, afaics you totally miss the point. This person is complaining to the SEC and making the argument that cryptocurrency will be used to circumvent securities regulation. He is essentially challenging the SEC that if they don't go after cryptocurrency then the SEC will be irrelevant because instead of complying with Rule 144 and 145 as not admended the way he is requesting, he argues people will just use cryptocurrency to try to circumvent the requirements entirely by arguing the cryptocurrencies are not securities. But all he is doing is inciting the SEC to crack down on cryptocurrency at some point in the future. The SEC is likely using this as an exhibit of their need to crack down in the future.

Also don't be confused by the underlined sentence. It is does not say an issuer is only one who sells coins directly to buyers. If you think it says that then you have serious english comprehension failure and also failure of the context of the SEC vs. Howey Supreme Court decision and subsequent case law.

Here's a direct link to Rules 144 and 145 elaboration: http://www.sec.gov/info/smallbus/secg/rules144-145-secg.htm

And you need to read that document more slowly and carefully.

Second, here's an article directly written by the SEC warning investors of Ponzi schemes conducted with cryptocurrencies.  The smoking gun here is that by the SEC's own language they make clear distinctions in the language they use between cryptocurrencies and the "investments" that can be made with these currencies:  http://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf  
  

 
We are concerned that the rising use of virtual currencies
in the global marketplace may entice fraudsters to lure
investors into Ponzi and other schemes in which these
currencies are used to facilitate fraudulent, or simply
fabricated, investments or transactions. The fraud may
also involve an unregistered offering or trading platform.
these schemes often promise high returns for getting in
on the ground floor of a growing Internet phenomenon.
Fraudsters may also be attracted to using virtual
currencies to perpetrate their frauds because transactions
in virtual currencies supposedly have greater privacy benefits
and less regulatory oversight than transactions in
conventional currencies. Any investment in securities in
the United states remains subject to the jurisdiction
of the SEC regardless of whether the investment is made
in U.S. dollars or a virtual currency. In particular, individuals
selling investments are typically subject to federal or state licensing requirements

You have serious reading comprehension failure if you don't see that the above says nothing to support your incorrect summary.

From what I can tell here, as long as you are a promoting an actual cryptocurrency which acknowledges the risks you face, doesn't claim to represent ownership in anything, and doesn't propose to be its own trading platform you are good.

And afaics you don't have a clue. And this is the last time I am going to suggest to you that you be get serious and study this properly.

Please I don't have enough free time go through all your sloppy research again if you do it again. Please if you want to rebut, at least properly read both threads and really immerse yourself in the issue properly.

Especially considering they have already released guidance on this (so if you run a Bitcoin ponzi now you have no excuse; you will face charges) then it would seem they have established legal precedent for people innocently speculating in actual currencies themselves.

Oh my. The law doesn't work that way son. Ignorance of the law is not a valid form of criminal defense. The SEC warning against Ponzi does nothing to absolve your culpability under the law for being involved in promoting, offering, and selling illegal, unregistered securities.
  

I can't find any dangerous language there; everything makes me feel like everyone involved in building and promoting a cryptocurrency is on legally solid ground.

And if they listen to you, they are in for potentially a world of future hurt.

Finally, another link where the SEC has moved to prosecute someone who ran an exchange that sold crypto-stocks (not the raw currencies): http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370543655716  
  
This further draws the line in the sand between what is defined as a security and what is not.

No it does not. Going for low hanging fruit doesn't mean they aren't biding their time before they destroy the crypto-currency wildwest. They are probably letting it run for now because the Winklevoss twins haven't cashed out yet and also because the phenomenon is not big enough yet. After the next super bubble and then the global crash of the USA into the economic abyss after 2017.9 is when the witch hunts are likely to come flying from every direction.

The fact that US based exchanges such as Poloniex and Coinbase have not had to register as securities exchanges is enough to draw conclusions to this fact, and consistent language like we see here just solidifies the case.

I don't think Bitcoin is a security, plus Coinbase has backing from the global elite and is thus likely shielded from the SEC. Poloniex is a poignant example because they trade so many different kinds of altcoins. But I think they can argue that they have complied with every legal guideline they've been made aware of and they are not promoting any altcoins (rather than just offering a service for trading that is indifferent as to which coin is better than the other). Those who are both promoting and securing the securities with their efforts, while also reselling ILLEGAL, unregistered securities are potentially much more culpable. Poloniex can get a slap on the wrist later perhaps or just be liable at the corporate level and not personal incrimination of the principles. Whereas, you as an individual and as a promoter...falling directly under the SEC vs. Howey Supreme Court decision...
  

I feel confident and comfortable that no rational decision by the SEC can come to the conclusion that the currencies I'm involved with: Monero or Aeon are anywhere near a Security...
  
I think if the SEC wanted to put their foot down and classify any of these as securities they would have done it already, and their 6-year hesitance will cost them the ability to pursue that route even if they ever tried it.  

You think...are you sure you have thought?

[americanpegasus]

It sounds like all of your arguements (which I still don't agree with) revolve around me selling Aeon or Monero after my efforts.  
  
I haven't sold any to date, only bought, and will simply continue to buy and hold.  It seems impossible, even in the most draconian interpretations of laws that don't even exist (which you seem predisposed to invent and then maliciously apply) that someone who does not sell - only buys - would be liable for any misconduct.  
  
Should the time come that I would actually like to trade some of my Monero for Bitcoin, the currencies would be so widespread that this would be a non issue. (A Winklevoss twin selling some Bitcoin isn't going to get them brought up on any charges).  
  
As well, it's likely that by that point I would simply choose to spend them directly with a merchant (also a succinct way of proving no wrongdoing).  
  
I feel like you are grasping for straws on this topic, and while being a little paranoid is healthy, it makes no sense to worry about complying with laws that don't even exist yet.  If you were right, then there would be no way for anyone to buy or help promote any new cryptocurrency legally, and to date *nothing* they have done has shown they are taking this stance.  If your flawed interpretations were correct, no US citizens could legally contribute to new cryptocurrency.
  
Since that's obviously not going to happen in my case, the issue is a nonstarter for me.  I'm going to be part of the cryptocurrency movement, even if all the laws regarding it aren't finalized yet; please remember that this isn't 2011; this is 2016 and things are much more certain now. 
 
Also, it is a reasonable conclusion that considering the SEC continues to refer to these as currencies, and US based exchanges are being allowed to continue operating as long as they comply with KYC laws, and there is no way to legal way to register your involvement with them despite their obvious legality, no reasonable citizen would be expected to comply with measures which don't exist.  
  
Please realize that an even stronger precedent has already been set with Ethereum, which major players like Goldman Sachs have invested money into even while the "insiders" have cashed out of.  This would be what would put me on edge, but since private citizens can observe this happening loudly and publicly without even so much as a statement against it by the SEC (while they have chosen to rapidly respond to other issues in this space) then again the precedent is set that cryptocurrencies cannot have any 'insiders' who are subject to these provisions.  
  
You can imagine all you like how they *might* have tried to leverage these laws against crypto, but they haven't, leaving individuals with no way to comply with them and still be involved in promoting a cryptocurrency..  
  
But sure, perhaps if Monero takes off then it would be a wise use of $1000 to hire a lawyer to write a letter to SEC inquiring about my situation, just to show I had made an attempt to comply with laws above and beyond what is expected.  It can't hurt, but I maintain that you are grasping at straws here.
  

[rnicoll]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

IANAL, but IMHO anything with centralised issuance (i.e. Ripple) is likely to fall under these laws, although it does depend on whether anyone cares enough to do anything about it. Personally I don't mine, so any coins I have are either bought or donated, which I think covers us fairly well, but obviously that requires a volunteer dev team.

[americanpegasus]

What's most fucked up us we are here worried about this petty bullshit, yet members of Congress openly engage in the highest forms of insider trading and then flaunt their 'untouchable' status. 
 
The Oligarchy is official. 
 
http://www.activistpost.com/2015/10/12-days-before-08-crash-congress-was-secretly-told-to-sell-off-their-stocks.html

[TPTB_need_war]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

IANAL, but IMHO anything with centralised issuance (i.e. Ripple) is likely to fall under these laws, although it does depend on whether anyone cares enough to do anything about it. Personally I don't mine, so any coins I have are either bought or donated, which I think covers us fairly well, but obviously that requires a volunteer dev team.

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, 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.

[americanpegasus]

I think the biggest flaw in your legal reasoning is that you say that if an asset gets to a certain size then all entities will be free to legally and openly speculate on it.  
  
But if something is an illegal security to start with, it doesn't suddenly become legal just because it gets big enough.  Illegal is always illegal, regardless of size.  
  
In this case the SEC merely has a bigger case to bust.  If something is illegal, it will always be illegal.  If you run a ponzi, you can rest assured from the moment you accept funds from others you are in violation of the law and even if your scheme grows to be worth billions of dollars you will still be in violation of the law.  
  
On the contrary, a pure PoW cryptocurrency is a legal currency from inception onward and does not fit any of the "illegal activities" that the SEC has outlined in *any* communication thus far.  
  
You are claiming that people should worry based on your interpretation of a law that doesn't even apply here, and which the SEC by its actions and statements have shown they do not intend to pursue.  
  
But I do agree it's time for the SEC to clarify laws regarding cryptocurrency, and once such clarification takes place I will be happy to comply with it.  

[TPTB_need_war]

I think the biggest flaw in your legal reasoning is that you say that if an asset gets to a certain size then all entities will be free to legally and openly speculate on it.  
  
But if something is an illegal security to start with, it doesn't suddenly become legal just because it gets big enough.  Illegal is always illegal, regardless of size.

In this case the SEC merely has a bigger case to bust.  If something is illegal, it will always be illegal.

I agree with your logic. I didn't intended to imply otherwise. I inserted a parenthetical in the last paragraph of my prior post to clarify.

Also I didn't intend to imply that other forms of investment fraud wouldn't still apply to Bitcoin, such as insider trading, etc.. I was only writing specifically to whether crypto-coins are illegal securities or not securities at all.

If you run a ponzi, you can rest assured from the moment you accept funds from others you are in violation of the law and even if your scheme grows to be worth billions of dollars you will still be in violation of the law.

Agreed. Note Ponzi schemes are not the only activity that cause shares of crypto-currency to fall under the securities law, as I explained about the implied investment contract.

On the contrary, a pure PoW cryptocurrency is a legal currency from inception onward and does not fit any of the "illegal activities" that the SEC has outlined in *any* communication thus far.

You are reinforcing my point! If you are predominantly/prominently discussing with the community about speculating on the exchange value of the created tokens, and not exclusively (or at least predominantly) to users of the currency, then evidently you have not yet created a currency and have instead created a share in an investment and thus an implied investment contract.

You are claiming that people should worry based on your interpretation of a law that doesn't even apply here, and which the SEC by its actions and statements have shown they do not intend to pursue.

You have shown nothing to contradict my interpretation, and you have shown no statements nor actions from the SEC that contradict my interpretation. In fact, I clearly highlighted in bold, red from your quote of the SEC and they specifically disavow the assumption that their regulatory powers are inhibited in the case of cryptocurrencies.

But I do agree it's time for the SEC to clarify laws regarding cryptocurrency, and once such clarification takes place I will be happy to comply with it.  

The law is clear enough. They allow you to willfully incriminate yourself in the meantime.

How much simpler can the SEC vs. Howey Supreme Court decision be? Promote to investors shares in any common enterprise (i.e. any collective) that are unregistered then go to jail. Enjoy.

[TPTB_need_war]

where is my post about this scammer wannabe TPTB_need_war? oh well.

It was entirely off-topic (noise) to this thread which is why I reported to the moderator and both your comments and mine replying to you were deleted. And I will report your off-topic post again. This thread is not about me nor my coin. You are posting your personalized slander of me in the wrong thread. Did you not even comprehend this thread is about analyzing the law for regulation of securities as it applies to crypto-tokens.

[benthach]

where is my post about this scammer wannabe TPTB_need_war? oh well.

It was entirely off-topic to this thread which is why I reported to the moderator and both you comments and mine replying to you were deleted. And I will report your off-topic post again. This thread is not about me nor my coin. You are posting your slander in the wrong thread.

i don't give a crap anyway. only dumb morons would fall for your shzit. creating a shit coin, think he already creating something special call zk but don't want to implement with his shitcoin rather want to sell it. the guy never heard of anything call testnet.

[TPTB_need_war]

where is my post about this scammer wannabe TPTB_need_war? oh well.

It was entirely off-topic to this thread which is why I reported to the moderator and both you comments and mine replying to you were deleted. And I will report your off-topic post again. This thread is not about me nor my coin. You are posting your slander in the wrong thread.

i don't give a crap anyway. only dumb morons would fall for your shzit. creating a shit coin, think he already creating something special call zk but don't want to implement with his shitcoin rather want to sell it. the guy never heard of anything call testnet.

You clearly have mental problems. How many times have I explained to you that I am not yet at testnet and I am not accepting any sales on my token project before testnet. As for selling my Zero Knowledge Transactions design and offering to help other altcoins implement it, the sale has already taken place with a private party.   I no longer have cash flow issues.

[benthach]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them. i have seen many many of them in this forum section alone. crypto world bringing all the crooks into one world.

[TPTB_need_war]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them.

Who has bought into anything I have done? You are lying. So the scammer is you apparently.

What is wrong with you man? Are you delusional and insane? You continue to accuse me of things I have never done. Please take your meds.

[benthach]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them.

Who has bought into anything I have done? You are lying. So the scammer is you apparently.

you have said you have created a coin or a dev of a coin. whatever that shitcoin is not my concern or waste time to look into it but i'm sure you already have created some coins.
now you selling your tech or already sold your tech to someone else instead implementing this tech into your shitcoin.

[TPTB_need_war]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them.

Who has bought into anything I have done? You are lying. So the scammer is you apparently.

you have said you have created a coin or a dev of a coin

The former is not the same as the latter. I have not sold anything about my own coin yet. Stop your lying. Selling my contracting services privately on some technical work I did is perfectly legal and normal activity for any software developer. And go make these posts in an appropriate thread. You are entirely disrespecting the topic of this thread. How many times have you been warned, then you reply you don't care about the topic of the thread. Are you trying to get banned from the forum.

[benthach]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them.

Who has bought into anything I have done? You are lying. So the scammer is you apparently.

you have said you have created a coin or a dev of a coin

The former is not the same as the latter. I have not sold anything about my own coin yet. Stop your lying. And go make these posts in an appropriate thread. You are entirely disrespecting the topic of this thread. How many times have you been warned, then you reply you don't care about the topic of the thread. Are you trying to get banned from the forum.

from your signature i can see you have quite a lot of coins/id under your belt
this OP is just another way for you to explore ways to creating scams

[TPTB_need_war]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them.

Who has bought into anything I have done? You are lying. So the scammer is you apparently.

you have said you have created a coin or a dev of a coin

The former is not the same as the latter. I have not sold anything about my own coin yet. Stop your lying. And go make these posts in an appropriate thread. You are entirely disrespecting the topic of this thread. How many times have you been warned, then you reply you don't care about the topic of the thread. Are you trying to get banned from the forum.

from your signature i can see you have quite a lot of coins under your belt
this OP is just another way for you to explore ways to creating more scams

Dude you are hallucinating. My username history has nothing to do with coin names. I never held any coin but BTC in my entire life thus far. You are a liar and you are breaking the law by writing false statements attempting to destroy my reputation with lies.

[benthach]

the practice of a crook, dishonesty and scammer wannabe. the people who are bought into his shitcoin now have nothing he's promised them.

Who has bought into anything I have done? You are lying. So the scammer is you apparently.

you have said you have created a coin or a dev of a coin

The former is not the same as the latter. I have not sold anything about my own coin yet. Stop your lying. And go make these posts in an appropriate thread. You are entirely disrespecting the topic of this thread. How many times have you been warned, then you reply you don't care about the topic of the thread. Are you trying to get banned from the forum.

from your signature i can see you have quite a lot of coins under your belt
this OP is just another way for you to explore ways to creating more scams

Dude you are hallucinating. My username history has nothing to do with coin names. I never held any coin but BTC in my entire life thus far. You are a liar and you are breaking the law by writing false statements attempting to destroy my reputation with lies.

i have lie nothing. you are just coming out of a rat hole, you have no reputation or credential in my book

[americanpegasus]

TPTB, I have found the internet filled with a variety of "characters" in recent years who seem to methodically poke at us, trying to find egotistical and personality weaknesses.  Then when they find a nerve, they continue to attack it, until one of two things has happened - the nerve becomes deadened to further attacks, or you lose your mind.  
  
I would suggest that when this happens to you (as it has been happening to me for years) you accept it is happening, agree, and show that you have no ego that can be damaged.  Enjoy the ride.  As a wise man once said,  
  
 
 
The greatest mistake a man can make is to take himself seriously.

[TPTB_need_war]

Advice accepted. So true. I am learning.

[altcoinUK]

Can I ask your opinion, does the incoming Friday ruling of SEC change your observation about crypto securities, what is illegal and what isn't?

http://www.cnbc.com/2015/10/29/mom-and-pop-crowdfunding-for-startups-is-about-to-become-a-reality.html

[TPTB_need_war]

Nothing you have quoted from the SEC guidance has disavowed nor vacated the law that is explained at the above link.

Thats because I agree with the proceedings, I have not seen an instance a member of the current core team of Monero or AEON making any solicitation for buying or forecasts on the market, contrary to other coins that acts as an enterprise (up-down management, changing of the emission, centralized nodes issuing tokens, etc)

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.

I recall flufflypony saying exactly the same and several times. Its been good so far but I would not be so confident if Monero or AEON had been launched with premines or changed the emission.

So many of your key community members here talking about investing. Sorry fail. Where are the users using it as a currency? Too many talk about HODLing, "only buyers no sellers", etc.. It is only my suggestion to talk only about use and never about investment at all, not even to disclose your holdings, plans, etc.. If your community is truly users then that should be possible. The fact that it isn't the normal mode of discussion should be instructive in any court proceeding.

On the contrary, a pure PoW cryptocurrency is a legal currency from inception onward and does not fit any of the "illegal activities" that the SEC has outlined in *any* communication thus far.

You are reinforcing my point! If you are predominantly/prominently discussing with the community about speculating on the exchange value of the created tokens, and not exclusively (or at least predominantly) to users of the currency, then evidently you have not yet created a currency and have instead created a share in an investment and thus an implied investment contract.

So many of your key community members here talking about investing. Sorry fail. Where are the users using it as a currency?

How do you differ community members from users? Why should they be subject to the same law as the people responsible for currently managing the decentralized entity? (via github and few websites)

Please reread my post which summarizes what I think the key finding of the SEC vs. Howey Supreme Court decision clarified. It is only what the prospective investors think that matters. If they think the community is creating reasonable expectations of investment gains, then it doesn't need to be only the developers who are creating the implied investment contract. Perhaps with PoW distribution it might be more difficult to prove the developers are culpable if it is found that the coins are illegal, that is if the developers were not participating in the "promotion or efforts" that lead to the "reasonable expectation of profits or gains from thereof". But that doesn't absolve the community creating the implied investment contract and thus making the coins illegal and thus anyone participating with (especially those promoting) illegal coins therefor culpable. I argue if the developers continue with a community that is promoting to investors such that the coins are arguably illegal, then the developers need to quit else potentially be participating in an illegal common enterprise.

[americanpegasus]

I argue if the developers continue with a community that is promoting to investors such that the coins are arguably illegal, then the developers need to quit or potentially be participating in an illegal common enterprise.

 
 
What, in your opinion, would be the difference between two PoW currencies from your legal perspective:  One is mined fairly for only a single day, which highly pre-announced, but nevertheless completely mined out in a single day.  It exists as a strict Bitcoin clone with no future development intended. 
 
Contrast this with an experimental new blockchain with many new features initially mined out over a period of years, such as Monero. 
 
If I got online and said, "Coin A is amazing!  It's going to be huge!  Everyone should buy it!" then would I be liable under your interpretation of the rules (even though I don't agree with you?)  There is no active development, and no community to speak of.  There are no insiders.  There is only the many people who mined it over a single day, and now hold it for whatever reasons they are holding/selling it.  If that wouldn't be illegal, then there is no way you can argue that Coin B, with active development and a longer distribution could ever be considered illegal. 
 
Contributing to an open source project doesn't automatically take something that was legal, and make it illegal.  See how your train of thought produces a logical fallacy?

[TPTB_need_war]

I argue if the developers continue with a community that is promoting to investors such that the coins are arguably illegal, then the developers need to quit or potentially be participating in an illegal common enterprise.

 
  
What, in your opinion, would be the difference between two PoW currencies from your legal perspective:  One is mined fairly for only a single day, which highly pre-announced, but nevertheless completely mined out in a single day.  It exists as a strict Bitcoin clone with no future development intended.  
  
Contrast this with an experimental new blockchain with many new features initially mined out over a period of years, such as Monero.  
  
If I got online and said, "Coin A is amazing!  It's going to be huge!  Everyone should buy it!" then would I be liable under your interpretation of the rules (even though I don't agree with you?)  There is no active development, and no community to speak of.  There are no insiders.  There is only the many people who mined it over a single day, and now hold it for whatever reasons they are holding/selling it.  If that wouldn't be illegal,

If that promoter is able to create reasonable expectations of investment gains, then he could be considered the security for the investors expectations and thus yes it could be illegal if unregistered and sold to the general public, and that promoter could be culpable if the expectations were predominately due to his promotions and efforts.

I mean how much more simple can it be? The securities law is designed to protect naive investors with proper disclosure. Culpability is for those who attempt to circumvent that purpose of the law by any means.

then there is no way you can argue that Coin B, with active development and a longer distribution could ever be considered illegal.

You keep trying to wiggle away from central finding of the Howey test, by inserting irrelevant tangential circumstances. Please re-read my prior post which was a reply to kazuki49.

Those actions you cite could be considered some proof of targeting users, but that would need to be preponderance of what is going on and real testers, ecosystem developers, and users forming those who are purchasing tokens. If instead the community are clearly investors and speculators (which is so obviously clear for Monero and Aeon and most every other altcoin if not all), then the fact that the developers have a long-term focus to improve the code and spreading the issuance out over a longer period is irrelevant to the preponderance of the fact that investors are buying with reasonable expectations of gain.

The court will look at the reality, not some ideological arguments that attempt to obfuscate reality.

  

Contributing to an open source project doesn't automatically take something that was legal, and make it illegal.  See how your train of thought produces a logical fallacy?

That is not logic because it a non-inclusive logic. For example, not contributing to an open source project doesn't automatically take something that was illegal, and make it legal. Mentioning either of those statements is irrelevant to what fulfills the Howey test.

Sorry you are constructing strawman after strawman hoping that your entire thesis of investing in altcoins won't come crashing down. Reality is hard to swallow.

Be very careful with arguing logic with an expert programmer. Logic is our bread and butter.

[americanpegasus]

Your arguments amount to the equivalent of, "the internet is illegal unless it is used by all participants to share some form of meaningful video.  This new network between universities you are constructing is probably going to be declared illegal."  
  
The utility and applications for the network (and in this case the economy) can only come after a successful speculatory phase.  
  
No one chooses to be the 30th, or 100th, or even 2,000th person to buy into a cryptocurrency because they are excited about all the places they can spend it.  You are smart, surely you understand the necessary tiers that a money arising from 'nothing' must undergo: the first such phase is successful speculation backed by the promise of the technology and the possibility that others will also adopt it.  
  
Only once a significant number of people hold the currency can meaningful transactions occur and a functioning economy emerge.  To expect all participants to buy a brand new cryptocurrency solely to participate in its non-existent economy is absurd.  To expect that people getting involved in an open source financial project are all criminals is equally absurd.  This would mean that everyone who 'hyped' bitcoin back in 2010 and 2011 are also criminals.  It would also make theymos a criminal for even having a Bitcoin speculation board on these forums, which has not and will not happen. 
  
Since people like Vorhees have already been thoroughly dealt with by the government, it is safe to assume they will not (and cannot) go back now and say "Actually everything you did was illegal, and instead of just paying taxes on it, you are being prosecuted".  This will never, ever happen.  
  
And since it wasn't illegal in the early days of bitcoin, it's not illegal now.  Cryptocurrencies are not securities; the SEC and the US Government have established that again and again through both precedent and release.  Any change to this now would likely go to the Supreme Court and be struck down due to 6 years of existing precedents not only set by US citizens but by other nations as well.  It would be an astronomically unlikely and thoroughly tyrannical act to begin prosecuting early holders of alt-coins (especially PoW ones) and the consequences for US Reputation (who is trying to be seen as an international advocate for cryptocurrency, actually) would be disastrous.  
  
Never happen, and I consider the matter closed in my mind.

[TPTB_need_war]

Can I ask your opinion, does the incoming Friday ruling of SEC change your observation about crypto securities, what is illegal and what isn't?

http://www.cnbc.com/2015/10/29/mom-and-pop-crowdfunding-for-startups-is-about-to-become-a-reality.html

Afaik no. To comply with the Jobs act afaik you must register and I believe there are requirements on investors such as 1 year hold periods. It may be another way to do a crypto ICO that is clearly legal, but it will come with some downsides in terms of hold period, filing reports, and admitting clear culpability for disclosure. But I need to study more on the details before I can say with 100% confidence.

So might be an improved option, but probably won't change my interpretation for those who are not using this new option.

[TPTB_need_war]

Your arguments amount to the equivalent of, "the internet is illegal unless it is used by all participants to share some form of meaningful video.  This new network between universities you are constructing is probably going to be declared illegal."

Please man. You are just wasting our time. You clearly have a bias because you aren't making any sense. I don't have time to repeat the same logic over and over. You are being redundant.

Your strawman analogy example does not create shares of a common enterprise which people can buy.

No one chooses to be the 30th, or 100th, or even 2,000th person to buy into a cryptocurrency because they are excited about all the places they can spend it.  You are smart, surely you understand the necessary tiers that a money arising from 'nothing' must undergo: the first such phase is successful speculation backed by the promise of the technology and the possibility that others will also adopt it.

Disagree. The speculation can be in the ecosystem (new ventures), where it should probably be so it is decentralized and creating network effects and not dumping the speculation into the nascent open source Inverse Commons where it puts the entire fledgling ecosystem at risk. After the Inverse Commons (the coin) becomes mature then everyone can speculate as they do for Bitcoin. If some nascent adopters decided to hold their tokens for the long-term, well maybe they will buy a condo instead of pizza, but if most of them are thinking that way then we are not in the early days of Bitcoin where people were focused on users and developing the ecosystem.

This is precisely what I will do different than the other altcoins before me. The key is to build the platform for the ecosystem. And yet you wonder why I don't want to join those projects which have demonstrated to me they don't have a clue about marketing nor shipping software to 3 million users (inflation-adjusted) as I did.

 
Only once a significant number of people hold the currency can meaningful transactions occur and a functioning economy emerge.  To expect all participants to buy a brand new cryptocurrency solely to participate in its non-existent economy is absurd.  To expect that people getting involved in an open source financial project are all criminals is equally absurd.  This would mean that everyone who 'hyped' bitcoin back in 2010 and 2011 are also criminals.  It would also make theymos a criminal for even having a Bitcoin speculation board on these forums, which has not and will not happen.

Observe me over the next year.

 
Since people like Vorhees have already been thoroughly dealt with by the government, it is safe to assume they will not (and cannot) go back now and say "Actually everything you did was illegal, and instead of just paying taxes on it, you are being prosecuted".  This will never, ever happen.

He settled by paying back all the money and getting a plea bargain. Everything he did was illegal. And do it again, they SEC will come after you.

I consider the matter closed in my mind.

Good. I don't need to convince you. You are grown up. You've been duly warned.

[americanpegasus]

Disagree. The speculation can be in the ecosystem (new ventures), where it should probably be so it is decentralized and creating network effects and not dumping the speculation into the nascent open source Inverse Commons where it puts the entire fledgling ecosystem at risk.

 
  
No one spends hard assets to be part of some charitable science project.  At least, not many people do.  To function in its intended way, a cryptocurrency *must* carry financial value; there is no other way.  To carry financial value humans must be allowed to speculate on its future value, especially considering that network effects are exponential.  It is silly to think that thousands of initial adopters will all put hard-earned financial value into a cryptocurrency and then unanimously agree: "We sure hope the value doesn't go up!"  
  
Of course the value will go up, along with the hash rate, due to the technology and applications.  All three are linked.  They are not separate entities.  
  
The very reason I am so bullish on Monero is I see that it's features (I won't shill here, but you are well familiar with them) permit the first actual instance of digital cash in the world, as well as several social contracts that have never been possible before.  
  
This is in stark contrast to many other shitcoins where "the value will go up because we will get more people to use it and the value will go up!  moon!".  But even though this was the case with some currencies like Dogecoin, it has still escaped scrutiny by the SEC, despite being less defensible than what Monero and Aeon are doing.  
  

Observe me over the next year.

 
  
And I'll use it to buy a copy of my best selling book.  Talk is cheap, and provides too easy of a dopamine blast.  Actions matter - good luck.  
  

He settled by paying back all the money and getting a plea bargain. Everything he did was illegal. And do it again, they SEC will come after you.

 
  
From running an illegal dice site, not for anything to do with the actual currency of bitcoin.  No one minded that he was using bitcoin or promoting it.  They minded he profited handsomely off a gambling operation.  
  
I have no plans to support or profit off any gambling operations.   
 
You should really lock yourself away in that cave we talked about.  Technically, by getting you to waste your time arguing with me (and the other Monero supporters) we delay this amazing cryptocurrency of yours.  The more we delay it, the less theoretical competition we have.  Therefore, continuing this argument is literally increasing the future value of Monero and is of no value to you.  Sometimes it can be a huge advantage to have less valuable time than the other guy (even though my time is valuable as well  ). 

[TPTB_need_war]

No one spends hard assets to be part of some charitable science project.  At least, not many people do.  To function in its intended way, a cryptocurrency *must* carry financial value; there is no other way.  To carry financial value humans must be allowed to speculate on its future value, especially considering that network effects are exponential.  It is silly to think that thousands of initial adopters will all put hard-earned financial value into a cryptocurrency and then unanimously agree: "We sure hope the value doesn't go up!"

And you think there is only one way to adopt a coin and this is why your investments are going no where. Investors don't become users. Duh.

I guess if all you have is a hammer, everything looks like a nail.

This is in stark contrast to many other shitcoins where "the value will go up because we will get more people to use it and the value will go up!  moon!".  But even though this was the case with some currencies like Dogecoin, it has still escaped scrutiny by the SEC, despite being less defensible than what Monero and Aeon are doing.

You all think so highly of yourselves and call everything else a shitcoin, but this is just your foolish pride all being in lockstep ready to lose your money together like good socialists in the end game. And your coins are no less culpable, in fact more so because you all are clearly running an investment clique (and it is radically hindering anything you could actually do in the market).
  

He settled by paying back all the money and getting a plea bargain. Everything he did was illegal. And do it again, they SEC will come after you.

 
  
From running an illegal dice site, not for anything to do with the actual currency of bitcoin.

He was selling illegal unregistered securities.

I'm done. This is non-productive for me.

[hashtag101]

Correct me if Im wrong tptb, but I believe he is saying that the way the law is written, and the case he has been referencing, could be used to cause us legal issues in the future.

He has stated a way forward, that we could follow, which would give us greater protection if legal action were brought up.

Who knows what strategy they are planning.

It might be a good idea to take these precautions, considering how evil they can be.

I dont think anyone is saying that it wouldn't be a stretch, but they have the audacity and the resources to pull it off.

I think tptb has presented a way they could crawl up our asses, though unlikely I hope, but definitely possible.

Its just that simple.

[TPTB_need_war]

The following 2001 Appeals Court decision should be more convincing about what I have been warning about Altcoin developers and communities primarily marketing their coins to investors for the purpose of investment gains, thus creating an implied "investment contract" criteria for a security under the durable 1946 SEC vs. Howey Supreme Court test.

Note tokens distributed via mining are still a form of "specific consideration in return for a separable financial interest" because one has to invest in mining (for PoW) and shares (PoS) in order to participate in mining:

http://lawbitrage.typepad.com/blog/2014/11/cryptoequity-regulation.html

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 the hard way.

The Howey test must be understood to be extremely general:

https://scholar.google.com/scholar_case?case=12097435876434110828&hl=en&as_sdt=6,33

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:

In defining the scope of the market that it wished to regulate, Congress painted with a broad brush. It recognized the virtually limitless scope of human ingenuity, especially in the creation of "countless and variable schemes devised by those who seek the use of the money of others on the promise of profits," and determined that the best way to achieve its goal of protecting investors was "to define `the term "security" in sufficiently broad and general terms so as to include within that definition the many types of instruments that in our commercial world fall within the ordinary concept of a security.'" Congress therefore did not attempt precisely to cabin the scope of the Securities Acts. Rather, it enacted a definition of "security" sufficiently broad to encompass virtually any instrument that might be sold as an investment.

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.

substance governs form, and the substance of an investment contract is a security-like interest in a "common enterprise" that, through the efforts of the promoter or others, is expected to generate profits for the security holder, either for direct distribution or as an increase in the value of the investment.

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).

[TPTB_need_war]

Below I explain in detail why I think there are only two ways crypto-tokens are not investment securities:

• All the tokens are obtained for free, or essentially free when they issued. To correspond with how restricted securities normally become unrestricted without reporting under some exemptions, ideally 6 months to a year should have transpired before these tokens are significantly resold to the public for consideration greater than significantly no cost, so that it can't be argued there was a transfer gimmick obfuscating the actual economic substance; or
• The tokens are primarily obtained for use cases and/or for furthering the Inverse Commons that is the platform, and not any significant expectation of appreciation of value of the tokens.

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.

I thus argue that Bitcoin significantly avoids being an investment security. There is a bit of concern around newly created tokens since Bitcoin became an investment speculation, but classifying only some of Bitcoin's tokens as securities would destroy fungibility and the tokens may be quite tangled by now. It appears Bitcoin is too large of a phenomenon now for the government to attack it on such dubious technicalities, as a popular outrage would likely ensue.

I argue that most if not all Altcoins have failed to achieve the above two exceptions and thus are illegal unregisted investment securities. Whether you buy or sell them is dependent on your appraisal of risk, timing, and whether you think they will still appreciate in value regardless. In particular I would tend to avoid Altcoins which have had prominent community members spouting off about the size of their HODLings, their "holding forever" pledges, their "only buyers, no sellers", "buy the dip", and other forms of inciting an expectation of appreciation of value. IANAL so readers should consult their own attorney.

So considering the three Supreme Court Howey test criteria explained in detail in my prior post:

A. Investment of money
B. Common enterprise
C. Expectation of profits "significantly" due to efforts of others.

A. Investment of money

Nearly all crypto-tokens today require an investment of money, except perhaps for Dogecoin if the mined coins were donated away and certainly for those who mined in the early days of Bitcoin where you could obtain coins just by letting a miner run in the idle cycles of your laptop with inappreciable electrical cost. The only chance a new altcoin could have to avoid this specific criteria of the Howey test would be either give away all the tokens for no "specific consideration" that is an appreciable cost cost for the recipient. If all the users were able to obtain all the tokens they needed for the typical use case via mining on their home computer with idle cycle and inappreciable electric cost, then there would not be any investment of money. This is because the investor must be capable of sustaining a loss in order for an financial instrument to classified as a security:

https://scholar.google.com/scholar_case?case=4524095741732962732&hl=en&as_sdt=6,33&as_vis=1&kqfp=10330650611816444522&kql=132&kqpfp=14710406364156655404#kq

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).

B. Common enterprise

All crypto-tokens where the tokens have been otherwise classified as securities via the Howey test, are also common enterprises due the least restrictive horizontal commonality test, because all participants' gains on their token values are common since tokens are fungible. There does not appear to be any way for any crypto-token to avoid this criteria of the Howey test.

The following is an erroneous argument (from a law professor!) because the horizontal commonality violated—by the orthogonality of the success of the platform(s), applications that use tokens, and the appreciation of value of the tokens themselves—hinges on the violation of the third criteria "C. Expectation of profits "significantly" due to efforts of others". Meaning that if all those obtaining tokens are interested primarily only in the platform and value created from applications that use the tokens, and not significantly from any appreciation of value of the tokens themselves, then the third criteria is not fulfilled thus being irrelevant that then the horizontal commonality is also lost:

http://lawbitrage.typepad.com/blog/2014/11/cryptoequity-regulation.html

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).

C. Expectation of profits "significantly" due to efforts of others.

When tokens are created and issued (whether it be an ICO or tokens created+assigned during mining), if they are acquired primarily for investment and not primarily for use (in what ever ways a token can be used other than for holding for appreciation of value), then there is an expectation of profits due to appreciation of value.

The fact that no investor is in control of the decentralized collective "common enterprise" qualifies for the "due to efforts of others" clause of this criteria of the Howey test:

https://scholar.google.com/scholar_case?case=4524095741732962732&hl=en&as_sdt=6,33&as_vis=1&kqfp=10330650611816444522&kql=132&kqpfp=14710406364156655404#kq

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

So the only way a crypto-token can potentially avoid qualifying for this criteria is for there to be no expectation of profits, either because the tokens are never obtained for investment or always the primarily consideration is the use value and not the appreciation of value. As documented in my prior post and here in another example, if the primary consideration is the use value, then there is no expectation of value appreciation:

http://law.justia.com/cases/oregon/court-of-appeals/1975/535-p-2d-109-2.html

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.

One might argue that proof-of-work miners sell tokens for profit margins (not gains) and thus the tokens are not initially obtained for investment. But I think the court has made it clear that no obfuscation gimicks will outweigh the actual economic substance, which is that miners are essentially issuers who transfer the created tokens to recipients in exchange for specific consideration and if those recipients are obtaining them with an expectation of appreciation of value, then this Howey criteria is fulfilled.

The following correct argument (from a law professor) is basically stating that if the primary reason for obtaining tokens is for use cases and/or developing an Inverse Commons ("the platform") and not significantly for appreciation of the tokens' value, then there is no expectation of profit due predominantly from the efforts of others, but rather an expectation of benefits of a common ecosystem. The key is that all those obtaining the tokens must have this expectation. In the case of Ethereum, it is obvious that buyers of their ICO were expecting gains from appreciation which meant they were depending on the efforts of others. That can be probably be documented from threads in this forum Bitcointalk.org.

http://lawbitrage.typepad.com/blog/2014/11/cryptoequity-regulation.html

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.

The following argument (by the same law professor) is a contrived, nonsense (loony), conflation of orthogonal categories (i.e. an ontological or category error). Too often I find people commit these sort of errors of logic. The Supreme Court decided that investments are not securities when they are notes paying an interest rate which were backed by commercial interests and thus not tied to the appreciation of value due to the efforts of others in an enterprise. Crypto-tokens do not pay an interest rate and their return on investment is not primarily due to facilitating short-term cash flow from commercial interests. Although it is true that crypto-tokens may be utilized in some cases for facilitating commercial interests, these are not the only thing backing the return on investment for those who hold the tokens.

http://lawbitrage.typepad.com/blog/2014/11/cryptoequity-regulation.html

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.

[TPTB_need_war]

Please feel free to vote by clicking this following post. Hopefully this will be my final post on this topic for while (or ever).

I am pretty well convinced that being prominently involved with an Altcoin that primarily exists for investor speculation, is potentially illegal. I will not do it.

I reset the poll and edited it to make it simpler to understand. If you've read my last several posts, then hopefully the poll makes sense.

Please vote again.

I voted for: 2 and 4 are illegal, unregistered "investment securities" as defined by USA securities regulation law.

Again I argue these definitions are useful only until the crypto platform of the tokens becomes a significant ecosystem on the order of where Bitcoin is now, after which point I think it is futile for the government to go against the popular activity on the technicality (pretense) of protecting the investor. In my opinion, the main risk is to small Altcoin communities that die leaving huge losses for investors. Prominent people involved with such failed crypto platforms might find themselves in legal trouble.

[TPTB_need_war]

Again I argue these definitions are useful only until the crypto platform of the tokens becomes a significant ecosystem on the order of where Bitcoin is now, after which point I think it is futile for the government to go against the popular activity on the technicality (pretense) of protecting the investor. In my opinion, the main risk is to small Altcoin communities that die leaving huge losses for investors. Prominent people involved with such failed crypto platforms might find themselves in legal trouble.

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).

It might really help if all the coins are anonymous so that downstream graphs for coins issued (or sold) during the period where the coin was predominately an illegal, unregistered investment security can't be identified or traced with block chain analysis. So thus once the platform ecosystem has reached the stage where the SEC can't attack all the coins as being an illegal, unregistered investment securities, then it has lost the ability to attack any of the coins. Note this might not be a defense though for those who want to report their taxable capital gains.

Referring to the currency itself (i.e. even physical cash notes have this property):

anonymous ⊂ fungible
fungible ⇒ anonymous

Bitcoin has no built-in on-chain anonymity. I invented the best on-chain anonymity currently known to exist.

[americanpegasus]

Alright TPTB.  I still don't agree with your SEC law interpretation at all, but you have inspired me to refrain from "Buy this now, it's gonna explode in value later on!" type posts from here on out, engage in better disclosure about my positions with the communities I moderate (pictured below), and to include a disclaimer in my signature underneath every one of my posts.  
  
I still don't feel any of these measures are necessary, but I feel they show honesty and good faith regardless, even if no one ever tries to accuse me of unethical behavior in the future.  
  

[TPTB_need_war]

Haha, your form is slightly altered.

Either you are being facetious, or entirely don't understand. You wouldn't report changes in ownership of non-securities to the SEC. By filing a report to the SEC about Monero, you are asserting that Monero is a security. But since Monero is not registered with the SEC by its issuers and promoters, then it would be illegal if it is deemed to be a security. The Form 4 has nothing to do with the process of registering a security with the SEC.

My reading of the law is that the only way for cryptocurrency to not be a security and thus not be illegal when it is not registered with the SEC, is for the cyptocurrency to be issued entirely to users and no investors. And by the time investors purchase tokens from users, those tokens should have all been clearly issued for users and not investors.

Since none of the cryptocurrencies other than Bitcoin can come close to complying with user-only issuance and distribution, they are all illegal in my opinion.

[americanpegasus]

My reading of the law is that the only way for cryptocurrency to not be a security and thus not be illegal when it is not registered with the SEC, is for the cyptocurrency to be issued entirely to users and no investors. And by the time investors purchase tokens from users, those tokens should have all been clearly issued for users and not investors.

Which makes no sense at all.  There is no line between a user and an investor; it's impossible to draw such a line, because anyone can believe anything they like.  With increased utility in a cryptocurrency comes increased value, due to networking effects. 
 
If you are saying that no other cryptocurrency other than bitcoin can ever be legal, then why are you working on one?  Do you plan to register yours with the SEC or declare to no investors are allowed to buy your coin from an exchange?

[TPTB_need_war]

My reading of the law is that the only way for cryptocurrency to not be a security and thus not be illegal when it is not registered with the SEC, is for the cyptocurrency to be issued entirely to users and no investors. And by the time investors purchase tokens from users, those tokens should have all been clearly issued for users and not investors.

Which makes no sense at all.  There is no line between a user and an investor; it's impossible to draw such a line, because anyone can believe anything they like.

The Howey test clearly states how to make the distinction between users and investors.You have entirely failed to comprehend what I wrote upthread over the past several posts where I detailed the case law. It clearly states that users have no expectation of appreciation in the value between their cost ("consideration") to acquire the tokens and what they are able to obtain in exchange for the tokens later. Investors instead do expect gains and that is why they obtain the tokens. Users obtain the tokens to use them for some need or activity. It is quite easy to prove that the crypto-tokens you are involved with are being predominately obtained by investors who are not using the tokens but rather HODLing them for future gains.

Please do not make me repeat this again. Please go improve your reading comprehension.

With increased utility in a cryptocurrency comes increased value, due to networking effects.

Yes that can be the case, but users do not hold tokens for gains. An apt distinction is the difference between having $500 in your checking account and having $5000 invested in a pink sheet stock. It is quite clear which holding is for use and which is for expectation of investment gains.

Courts are not blind. They can easily discern the actual economics facts.

If you are saying that no other cryptocurrency other than bitcoin can ever be legal, then why are you working on one?

Because I will design my crypto-platform to not issue crypto-tokens to investors.

Do you plan to register yours with the SEC or declare to no investors are allowed to buy your coin from an exchange?

No issuance to investors. No public announcement nor offering will be made to investors. No representations nor promotions will be made to investors. That already suffices to be exempt for the Howey test in my opinion.

There will likely be no exchange for as long as I can prevent one from existing hopefully at least 6 months after coins have been issued to users, although I think this requirement is not strictly necessary since the prior paragraph is sufficient.

If investors on their own accord find ways to trade for coins that were issued to users, per my interpretation that is outside the scope of the Howey test. It is obvious they were not encouraged, promoted, nor even facilitated in having expectations of gain, solely (or predominantly ) from others. They will have proven their expectations rely solely on themselves. And in fact such effort on the part of investors to obtain tokens, becomes a form of use and adds network effects.

Reading the law carefully is important.

[americanpegasus]

 
No issuance to investors. No public announcement nor offering will be made to investors. No representations nor promotions will be made to investors. That already suffices to be exempt for the Howey test in my opinion.

There will likely be no exchange for as long as I can prevent one from existing hopefully at least 6 months after coins have been issued to users, although I think this requirement is not strictly necessary since the prior paragraph is sufficient.

Ok,  ,  . 
 
Just.... please stop.  You're killing me.    
 
You're going to launch your coin and not tell anybody about it and try to avoid people knowing about it!? 
 
I'll tell you right now, removing the speculatory and early-adopter incentives from your coin is going to absolutely destroy any economic velocity it might ever hope to have.  If people are not incentivized to use your currency in increasing numbers, why would they ever start using it at all?  As well, the fact that you are going to make efforts to keep 'a lid' on the launch and creation of your coin is going to absolutely ruin any chance of people later growing interested in your coin (no matter how good the protocol).  By your logic, Bytecoin should be considered the 'true' implementation of Cryptonote since they claim to have had a 'token' for two years before it became public knowledge and people began speculating on it through exchanges.  Nevermind that no one had ever heard about it and 80% of it was mined by the time it was announced. 
 
Rethink your strategy, as well as your legal analysis of the situation.
 

[TPTB_need_war]

You're going to launch your coin and not tell anybody about it and try to avoid [all] people knowing about it!?

I didn't write that.

I'll tell you right now, removing the speculatory and early-adopter incentives from your coin is going to absolutely destroy any economic velocity it might ever hope to have.

Observe and be schooled in marketing.

If people are not incentivized to use your currency in increasing numbers, why would they ever start using it at all?

Investors don't use a currency. I told you that up thread, but now you make me repeat it again. Everything for you looks like a nail, because you've only got a hammer.

As well, the fact that you are going to make efforts to keep 'a lid' on the launch and creation of your coin is going to absolutely ruin any chance of people later growing interested in your coin (no matter how good the protocol).

Actually it is quite the opposite.

By your logic, Bytecoin should be considered the 'true' implementation of Cryptonote since they claim to have had a 'token' for two years before it became public knowledge and people began speculating on it through exchanges.

And ~0 usership.

Rethink your strategy, as well as your legal analysis of the situation.

You need that advice, not me.

[americanpegasus]

To put this topic to bed once and for all, the head of the SEC, Ms. Kara Stein came out today and spoke positively of "blockchain technology".   
 
http://www.coindesk.com/sec-commissioner-kara-stein-blockchain-technology/

[TPTB_need_war]

To put this topic to bed once and for all, the head of the SEC, Ms. Kara Stein came out today and spoke positively of "blockchain technology".   
 
http://www.coindesk.com/sec-commissioner-kara-stein-blockchain-technology/

Nothing and absolutely nothing in her statements absolves culpability under the USA Securities law and Howey test.

You seem to completely misunderstand (and conflate) that statements about the potential of technology speak to nothing about legal implications of the rollout of technologies to investors.

Again I have warned you all that virtually all of the altcoins are ILLEGAL unregistered investment securities and by trading in them, you speculators are potentially setting yourselves up to be culpable, especially those of you who have prominent roles in the community and make statements about speculation.

Proceed at your own peril. And do consult your attorney, because IANAL.

[Fontas.]

Bitshares have made themselves legal in the eyes of the SEC by calling things what they are not.


They must have great lawyers to come up with that.

[Fontas.]

To put this topic to bed once and for all, the head of the SEC, Ms. Kara Stein came out today and spoke positively of "blockchain technology".  
  
http://www.coindesk.com/sec-commissioner-kara-stein-blockchain-technology/

Now just Chuck Rosenberg left to speak positively about Bitcoin so that we can free Ross.

[TPTB_need_war]

from the article:

A wide variety of federal agencies have taken an interest in cryptocurrency companies over the last year, with many preparing for administrative actions and even criminal charges in early 2016. These agencies have been seen cooperating on several levels. One agent with the Securities and Exchange Commission told Coin Fire that they were,

Looking at the worst offenders in cryptocurrency and would be closing in further on our unofficial “top ten” list of which Cryptsy and Project Investors will find itself to be in the Top 5.

[americanpegasus]

Looking at the worst offenders in cryptocurrency and would be closing in further on our unofficial “top ten” list of which Cryptsy and Project Investors will find itself to be in the Top 5.

 
  
Yes, project 'investors' and companies that outright scam their customers and fail to protect them.  
  
The SEC is very upset at shit this GAW and Paycon: http://www.coindesk.com/sec-files-suit-against-brother-of-gaw-miners-ceo-amid-investigation/  
  
I don't think they are going to take the time to go after programmers and moderators of communities of new currencies that clearly state the risk involved.  If I have ever made misleading statements (that weren't outright jokes) about any of the projects I am involved with, please refer me to them.  
  
The original bitcoin was treading on strange & unexplored ground, just like new altcoin currencies are treading on strange and unexplored ground.  That being said, so far US Government agencies have taken a suprisingly fair and refreshing stance on online currencies: as long as you are not hyping outright ponzis, selling shares in something that is clearly stated as a security, trying to deliberately scam money from people, or selling illegal things online they don't seem to mind.  
  
Both the FBI and the SEC should be commended for this - I can just as easily imagine a world where the hammer came down on every instance of "digital money" starting in 2011 and forced the whole movement underground for decades (where it would have still inevitably won, just on a longer time scale).  

[Spoetnik]

To put this topic to bed once and for all, the head of the SEC, Ms. Kara Stein came out today and spoke positively of "blockchain technology".   
 
http://www.coindesk.com/sec-commissioner-kara-stein-blockchain-technology/

Nothing and absolutely nothing in her statements absolves culpability under the USA Securities law and Howey test.

You seem to completely misunderstand (and conflate) that statements about the potential of technology speak to nothing about legal implications of the rollout of technologies to investors.

Again I have warned you all that virtually all of the altcoins are ILLEGAL unregistered investment securities and by trading in them, you speculators are potentially setting yourselves up to be culpable, especially those of you who have prominent roles in the community and make statements about speculation.

Proceed at your own peril. And do consult your attorney, because IANAL.

This sounds like a healthy dose of common sense even of your a kid or noob etc.
Be careful out there guys.. all kinds of things could happen any time.

And NO TPTB_need_war since you asked i am NOT a girl LOL
I wish they got it made.. i'd find me a rich man  

[TPTB_need_war]

Nothing special. Same as Ether :

Ether is a product, NOT a security or investment offering. Ether is simply a token useful for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform; it does not give you voting rights over anything, and we make no guarantees of its future value.

https://blog.ethereum.org/2014/07/22/launching-the-ether-sale/

Ownership of ETH carries no rights express or implied. Purchases of ETH are non-refundable. Purchasers should have no expectation of influence over governance of the platform.

http://3amdeveloper.com/terms-and-conditions-of-the-ethereum-genesis-sale/

Perhaps Iota folks may have started to morph the presentation of their endeavors to prospective "investors", because of this thread I did on the legality of selling unregistered shares to investors:

https://bitcointalk.org/index.php?topic=1218399.0

In any case, I do not take sides on this issue. I am not making any accusations of bad intentions nor intentional fraud.

If they have already raised money in the form of shares (and I have no position about whether that claim is true or not because I don't know), I will just note that per my thread above, it is seems impossible for them to now claim they are not offering an investment and have it stand up as a valid argument in a court of law w.r.t. to (at least USA) securities law.

Not at all. This is standard software sale, same way Ethereum, Augur, Gems, Voxelus etc. does it. You need to understand that this guy is a troll, he was banned for stalking, false accusations and death threats on nxtforum the day before.

Seems all of you need to read my linked thread more carefully. Saying that "it is not an investment" doesn't make it so. The legal criteria are covered in great detail in my linked thread.

Again this doesn't mean I am accusing anyone of fraud or bad intentions. I am not taking sides on that concern. Rather I am just pointing out that every single cryptocurrency that is marketed to speculators, is an investment, regardless of any disclaimers issued. Study the law. Delusion won't help you in a court-of-law (even if it is not a kangaroo court).

I'm not catching you on any word, I'm looking at the dictionary definition and silly claims that people who quite obviously "put (money) to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value" are not investors. That's nonsensical.

I live in a country with high inflation. People buy a lot of USD to save their money. Are they investors?

W.r.t. to securities law (as I covered in my thread above), a government issued currency is not an unregistered security. But a private issued cryptocurrency always is, unless it was issued primarily to non-speculators (non-investors) for use as a currency token and not as an investment (e.g. a game currency given away from free and primary to participants of the game not to investors and speculators in the potential rise in value of the tokens).

You can't escape the intent of the securities law, which is to protect speculators and investors from "get rich quick" scams.

For example, americanpegasus argued that Aeon is not an unregistered investment security because it is issued by proof-of-work and no party received the proceeds. Yet if there is a community of speculators centered around the core developer (smooth) who are obviously by their forum posts involved for investment and thus this group is looked upon by investors as responsible for the future potential value, then this is an unregistered invesment security as defined by the Howey test. If rather Aeon was primarily distributed for free to n00bs who don't have a clue about investment and the primary use of the tokens is to spend them, then one could argue it is not an unregistered investment security under the Howey test.

Some people believe the USA securities law is not the model that applies globally, but I personally wouldn't risk that. The EU seems to be codifying the similar intent of the law. The globalization of the USA style hegemony is well underway.

[iotatoken]

Please stop lying and misrepresenting. If we're going to continue this discussion I am going to demand your full name so I can have my lawyer contact you incase you choose to continue spreading lies and slander. Back up your own words now or stop lying.

[TPTB_need_war]

I don't want to get in a fight with you. I have nothing against your project. My only concern is that all of us are getting into trouble with the law w.r.t. to unregistered investment securities. I am concerned for you guys too as well as for investors and all of us. You may be getting really poor legal advice (lawyers can make more money getting you into more trouble).

Could you please have your lawyers come debate me in my thread about what constitutes an unregistered investment security. I want to pick their brains and see who is correct. They can debate me anonymously, so they have no legal culpability.

Rather than just appeal to authority, have them come in my thread and prove their superior knowledge. All of us would surely love to see more input from real lawyers. For some reason, they are afraid to post at this forum (even anonymously).

[TPTB_need_war]

And all this just for a zero chance to charge 50'000 USD penalty?

In the sister thread of my securities law thread, someone who claimed to be often consulting with securities law attorneys pointed out that Erik Voorhees escaped severe criminal proceedings only because he refunded all the money to the investors before the SEC could finalize their actions.

So it was much more costly than some $50,000 fine. The level of financial culpability apparently depends on the level of losses and investmentparticipation you are creating. The culpability for jail time is not so limited, especially if someone willfully violates securities law. Again no specific allegations of your case (IANAL). Erik got lucky. Maybe because his scheme was not so willfully snubbing the regulators. Yet you have CfB here acting like his Romanian cohort Mircea Popescu, who I (as AnonyMint) warned the USG will eventually "burn his finger tips up to his armpits".

Hey Putin is part of the same globalist club and this current charade is only temporary and then we will all fall into the NWO together. That is when they will burn your ass over there in Belarus.

Don't forget it was Larry Summers who was over there in Russia after the fall of the USSR to organize the distribution of the nationalized assets to the selected oligarchs who are loyal to the globalist club. Do a Youtube search on Anthony Sutton. Also "Princess of the Orient".

Don't forget who funded the Bolshevik revolution. The globalists are running the show.

[TPTB_need_war]

Moving the discussion that was in my coin's thread over to this more appropriate legal discussion thread. Let's continue this discussion here. Some of the following posts may be deleted from my coin's thread.

...
Please notify me of any corrections I need to make and I will edit the table.

Some notes:

1) ShadowCash is proof of stake.
2) Monero does support mass TXs and has a market based solution in place to allow the main chain blocksize to grow to accommodate them. This is done without the need for a secondary level that is subject to government regulation. It is by the way a classic case of take care of the long term and the short term will take care of itself.
3) The proof of stake vulnerability in Dash is actually much higher than in regular proof of stake coins because of the 1000 Dash requirement for masternodes.
4) Lumping "IPO or mineable by speculators" into one makes no sense from a US or global regulatory point of view.

I will elaborate on 4. The critical US government agency for crypto currency regulation is FinCEN and not the SEC. The SEC has already argued before the courts that Bitcoin is money. This was critical in the Trendon Shavers / pirateat40 case since Trendon Shavers argued that he was not issuing securities with out SEC registration because Bitcoin was not money.. Furthermore internationally we see crypto currency regulation moving on the direction of treating crypto currency as money. The European Union being a good example.  It is for this reason that FinCEN has issued clear guidance close to three years ago, https://www.fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.html, while the SEC has not.  There are three further FinCEN rulings that are also very significant.
https://www.fincen.gov/news_room/rp/rulings/pdf/FIN-2014-R001.pdf
https://www.fincen.gov/news_room/rp/rulings/html/FIN-2014-R011.html
https://www.fincen.gov/news_room/rp/rulings/html/FIN-2014-R011.html

The first question and this is critical is whether the crypto currency is classified as a centralized virtual currency or a de-centralized virtual currency. The definition of de-centralized virtual currency is as follows from FIN-2013-G001

c. De-Centralized Virtual Currencies

A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

Mining of POW coins has been clarified in FIN-2014-R001.

Now for my thoughts, First I am not a lawyer.
A POW coin with no premine, such as Bitcoin or Monero is a de-centralized virtual currency. Developers and miners are not MSBs. This is the ideal case. This requires that development of the coin be funded solely by donation of time, money or both. Any attempt to use the emission to fund development will require one or more of the players to register as an MSB.
Dash will likely require an army of lawyers to figure out. As far as I see it, miners are likely MSBs (since they are required to turn over a part of the mined coins to the masternodes) masternodes are also likely MSBs (since they are required to turn over a portion of their coins to development) and the holders of the spork keys are also likely MSBs (since they have in effect been given central administrator responsibilities). Anyone involved with Dash in the above capacities, especially those in the US, would be wise to get professional legal advice and get a ruling from FinCEN on their particular situation.
Delegated structures have also a high regulatory risk.
Issuers of crypto - currencies (such as those behind Ripple, Ethereum etc.) are MSBs

I do not know what issuance model is being proposed by the OP.

Dash will likely require an army of lawyers to figure out. As far as I see it, miners are likely MSBs (since they are required to turn over a part of the mined coins to the masternodes) masternodes are also likely MSBs (since they are required to turn over a portion of their coins to development) and the holders of the spork keys are also likely MSBs (since they have in effect been given central administrator responsibilities). Anyone involved with Dash in the above capacities, especially those in the US, would be wise to get professional legal advice and get a ruling from FinCEN on their particular situation.

Money Services Businesses transmit money between legal entities.

Blockchain addresses are not legal entities. Nor are they owned by legal entities. Nor do they have any relation to persons living or dead. So all this talk about legal implications is just bogus nonsense.

...
Money Services Businesses transmit money between legal entities.

Blockchain addresses are not legal entities. Nor are they owned by legal entities. Nor do they have any relation to persons living or dead. So all this talk about legal implications is just bogus nonsense.

The holders of the private keys of Blockchain addresses are legal entities. By the way this level of denial when it comes to the FinCEN guidance is not just limited to Dash. It is in fact common among most alt-coins. Here is some interesting reading with respect to Ripple. https://www.fincen.gov/news_room/nr/html/20150505.html

The holders of the private keys of Blockchain addresses are legal entities.

There are no "holders" of blockchain private keys in any legal sense. A private key can by known by anyone and multiple people at once for that matter.

You do not have a legal contract between yourself and the blockchain, so therefore no legally defined ownership.

To regulate pure blockchain transactions you'd have to find a way to tie a legal entity (person or corporation) to a blockchain address and that can only be done by contract - the way a fiat account is made synonymous with people. Satoshi broke that link. That is the whole point of crypto.

If you registered with an ETF and invested using such a statutory financial instrument then that would be different. You'd have a contract with the ETF which could be regulated. But then you wouldn't be holding private keys, you'd just be holding paper.

...

There are no "holders" of blockchain private keys in any legal sense. A private key can by known by anyone and multiple people at once for that matter.

You do not have a legal contract between yourself and the blockchain, so therefore no legally defined ownership.

To regulate pure blockchain transactions you'd have to find a way to tie a legal entity (person or corporation) to a blockchain address and that can only be done by contract - the way a fiat account is made synonymous with people. Satoshi broke that link. That is the whole point of crypto.

If you registered with an ETF and invested using such a statutory financial instrument then that would be different. You'd have a contract with the ETF which could be regulated. But then you wouldn't be holding private keys, you'd just be holding paper.

So nobody owns a certain amount of Dash? What a bizarre concept. Please get legal advice and / or get a FinCEN ruling if you are concerned about the legal ramifications of your Dash activities in the US and / or elsewhere. I am not debating pointless "legal" arguments further.

So nobody owns a certain amount of Dash?

They "own" it in a practical sense, but not contractually.

It's a bit like saying that anyone who happens to be in possession of your house keys "owns" your house. You know fine well they don't and there's nothing "bizarre" about it.

...

They "own" it in a practical sense, but not contractually.

It's a bit like saying that anyone who happens to be in possession of your house keys "owns" your house. You know fine well they don't and there's nothing "bizarre" about it.

http://legal-dictionary.thefreedictionary.com/possession
Edit: http://legal-dictionary.thefreedictionary.com/ownership

http://legal-dictionary.thefreedictionary.com/possession
Edit: http://legal-dictionary.thefreedictionary.com/ownership

You mean constructive possession ?

Ok, I can see that applying in crypto to some extent, but jeez - good luck to anyone trying to prove that a particular person has constructive possession of a certain private key. The problem is (and this again is the whole point of crypto-anonymity) everyone is a theoretical constructive possessor. Having said that, I accept your point that it's legally ambiguous at least. But I don't think I'll be loosing any sleep over a couple of strings of numbers and letters.

Guys I am going to copy + paste the legal divigations to the thread on that topic I made. Let's move the discussion over there (and I will also enter the discussion), not in my coin's thread. Please wait for a link after I complete the work.

Please don't reply further on that topic here in this thread. It is really too much of a diversion from my coin's thread. And it is going back and forth.

[TPTB_need_war]

ArticMine is correct that anyone that transferring money or money equivalents that is not for their own personal use is a MSB in terms of the FinCEN guidance. Period.

Any obfuscations Dash or BitShares try to claim won't help them escape culpability.

However I don't agree with ArticMine's claim that only the FinCEN has jurisdiction. FinCEN's jurisdiction is w.r.t. to money transmission, and the SEC has an orthogonal jurisdiction w.r.t. the Howey test for illegal unregistered investment securities (which was covered in detail upthread).

[ArticMine]

ArticMine is correct that anyone that transferring money or money equivalents that is not for their own personal use is a MSB in terms of the FinCEN guidance. Period.

Any obfuscations Dash or BitShares try to claim won't help them escape culpability.

However I don't agree with ArticMine's claim that only the FinCEN has jurisdiction. FinCEN's jurisdiction is w.r.t. to money transmission, and the SEC has an orthogonal jurisdiction w.r.t. the Howey test for illegal unregistered investment securities (which was covered in detail upthread).

In order to pass the Howey test an necessary but not sufficient condition is the presence of a centralized administrator as per the FinCEN guidance. In short the virtual currency must be centralized and not de-centralized. This centralized administrator is needed to to provide the "depending solely on the efforts of a promoter or third party." part of the Howey test. There are already examples in decentralized virtual currencies where "depending solely on the efforts of a promoter or third party." part of the Howey test has failed. Bitcoin: the XT vs Core debate. Monero: Replacing the initial developer with the current team. Dashcoin (not to be confused with Dash): The developer "sold" the coin and the community simply ignored the sale and continued as if nothing had happened.  

Giving away coins for free and keeping a portion of the pre-mine to fund development is exactly what Ripple did and FinCEN came down hard. This does make the issuer an MSB. https://www.fincen.gov/news_room/nr/html/20150505.html

[TPTB_need_war]

ArticMine is correct that anyone that transferring money or money equivalents that is not for their own personal use is a MSB in terms of the FinCEN guidance. Period.

Any obfuscations Dash or BitShares try to claim won't help them escape culpability.

However I don't agree with ArticMine's claim that only the FinCEN has jurisdiction. FinCEN's jurisdiction is w.r.t. to money transmission, and the SEC has an orthogonal jurisdiction w.r.t. the Howey test for illegal unregistered investment securities (which was covered in detail upthread).

In order to pass the Howey test an necessary but not sufficient condition is the presence of a centralized administrator as per the FinCEN guidance. In short the virtual currency must be centralized and not de-centralized. This centralized administrator is needed to to provide the "depending solely on the efforts of a promoter or third party." part of the Howey test. There are already examples in decentralized virtual currencies where "depending solely on the efforts of a promoter or third party." part of the Howey test has failed. Bitcoin: the XT vs Core debate. Monero: Replacing the initial developer with the current team. Dashcoin (not to be confused with Dash): The developer "sold" the coin and the community simply ignored the sale and continued as if nothing had happened.

FinCEN guidance doesn't not apply to the Howey test. FinCEN is not tasked with protecting unsophisticated investors from fraud. FinCEN's job is to fight money laundering.

The Howey test is more nuanced than that, and if a group is promoting a coin for investment purposes they may be culpable under the Howey test. I covered this in detail upthread.

All cryptocoins that being primarily distributed to speculators with no significant users of the currency, are at risk IMHO. That includes Monero and Aeon.

Giving away coins for free and keeping a portion of the pre-mine to fund development is exactly what Ripple did and FinCEN came down hard. This does make the issuer an MSB. https://www.fincen.gov/news_room/nr/html/20150505.html

FinCEN came down on Ripple for being an exchanger and a centralized administrator that was processing money transfers for third parties without registering as an MSB and applying AML/KYC controls. The sales of XRP for fiat that are violations are because Ripple was also exchanging and also able to remove supply from the market.

The Guidance also defines an administrator of virtual currency as a person or entity “engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.”

I don't see any mention of Ripple being in violation because of sales of coins it gained during the time of distribution whether it be premine or otherwise. The mention of the premine was just a statement of facts, not a statement of a violation. It is the fact that Ripple was acting as an exchanger and centralized administrator that tainted any sales of XRP they made.

Disclaimer: I am not a lawyer and am merely offering my opinion for argumentative purposes. Readers, consult your own attorney.

[smooth]

FinCEN guidance doesn't not apply to the Howey test. FinCEN is not tasked with protecting unsophisticated investors from fraud. FinCEN's job is to fight money laundering.

Somewhat true but remember "money laundering" is expansive and includes transmission of money that is the proceeds of fraud or to facilitate fraud. As such Fincen's scope reaches anti-fraud and consumer protection, often in cooperation with other agencies.

[TPTB_need_war]

FinCEN guidance doesn't not apply to the Howey test. FinCEN is not tasked with protecting unsophisticated investors from fraud. FinCEN's job is to fight money laundering.

Somewhat true but remember "money laundering" is expansive and includes transmission of money that is the proceeds of fraud or to facilitate fraud. As such Fincen's scope reaches anti-fraud and consumer protection, often in cooperation with other agencies.

Good point. In connection with fraudulent transfer of money, FinCEN would have jurisdiction also. So in one example if a premine was fraudulent or connected with other fraudulent activity, then selling it for real money, would also be within FinCEN's jurisdiction perhaps.

I find that usually FinCEN is taking action when MSB registration and controls are not being done where they should have been. Thus I still think the SEC is the more likely regulatory body for fraudulent investment schemes.

[ArticMine]

ArticMine is correct that anyone that transferring money or money equivalents that is not for their own personal use is a MSB in terms of the FinCEN guidance. Period.

Any obfuscations Dash or BitShares try to claim won't help them escape culpability.

However I don't agree with ArticMine's claim that only the FinCEN has jurisdiction. FinCEN's jurisdiction is w.r.t. to money transmission, and the SEC has an orthogonal jurisdiction w.r.t. the Howey test for illegal unregistered investment securities (which was covered in detail upthread).

In order to pass the Howey test an necessary but not sufficient condition is the presence of a centralized administrator as per the FinCEN guidance. In short the virtual currency must be centralized and not de-centralized. This centralized administrator is needed to to provide the "depending solely on the efforts of a promoter or third party." part of the Howey test. There are already examples in decentralized virtual currencies where "depending solely on the efforts of a promoter or third party." part of the Howey test has failed. Bitcoin: the XT vs Core debate. Monero: Replacing the initial developer with the current team. Dashcoin (not to be confused with Dash): The developer "sold" the coin and the community simply ignored the sale and continued as if nothing had happened.

FinCEN guidance doesn't not apply to the Howey test. FinCEN is not tasked with protecting unsophisticated investors from fraud. FinCEN's job is to fight money laundering.

The Howey test is more nuanced than that, and if a group is promoting a coin for investment purposes they may be culpable under the Howey test. I covered this in detail upthread.

All cryptocoins that being primarily distributed to speculators with no significant users of the currency, are at risk IMHO. That includes Monero and Aeon.

Giving away coins for free and keeping a portion of the pre-mine to fund development is exactly what Ripple did and FinCEN came down hard. This does make the issuer an MSB. https://www.fincen.gov/news_room/nr/html/20150505.html

FinCEN came down on Ripple for being an exchanger and a centralized administrator that was processing money transfers for third parties without registering as an MSB and applying AML/KYC controls. The sales of XRP for fiat that are violations are because Ripple was also exchanging and also able to remove supply from the market.

The Guidance also defines an administrator of virtual currency as a person or entity “engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.”

I don't see any mention of Ripple being in violation because of sales of coins it gained during the time of distribution whether it be premine or otherwise. The mention of the premine was just a statement of facts, not a statement of a violation. It is the fact that Ripple was acting as an exchanger and centralized administrator that tainted any sales of XRP they made.

Disclaimer: I am not a lawyer and am merely offering my opinion for argumentative purposes. Readers, consult your own attorney.

In the statement of facts https://www.fincen.gov/news_room/nr/pdf/Ripple_Facts.pdf which is linked form the FinCEN page I quoted the following quote is very relevant. Bold my emphasis.

ATTACHMENT A:  STATEMENT OF FACTS AND VIOLATIONS
I.
INTRODUCTION AND BACKGROUND
1.
Ripple Labs Inc. (“Ripple Labs”) is a corporation registered in Delaware and headquartered in San Francisco, California.  NewCoin,
Inc. and OpenCoin, Inc. (“OpenCoin”) are the predecessors of Ripple Labs.
2.
Ripple Labs facilitated transfers of virtual currency and provided virtual currency exchange transaction services.
3.
The currency of the Ripple network, known as “XRP,” was pre-mined.  In other words, unlike some other virtual currencies, XRP was fully generated prior to its
distribution.  As of 2015, XRP is the second-largest cryptocurrency by market capitalization, after Bitcoin.  
4.
XRP Fund II, LLC, a wholly-owned subsidiary of Ripple Labs, was incorporated in South Carolina on July 1, 2013.  On July 2, 2014, XRP Fund II changed its name to
XRP II, LLC.  During a portion of the relevant timeframe, the entity was named XRP Fund II, LLC, but it will be referred to as XRP II throughout this document.

It does not say transfer for compensation. There are other violations involving exchange service etc mentioned in the document. The question is why is pre-mined even relevant here? The answer is the the guidance that I quoted above and which Ripple ignored. From the same statement of facts.

7.
Specifically, the Guidance defines an exchanger as a person or entity “engaged as a business in the exchange of virtual currency for real currency, funds, or other virtual currency.”  The Guidance also defines an administrator of virtual currency as a person or entity “engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.”  

Edit: I would not touch a pre-mine without legal advice.

[ArticMine]

FinCEN guidance doesn't not apply to the Howey test. FinCEN is not tasked with protecting unsophisticated investors from fraud. FinCEN's job is to fight money laundering.

Somewhat true but remember "money laundering" is expansive and includes transmission of money that is the proceeds of fraud or to facilitate fraud. As such Fincen's scope reaches anti-fraud and consumer protection, often in cooperation with other agencies.

Yes. My point is that because of the broadness of the FinCEN mandate if a virtual currency meets the very narrow FinCEN requirement of de-centralized virtual currency then it also fails the Howey test but not the other way around. I fail to see how a crypto - currency can be both a de-centralized virtual currency under the FinCEN requirements and at the same time pass the Howey test making the currency itself a security.

Edit 1: FinCEN goes way further than simply dealing with fraudulent money transfers or money laundering.

[TPTB_need_war]

...
My mind is blown! Do these monerotards have any clue about user friendliness! Compile binaries from source (my gf wouldn't have any clue what binaries and source are)! Are you fucking kidding. That is ridiculous beyond ridiculous.

... but just think about this for a moment. One can compile the Monero binaries from source for various platforms, and post links to the compiled binaries here on BCT thereby demonstrating how Monero fails the Howey test.

As per how I interpret what I have researched about it (details are upthread), the Howey test refers to the economic facts not to the quality of execution of marketing.

The economic test is whether the securities are being marketed to investors and whether those investors base their decision to invest based on the efforts of some person or group's expected future efforts to deliver the return on investment.

IMO, every altcoin that is being promoted and distributed to investors seems to meet the Howey test. The development of the altcoin and its future value is not chaotic, but rather entrusted to some lead devs and some community leaders/promoters.

In the case of Bitcoin, its ecosystem is so widely distributed that one could argue that there is no single group that is being relied on that could even promote it to investors.

Just because Monero doesn't offer compiled binaries, IMO that doesn't sufficiently constitute a widely distributed ecosystem. Afaics, Monero is predominantly driven by a core group of devs and some community leaders/promoters.

That doesn't mean the SEC is necessarily going to crack down on Monero. I tend to think there are much lower hanging fruit, such as Dash and other much more scammy altcoins. And even those may never be large enough to attract the attention of the SEC.

One can argue that altcoins are just software and investors are acting on their own volition. But all the heavy pumping of Monero on these forums is going to work against that line of argument.

Edit: also I do think that it would be more dubious case for the SEC to go after a coin that is developed open source and which the developers and promoters receive no direct remuneration from the coin (unlike Dash and BitShares). I do see a qualitative distinction.

[TPTB_need_war]

My point is that because of the broadness of the FinCEN mandate if a virtual currency meets the very narrow FinCEN requirement of de-centralized virtual currency then it also fails the Howey test but not the other way around. I fail to see how a crypto - currency can be both a de-centralized virtual currency under the FinCEN requirements and at the same time pass the Howey test making the currency itself a security.

So your point is that because FinCEN has defined how a decentralized crypto currency can be "money", then "money" can't also be an investment security.

This is failure of logic because FinCEN's guidance is not exclusionary. Saying that decentralized crypto currency has an attribute which is that it shall be considered "money" from the perspective of FinCEN's jurisdiction and mandate over money transfers, is not saying that decentralized currency is only "money" in every other case of jurisdiction and mandate. If you can find any where that FinCEN wrote that decentralized currency is ONLY money and nothing else, then please do. There is a big difference between qualifying as a money equivalent for the purposes of FinCEN's jurisdiction and being declared to be ONLY money in every possible case. Otherwise this exhibits that you don't understand well legalese.

The Howey test will look at the economic facts and no obfuscations will color the inspection of the facts.

Edit: Also even that which is money to users in the FinCEN guidance doesn't preclude those tokens having investment attributes to issuers and speculators. FinCEN even makes a distinction between different types of entities involved with crypto currency, such as miners, issuers, etc..

[l8nit3]

seems pretty serious, although I'm not sure I fully understand it. My (basic) understanding is that cryptocoins and their exchanges need to meet certain regulations according to US law.... and that most, if not all, have not met said requirements??

Is this possibly what XPY and 'he who must not be named' were trying to touch on when claiming to be registering with the S.E.C?

[TPTB_need_war]

I don't see any mention of Ripple being in violation because of sales of coins it gained during the time of distribution whether it be premine or otherwise. The mention of the premine was just a statement of facts, not a statement of a violation. It is the fact that Ripple was acting as an exchanger and centralized administrator that tainted any sales of XRP they made.

In the statement of facts [...] which is linked form the FinCEN page I quoted the following quote is very relevant.

I already pointed out that I didn't agree with your theory about the word pre-mine in the Preamble. It was not in the list of violations.

Edit: I would not touch a pre-mine without legal advice.

Perhaps readers shouldn't be touching any altcoin without legal advice, except do note that the investors who are not promoters nor issuers apparently have much lower culpability as discussed in detail far upthread.

I will not get in another long discussion repeating everything that was already discussed upthread. I am limiting how much time per day I can be on the computer, so I must allocate wisely.

I do appreciate your participation. Thanks.

[smooth]

My point is that because of the broadness of the FinCEN mandate if a virtual currency meets the very narrow FinCEN requirement of de-centralized virtual currency then it also fails the Howey test but not the other way around. I fail to see how a crypto - currency can be both a de-centralized virtual currency under the FinCEN requirements and at the same time pass the Howey test making the currency itself a security.

So your point is that because FinCEN has defined how a decentralized crypto currency can be "money", then "money" can't also be an investment security.

This is failure of logic because FinCEN's guidance is not exclusionary. Saying that decentralized crypto currency has an attribute which is that it shall be considered "money" from the perspective of FinCEN's jurisdiction and mandate over money transfers, is not saying that decentralized currency is only "money" in every other case of jurisdiction and mandate. If you can find any where that FinCEN wrote that decentralized currency is ONLY money and nothing else, then please do. There is a big difference between qualifying as a money equivalent for the purposes of FinCEN's jurisdiction and being declared to be ONLY money in every possible case. Otherwise this exhibits that you don't understand well legalese.

The Howey test will look at the economic facts and no obfuscations will color the inspection of the facts.

Edit: Also even that which is money to users in the FinCEN guidance doesn't preclude those tokens having investment attributes to issuers and speculators. FinCEN even makes a distinction between different types of entities involved with crypto currency, such as miners, issuers, etc..

I don't think that was his argument. It was that FinCEN's exemptions for decentralized virtual currencies are so narrow that it probably satisfies the SEC as well. Maybe true, maybe not. Certainly the SEC is not bound by FinCEN, however the issues have significant overlap.

Also, on the pre-mine issue, he quoted from FinCEN which says that if you "create" or "issue" units, you are an "administrator". Hard to make the case that anyone who premines or ICOs is not an "administrator" under this rule.

[TPTB_need_war]

My point is that because of the broadness of the FinCEN mandate if a virtual currency meets the very narrow FinCEN requirement of de-centralized virtual currency then it also fails the Howey test but not the other way around. I fail to see how a crypto - currency can be both a de-centralized virtual currency under the FinCEN requirements and at the same time pass the Howey test making the currency itself a security.

So your point is that because FinCEN has defined how a decentralized crypto currency can be "money", then "money" can't also be an investment security.

This is failure of logic because FinCEN's guidance is not exclusionary. Saying that decentralized crypto currency has an attribute which is that it shall be considered "money" from the perspective of FinCEN's jurisdiction and mandate over money transfers, is not saying that decentralized currency is only "money" in every other case of jurisdiction and mandate. If you can find any where that FinCEN wrote that decentralized currency is ONLY money and nothing else, then please do. There is a big difference between qualifying as a money equivalent for the purposes of FinCEN's jurisdiction and being declared to be ONLY money in every possible case. Otherwise this exhibits that you don't understand well legalese.

The Howey test will look at the economic facts and no obfuscations will color the inspection of the facts.

Edit: Also even that which is money to users in the FinCEN guidance doesn't preclude those tokens having investment attributes to issuers and speculators. FinCEN even makes a distinction between different types of entities involved with crypto currency, such as miners, issuers, etc..

I don't think that was his argument. It was that FinCEN's exemptions for decentralized virtual currencies are so narrow that it probably satisfies the SEC as well. Maybe true, maybe not. Certainly the SEC is not bound by FinCEN, however the issues have significant overlap.

Also, on the pre-mine issue, he quoted from FinCEN which says that if you "create" or "issue" units, you are an "administrator". Hard to make the case that anyone who premines or ICOs is not an "administrator" under this rule.

Get your facts straight. Afair, FinCEN (in more than one document, reiterating it in that prosecution) said if you create or issue AND redeem. The point is that by issuing and redeeming, then you are acting as an administrator from a money transmitting perspective, which is FinCEN's mandate.

I don't understand how some bizarro interpretation of narrowness has anything to with the SEC as their mandate is to protect investors. FinCEN doesn't have that mandate.

Seems like a lot of nonsense. You guys don't seem to base your analysis on the mandate and purpose of the agency, that is why you don't seem to make sense of their guidance.

[ridery99]

I hope more ICOs will come so we might see scammers buying expensive drinks and hookers like EQX coin back in the good old times

[TPTB_need_war]

Since you are talking shares anyway, why not simply issue so many common stock shares that they are tiny value per share, comparable to a cryptocurrency value per coin or maybe less since shares have no decimal-places they are whole things, integer things; issue the shares on an existing platform such as HORIZON or NXT or Ethereum or the like, and use the API of that platform from your app to let people earn shares.

-MarkM-

That's brilliant, the only downside being compliance with federal securities laws.

I've looked into that. The nasty little surprise is the "Howey test", which allows the SEC to go after any vehicle so long as it meets this four criteria:

1. It has to be sold for money.
2. It has to be intimately tied to a common enterprise, not an aggregation of enterprises.
3. A reasonable person considering whether or not to buy it will be motivated by the hope of profit when deciding to buy or pass.
4. The expected profits are to be realized by the efforts of a centralized group headed up by the promoter, or the efforts of the promoter him- or herself.

Cryptocurrency-wise, #4 is the easiest to avoid for a true decentralized cryptocurrency. So long as you encourage, or at least allow, any independent party or parties to build value-adding services using your cryptocurrency which have the effect of making the crypto more valuable, I think you can make a good case for criterion #4 being false. To qualify as a security, all four criteria have to be met. If one of the four criteria is false, your crypto will not be a security by this test.

By my reckoning, your best bet is to focus on #4 rather than trying to get clever or cute with #1. ["The IRS said Bitcoin is property, not money, and I sold it for Bitcoin!"] Better yet, focus on #4 and #2 by actively encouraging as many independent folks as possible to build value for your crypto. In this sense, the crypto most unlike a security is Dogecoin. To prove it meets the Howey test, the SEC would have to prove a conspiracy theory. That's possible in a court, but it's an onerous procedure unless the conspiracy is small in membership. With respect to Dogecoin, the SEC might as well be hawking the "Protocols of the Elders of Shibe" (if you get my drift.)

One notorious crypto, Paycoin, did meet the Haney test because its promoter, Josh Garza, personally promised that he'd buy back the ones he sold at a price of twenty dollars each through an organization he controlled. This promise sunk him; the fact that he reneged on it sunk him hard.

Disclaimer: I'm not a lawyer, only a Googler. Don't listen to me unless you want to go overboard to pass the "smell test." You cannot rely on me for a technicality-driven measn to avoid the Howey test.

Afaics, the Howey test only requires that investors had a reasonable cause to expect their gains would come from the efforts of some group or community. So if you are pitching your coin to investors, I think you will be culpable. Just being decentralized in terms of distribution of the coins (and not selling it directly) doesn't appear to be sufficient. The Supreme Court said it will look past any obfuscations and always at the underlying economic reality, meaning whether the investors were reasonably relying on the lead developer for their future returns.

To bypass the Howey test, I suggest distributing the coin to non-investors (initial distribution) and diversify the ecosystem as soon as possible so the future performance of the tokens is not tied to the lead developer. These HODLer coins that have nearly no usership can't accomplish this.

Disclaimer: I am not a lawyer.

[egghead123]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

I would make that list on the OP a bit simpler for simpletons like myself.The questions look too formal/sanitised for the majority of peeps who tune in and I have looked at a few of your threads and they are interesting but some of the points I would compress a bit.Maybe something like

question= is it illegal to premine a coin and sell it through an ICO/IPO and then run off with all the raised funds and do no development leaving the buyers/investors/community swinging in the breeze?

answer=yes and if not it pretty much should be

[TPTB_need_war]

Hopefully, we would be OK with regard to securities law if we premine 100% and distribute those coins to users of our app at no cost.

I think so if you can also get many other apps to use your coins and create a huge diverse ecosystem for these tokens (but I don't think you can do that without losing your focus on your app!), but consult your own attorney. Note smooth and others felt premine was culpable. I argued against that. None of us are lawyers.

I doubt distributing 100% at no cost is a problem.

How do you prove 100% was distributed not to yourself? I think you should remove the "100%" and reconsider if that changes your stance since you were stating in my thread that a premine is culpable.

[TPTB_need_war]

I replied to you in the long thread about the Howey test.

Your reply:

Afaics, the Howey test only requires that investors had a reasonable cause to expect their gains would come from the efforts of some group or community. So if you are pitching your coin to investors, I think you will be culpable. Just being decentralized in terms of distribution of the coins (and not selling it directly) doesn't appear to be sufficient. The Supreme Court said it will look past any obfuscations and always at the underlying economic reality, meaning whether the investors were reasonably relying on the lead developer for their future returns.

says that you're either antsier or more prudent than I. You seem reluctant to accept that Howey requires that all four criteria be met, and even more reluctant to recognize the efficacy of a "best-efforts" defense. Did you read the link I supplied, or the Wikipedia article on Howey? W.J. Howey went out of his way to discourage independent action. By my lights, that's the complete opposite of the peer-to-peer foundations of cryptocurrency. As I noted, I'm no lawyer myself...but I fail to see why a best-efforts defense backed up by repeatedly and publicly encouraging independent entrepreneurial action won't hold up.

A capable lawyer could really drag out the case by slowly and emphatically introducing every individual exhortation by the dev (team) to build an independent service for the cryptocurrency - as Defense Exhibit A, B, C, and so on in a performance that would be a lot like a filibuster - and not stop introducing them until he runs out, or is shouted down by the judge (which would give him good grounds to "except" [i.e., indirectly object and give notice of a future appeal.]) or until the prosecutor agreed to stipulate that there's a pattern of exhortation that's the opposite of the pattern of W.J. Howey's exhortations. To mount a defense of this kind, all you need to do is be somewhat of a nag.

I can probably safely assume you didn't read the entire thread of prior discussion and analysis at the link I provided to you. I don't have time to go redigest that thread again, so I will just attempt to broadly resummarize from memory. You should refer to the thread to dig deeper.

I had read the actual Supreme Court text and not just summary of interpretation. The judgement revolves around the interpretation of the meaning of "investment contract" and it specifically says that there are no specific cases that will preclude the interpretation of the economic reality:

The term 'investment contract' is undefined [...]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

So there are no specific rules. The court will look at the economic reality of whether participants were placing of capital or laying out money in expectation of profit. Note that 'capital' might not even mean money. It can include applying their effort, which is a form of human capital. I confirmed this by reading in depth other expert interpretations and subsequent case law.

It appears to me that the court will look at the reasonable expectations of the participants. And always side with protecting the public. Thus my interpretation is if the participants are not investing but just using your tokens, then they don't need to be protected by securities registration. However if your tokens are being invested in by investors expecting a profit, then you need to register then with the SEC. This is why I advised making sure the ecosystem is well diversified asap, so that by the time investors start accumulating the tokens, then it can't be alleged that the investors were basing their investment on the ongoing effort of the original developers of the coin. It is with this interpretation that I have concluded that even coins (such as Aeon and Monero) which distributed their coins via PoW are still culpable under this law. And I don't understand why smooth is risking his already lucrative employment as a software developer to work on a coin that could end up getting him in big trouble. He doesn't need that! And for what gain? IMO Monero and Aeon are not solving any major paradigmatic issues for crypto. OTOH, since they are very small fish, they are likely to never amount to any legal case, but again why waste effort?

But again I am not a lawyer, so you can't cite my posts as legal advice!!

[TPTB_need_war]

SEC, "Some mining contracts are securities":

[TPTB_need_war]

Warned Zcash their plans for an 11% royalty on coin emission may run afoul of FinCEN guidance, and also suggesting they read this thread about the Howey test.

[CryptoSporidium]

Warned Zcash their plans for an 11% royalty on coin emission may run afoul of FinCEN guidance, and also suggesting they read this thread about the Howey test.

Surely team Zooko have considered this and have a plan to meet any fincen requirements. If not, the zcash is a dead man walking and someone will fork and release a clone without the 11% elephant baggage. Some smart tech people can be quite stupid ...

[TPTB_need_war]

Warned Zcash their plans for an 11% royalty on coin emission may run afoul of FinCEN guidance, and also suggesting they read this thread about the Howey test.

Surely team Zooko have considered this and have a plan to meet any fincen requirements. If not, the zcash is a dead man walking and someone will fork and release a clone without the 11% elephant baggage. Some smart tech people can be quite stupid ...

Appears they are really this clueless:

Zooko (CEO of Zcash) is answering questions live now for the next 2 hours if anyone wants to participate:

https://forum.bitcoin.com/post16211.html

See my (shelby3's) posts in the above thread for numerous gaps in Zooko's knowledge about crypto currency (their team really needs someone like me but they've screwed up the funding model so I won't be joining them, much better to fork their code which is something I will be able to do if my other plans are successful giving me adequate resources to hire the necessary zk-snarks experts and then I can also expand it to smart contracts while fixing Ethereum's insoluble flaw). There is no way they can meet FinCEN regulations for the miners, because the corporation is not the miners. The miners will need to comply, or not mine.

Readers I urge you to read my posts in that thread linked above wherein I correct numerous myopias of Zooko. It will be very educational. I have explained some scams going on for Bitcoin right now.

[illodin]

Warned Zcash their plans for an 11% royalty on coin emission may run afoul of FinCEN guidance, and also suggesting they read this thread about the Howey test.

Surely team Zooko have considered this and have a plan to meet any fincen requirements. If not, the zcash is a dead man walking and someone will fork and release a clone without the 11% elephant baggage. Some smart tech people can be quite stupid ...

In the AMA Zooko was ignoring that specific question, he answered promptly to everything else.

That tells me he

a) pretends the issue doesn't exist and hopes it goes silently away as he has $1M duty to his investors
or
b) is careful not to say anything about it in public in order to claim ignorance later.

[TPTB_need_war]

Warned Zcash their plans for an 11% royalty on coin emission may run afoul of FinCEN guidance, and also suggesting they read this thread about the Howey test.

Surely team Zooko have considered this and have a plan to meet any fincen requirements. If not, the zcash is a dead man walking and someone will fork and release a clone without the 11% elephant baggage. Some smart tech people can be quite stupid ...

In the AMA Zooko was ignoring that specific question, he answered promptly to everything else.

That tells me he

a) pretends the issue doesn't exist and hopes it goes silently away as he has $1M duty to his investors
or
b) is careful not to say anything about it in public in order to claim ignorance later.

Or his legal counsel has advised him to not discuss such issues in public.

[TPTB_need_war]

Zcash does not understand this thread about funding and distribution models and I also point out how the recent Ethereum shrilling has thus made Ethereum illegal:

Have you done[published very transparently and with equal emphasis to other technobabble hype] any analysis?

You should be asking Ethereum that question.

Did Nick "Satoshi" Szabo mention any such analysis during his apparent endorsement of Ethereum in his presentation where he promoted centralization as a problem.

Did Ethereum just violate the SEC securities law by underpromoting transparency (c.f. the linked Coin Center report), e.g. hiding it in obscure layers as r0ach has shown and put talking head Vitalik on a stage to promote the shit out of it with technobabble.

The most important fact is that an "Initial Coin Offering" could potentially be treated as selling a security by SEC or other securities regulators. See the new report “Is Bitcoin A Security?” by the excellent Coin Center crew to understand what that means and when it might apply:
 https://coincenter.org/2016/01/is-bitcoin-a-security/

So this is the number one fact that determined my decision: doing an ICO would risk legal consequences that could prevent the technology from ever being built.

     (The Coin Center report actually cites us as an example of how to avoid this legal issue.)

I had studied that Coin Center report in the past and their conceptualization of the Howey test (pg. 41 of the report) is incorrect! The test is not some explicit set of 4 attributes as the Coin Center claims but rather the Supreme Court explicitly stated it will overlook all obfuscations and distill to the economic reality of who is creating the expectations of investors (implied by any means, not just those 4 attributes so enumerated)! For example, the points on pg. 30 (32 of the PDF) and pp. 38 - 40 are linking profit by developers to the Howey test, but rather I argue the Howey test looks not primarily at profits by developers (although that is also a necessary ingredient) but rather whether the developers promoted expectations for gains amongst the investors. The term 'security' means another entity is securing (i.e. responsible for in the eye of the investor for) the outcome. Note IANAL though.

Pleeeeaaaaaassssseeee don't insinuate to us that your company is basing its decision on a report from the Coin Center and has not consulted its own legal counsel. You need your own legal counsel to indemnify you from this risk.

That Coin Center report has technical errors as well, such as they claim on pg. 15 (17 of the PDF) that a 51% attack can't create coins out of the thin air nor otherwise alter the consensus protocol, but what they fail to realize is that the minority mining can't fork away from the 51% attack because the 51% attack can always create the longest chain on any new fork as well. So the minority mining is powerless and thus the users of the coin have no choice but to the use the 51% attacked protocol, so their cois are not locked up (jammed). Also that Coin Center report claims it is very expensive to sustain a 51% attack, but this fails to mention the case where the cost is charged to the collective by the corrupt State, such as may be the case in China (which controls 65% of Bitcoin's hashrate) where perhaps a wink and a handshake gets you free electricity from the Three Gorges Dam.

The Coin Center repeats that technical error on pg. 19 (21 of the PDF) wherein they formulate a thus erroneous distinction between proof-of-work (PoW) and permissioned block chains. On pg. 20 (22 of the PDF), the report makes an erroneous claim about proof-of-stake (PoS) coins being more expensive to acquire as the coin's price rises, because as we explained, PoS has lack of Nash equilibrium failure modes of which includes the fact that externalities can be employed to pay for attacking the coin, most especially because the attack cost is paid only once and not ongoing as for PoW. On pg. 53 (55 of the PDF), the statement that investors in ETH (Ethereum's tokens) do so primarily for use-value is entirely disproven by the recent domination of the Altcoin Discussion thread at Bitcointalk.org with numerous of Ethereum threads shrilling[1] for the recent price rise from $2 to $15 despite my numerous attempts to explain that Ethereum has no use-case because they never solved the centralization of verification issue.

On pg. 23 (25 of the PDF) the point is made that proof-of-burn is probably the most unarguably fair.

[1]	https://bitcointalk.org/index.php?topic=1356957.0 https://bitcointalk.org/index.php?topic=1361609.0 https://bitcointalk.org/index.php?topic=1360037.0 https://bitcointalk.org/index.php?topic=1361613.msg13856423#msg13856423

> There's actually a good reason for securities regulators to look critically at such deals —
> because they are an opportunity for the seller to take advantage of the buyers, and to find
> buyers who are naive or vulnerable. An ICO is an acute opportunity for a "pump-and-dump"
> scam. I didn't want even the appearance of the possibility of such a thing to be associated
> with Zcash. I also didn't feel comfortable taking money from people who may be ill-informed
> and who may be unable to afford the loss if the project were to fail.
>
> It's ironic: there is a certain segment of the cryptocurrency world who considers an open ICO
> to be good because it exposes a bunch of self-selected people to the upside, but this is the exact
> same reason that securities regulators such as SEC regard such things as potentially bad: because
> they expose a bunch of self-selected people to the downside! (And insidiously, the cost to the
> buyers is potentially to the benefit of the seller.)

But you have steadfastly ignored the numerous times I (shelby3 on the Zcash forum and Zooko's AMA) have asked you to comment on the FinCEN regulations which seem to require that all Zcash miners will have to apply as Money Service Businesses (and note even the Coin Center report mentions FinCEN at the top of page 3), if you require miners to transfer 11% of the coinbase block rewards to your corporation. Even if you build in the protocol the requirement that 11% of the coinbase is to be transfered to your foundation, the miner still is the one who creates the block and decides on his own free will whether to honor the protocol or fork the protocol. This is very dubious and I don't think miners will risk it! You may think that FinCEN regulations do not apply globally, but the G20 has announced plans to cooperate against money laundering (and the recent false flag operation in France is being used as another excuse just as that false flag 9/11 got the BigT Lie rolling with the resultant "Patriot" Act). You think you are clever, but you are digging your grave by monkeying around trying to skirt USA regulations, which you've now admitted in public above. Not good. You are starting to demonstrate that you are not competent to run this operation. Please stop being obstinate and wake up to the realities.

That will kill your coin because it means that FinCEN controls your coin.

[TPTB_need_war]

I want to add that I realize the legal issues make any PUBLIC pre-sale/pre-mine choice dubious. If you do public ICO then the tokens must be registered as securities. If you do PRIVATE pre-sale and then PUBLIC royalties from mining as Zcash proposes, then the miners apparently have to register as Money Service Businesses under FinCEN regulations and the coming G20 plan to harmonize these regulations starting in 2017.

Appears the only options for legal distribution are PRIVATE ICOs (that can include any qualified investors as so defined by the SEC but you can't advertise this to the public-at-large and has to be viral within the qualified investor social network).

Or via PUBIC proof-of-work mining.

IANAL yet I think Ethereum violated the securities law.

Some have also claimed that PUBLIC airdrops might be legal, when these are not marketed as investments but rather for-use tokens.

[TPTB_need_war]

One point they forgot to make is that it doesn't matter if Ethereum did their ICO under Swiss laws. The USA has securities law is that if you advertise and market securities to US investors, then you are culpable under US law no matter where in the world you are. They will come after you. KimDotCom will soon learn this that you can't run and you can't hide from the USA. Don't forget that Sweden was involved in trying to extradite Assange and probably turning him over to the USA. And Switzerland has been caving in to USA demands for turning over US citizens hiding wealth in Swiss banks.

And besides, Martin Armstrong has pointed out that the G20 will start sharing information and cooperating on enforcement as of 2017 (when the global economy will collapse in earnest and capital controls will be ramped up significantly).

Here is something related to FinCEN which is not the same as SEC regulation, but nevertheless the same principle applies of filtering out US residents/citizens:

You can avoid US customers, but it takes work

America

Plenty of businesses, some of my own clients included, have decided that the US market just isn’t for them.

They’ve either soured on the idea of servicing US clients altogether, or have decided to launch and wait it out in jurisdictions like Canada until the US sees regulatory reform.

This can be both profitable and practical, but simply incorporating the overseas market isn’t going to cut it.

The smart business will develop a set of policies and procedures reasonably calculated to keep US residents out. A competent attorney can help guide you through this process, and I can give some very basic principles here.

    Firstly, a pre-emptive response to a question I get asked weekly: geofiltering incoming IP addresses is only the beginning. The business itself should detect the jurisdiction of the customer’s IP address, display that address, and ask the customer to confirm that this is his or her jurisdiction.

Both customer and business can take affirmative steps: the customer can be required to click a button stating “I affirm that I am a resident of *country*,” and the business can require verifying documentation, like a passport or utility bill.

Several providers offer these kinds of onboarding services. Your business should develop a risk profile for each of its customers in real time setting forth the probability that the customer is a US resident.

The risk profile should take into account different factors like: (i) whether the customer registers a US bank account with your business, (ii) how many transfers to US bank accounts the customer requests (if you offer such a service), and (iii) how many times the customer accesses your service from within the US after setting up a new account.

The record shouldn't just show that your business followed its own policies, but that those policies worked. If push comes to shove, a judge and jury would probably like to see that, every once in a while, your procedures actually caught a US resident trying to use your service, and that you closed his or her account.

Finally, it should go without saying that your business should not advertise to US customers. This all might seem excessive for, or inapplicable to, your business and indeed it might be. The proper set of procedures will depend heavily upon the details of your business model and your degree of risk tolerance.

For some, even crafting and implementing these policies may be just as unappetising as compliance. There is, in fact, a way to service US customers and avoid these burdens.

Namely, you can become the agent of a Bank or Credit Union, as existing MSB Certified agents of banks, credit unions and money services businesses are typically exempt from registration and licensure requirements.

Functionally, becoming an agent means hiring an attorney to negotiate and execute an agreement with the bank, credit union or MSB (called the “principal”) setting forth your relative rights and obligations.

I don't have time to read this:

http://www.coindesk.com/forking-bitcoin-msb-legal-issues/

I was also provided the following link by Zcash:

https://coincenter.org/2016/02/no-fincen-policy-is-not-relevant-to-the-bitcoin-forking-debate

[TPTB_need_war]

I was also provided the following link by Zcash:

https://coincenter.org/2016/02/no-fincen-policy-is-not-relevant-to-the-bitcoin-forking-debate

I responded privately to Zcash as follows:

Okay I read the document you provided and it doesn't change anything I have written in the past. I never said the developers would be at-risk of FinCEN regulation. It is the miners who transfer coinbase to your company/foundation that will be subject to registration as MSBs. And the document you provided does not argue otherwise. The document you provided is only talking about miners who don't transfer their coinbase but rather mine it for themselves (they may exchange it later as an individual but that is not the same as a regularized transfer operation). Now you might argue that since they are transferring it only to one (or just two) entity then there is no risk of money laundering, thus the MSB regulation would not apply. But that is not what FinCEN guidance says. They say if the entity is creating and transferring, then they must register. Sorry you are potentially wrong and this could cost you dearly. Why not simply premine it! Much easier and avoids the problem on your miners.

[coins101]

What is the point of all this? You're trying to second guess what regulators will do in each country by reference to America?

Well, that's a waste of time. Some countries will make up regulation on the spot if they don't like the colour of your shoes.

If your concern is that America will hunt you down even if you live outside of the USA, then throw away your computer and crawl under a rock. Or just hard code black lists of American IP addresses into your code. If its investment related concerns, tell yanks they can't participate and if they try they take liability for your legal costs - TnC's issue.

This really is a pointless, futile exercise. If its that much of a concern, write up your project and post it to regulators asking for their view on legalities.

[TPTB_need_war]

This really is a pointless

Only to someone who isn't paying attention to what is really going in the world that is oblivious to most (see below).

Whereas, it has helped me greatly to decide how to launch a coin wherein it will be legal every where. Which is very important compared to those coins which may run into trouble later, such as Ethereum and Zcash (assuming Zcash continues with their plan to have miners act as money transmitters to the foundation).

Note the issues I raised in this thread may not apply for those coins that never reach some level of millions of adoption, if they are no threat to the powers-that-be and haven't caused anger among investors.

You're trying to second guess what regulators will do in each country by reference to America?

https://www.armstrongeconomics.com/world-news/taxes/2017-the-year-from-political-hell/
https://www.armstrongeconomics.com/world-news/2017-is-coming-and-the-g20-has-agreed-to-share-all-info-on-everyone/
https://www.armstrongeconomics.com/world-news/swiss-to-give-up-everything-everybody/
https://www.armstrongeconomics.com/international-news/western_europe/britain-to-ban-any-encryption-that-prevents-the-taxman-from-exposing-british-citizens/
https://www.armstrongeconomics.com/international-news/western_europe/uk-to-ban-whatsapp-messaging-service/
https://www.armstrongeconomics.com/world-news/larry-summers-calls-to-end-100-billis-here-comes-the-totalitarian-state/
https://www.armstrongeconomics.com/world-news/taxes/the-new-age-of-economic-totalitarianism-the-london-meeting-to-end-currency/
https://www.armstrongeconomics.com/world-news/nsa-blames-snowden-for-paris/
https://www.armstrongeconomics.com/world-news/nsa-a-tax-economics-espionage-agency/
https://www.armstrongeconomics.com/category/world-news/taxes/
http://www.nestmann.com/
http://www.nestmann.com/best-place-to-launder-money-surprisingly
http://www.nestmann.com/theyre-coming-for-your-cash

http://www.independent.co.uk/news/world/asia/china-has-made-obedience-to-the-state-a-game-a6783841.html
http://theantimedia.org/china-just-launched-the-most-frightening-game-ever-and-soon-it-will-be-mandatory/

At G20 last year, all governments agreed to report everyone everywhere to their host countries for tax purposes. The hunt for taxes is destroying the world economy at a staggering rapid pace and this is far worse than even I had anticipated when we first forecast BIG BANG would hit 2015.75 back in 1985. Here is a email a non-US citizen received from his trust company in Malta.

“The reporting charges have arisen due to the implementation of new U.S legislation known as the Foreign Account Tax Compliance Act (“FATCA”) which has been introduced as part of a global initiative to create an International tax reporting regime. Together with the majority of the World’s major trading nations, the Maltese Government has entered into an agreement with the US Authorities to implement FATCA legislation in Malta. The legislation has required all Trust Companies in Malta to evaluate all structures operated on behalf of clients and categorise them according to detailed rules set out in the FATCA legislation. This categorisation process is not just limited to structures operated on behalf of US clients, or clients holding US assets but has to include all clients and structures irrespective of where clients and their structures are domiciled. We can advise you that <Name> has taken extensive legal and tax advice regarding the categorisation of clients and which information should be reported according to various trigger reporting events since our accounting and client management systems have to be tailored to supply relevant information on a per client and <Name> entity basis to the Malta Authorities who then report directly to the IRS.

Consistent with many other Trust Companies a decision has been taken to pass on some of the costs of this work to client structures for whom we act. Accordingly a December invoice will be issued for a one off fee of £250 that will be described in the invoice as a FATCA classification fee.“

You need to understand that the dollar will grow stronger as we collapse starting in earnest in 2017 and this will place the global financial leverage in the hands of the USA so it can force FATCA on the rest of the world while the rest of the world collapse they too will hunt down "tax evaders":

The dollar rally and the devaluation of the yuan is not a fluke and it most certainly is not a one-time event. The dollar declined against the yuan for 19 years during the same timing that saw gold decline from 1980 to 1999. The major low on an annual closing basis at 2013 and 2014 was an outside reversal to the upside for the dollar. The Yearly Bullish Reversal stands at 683 and technical resistance stands at 658. The dollar filled the gap that existed prior to 1994 and is yet another confirmation that the dollar rally is underway.

Yes, the world trade is contracting and will get much worse after October. Governments are destroying the world economy on their hunt for taxation. Politicians are hunting money as if it were some sport and are undoing everything that was built postwar. Numerous reports are coming in to us about people traveling on trains and having their bags searched for money in Europe. The hunt for cash is wiping out the world economy. Americans are being thrown out of banks and mutual funds everywhere. FATCA has forced Americans to repatriate dollars. The only real Americans who can operate overseas are now established multinational companies. Small companies cannot expand from the United States nor can individuals send money anywhere.

Add to FATCA the problem in Europe and we see capital still pouring into the USA from both China and Europe. The real estate cycle has/or will peak with this turning point around the world from Switzerland, Britain, Canada, to Asia right down into India and Australia. We are plagued by politicians who have absolutely no clue how to run an economy and it is now all about them retaining power virtually everywhere we look.

The dollar rally is unfolding despite the fact people do not understand why. They look only at the USA debt and assume the dollar must crash, when in fact, the problem we face is on a global scale and $18 trillion in U.S. debt is simply not the large enough for international capital to hide. The future is going to be anything but a textbook move. This is why this year’s World Economic Conference is going to be a real eye opener.

[TPTB_need_war]

Regulation increasing as I expected...

Recently the European Commission (EC) announced plans to apply the EU anti-money laundering and counter-terrorist financing regulations (the Fourth AML Directive or 4AMLD) to digital currency exchanges and possibly wallet providers.

This move is a part of the EC’s broadening action against terrorist financing.

But while this news comes as no surprise, another EC proposal, far less publicized and somewhat overlooked, has the potential to revolutionize the current state of affairs in digital currency regulation in the EU.

The EC announced that it will consider applying the licensing and supervision rules of the Payment Services Directive (PSD; a new version of which, 2PSD, has been adopted in 2015) to digital currency exchanges in order to "promote better control and understanding of the market".

PSD is one of the cornerstones of the EU single market for payments. It sets out rules for regulated payment services and contains a catalogue of such services.

Firms which render payment services have to comply with many regulations, including licensing and supervision rules, which now the EC apparently also intends to apply to digital currency exchanges.

Such a plan seems to be sensible. It is clear that there are two legal acts in the EU that would be well-suited for regulating cryptocurrencies: PSD and another related directive, the E-Money Directive (EMD). Works on the new '3EMD' are now under way, so some changes could be introduced there as well.
Revising basic assumptions

What matters, however, is what the current PSD regulatory methodology looks like.

A crucial piece of the PSD is the definition of "funds", which so far has included only cash, bank (scriptural) money and e-money (regulated by the EMD). Cryptocurrencies do not fall into any of those categories – a fact confirmed by the European Central Bank (ECB) and others.

It follows that, for the EC, digital currency exchanges would be best covered by some provisions of the PSD, although in the current form it does not apply to digital currencies at all.

It therefore appears that regulatory change might have to be much deeper than merely adding a few provisions extending the scope of licensing and supervision regulations on digital currency exchanges.

New regulations would probably have to revise some of the basic assumptions and concepts of the PSD, including definitions of "funds", "payment transaction" or "payment institution".
How should stakeholders react?

It is difficult to evaluate the EC's plan, since at the moment it is extremely general and vague. However, very likely it will open the door for the introduction of cryptocurrencies to the EU payment services regulations.

Various proposals may emerge afterwards, from cautious and restrained ones to those proposing comprehensive and broad regulation.

Firms that may be affected by any regulatory change should monitor developments closely and be ready to react.

[spartacusrex]

Good thread.

Whereas, it has helped me greatly to decide how to launch a coin wherein it will be legal every where.

I have read most of the threads on this topic.. (There's a lot to digest)

Is this the conclusion :

1) You can launch a coin that uses POW mining to distribute the coins.

2) Private ICO's, but only to investors that the SEC recognises as institutional.

3) By PUBLIC air-drop - say if you gave them away to every bitcointalk user, for free.

4) Register with FinCEN.. jump through all their hoops.

5) Use a Bank to do it.

And -basically- any coin that has so far done any ICO is a valid target. No one has done it right.

..

Is this where we are at ? I'll be honest. The US of A sucks balls at the moment.

[TPTB_need_war]

Actually you're wrong. That's the daily volume you've quoted there ($10m+).

Insiders buying from themselves to pump up daily volume is a well known tactic of shrilling shit coins. Welcome to the party. Seems you need to catch up on your education of how market manipulation works when the insiders control a large percentage of the float.

Again 96% of all ETH volume is done on two exchanges. I don't see those exchanges sharing their KYC data on who is trading with whom. So it is impossible for anyone to refute this.

Nope. That's just your personal opinion, not fact set in stone, which you will also find impossible to prove. Others have a different opinion of the ETH daily volume.

Where is your proof?

I've never seen a case where humans didn't take money that was sitting in front of their faces to take. The insiders always do this, unless they are worried about being caught and prosecuted. But since ETH was an illegal unregistered investment security launched from Switzerland to attempt to side step SEC (and I presume EU) regulations[1], we don't have to doubt whether they feel constrained by any regulators.

[1] But they marketed it to US investors so they are still in violation of SEC law.

[TPTB_need_war]

stoat hope you've hid your IP address well, because jail time awaits you:

15 U.S. Code § 78i - Manipulation of security prices

(a) Transactions relating to purchase or sale of securityIt shall be unlawful for any person, directly or indirectly, by the use of the mails or any means or instrumentality of interstate commerce, or of any facility of any national securities exchange, or for any member of a national securities exchange—
(1) For the purpose of creating a false or misleading appearance of active trading in any security other than a government security, or a false or misleading appearance with respect to the market for any such security, (A) to effect any transaction in such security which involves no change in the beneficial ownership thereof, or (B) to enter an order or orders for the purchase of such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the sale of any such security, has been or will be entered by or for the same or different parties, or (C) to enter any order or orders for the sale of any such security with the knowledge that an order or orders of substantially the same size, at substantially the same time, and at substantially the same price, for the purchase of such security, has been or will be entered by or for the same or different parties.
(2) To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
(3) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security, a security-based swap, or a security-based swap agreement with respect to such security, to induce the purchase or sale of any security registered on a national securities exchange, any security not so registered, any security-based swap, or any security-based swap agreement with respect to such security by the circulation or dissemination in the ordinary course of business of information to the effect that the price of any such security will or is likely to rise or fall because of market operations of any 1 or more persons conducted for the purpose of raising or depressing the price of such security.
(4) If a dealer, broker, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security, a security-based swap, or security-based swap agreement with respect to such security, to make, regarding any security registered on a national securities exchange, any security not so registered, any security-based swap, or any security-based swap agreement with respect to such security, for the purpose of inducing the purchase or sale of such security, such security-based swap, or such security-based swap agreement any statement which was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, and which that person knew or had reasonable ground to believe was so false or misleading.
(5) For a consideration, received directly or indirectly from a broker, dealer, security-based swap dealer, major security-based swap participant, or other person selling or offering for sale or purchasing or offering to purchase the security, a security-based swap, or security-based swap agreement with respect to such security, to induce the purchase of any security registered on a national securities exchange, any security not so registered, any security-based swap, or any security-based swap agreement with respect to such security by the circulation or dissemination of information to the effect that the price of any such security will or is likely to rise or fall because of the market operations of any 1 or more persons conducted for the purpose of raising or depressing the price of such security.
(6) To effect either alone or with one or more other persons any series of transactions for the purchase and/or sale of any security other than a government security for the purpose of pegging, fixing, or stabilizing the price of such security in contravention of such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.

Securities Regulation Code

CHAPTER VII

Prohibitions on Fraud, Manipulation and Insider Trading

 

SEC. 24. Manipulation of Security Prices; Devices and Practices.

24.1     It shall be unlawful for any person acting for himself or through a dealer or broker, directly or indirectly:

a)         To create a false or misleading appearance of active trading in any listed security traded in an Exchange or any other trading market (hereafter referred to purposes of this Chapter as “Exchange”):

(i)        By effecting any transaction in such security which involves no change in the beneficial ownership thereof;

(ii)        By entering an order or orders for the purchase or sale of such security with the knowledge that a simultaneous order or orders of substantially the same size, time and price, for the sale or purchase of any such security, has or will be entered by or for the same or different parties; or

(iii)       By performing similar act where there is no change in beneficial ownership.

b)         To effect, alone or with others, a series of transactions in securities that:

(i)         Raises their price to induce the purchase of a security, whether of the same or a different class of the same issuer or of a controlling, controlled, or commonly controlled company by others;

(ii)        Depresses their price to induce the sale of a security, whether of the same or a different class, of the same issuer or of a controlling, controlled, or commonly controlled company by others; or

(iii)       Creates active trading to induce such a purchase or sale through manipulative devices such as marking the close, painting the tape, squeezing the float, hype and dump, boiler room operations and such other similar devices.

c)        To circulate or disseminate information that the price of any security listed in an Exchange will or is likely to rise or fall because of manipulative market operations of any one or more persons conducted for the purpose of raising or depressing the price of the security for the purpose of inducing the purchase or sale of such security.

d)        To make false or misleading statement with respect to any material fact, which he knew or had reasonable ground to believe was so false or misleading, for the purpose of inducing the purchase or sale of any security listed or traded in an Exchange.

e)         To effect, either alone or others, any series of transactions for the purchase and/or sale of any security traded in an Exchange for the purpose of pegging, fixing or stabilizing the price of such security, unless otherwise allowed by this Code or by rules of the Commission.

24.2.    No person shall use or employ, in connection with the purchase or sale of any security any manipulative or deceptive device or contrivance. Neither shall any short sale be effected nor any stop-loss order be executed in connection with the purchase or sale of any security except in accordance with such rules and regulations as the Commission may prescribe as necessary or appropriate in the public interest or for the protection of investors.�

24.3.   The foregoing provisions notwithstanding, the Commission, having due regard to the public interest and the protection of investors, may, by rules and regulations, allow certain acts or transactions that may otherwise be prohibited under this Section.

[TPTB_need_war]

Lol, according to TPDB, every person on this forum should be locked up.

No. As I've pointed out in the past, the securities regulations appear to be lenient against those who were merely buy and selling illegal unregistered and/or manipulated securities. Those who are promoting are dangerously close to the line. Those who are actively manipulating are flirting with the law. Note IANAL.

[ArticMine]

It comes down to the question of whether a crypto currency is a security. For decentralized virtual currency (FinCEN definition) I argue the answer is  no, since by its very nature a security requires an issuer (the person who is required by law to register or cause registration to occur). For centralized virtual currencies this is where it gets interesting. In this case there is an issuer; however that does not mean there is a security. Take Ethereum for example. In this case there is a very good case that unregistered securities were issued in the IPO / ICO. The more interesting question is was the security the Ether itself or the promise to deliver the Ether at a future date before it was created?  I say the latter.

When it come to fitting certain members of this forum for an orange jumpsuit in the United States, my bet is on FinCEN over the SEC. FinCEN needs to prove in court is that the virtual currency is centralized , the SEC in addition to proving in court the virtual currency is centralized also has to prove in court that it is a security.,

Edit: I believe it is only a matter of time before FinCEN makes a move on Ethereum.

[CryptocurrencyNetwork]

I agree that some Cryptos tokens will attract unwanted attention regarding this matter.

[TPTB_need_war]

4.   the largest music monetization company is MUSE

What the fuck is that?

Okay this is Peertracks and apparently the Bitshares asset is MUSE.

Peertracks runs on the Bitshares block chain, which means it can't scale[...]

The Peertracks Note features is interesting. It might turn audiences in P&D targets though, so I am not sure it is desirable. It is also not clear if these are illegal unregistered securities under SEC law in the USA. I do know that in the case of airplane VIP memberships the Supreme Court ruled they were not subject to the Howey test. I will need to study that more.

[...]I just don't think the masses are going to be tuned into Notes as something they are interested in. You are basically trying to turn the serious music fans into speculators. A rule of Marketing 101 is don't assume you can change an Apple into an Orange. You must target a real existing need, not a fantasy. Yeah speculators here will think Notes are cool, but the actual music fans I think will perceive it to be a negative feature and an insult to love of music. You basically corrupt the musicians teaching then to do P&D instead of produce great music. Sigh.

Definitely the Peertracks Notes will be illegal unregistered investment securities if fans from the USA are allowed to buy them. Follows quoted is an excerpt from my prior research. The key point is that since Notes are transferable and they are mainly purchased with an expectation of gain from reselling them, then they are an expectation of profits significantly due to the efforts of the artist and his fans, i.e. effectively a common enterprise. This is why both Kickstarter and Indiegogo havestrict Terms of Use that prevent any 'perks' which are "any form of 'security' (as such term is defined in the Securities Act of 1933)" or "any form of financial incentive or participation in any profit sharing"

C. Expectation of profits "significantly" due to efforts of others.

When tokens are created and issued (whether it be an ICO or tokens created+assigned during mining), if they are acquired primarily for investment and not primarily for use (in what ever ways a token can be used other than for holding for appreciation of value), then there is an expectation of profits due to appreciation of value.

The fact that no investor is in control of the decentralized collective "common enterprise" qualifies for the "due to efforts of others" clause of this criteria of the Howey test:

https://scholar.google.com/scholar_case?case=4524095741732962732&hl=en&as_sdt=6,33&as_vis=1&kqfp=10330650611816444522&kql=132&kqpfp=14710406364156655404#kq

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

So the only way a crypto-token can potentially avoid qualifying for this criteria is for there to be no expectation of profits, either because the tokens are never obtained for investment or always the primarily consideration is the use value and not the appreciation of value. As documented in my prior post and here in another example, if the primary consideration is the use value, then there is no expectation of value appreciation:

http://law.justia.com/cases/oregon/court-of-appeals/1975/535-p-2d-109-2.html

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.

I find it useful to quote the Indiegogo Terms of Use as follows:

Prohibited Campaigns

Campaign Owners are not permitted to create a Campaign to raise funds for illegal activities, to cause harm to people or property, or to scam others. If the Campaign is claiming to do the impossible or it's just plain phony, don't post it. Users must comply with all applicable laws and regulations in connection with their Campaigns, including offering Perks and using Contributions. Campaign Owners shall not make any false or misleading statements in connection with their Campaigns.

Prohibited Perks

Campaign Owners are not permitted to offer or provide any of the following as a Perk:

• any form of "security" (as such term is defined in the Securities Act of 1933);
• any form of financial incentive or participation in any profit sharing;
• any alcoholic consumer products (vouchers or memberships offering physical delivery of alcoholic consumer products are permitted);
• any controlled substance or drug paraphernalia;
• any weapons, ammunition and related accessories;
• any form of lottery or gambling;
• any form of air transportation; or
• any items promoting hate, discrimination, personal injury, death, damage, or destruction to property; or any items (a) prohibited by applicable law to possess or distribute, (b) that would violate applicable law if distributed, or (c) that would result in infringement or violation of another person's rights if distributed.

[TPTB_need_war]

I feel good to be invested in the best decentralized data storage, and hope they will continue to consider how to leverage reputation systems to prevent cheating & attacks.  If you find an obviously superior method, feel free to let us know. 

Of course you do, because you have vested interest because you bought 1/1000th of the illegal unregistered securities (pre-sold for a lie that is vaporware) and now are pumping these lies on unwary n00bs. I am recording all of this for the future SEC investigations and jail time for those who deserve to go to jail.

[TPTB_need_war]

SEC sent out a warning in January 2016. Hope the pumpers are preparing for their jail time:

There is a reason why the SEC issued a warning about Crypto coins calling them scams.. 90% are !
I was doing research early this year when i stumbled onto their press release by accident (same day it was posted)
I then posted it in the Bitcoin section where everyone said it was good news AHAHHAHAHHA
It even mentioned an unnamed forum which was totally obvious they meant Bitcointalk.
Read it yourselves.. https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf (Issued Jan 4th 2016)

[TPTB_need_war]

Well the offer me to buy some software during Crowdsale, I liked the idea DAG and bought some.

What have I done wrong 

Did you verify that Iota adhered to all laws and regulations for selling investment securities in every jurisdiction where they offered the "tokens" for sale to investors?

Specifically did they register these tokens with the SEC in the USA? If not, did they restrict non-qualified USA investors from obtaining the coins?

I hope you aware it is against the policy of crowdfunding sites such as Kickstarter and Indiegogo to offer any shares or redeemable tokens to contributors.

[iotatoken]

Well the offer me to buy some software during Crowdsale, I liked the idea DAG and bought some.

What have I done wrong 

Did you verify that Iota adhered to all laws and regulations for selling investment securities in every jurisdiction where they offered the "tokens" for sale to investors?

Specifically did they register these tokens with the SEC in the USA? If not, did they restrict non-qualified USA investors from obtaining the coins?

I hope you aware it is against the policy of crowdfunding sites such as Kickstarter and Indiegogo to offer any shares or redeemable tokens to contributors.

Why would we ever register with SEC to sell software? I know you want to pretend you're a lawyer, but c'mon, this is pretty basic. When I talked with our lawyers about this there was absolutely no constraints on selling software to the US.

[TPTB_need_war]

Well the offer me to buy some software during Crowdsale, I liked the idea DAG and bought some.

What have I done wrong 

Did you verify that Iota adhered to all laws and regulations for selling investment securities in every jurisdiction where they offered the "tokens" for sale to investors?

Specifically did they register these tokens with the SEC in the USA? If not, did they restrict non-qualified USA investors from obtaining the coins?

I hope you aware it is against the policy of crowdfunding sites such as Kickstarter and Indiegogo to offer any shares or redeemable tokens to contributors.

Why would we ever register with SEC to sell software? I know you want to pretend you're a lawyer, but c'mon, this is pretty basic. When I talked with our lawyers about this there was absolutely no constraints on selling software to the US.

Afaik, you sold a token which can be resold by investors. The Supreme Court has said about the Howey test, that it would look past all attempts to obfuscate a security.

Software is not an investment, rather it is purchased for a use case. The Howey test looks at what the expectations were of those purchasing.

Your lawyers are ignorant apparently.

[iotatoken]

Well the offer me to buy some software during Crowdsale, I liked the idea DAG and bought some.

What have I done wrong 

Did you verify that Iota adhered to all laws and regulations for selling investment securities in every jurisdiction where they offered the "tokens" for sale to investors?

Specifically did they register these tokens with the SEC in the USA? If not, did they restrict non-qualified USA investors from obtaining the coins?

I hope you aware it is against the policy of crowdfunding sites such as Kickstarter and Indiegogo to offer any shares or redeemable tokens to contributors.

Why would we ever register with SEC to sell software? I know you want to pretend you're a lawyer, but c'mon, this is pretty basic. When I talked with our lawyers about this there was absolutely no constraints on selling software to the US.

Afaik, you sold a token which can be resold by investors. The Supreme Court has said about the Howey test, that it would look past all attempts to obfuscate a security.

Software is not an investment, rather it is purchased for a use case. The Howey test looks at what the expectations were of those purchasing.

Your lawyers are ignorant apparently.

Haha, we have never tried to 'obfuscate' anything. We made it crystal clear that we do not care about speculators, we do not promise any appreciation in value of the tokens, we sold the tokens as software (which it is), and we SPECIFIED that it was not an investment, security or asset.

Are you willing to legally go on record with this as a claim? If not please get a new life, not a single atom in the universe cares that you exist. In fact I would say that you are bringer us closer to the heat death of the universe by expelling so much energy on useless things.

[TPTB_need_war]

Well the offer me to buy some software during Crowdsale, I liked the idea DAG and bought some.

What have I done wrong  

Did you verify that Iota adhered to all laws and regulations for selling investment securities in every jurisdiction where they offered the "tokens" for sale to investors?

Specifically did they register these tokens with the SEC in the USA? If not, did they restrict non-qualified USA investors from obtaining the coins?

I hope you aware it is against the policy of crowdfunding sites such as Kickstarter and Indiegogo to offer any shares or redeemable tokens to contributors.

Why would we ever register with SEC to sell software? I know you want to pretend you're a lawyer, but c'mon, this is pretty basic. When I talked with our lawyers about this there was absolutely no constraints on selling software to the US.

Afaik, you sold a token which can be resold by investors. The Supreme Court has said about the Howey test, that it would look past all attempts to obfuscate a security.

Software is not an investment, rather it is purchased for a use case. The Howey test looks at what the expectations were of those purchasing.

Your lawyers are ignorant apparently.

Haha, we have never tried to 'obfuscate' anything. We made it crystal clear that we do not care about speculators, we do not promise any appreciation in value of the tokens, we sold the tokens as software (which it is), and we SPECIFIED that it was not an investment, security or asset.

The Howey test doesn't concern itself with what you claim you claimed. It looks at the expectations that investors have. It is clear from all the pumping of Iota that investors are expecting and even promoting gains on these tokens. Thus they are securities. And you did create them and sell them.

Any way, feel free to ignore me. You'll learn the hard way. Bring some Vaseline with you to jail to make it easier on yourself.

[iotatoken]

Hahahahaha no. Ugh how did you not get aborted? Good luck kid.

[Come-from-Beyond]

Afaik, you sold a token which can be resold by investors. The Supreme Court has said about the Howey test, that it would look past all attempts to obfuscate a security.

Software is not an investment, rather it is purchased for a use case. The Howey test looks at what the expectations were of those purchasing.

Your lawyers are ignorant apparently.

Could you comment on http://curia.europa.eu/jcms/upload/docs/application/pdf/2012-07/cp120094en.pdf, please?

[TPTB_need_war]

Afaik, you sold a token which can be resold by investors. The Supreme Court has said about the Howey test, that it would look past all attempts to obfuscate a security.

Software is not an investment, rather it is purchased for a use case. The Howey test looks at what the expectations were of those purchasing.

Your lawyers are ignorant apparently.

Could you comment on http://curia.europa.eu/jcms/upload/docs/application/pdf/2012-07/cp120094en.pdf, please?

Software is not a fungible money. Software is not purchased for expectations of gains.

Your logic is that buying a bicycle is not an investment security even though it can be resold. Then nothing is an investment security by your test. Rather the Howey test looks at the relevant economic facts and ignores any such attempt at obfuscation.

Are attorneys in Europe really this dumb   

[Come-from-Beyond]

Software is not a fungible money. Software is not purchased for expectations of gains.

Your logic is that buying a bicycle is not an investment security even though it can be resold. Then nothing is an investment security by your test. Rather the Howey test looks at the relevant economic facts and ignores any such attempt at obfuscation.

Are attorneys in Europe really this dumb   

I just needed your comment. I didn't expect that you would change your position nor anyone expected that.

[iotatoken]

The most hilarious part about these trolls is that they argue from a retroactive point of view. Laws are never retroactive. According to TPTB's "expert lawyer opinion" pokemon cards were really a security because they appreciated in value due to demand after they were sold as a card game. Genius.

[Come-from-Beyond]

The most hilarious part about these trolls is that they argue from a retroactive point of view. Laws are never retroactive. According to TPTB's "expert lawyer opinion" pokemon cards were really a security because they appreciated in value due to demand after they were sold as a card game. Genius.

Well, he is not an expert and has the right to be wrong. Of course, noone seriously believes that TPTB is better than Ethereum lawyers but if one conforms to TPTB's rules then the one conforms to all possible jurisdictions. So TPTB's opinion is useful to some degree.

[iotatoken]

The most hilarious part about these trolls is that they argue from a retroactive point of view. Laws are never retroactive. According to TPTB's "expert lawyer opinion" pokemon cards were really a security because they appreciated in value due to demand after they were sold as a card game. Genius.

Well, he is not an expert and has the right to be wrong. Of course, noone seriously believes that TPTB is better than Ethereum lawyers but if one conforms to TPTB's rules then the one conforms to all possible jurisdictions. So TPTB's opinion is useful to some degree.

He has the right to be wrong, but he does not admit that he's wrong. He states things as a matter of fact and thus deserves to be ridiculed for it.

[TPTB_need_war]

Software is not a fungible money. Software is not purchased for expectations of gains.

Your logic is that buying a bicycle is not an investment security even though it can be resold. Then nothing is an investment security by your test. Rather the Howey test looks at the relevant economic facts and ignores any such attempt at obfuscation.

Are attorneys in Europe really this dumb    

I just needed your comment. I didn't expect that you would change your position nor anyone expected that.

The most hilarious part about these trolls is that they argue from a retroactive point of view. Laws are never retroactive. According to TPTB's "expert lawyer opinion" pokemon cards were really a security because they appreciated in value due to demand after they were sold as a card game. Genius.

Well, he is not an expert and has the right to be wrong. Of course, noone seriously believes that TPTB is better than Ethereum lawyers but if one conforms to TPTB's rules then the one conforms to all possible jurisdictions. So TPTB's opinion is useful to some degree.

CfB I did not change my position. Your disingenuous attempt to assert that I am waffling is a despicable obfuscation tactic.

If you read this entire thread, you will see I have explained in great detail with quotations from the relevant Supreme Court decisions, that the Supreme Court has clarified that the Howey test is employed to distinguish an investment security from other scenarios which are not investment securities.

The key aspect of the Howey test is whether the individuals who are purchasing what is offered, are expecting to gain on the resale value due to the ongoing efforts of some group other than themself. This means they've placed their trust in a group (an ongoing enterprise) that is responsible for their future gains.

It is quite clear that ever since your ICO, that the future value of Iota's tokens is dependent on iotatoken and Come-from-Beyond, for example all the development work you had to complete from the time you sold the tokens until now and still ongoing work required. As well, you arguing with me here in this thread, indicates that you are responsible for the promotion and forming public opinion which determines the value of Iota's tokens.

Also one of the other key factors is that money paid for these tokens was transferred to this group, which the investors are depending on for their expectation of gains.

Pokemon cards are not software, they are physical collectibles similar to baseball cards. The major reason for obtaining these cards was not for depending on the ongoing efforts of a group to promote and provide value for these cards. To the extent these cards have risen in value, it is because of the inherent value of the cards when they were created, not due to any reliance on ongoing efforts of promoters and developers to raise their value over time.

Pokemon card values are a user-driven phenomenon. Iota token values are an iotatoken and Come-from-Beyond driven phenomenon (and the various early investors who also pump your tokens here in this forum and rave about Come-from-Beyond's reputation of creating Nxt). The users are depending on your development group to implement and monitor the coin ongoing. Heck your company is even providing centralized servers which are essential to the launch phase which will make or break the value of the tokens.

The USA Supreme Court has specifically stated it will ignore all such obfuscations and focus on the economic facts, which is whether the investors were depending on the actions of the sellers of the securities for the expectation of the gains on the value of the securities. The Supreme Court will also look as to whether the primary reason for obtaining the tokens was for an expectation of the gains, and not primarily for the use value of trading the tokens as a currency for some game or services.

None of the investors of Iota are using them to trade for services or in a game. They are HODLing them in expectation of selling them for an investment gain to greater fools, and they help to promote the tokens on these forums thus displaying their intentions and expectations.

If you two insist of writing stupid shit which exemplifies that you have not even read this thread entirely, and thus do not understand the Howey test, then you are being disingenuous and trying to fool your investors. Which is another fact to add to your culpability under the Howey test and USA securities law.

And yes I think Ethereum's lawyers are dumb shit. And btw, my father is very prominent attorney who has been a general counsel and run the entire west coast division for the world's largest oil company. I have not only inherited his IQ, but I also was exposed to numerous legal briefs and discussions with him over my teenage years which thus an imbued in me the ability to understand key salient points of the court's legal decisions.

I see many attorneys making some egregious mistakes with their comments about crypto currency within the context of the USA's Howey test. I have provided those refutations and clarifications upthread.

The Howey test is very simple. A security means the investor places his surety and trust in a ongoing enterprise to provide his expectation of gains. When buying a bicycle which I resell in the future, I don't depend on the efforts of some ongoing enterprise for the expectation for gains in the value of the bicycle. When I buy software which I resell one day, I don't buy the software to expect gains on the value of the software but rather I buy it primarily to use it. Duh! The SEC regulates these ongoing enterprises so they provide proper disclosures or that they limit their offerings to qualified investors who have at least $1 million in liquid net worth or who have proven they are sophisticated investors who understand well all the technologies and risks involved. Obviously from the dumb comments that speculators make on these forums, they are not all sophisticated. And I understand you did not check to make sure all participants in your ICO (that are USA citizens) had a liquid networth of $1 million.

[Come-from-Beyond]

CfB I did not change my position...

You may be right or wrong. In any case it doesn't make sense to argue on that.

[TPTB_need_war]

CfB I did not change my position...

You may be right or wrong. In any case it doesn't make sense to argue on that.

No. You should explain why you thought I changed my position. So readers can decide if your logic makes any sense.

I suspect that you thought that because I wrote "Software is not a fungible money" that I had changed my position. That phrase was a terse response to iotatoken's point that Iota tokens are only software. Actually that phrase taken out-of-context would be incorrect, because Bitcoin is software and is fungible. The salient distinction as I clarified in my long post just a few moments ago, is that no one is depending on the control exerted by a group that sold us the Bitcoins for the expectation of gains in the value of Bitcoin. That is why Bitcoin is not an investment SECURITY. It is an investment or speculation, but not a SECURITY, because no one is depending on the efforts of an ongoing enterprise for the expectation of gains.

[Come-from-Beyond]

No. You should explain why you thought I changed my position. So readers can decide if your logic makes any sense.

I suspect that you thought that because I wrote "Software is not a fungible money" that I had changed my position. That phrase was a terse response to iotatoken's point that Iota tokens are only software. Actually that phrase taken out-of-context would be incorrect, because Bitcoin is software and is fungible. The salient distinction as I clarified in my long post just a few moments ago, is that no one is depending on the control exerted by a group that sold us the Bitcoins for the expectation of gains in the value of Bitcoin. That is why Bitcoin is not an investment SECURITY. It is an investment or speculation, but not a SECURITY, because no one is depending on the efforts of an ongoing enterprise for the expectation of gains.

I didn't mean that you would change your position.

You keep referring to US laws, but they are not applicable in Western Europe. Also, the USA won't export democracy to those countries as the states used to do with the other parts of the globe. So stop pushing your agenda that USA is the center of the world. Greenwich has been the center and will keep being it even if Trump becomes the president.

[Come-from-Beyond]

I think this thread should be split into at least 2 parts, because every post that refers to SEC and Howey test is void (in legal meaning) for Europe as shown by this document - http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32010R1095.

[iotatoken]

Just ignore this idiot. His arguments can be summarized as follows:

1. Retroactive laws (which doesn't exist)
2. That we're responsible for how other people perceive their tokens

In other words, he's useless to the universe.

[TPTB_need_war]

1. Retroactive laws (which doesn't exist)

Are you ludicrously claiming the 1930s Security Act and the Supreme Court's Howey test interpretation is still not in force in the USA?

Young man, I've seen your Facebook account with your Likes on the Grateful Dead and bands of that drug culture.

2. That we're responsible for how other people perceive their tokens

You are because you have promoted them as such and you have promised to deliver certain development, which thus ties the investor's expectations to your ongoing enterprise by your own design of how you offered the ICO before the development is done and before the software is fully decentralized on auto-pilot.

[Come-from-Beyond]

Are you ludicrously claiming the 1930s Security Act and the Supreme Court's Howey test interpretation is still not in force in the USA?

And you claim that these things matter in Europe because ...

Fill the gap, please.

[TPTB_need_war]

You keep referring to US laws, but they are not applicable in Western Europe.

Incorrect. Please stop pretending you are attorney, because you obviously are negligent in your conceptualization of the current international reach of US law. Which btw, is only going to become more pervasive in 2017, as the G20 has pledged to harmonize and cooperate on cracking down on financial defectors. The world is not some fantasy of independent regions. The world is run by an elite class who are supra-national and they are driving very rapidly towards a global governance system, so that there is no place to run and no place to hide from the hegemony of the global elite.

I suppose you are unaware that Switzerland totally caved into the USA demands on bank secrecy. Even Germany was able to penetrate Swiss bank secrecy by using bribes.

Russian speakers apparently believe the lie that Russia can stand up to the USA, which the elite have by design helped to foster by awarding Edward Snowden safe haven in Russia and complete with this faked failure of the USA when it required the Ecuadoran President's plane to land in France. Do you really live in some foolish kindergarden fantasy where you think the Snowden could have left Hong Kong without the elite knowing where he was and also knowing that he was not on the Ecuadorian President's plane. This is all planned theatre to fool the naive. This was never the case because Russia and the USA are being run by the same elites. They want you to believe that is not so and for you to hold your foolish, nationalistic pride.

But even that conspiracy oriented perspective is not required, because the USA can prosecute you and if necessary they will go after you with a proxy such as seizing your funds and business in the USA and the Swift wire transfer system, and of any one who is aiding, coddling, and protecting you. I mean really can you expect Iota to not totally crash in value if the USA is attacking the ongoing enterprise that is responsible for the Iota centralized servers and driving its development and promotion. They've done this to Julian Assange to KitDotCom, etc.. They can be ready to arrest (interdict) you during your international travels. Eventually they'll nab you. If it is really important, they'll covertly kidnap you and forceably move you to a jurisdiction where they can arrest you. With FATCA, the USA has demonstrated it can pressure the foreign banks to enforce USA laws by threatening to blacklist them from the international financial system.

All the G20 have the same shared problem which is how to prevent financial defectors as the global sovereign debt collapse goes over the cliff later this year and especially in 2017. The powers-that-be know what is coming and they are preparing to prevent the practice of safe havens that allow individuals to play the various jurisdictions against each other. Don't be so damn naive. This isn't something decades from now, this is happening now.

Instead of your childish fantasies of what you wish the law says, let's actually look at what the law says.

A. Activities and Circumstances Requiring Registration

Under the U.S. federal securities laws, a foreign private issuer must register an offering of its securities under the Securities Act or a class of securities under the Exchange Act, or both, as explained below, in the following circumstances:

    * The foreign private issuer wishes to conduct a public offering of its securities in the United States;

1. U.S. Public Offering

Under the U.S. federal securities laws, every offer or sale of securities must either be registered pursuant to the Securities Act or exempt from such registration. Although specific exemptions exist with respect to both the type of security and type of transaction at issue, those most often relevant to foreign private issuers include offerings made on a limited basis (either not to the general public or outside the United States). Please see below for a general overview of exemptions and safe harbors available to foreign private issuers. If no exemption or safe harbor applies, offers and sales must be effected by means of a publicly-filed Securities Act registration statement.

In order to qualify for an exemption from registration with the SEC, you must either sell only to qualified investors or you must make no public offering, and also publicly file a Form D, ostensibly none of which Iota's ICO complied with.

Do you really think the US laws would mention "foreign private issuer" if the USA law has no jurisdiction over them. 

[Come-from-Beyond]

Do you really think the US laws would mention "foreign private issuer" if the USA law has no jurisdiction over them. 

So you keep sticking to the delusion that USA sets laws in Western Europe despite of that document upthread that proves the opposite. I don't see a reason to continue this discussion with you. You are obviously in total denial, caused by inability to accept that you were wrong.
Dixi.

[TPTB_need_war]

Do you really think the US laws would mention "foreign private issuer" if the USA law has no jurisdiction over them.  

So you keep sticking to the delusion that USA sets laws in Western Europe despite of that document upthread that proves the opposite. I don't see a reason to continue this discussion with you. You are obviously in total denial, caused by inability to accept that you were wrong.
Dixi.

Apparently you are in denial that all European banks are complying with FATCA which is a USA law.

Apparently you have entirely ignored my point that the G20 has already pledged to cooperate against financial defectors, because the Europeans are also escaping to the USA to deny paying their European responsibilities. All the governments are bankrupt and they will be joining together to make sure no one can game the jurisdictional boundaries.

It is your Russian delusion. You will get another spanking just as you did for the past decades in the wonderful dictatorship of Belarus. If you want to join the prosperous world, and actually make something for IoT, then you can't hide in nefarious corners of the globe and deny a global community of laws.

I am sure Samsung and other major companies you want to cooperate with on IoT are going to really appreciate your statements in this thread. You are digging your grave, just as you did by debating me in the POLL thread.

So we are indeed just four elections away from complete chaos: (1) BREXIT, (2) U.S. Presidental Election, (3) Germany’s election, and (4) the French elections.

[TPTB_need_war]

I created the thread(s) that attempts to decipher what the existing law is on this issue:

https://bitcointalk.org/index.php?topic=1218399.0

I have concluded that offering an ICO/IPO is incredibly risky for the developers and insiders. I think the G20 will eventually come after them in a concerted cooperation by governments to appease the voters who are fed up with corruption in government and banking. The G20 will use this as a political witch hunt to divert attention from the sovereign debt collapse that socialism created.

Having said that, philosophically I would wish for absolutely no regulation and let fools loose their money because they are fools. That should move the money to those who aren't fools and thus make the economy more productive.

But making decisions based on what I wish to be, is not a pragmatic methodology. Being a lead developer on my own crypto project, I must obey the law that is, not my fantasies of what I wish it would be.

[TPTB_need_war]

INDIEGOGO - The best place to get your Rimbit - Get it now while it's easily affordable - Your Choice - Click Here

I have reported to Indiegogo your illegal selling of investments as Perks.

You are violating their policies as well ostensibly selling illegal unregistered investment securities to USA investors.

[TPTB_need_war]

Those who purchased Rimbit via Indiegogo should be demanding a refund from their credit card company now, because the campaign violated Indiegogo's Terms of Service on Prohibited Perks, thus the tokens will now be scorned and worthless.

This $151,806 loss for Indiegogo and huge number of chargebacks jeopardizing their merchant account relationship with the credit card companies, will hopefully incentivize Indiegogo to take legal action against Marcelo Karlsson. Hopefully they will also report him to the SEC so they can hopefully begin an investigation into the investments scams in crypto currency.

I have an inkling this smallish scam may be the one that ignites the fire that brings down the entire ICO altcoin ecosystem.

Edit: the SEC has recently warned about those who are getting involved in these crypto-currency scams and I hope Indiegogo takes the SEC warning seriously.

ICO is definitely the time to get in  

Best time to get yourself potential jail time in the future when the SEC starts to crack down and GLOBALLY with the cooperation of the G20.

Hope you've hid your identity well because you are promoting illegal unregistered investment securities to USA investors on this forum.

[TPTB_need_war]

Start collecting the list of pumper accomplices that will be going to jail:

Has Evan "substantially ripped off" anyone in order to be in a list where actual scammers that stole people's money are in?

The unethical slights-of-hand legalese criminal minds make.

Bill Clinton said, "It depends on what the meaning of the word 'is' is. If the--if he--if 'is' means is and never has been, that is not--that is one thing. If it means there is none, that was a completely true statement....Now, if someone had asked me on that day, are you having any kind of sexual relations with Ms. Lewinsky, that is, asked me a question in the present tense, I would have said no. And it would have been completely true.".

Of course Evan and his accomplices such as yourself have succeeded in defrauding those who bought the P&D when the price rose to nosebleed levels and then crashed. The P&D that was enabled by insiders controlling the float through this shell game, thus able to buy DRK from themselves pushing the price, market cap, and volume up to nosebleed levels which fooled the naive.

Come on, don't think you can get away with that shit with me. Slime-ball AlexGR you are out-of-league trying to debate me. You will lose.

https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf

Any investment in securities in
the United states remains subject to the jurisdiction
of the seC regardless of whether the investment is made
in U.s. dollars or a virtual currency.
In particular,
individuals selling investments are typically subject
to federal or state licensing requirements.

Recent SEC enforcement actions demonstrate there are serious consequences for acting as an unregistered broker, even where there are no allegations of fraud.

 Common Scenario with Risks

The broker-dealer registration issue commonly arises when a company or private investment fund raises capital from investors in a private (unregistered) securities offering using its own employees or third party “finders” to locate investors. When these individuals solicit investors on a regular basis or are specifically compensated for their efforts, they may be required to register as a broker or to be associated with a registered broker-dealer firm.

A company or individual acting as an unregistered broker-dealer is in violation of applicable registration requirements and faces possible government enforcement action, monetary penalties and investor lawsuits seeking rescission of the investment and recovery of the purchase price paid. Registering as a broker-dealer is a significant undertaking and will subject the firm to extensive regulation by the SEC, Financial Industry Regulatory Authority (FINRA) and/or state securities regulators. It is normally not a practical alternative for companies engaged in limited or infrequent capital raising activities.

Who is a Broker-Dealer?

The test for broker registration is broad and depends on the particular facts and circumstances. The principal factors the SEC considers include whether the person (1) actively solicited investors, (2) advised investors as to the merits of an investment, (3) regularly participated in securities transactions and (4) received commissions or transaction-based remuneration.

 Finders Exemption. It is generally thought that persons who do nothing more than introduce prospective investors to the issuer, do not participate in negotiating the transaction, and who receive compensation not dependent on or related to the purchase of a security are “finders,” not “brokers,” and are not required to be registered. While a few no-action letters support this position, the SEC has been reluctant to create a “finder’s exemption.”

The SEC has cautioned that persons who find investors for issuers, even in a “consultant” capacity, may need to register as a broker depending on a number of factors, including whether (1) the finder participates in the solicitation, negotiation or execution of the transaction, (2) compensation is related to the outcome or size of the transaction, (3) the finder is otherwise engaged in the business of effecting securities transactions and (4) the finder handles securities or funds of others. A “yes” answer to any of these factors indicates that registration may be required.

[Come-from-Beyond]

Start collecting the list of pumper accomplices that will be going to jail:

Good idea. Looks like noone really pays attention to your words so few guys successfully convicted should add some weight. If I were you I would start from CFB to prove that USA jurisdiction is omnipotent (it's one of your wet dreams IIRC - global domination of the US).

[UKBob]

So legally, in your (anyone and everyone!) country, is there a difference between:-

a) buying into the shares of Company X, hoping that they will double in value or
b) buying into Company X's crypto currency hoping that they will double in value?



 
  
 

[TPTB_need_war]

Start collecting the list of pumper accomplices that will be going to jail:

Good idea. Looks like noone really pays attention to your words so few guys successfully convicted should add some weight. If I were you I would start from CFB to prove that USA jurisdiction is omnipotent (it's one of your wet dreams IIRC - global domination of the US).

Great for you that you feel you can hide from modern civilization in Belarus.

Meanwhile most developers (a.k.a. ICO "issuers") and promoters (a.k.a. "broker dealers") live in the G20 and thus will be subject to SEC prosecution due to the announced cooperation of the G20 to go after financial crimes.

[Come-from-Beyond]

Great for you that you feel you can hide from modern civilization in Belarus.

Meanwhile most developers (a.k.a. ICO "issuers") and promoters (a.k.a. "broker dealers") live in the G20 and thus will be subject to SEC prosecution due to the announced cooperation of the G20 to go after financial crimes.

It's not about hiding, it's about having more rights.

PS: The USA anthem with its "the land of the free" always reminds me

[ArticMine]

...

Great for you that you feel you can hide from modern civilization in Belarus.

Meanwhile most developers (a.k.a. ICO "issuers") and promoters (a.k.a. "broker dealers") live in the G20 and thus will be subject to SEC prosecution due to the announced cooperation of the G20 to go after financial crimes.

Replace SEC with FinCEN and I will agree with you.

Edit: Many ICOs are not securities; however the fact that they are not securities does not make them legal.

[Come-from-Beyond]

@TPTB_need_war, I'm switching into more intense work mode, so I won't have time to reply to your posts. To finish the last unfinished convo: I find your posts about Europe (Belarus particularly) and superiority of USA and its laws too racist and very close to extremism. I think you should be stopped before it's too late, so if I see that this issue progresses I'll report you to your local authorities (not for punishment, but for taking you under a closer control). Your sort of mindset and intolerance can escalate into really destructive behavior. Nothing personal, take care and use your chance for the last word.

[coldmoldy]

What's up with this TPTB guy? It's like he's slowly getting crazier and crazier. What's his IQ again?

[TPTB_need_war]

@TPTB_need_war, I'm switching into more intense work mode, so I won't have time to reply to your posts. To finish the last unfinished convo: I find your posts about Europe (Belarus particularly) and superiority of USA and its laws too racist and very close to extremism. I think you should be stopped before it's too late, so if I see that this issue progresses I'll report you to your local authorities (not for punishment, but for taking you under a closer control). Your sort of mindset and intolerance can escalate into really destructive behavior. Nothing personal, take care and use your chance for the last word.

Some people don't seem to know the definition of 'racisim' and conflate it with 'nationalism' or 'patriotism'. They also seem to lack reading comprehension (at least of the English language). I wrote upthread that the G20 had pledged to coorperate to enforce each others' laws on financial crimes. Someone seems to conflate a mutual respect for each nations' laws as stating the USA is dominating the other members of the G20. If anything, it it the old world banksters from Europe and London such as the Rothschilds who are controlling the USA.

So the ethnic Russian totalitarian developer of IOTA threatens to report me to authorities to attempt to violate my free speech rights.  

Why not just inject me with some plutonium with the tip of an umbrella; would be more efficient.

I hope readers are paying attention to nefarious actors we have here in cryptoland. And to the danger of being murdered or otherwise attacked personally simply for attempting to share the facts on the law that is. And for calling out scams and the criminal mindset of a small subset of the population (apparently a large percentage of which live in countries behind the former Iron Curtain where ostensibly corruption is the norm and is apparently engrained in the culture).

[vuduchyld]

Cross-referencing and wondering why no one wants to rationally discuss this topic?

https://bitcointalk.org/index.php?topic=1218269.0

Mostly because this forum is full of teenagers and irrational people.  Hard to have a rational discussion.

[TPTB_need_war]

Great for you that you feel you can hide from modern civilization in Belarus.

Meanwhile most developers (a.k.a. ICO "issuers") and promoters (a.k.a. "broker dealers") live in the G20 and thus will be subject to SEC prosecution due to the announced cooperation of the G20 to go after financial crimes.

It's not about hiding, it's about having more rights.

PS: The USA anthem with its "the land of the free" always reminds me

So you advocate them selling investment securities in an opaque market without full disclosures and allowing non-accredited investors to buy your very risky stage speculations. But society has decided it is better to have full disclosure and to prevent non-accredited investors from speculating with their lunch money in order to have a better functioning society. Same as society has decided that prosecuting crack dealers is better for society. If you want more rights, then don't task the government with doing what we should do ethically. Otherwise there is no recourse for society other than to hand that regulatory power to the government, which as we know leads to corruption (all power corrupts absolutely).

You can't just say you want more rights, when that means injuring others, because injuring others is not a right.

It has been elaborated in other threads that premines/ICOs/instamines are the antithesis of non-maniluated, permissionless, decentralized systems.

[TPTB_need_war]

There is no concrete evidence that Eduardo DeCastro = iCEBREAKER. I've asked before to people to provide evidence, but like I said, I haven't seen anything concrete yet. Until then, it is a mere allegation.

You are the only fair and balanced Monero Dev I am aware of, so what`s your take on the "concrete evidence" regarding the accusations that Evan has scammed anyone? Do you think he should be on that list?

Those who lost funds to Mt Gox did so on their own volition, including the Mt Gox Terms of Service which I assume had the necessary legal disclaimers about culpability for theft. Does that mean the investors weren't scammed?

Those who invest in a token on their own volition, inherently expect that the market for those tokens is not manipulated by the insiders controlling the float by having a scam scheme to control > 50% of the tokens in existence. Satoshi controls maybe at most 1% of the Bitcoins that will be in existence.

Criminals find clever ways to obscure their crimes such as your Dash accomplice semantic slime quoted above, but that still doesn't make them legal. IANAL but I am reasonably certain that Evan and the unnamed insiders have broken the laws that the SEC and FinCEN are tasked to enforce.

[...]

You can't just say you want more rights, when that means injuring others, because injuring others is not a right.

It has been elaborated in other threads that premines/ICOs/instamines are the antithesis of non-maniluated, permissionless, decentralized systems.

I'm still under the weather unable to digest posts fully, but feel that the OP may need be amended to reflect both sentiments.

I just don't see how pretending to not have committed scams can be tolerated. It would be different if Evan stopped lying about intentionally doing the instamine instead of claiming it was an accident which I have explained is implausible because every lead developer will be monitoring his coin carefully on launch to see the coins are being issued at the correct rate. It doesn't take hours to make that determination. Also dEBRUYNE has provided quotes of Evan as additional evidence that he is lying.

If Evan stopped trying to obscure the fact that he intentionally set up a way to control the float and > 50% of the tokens, then we could say that investors have full disclosure and thus if they are scammed it is on their own FULLY INFORMED volition.

Until Evan makes FULL DISCLOSURE of the truth, then he is scammer. There is no other valid sentiment.

[TPTB_need_war]

I recently answered on another thread:

Anyone who bought Dash on the basis, in whole or part, of misleading statements from Evan or the others and then lost money has been scammed.

Prime among those are the ones to whom the instaminers dumped their coins during the initial pump up to 0.0267, a price which has not be reached again in two years. That not only funded the project, it likely put a long of money straight into insiders' pockets. Subsequent pumps and prices inflated by continued double-talk and spin from Evan and others have only added to their ranks.

But smooth, "We're adults therefore any lies that we accept as true (even if advertised) are the fault of our not researching enough (even if developers are actively telling us otherwise), thus scams are impossible"--said the man before being convicted of securities fraud.

[TPTB_need_war]

As I warned you, the countries will be pushed towards cooperating against financial crime:

http://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers

The globalists are destroying the nation-states on purpose and inciting the masses to clamor for a global discipline on malfeasance. I've known for a long time this would be coming. One thing you will learn about me by observing me over time is my ability to predict the future. For example was my 2011 prediction that the nations would not exit the EU and instead would double-down for more sloppy seconds.

[freshman777]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

[TPTB_need_war]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

Unfortunately the person who wrote that doesn't have the knowledge to understand. Let me explain.

I'd prefer to have no securities regulation law.  In order to not end up with such laws, then we must be able to police our own community. If we can't do that, the public will demand laws.

Laws exist because of a power vacuum. That means that the collective is powerless to stop the hurtful activity, thus someone must step into the vacuum and take control. Thus voila! Government. Laws.

We do it to ourselves because we have criminal mindsets amongst us who prefer to hurt others to get what they want, than to help others to get what they want.

[freshman777]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

Unfortunately the person who wrote that doesn't have the knowledge to understand. Let me explain.

I'd prefer to have no securities regulation law.  In order to not end up with such laws, then we must be able to police our own community. If we can't do that, the public will demand laws.

Laws exist because of a power vacuum. That means that the collective is powerless to stop the hurtful activity, thus someone must step into the vacuum and take control. Thus voila! Government. Laws.

We do it to ourselves because we have criminal mindsets amongst us who prefer to hurt others to get what they want, than to help others to get what they want.

You mean to say people from US are enlightened with the wisdom, the rest of the world are dumb? Read his post again.

[TPTB_need_war]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

Unfortunately the person who wrote that doesn't have the knowledge to understand. Let me explain.

I'd prefer to have no securities regulation law.  In order to not end up with such laws, then we must be able to police our own community. If we can't do that, the public will demand laws.

Laws exist because of a power vacuum. That means that the collective is powerless to stop the hurtful activity, thus someone must step into the vacuum and take control. Thus voila! Government. Laws.

We do it to ourselves because we have criminal mindsets amongst us who prefer to hurt others to get what they want, than to help others to get what they want.

You mean to say people from US are enlightened with the wisdom, the rest of the world are dumb? Read his post again.

That is not what I wrote. Try again to understand the point about power vacuums.

As to the point about useless laws or conflating law with morality, I will share with you a debate I am having with another Communist criminal mind:

Come on now boys. If you are so sure this is not a scam, then make your sworn disclosures about your involvement in it. Are you afraid of future SEC and FinCEN actions and thus afraid to disclosure. Hmmm.

Stop obfuscating with off topic diversionary tactics.

I am trying to rescue you idiots. But you are determined to dig own pathway to jail.

Wake up and see the light pronto for your own sake.

Thank you for your interest, if genuine. However, to quote Hillary Clinton (since you mentioned the Clintons a lot in some of your posts):

"It’s a stark fact that the United States has less than five percent of the world’s population, yet we have almost 25 percent of the world’s total prison population."

I'm in the 95%+ of the global population (=non US citizen). I'm also unaffected by the prison-mania of the USA, FinCEN, SEC etc. Not that if I were affected I would have something to worry about.

Come-from-Beyond (who is in Belarus) make a similar line of argument to me.

It seems to me that those who grew up in these (former?) Communist states developed a culture of theft, because that was the only way to game the totalitarian system. We all know that Communism is a philosophy of stealing from each other.

And now they blame that on the Americans who worked more diligently and with attention to quality and pride in one's work, than any other nation except perhaps Japan. Globalist leaders insinuate it is okay for your to steal to take back from the evil Americans who took more than their fair share. They urge you to continue the Communist paradigm of ganging up on your neighbor.

I call on American software developers to take the high ground and show the world our cultural heritage and values. Let's teach these Eastern Europeans why America kicks ass with productivity and trying to do the right thing.

Now I will surely agree with you that so many Americans have become dysfunctional Socialists and are milking the reserve currency status. And I will agree with you that American leaders have abused other nations, and in fact Antony Sutton researched and concluded that the banksters from America and Europe installed the Bolshevik revolution. I haven't studied your history enough, so I don't want to make any claim.

I will just try to urge you to please lose that Communist attitude and please work to make the world a better place. We need to not end up in an unethical clusterfuck Dark Age. And take back your right to own a gun because without that, you are nothing against totalitarianism.

The USA is fucked up and it will need to break up into separate regions where those who have shared values can congregate. There are big changes coming to world accelerating as of 2018.

I urge you to look past the tip of your nose and be part of the better future. Let's go make it. I am 51. My time to be highly productive at the top level has peaked; and I am on the tail end of my career. You are young. You make this world. Please think about what you are doing.

Edit: and Evan is an American and thus all the more I demand he not insult the reputation of American developers by operating perhaps the most scammy altcoin by market cap (although some might argue that is Ripple).

As I warned you, the countries will be pushed towards cooperating against financial crime:

http://www.theguardian.com/news/2016/apr/03/what-you-need-to-know-about-the-panama-papers

The globalists are destroying the nation-states on purpose and inciting the masses to clamor for a global discipline on malfeasance. I've known for a long time this would be coming. One thing you will learn about me by observing me over time is my ability to predict the future. For example was my 2011 prediction that the nations would not exit the EU and instead would double-down for more sloppy seconds.

For a person with such a breadth of understanding regarding global expansion of totalitarianism, why would you insist on others publicly disclosing stuff like their cryptoholdings, when, tomorrow for example, crypto could be illegal and all such posts might be admissions of possession and thus grounds for confiscation?

Cripes man, did this point completely fly over your head that you are the one who is demanding that everyone disclose everything so we can count and prove all the victims.

I am arguing it should be sufficient to just declare Evan a sleazy scammer who rips off people by designing a scam to control the float and manipulate the price and volume, as well printing press coins out of thin air masternode scheme, handing them to insiders, and dumping them on the market.

Could I ask that you please don't waste my entire day on this redundant shit.

Do you even have any cryptocurrency?

Yes Bitcoin.

Ethics are highly subjective.

That is what someone with no ethics says. Ethics are quite objective. But I don't have time to go off on that tangent with you which you can begin by unconflating morality and ethics. For example, pursuing zero-sum games (where you must take from others in order to gain) is objectively unethical when a non-zero-sum alternative(s) exist. This is why Communism is objectively unethical.

[smooth]

I don't know what any particular country does, but the idea of countries claiming jurisdiction over those doing business with their own residents, even if the business is located elsewhere is not unique to the US. It is very widespread if not nearly universal. Most countries would not stand up to the US over this not only because the US is powerful and gets away with laws like FACTA and strongarming everyone into MLATs, but just because they want the same powers for themselves. US companies have been on the receiving end here in several high profile cases and probably many smaller ones.

[iCEBREAKER]

I don't know what any particular country does, but the idea of countries claiming jurisdiction over those doing business with their own residents, even if the business is located elsewhere is not unique to the US. It is very widespread if not nearly universal. Most countries would not stand up to the US over this not only because the US is powerful and gets away with laws like FACTA and strongarming everyone into MLATs, but just because they want the same powers for themselves. US companies have been on the receiving end here in several high profile cases and probably many smaller ones.

Any nation with rudimentary securities regulation will have issues with crypto-scams offering a quasi-legal boiler-room prospectus like this one:

http://www.digitalcatallaxy.com/report2015.html

or an elevator pitch like these:

https://bitcointalk.org/index.php?topic=421615.msg14418341#msg14418341
https://www.youtube.com/watch?v=za7JxaSYfQQ

(Sucks to see Amanda jump the shark so quickly.  Her show could have done better than suffering Certain D000M as The DailyDash.  She could have been a contender.   )

[StinkyLover]

SEC sent out a warning in January 2016. Hope the pumpers are preparing for their jail time:

There is a reason why the SEC issued a warning about Crypto coins calling them scams.. 90% are !
I was doing research early this year when i stumbled onto their press release by accident (same day it was posted)
I then posted it in the Bitcoin section where everyone said it was good news AHAHHAHAHHA
It even mentioned an unnamed forum which was totally obvious they meant Bitcointalk.
Read it yourselves.. https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf (Issued Jan 4th 2016)

I get where you're coming from but that link statement doesn't tally with what you've written. That link is talking specifically about Ponzi schemes which involve an individual or group 'personally' taking money from a person or people to pay off previous investors thereby creating a false impression of investment return.

There are bitcoin and crypto-asset investment schemes that I can see that information/warning applying to, but I don't see how cyptocurrencies 'in general' fall into that definition.

Are devs personally taking money off people to pay other people who've invested previously?? That's the only definition of a Ponzi scheme. If that's not happening, then it's not a Ponzi scheme.

I agree there's scammers and thieves in this industry but the law already caters for that.

[noobtrader]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

so... why monero dev seem so obsessed with law and regulation   what would happen if law and regulation forbid anonitmity  

[TPTB_need_war]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

so... why monero dev seem so obsessed with law and regulation  what would happen if law and regulation forbid anonitmity  

Supporting, not supporting, or merely recognizing an existing specific law, should not be equated with supporting or not supporting all (existing and hypothetical) laws. Who in their sane mind would advocate having no law whatsoever.

Why do you support a law which prevents me from shooting you in the head without any repurcussions   What would happen if law and regulation would forbid you from breathing  

Society has established laws to protect itself from investment scams. We hope society will protect a right to digital transactions privacy (or at least the right to use encryption), but if society decides we must all shoot ourselves in the head, then we'll be in a Dark Age.

(I advise you don't pursue any career which involves applying logic)

[TPTB_need_war]

SEC sent out a warning in January 2016. Hope the pumpers are preparing for their jail time:

Read it yourselves.. https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf (Issued Jan 4th 2016)

I get where you're coming from but that link statement doesn't tally with what you've written. That link is talking specifically about Ponzi schemes which involve an individual or group 'personally' taking money from a person or people to pay off previous investors thereby creating a false impression of investment return.

You need to learn to read:

Look Out for Potential Scams
Using Virtual Currency

We are concerned that the rising use of virtual currencies
in the global marketplace may entice fraudsters to lure
investors into Ponzi and other schemes in which these
currencies are used to facilitate fraudulent, or simply
fabricated, investments or transactions

[smooth]

https://www.reddit.com/r/Anarcho_Capitalism/comments/4d7joq/wha_are_people_from_us_so_obsessed_with_laws/

so... why monero dev seem so obsessed with law and regulation   what would happen if law and regulation forbid anonitmity  

Which monero dev do you think is obsessed with law and regulation? If you are referring to the starter of this thread, he's not a monero dev at all. If you mean me, I've made a few (I think 3-4) comments here but I'd hardly call that obsessed. Some awareness of law and regulation is absolutely necessary to understanding the world whether you agree with them or not, as they do exist and affect how people behave.

[TPTB_need_war]

AMP tokens for vaporware

You've got about two more weeks to use that lame retort before people will start calling you a blatant liar.

No adoption and no use case is vaporware.

Any one can write some code and do a testnet demonstration and claim they have created something. GitHub is littered with code that no one uses.

We'll soon see.

IANAL so readers consult your own attorney, but my layman's understanding is they can NEVER fix the fact that they presold ILLEGAL unregistered investment securities to non-accredited USA investors. I implore you to understand the Supreme Court's Howey test. This will haunt this project until the SEC and/or FinCEN comes after them. Greg Meredith is a USA citizen. I really don't have any idea what he is thinking that he thinks he can raise money in this way and not end up in big trouble later.

If they wanted to raise funding to work on Synereo, they could have attempted a crowdfunding or to attract angel/venture private placement investment. But that would require them to have a well vetted business plan or convincing altruistic explanation. Instead they sell technobabble delusion to unwary n00bs and pumpers (same as Ethereum is doing, but at least Ethereum ran away to Switzerland so they think they can avoid USA securities law and still sell to non-accredited USA investors).

Any entity selling an ICO is (intentionally or perhaps cluelessly) corrupt. Period.

I warned you months ago. You have no one to blame but yourself, for not studying and listening more carefully.

Decentralized social networking projects are not novel. The list is littered with failures as you were told already upthread[1].

I don't hate them. I wished them good luck upthread. I am just feeding back frankly the reality.

[1] https://en.wikipedia.org/wiki/Comparison_of_software_and_protocols_for_distributed_social_networking

[StinkyLover]

SEC sent out a warning in January 2016. Hope the pumpers are preparing for their jail time:

Read it yourselves.. https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf (Issued Jan 4th 2016)

I get where you're coming from but that link statement doesn't tally with what you've written. That link is talking specifically about Ponzi schemes which involve an individual or group 'personally' taking money from a person or people to pay off previous investors thereby creating a false impression of investment return.

You need to learn to read:

Look Out for Potential Scams
Using Virtual Currency

We are concerned that the rising use of virtual currencies
in the global marketplace may entice fraudsters to lure
investors into Ponzi and other schemes in which these
currencies are used to facilitate fraudulent, or simply
fabricated, investments or transactions

Yes but you can clearly see that they are saying "and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions".

There is still nowhere that says cryptocurrencies as a whole are fraudulent. The statement is that fraudsters are being enticed to use them for fraudulent purposes. It only talks about the rising use of cryptocurrencies. It no way does it label cryptos as illegal securities or warn users (or devs) that they might be in trouble now, or in the future.

How are you interpreting the statement above to apply to any crypto in existence?

[TPTB_need_war]

Yes but you can clearly see that they are saying "and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions".

There is still nowhere that says cryptocurrencies as a whole are fraudulent. The statement is that fraudsters are being enticed to use them for fraudulent purposes. It only talks about the rising use of cryptocurrencies. It no way does it label cryptos as illegal securities or warn users (or devs) that they might be in trouble now, or in the future.

How are you interpreting the statement above to apply to any crypto in existence?

Re-read the entire analysis in this thread.

[TPTB_need_war]

3. Once the issue was recognized, the founder of the coin issued a fix within a few hours to adjust the difficulty more quickly than the algorithm included in the Litecoin code.

Appears they've just incriminated themselves, by admitting they didn't immediately halt the mining by informing the public and declaring a fork with a restart was forthcoming, but instead let the instamine run on for several hours.

4. The only two members of the development team at the time were Evan Duffield and InternetApe. InternetApe sold all his coins early on, and is no longer involved with the project. All other members of the current team joined later. InternetApe was able to accumulate 160K DASH over the first weeks of the project so that should provide an idea of the range a founding member was able to accumulate. So the launch issues and high rewards happened to everyone equally and there was no bad intention, just part of a young hobby project that later became a much more serious project.

How can Evan know that Kyle Hagan sold all his DRK unless Evan was controlling Kyle's mining equipment. Notice how Evan refused to disclose how many DRK he mined. He also doesn't disclose who Kyle sold his DRK to and for what price.

smooth are you not understanding my logic? Everything Evan is writing in that document appears to me to be incriminating. Here is another example:

6. These early mined tokens had no value at the time and many people just traded them OTC or sold them in exchanges very early on. There was no benchmark and no way to know Dash was going to grow and become a bigger project so most first day miners just sold their coins.

How can he know what the first day miners did on OTC unless he was buying all the coins that were sold or was in communication with all the first day miners.

He claiming or admitting that the first day miners were a close knit group.

smooth are you not understanding my logic? Everything Evan is writing in that document appears to me to be incriminating. Here is another example:

Did you see me disagree?

Incriminating or not, at best it is obviously all double-talk, half truths, and speculation presented as fact. That alone is enough to make any sane person want to stay the fuck away.

It is either fact that he could know what he claims to know, in which case they need to disclose all the facts they knew. For example, if they can know what all first miners did, then they must disclose the numbers.

Else it is speculation painted as fact which is a violation of proper disclosure for investment securities.

So either way, it appears to be incriminating w.r.t. securities law in the USA, but note IANAL.

The House of Cards known as XCoin, DarkCoin, DRK, Dash, Dashpay, appears to be nearing its deathstar destiny.

Please don't blame smooth, as he didn't post this here. I am the one quoting it for future SEC/FinCEN investigators and also to alert Dash investors and pumpers of the potential legal and market price implosion implications per the upthread analysis:

More deceptive and misleading statements about the instamine that Dash continues to use to scam investors even now, this time an in "Official Communication".

https://dashpay.atlassian.net/wiki/display/OC/Dash+Instamine+Issue+Clarification

Repeats many of the unsupportable or false claims mentioned in the OP from the old Darkcoin FAQ such as coins being redistributed, the nature of the distribution, and where and how large holders obtained their coins. Omits critical information about key events surrounding the instamine such as the early launch and the deliberate withholding of development plans until after the instamine was complete.

Also mischaracterizes the origin of the instamine coins as being the Litecoin difficulty adjustment algorithm which is absolutely false. Most of the "extra coins" came from the absurdly-high block rewards due to a "bug" (500 coins/block IIRC, roughly 285 times higher than now). If Dash had constant block rewards as did Litecoin (for four years), its instamine would have been very small, as Litecoin's was (in fact even smaller, since the Dash had a difficulty adjustments at 4x the frequency of Litecoin).

[TPTB_need_war]

The damage done by selling unregistered, ostensibly illegal, investment securities to non-accredited (n00b) lunch money speculators:

[...]

I warned you upthread that I don't hate you or Synereo's group, yet you were trying to make me hate you. Well you failed. I pity you, but don't have time for that either.


Edit: what is really sad is that you claim to be ideologically driven for the betterment of mankind, yet you waste precious time on nonsense when in fact I have a good chance of being the one who can help us achieve that. All because of those stupid AMPs. This is the damage that preselling ICOs does. Because you were fooled and made an error and now associate your angst/disappointed/disbelief with me.

[TPTB_need_war]

And unfortunately Indiegogo hasn't replied further and appears to be doing nothing about this. More people have been allowed to contribute to the campaign since I reported the Prohibited Perks to Indiegogo.

Indiegogo is now knowingly facilitating this investment fraud.

So many days have transpired and Indiegogo has not stopped this campaign which continues to receive new contributions which are ostensibly being offered rimbit tokens in exchange:

https://www.indiegogo.com/projects/a-better-bitcoin-will-you-wait-till-its-to-late/x/13712033#/funders

The last response I had from Rimbit was dated April 3:

Brian Sunday at 08:19
Hi Shelby,

Thank you for sharing your concern with us. At this time, the campaign is under review to ensure that it adheres to our Terms of Use (http://www.indiegogo.com/about/terms).

So what happens now? We will include the information you have provided along with all other information at our disposal in our review of the campaign. In some cases, we will contact the campaign owner to have them edit their campaign and it will remain on our platform. If the project doesn't follow our rules, we may remove the campaign. We may also restrict the campaign owner's future activities on Indiegogo.

To protect our users' privacy, we're unable to share the action we take. At Indiegogo, we take the trust and safety of our community very seriously, and we greatly appreciate your patience and understanding throughout this review process. To learn more about Indiegogo’s Trust & Safety effort, please visit: www.indiegogo.com/trust

Please note that you do not need to contact us again. Doing so would create a new ticket and prolong the process. Thank you again for taking the time to get in touch with us and for helping to keep Indiegogo a safe and secure platform.

Regards,

Brian
Trust and Safety

[TPTB_need_war]

For those who still think global cooperation isn't coming:

https://www.armstrongeconomics.com/world-news/taxes/obama-wants-worldwide-taxes/

https://www.armstrongeconomics.com/world-news/panama-papers-used-for-political-purposes/

[StinkyLover]

Yes but you can clearly see that they are saying "and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions".

There is still nowhere that says cryptocurrencies as a whole are fraudulent. The statement is that fraudsters are being enticed to use them for fraudulent purposes. It only talks about the rising use of cryptocurrencies. It no way does it label cryptos as illegal securities or warn users (or devs) that they might be in trouble now, or in the future.

How are you interpreting the statement above to apply to any crypto in existence?

Re-read the entire analysis in this thread.

I have. It's all speculation, embellishment, supposition and extrapolation. No-one has produced anything 'official from the SEC' or any other governing body that positively confirms that the issuing of a cryptocurrency is a fraudulent act in itself. Investment funds based on cryptos is another matter...

Posting a link to what someone on this site said earlier in another post is NOT an official statement. As you said, it's just personal analysis of the law. It's not an official statement from any governing body.

[TPTB_need_war]

Yes but you can clearly see that they are saying "and other schemes in which these currencies are used to facilitate fraudulent, or simply fabricated, investments or transactions".

There is still nowhere that says cryptocurrencies as a whole are fraudulent. The statement is that fraudsters are being enticed to use them for fraudulent purposes. It only talks about the rising use of cryptocurrencies. It no way does it label cryptos as illegal securities or warn users (or devs) that they might be in trouble now, or in the future.

How are you interpreting the statement above to apply to any crypto in existence?

Re-read the entire analysis in this thread.

I have. It's all speculation, embellishment, supposition and extrapolation. No-one has produced anything 'official from the SEC' or any other governing body that positively confirms that the issuing of a cryptocurrency is a fraudulent act in itself. Investment funds based on cryptos is another matter...

Posting a link to what someone on this site said earlier in another post is NOT an official statement. As you said, it's just personal analysis of the law. It's not an official statement from any governing body.

The Supreme Court was quoted. Try reading the thread again.

[TPTB_need_war]

By running all investment through a funnel which siphons the community wealth through the masternode scam, he is actually killed the network effects.

The instamine means nothing.  Not only were most of those coins sold off, and bought and sold multiple times, it really doesn't matter.

IANAL, yet appears the end game is perhaps jail time for him and perhaps all you pumpers as well who continue to spread illegal prospectus.

...with Dash currently having the upper hand due to superior technology with self governance and funding.

Liar. Illegal hype.

Taoway is that you? you're the guy that first broke the darkcoin scam are you not? Are you the same person? I heard that you are.

You are the one we should all be thankful too for bringing the outright scam to our attention. You probably helped us stop Dash becoming a MUCH larger problem.

Was he bought off to stop attacking? Attack to force Evan to sell you some cheap DRK and in exchange you agree to become a pumper. Not beyond the realm of plausibility. Only they know.

TaoOfSaatoshi deleted this information from his illegal Dash hype thread:

The Tao/Satoshi Index

A reply of yours, quoted below, was deleted by the starter of a self-moderated topic. There are no rules of self-moderation, so this deletion cannot be appealed. Do not continue posting in this topic if the topic-starter has requested that you leave.

You can create a new topic if you are unsatisfied with this one. If the topic-starter is scamming, post about it in Scam Accusations.

True index is ¹/₆₆₃ = 0.0015

If it is any consolation, Dash's coinmarketcap.com marketcap is closer to its "Adoption-adjusted Market Cap" than Ethereum's and Litecoin's are.

I thus suggest an idea for a new metric for ranking altcoins.

Sqrt(M x H)

M = Mean transactions fees paid per unit time to decentralized proof-of-work miners
H = hash rate (normalized in electricity cost per hash to SHA256).

Using M = Sent avg. per hour, H = Hashrate (normalized):

Coin |	Relative Adoption |	Ratio |	Adoption-adjusted Market Cap
1.Bitcoin	6.5×10¹²	1	$6.4 billion
2.Namecoin	8.6x10¹⁰	1/76	$85 million
3.Ethereum	6.6x10¹⁰	1/99	$65 million
4.Litecoin	1.3x10¹⁰	1/500	$13 million
5.Dash	9.8x10⁹	1/663	$10 million
6.Blackcoin	7.4x10⁸	1/8784	$0.7 million
7.Dogecoin	6.1x10⁸	1/10656	$0.6 million
8.Auroracoin	5.8x10⁶	1/1120690	$5,931

I edited the table above so readers can see the "Adoption-adjusted Market Caps".

You can see how pitiful the altcoins are.

[TPTB_need_war]

warrant canary

Thanks for teaching me that term. I'm thinking a national security gag order can also compel the party to continue to spit out the pronouncements that no legal process has been served, because the gag order supercedes due process?

I have also contemplated that sort of conspiratorial angle, because as you say it doesn't make sense that Evan so blatantly snubs his nose to the numerous regulatory laws that he appears to be violating. Then again, perhaps the authorities don't prosecute these until they reach a certain size    Or maybe he just isn't that smart potentially combined with a criminal mindset that discounts/rationalizes away risk. Or maybe we are all hallucinating and wrong. 

Also I've read from a former SEC prosecutor that the SEC doesn't always do its job, and it more or less used only for hatchet jobs on political enemies or enemies of the State's absolute power.

In another case, appears to me that Indiegogo is violating its own Terms of Service and ostensibly securities law in the case of Rimbit.

[TPTB_need_war]

The [Dash] dev hasn't f*cked off to the Bahamas to enjoy his "takings". He's taken god knows how much personal abuse, character malignment and professional attacks over everything from the launch to his coding.

Which he completely deserves for his ostensibly illegal activities, which btw may take the coin to 0 if FinCEN and/or SEC action begins against him and his accomplice pumpers here in this forum.

He is a disgrace to crypto-currency and is helping to advance the popular idea that crypto-currency is only for nefarious activities. Which is hurting all of us, even those who didn't "invest" in DRK.

Erik Voorhees barely escaped prison by returning all the money.

And you are a disgrace for claiming we are a disgrace for pointing this out.

If this forum can't do something about allowing ostensibly illegal promotion or illegal unregistered investment scams such as the cases Dash and Rimbit which are obvious, then perhaps it is time to replace this forum. I am all for freedom-of-speech, when it is legal.

And of course he hasn't disappeared because the masternode lucrative scam is ongoing. Ditto Rimbit continues to sell more 100% premined tokens on Indiegogo in violation of Indiegogo's Prohibited Perks policy even after Indiegogo acknowledged my message alerting them to this over 2 weeks ago.

WTF has this world turned into a scam paradise where no one respects rudimentary consumer protection laws any more  

Nice to know we're all in the same disgraceful boat.

Legal and illegal are extremely relative terms, depending one's geographical coordinates.

These Dash accomplice criminal mindsets promote jurisdictional gaming of common sense law, but they will fail because they are entirely (objectively) unethical:

As I had explained to AlexGR upthread, objective ethics is not playing in zero sum games when a non-zero sum game is available that expands the pie for everyone. I realize he hails from some Communist culture where they had to steal from each other, so he was taught to not have ethics.

I don't know what any particular country does, but the idea of countries claiming jurisdiction over those doing business with their own residents, even if the business is located elsewhere is not unique to the US. It is very widespread if not nearly universal. Most countries would not stand up to the US over this not only because the US is powerful and gets away with laws like FACTA and strongarming everyone into MLATs, but just because they want the same powers for themselves. US companies have been on the receiving end here in several high profile cases and probably many smaller ones.

Any nation with rudimentary securities regulation will have issues with crypto-scams offering a quasi-legal boiler-room prospectus like this one:

http://www.digitalcatallaxy.com/report2015.html

For those who still think global cooperation isn't coming:

https://www.armstrongeconomics.com/world-news/taxes/obama-wants-worldwide-taxes/

https://www.armstrongeconomics.com/world-news/panama-papers-used-for-political-purposes/

[TPTB_need_war]

The points of this thread are apparently making their way around the crypto-currency community:

The Slock.it DAO crowdsale might be cancelled? http://www.smithandcrown.com/slock-it-dao-crowdsale-to-be-unofficial-delays-expected/

I updated it on http://icocountdown.com

Speculation everyone?

Probably they made a good decision of cancelling the crowdsale to avoid legal and regulatory issues that can become very complicated in the future.

[TPTB_need_war]

Charles Hoskinson disclaims the decision of Ethereum to sell vaporware tokens and also to not blacklist USA investors! Wow!

[...]

W.r.t. to WAVES, Charles is ostensibly very wisely making sure he and his company are not associated with the ostensibly illegal selling of unregistered investment securities to USA investors:

Charles Hoskinson disclaims the decision of Ethereum to sell vaporware tokens and also to not blacklist USA investors! Wow!

[...]

I applaud Charles' statements and actions in this thread and in the quoted video.

Disclaimer: IANAL, so make sure you consult your own attorney. My statements are my personal opinions.

question to charles why dont you join

Can't you read between the lines that Charles is distancing himself and his company from the investment securities law implications of ICOs.

He is all for collaboration of the technology. So he won't "join" in the sense of being tied into a promotion of an ICO. He will be amiable with those who want to develop the technology around block chains.

His actions and the way he has stated it is very professional.

Please stop berating Charles.

Can we get some clarity why you were listed on the team page please. Also I appreciate the answers.

This is why I got so angry. There is no formal relationship. Waves should have not listed Alex as a team member. Alex nor I were consulted in this decision. Using someone's name or work to raise millions of dollars is a serious concern and should not be taken lightly.

Scorex isn't designed to be a full and secure cryptocurrency. It's a great platform for rapid experimentation, which is badly needed in academia and industry. In fact in the announcement of scorex, there was some text criticizing ICOs. It's one of the reasons I loved the project when I found it last year.

This is not a debate about open source. Not once has anyone said scorex cannot be used. It's an argument about iohk personnel being represented as employees or partners of another Venture for the purpose of raising millions of dollars. It is something that I cannot permit. I asked privately for it to stop and then had to escalate after the waves project continued to imply via proxies a relationship.

I assume it will stop now so I wish the project well and the best of luck.

[TPTB_need_war]

Putin signs Ponzi criminalization Bill: where's Sergey?

Up till now, Russia had a pretty laissez faire towards Ponzi and pyramid schemes, but a new law just introduced makes running one a criminal offence in itself for the first time.
Maybe not entirely unconnected with the disappearance of Russian Ponzi Superstar Sergey Mavrodi and the abrupt shutdown of MMMGlobal "Republic of Bitcoin", which was mainly administered out of Russia.

http://www.rapsinews.com/legislation_news/20160330/275727532.html

[Come-from-Beyond]

You forgot to quote this:

Can't you read between the lines that Charles is distancing himself and his company from the investment securities law implications of ICOs.

Man, you should stop explaining everything as an attempt to stay away of SEC ruling. Your posts are not only racist (because imply superiority of the USA) but are also plain annoying because were repeated too many times.

In this very case Charles explained his intentions pretty clear, no need to create conspiracy theories.

[TPTB_need_war]

You forgot to quote this:

Can't you read between the lines that Charles is distancing himself and his company from the investment securities law implications of ICOs.

Man, you should stop explaining everything as an attempt to stay away of SEC ruling. Your posts are not only racist (because imply superiority of the USA) but are also plain annoying because were repeated too many times.

In this very case Charles explained his intentions pretty clear, no need to create conspiracy theories.

Nice try to divert attention away from your money grabbing scams:

is the only thing missing to pump the new Waves IPO to the moon:

https://www.youtube.com/watch?v=JG_XiOdbum8#t=57s

Successful IPO launch ingredients:

1. Prominent Eastern European dev

"check"

[...]

[Come-from-Beyond]

Nice try to divert attention away from your money grabbing scams:

is the only thing missing to pump the new Waves IPO to the moon:

https://www.youtube.com/watch?v=JG_XiOdbum8#t=57s

Successful IPO launch ingredients:

1. Prominent Eastern European dev

"check"

[...]

To make it clear:

You didn't have counter-arguments so you posted another racist post, right?

PS: BTW, why "your"? You think that I'm involved in Waves or it's just all that you can do - completely made-up ad hominems?

[TPTB_need_war]

You didn't have counter-arguments so you posted another racist post, right?

We already had this discussion in the past. Cultures which harbor people who disrespect G20 norms on investment securities law are harboring scammers in my view and also apparently in the opinion of the person I quoted. This has nothing to do with race.

Keep building your strawman legal case.  

You are on Ignore and are not coming off of it ever again. So don't expect replies.

[Come-from-Beyond]

You didn't have counter-arguments so you posted another racist post, right?

We already had this discussion in the past. Cultures which harbor people who disrespect G20 norms on investment securities law are harboring scammers in my view and also apparently in the opinion of the person I quoted. This has nothing to do with race.

Keep building your strawman legal case.  

You are on Ignore and are not coming off of it ever again. So don't expect replies.

Well, guys, nothing to see here anymore. It's a clinical case, poor TPTB has gone into the total denial.

[Come-from-Beyond]

Their (ICO promotion) signatures always reveal their hatred for the truth I speak about selling ostensibly illegal unregistered investment securities to US investors.

Suppose they don't like that truth. How sad they wouldn't be able to steal money if they obeyed the law. 

The laws you refer to were created to protect interests of banksters, not of ordinary people. We all are 18+ here and decide ourselves what to do with our money. Go and post on Wall Street forums, people like you (who want to be a submissive of USA govt) are not welcome here.

PS: Could anyone quote my post, please? The guy doesn't like when I disturb him in his delusion world, but the message is intended to open his eyes and bring him back to the reality, it's important for him (though he won't admit that even to himself).

[TPTB_need_war]

Just curious, and not looking to get into a long-running discussion over this, but if Waves is domiciled in Europe somewhere isn't it really the responsibility of US investors to obey US laws, not some foreign organization?

IANAL, but apparently US law goes after the issuers if they market them to non-accredited US investors. There may be details and exceptions. There is an entire thread on this topic.

Secondly, they are selling tokens, not shares in a corporation. How is what they're doing different then selling any other token (postage stamps, old coins) or commodity that goes up and down in value?

That linked thread explains the Supreme Court Howey test. Key criteria is the n00b (non-accredited) investors are relying on the future actions of issuer for the expectations of profits.

[TPTB_need_war]

Seriously though, is there any reason for me to invest in Dash, given the evidence? (genuine question)

Because it might go up in value?

If you are looking for long term success, no, there is not really a basis to expect that, and the disreputable background documented here only makes that less likely.

If you are looking for short term swings, sure, go for it if your research supports it and you can afford the risk.

Be careful if you are playing big though. The liquidity in Dash is quite poor, both relative to the market cap and in absolute terms. Most likely because the vast majority of the coin supply doesn't ever hit the market, it is HODLed by instaminers and early adopters who have it locked up in masternodes.

For small-size trading where you try to time the market and don't need to worry much about liquidity, it can be as good as anything else.

And also given the level of insider control alleged, we don't know if the Dash liquidity is faked. So actual liquidity may be even worse than advertised.

Every day you have hanging over your investment the extra risk that FinCEN, State of Arizona, or the SEC could announce an investigation.

[TPTB_need_war]

I was thinking synereo was possibly meant

Same answer though. I don't even really know what that is, beyond some vague thing about social media. No idea how it was launched, what it does, etc. Never looked at it.

A competing social network for maskcoin or jambox or w/e hes calling it now. Hes trying to imply that you and Shelby intentionally gang on together on things maybe?

I dont know, but it seems like you broke the fella so i guess we probably wont know

I've read most of the 50+ page Synereo white paper, expended several hours viewing some of their YouTube Hangouts, done some limited discussion with their founding developer (username here Elokane), and posted in every recent Synereo thread in Altcoin Discussion.

Synereo was launched as a vaporware ICO and the math whiz on the project is Greg Meredith who is into process calculus research and was one of key persons apparently on Microsoft's BizTalk design. Greg is into using Scala and also is collaborating on the math modeling of Ethereum's upcoming, promised Casper design (which btw several of us, excluding smooth, have criticized in the Ethereum Paradox thread for its fundamental insoluble flaws).

I have pointed out that there are numerous P2P (aka distributed) social networking projects, so the idea of Synereo being the first and able to sweep the world, is very slim, especially they have no compelling features afaics. Thus I have criticized them for preselling tokens ("AMPS") with no adoption and on hype. Their major claim as an innovative feature is an "Attention Model" which is composed of reputation ("Reo") and a counter-vailing force of being able to pay to override reputation with the AMPS tokens. In other words, they aim to make the content that the users share more relevant. I had pointed out that the Reo needs to be fine-grained on for example #hashtags, and Elokane indicated that although that is not in the white paper they are implementing something like that, yet there is no holistic public specification afaik. They are claiming to be very close to beta, but I've pointed out that doesn't mean they are any where near adoption. I have also pointed out that Facebook users don't seem to have major complaints about the relevance of shared content on feeds, thus I doubt anyone will adopt Synereo (because their friends won't be there and much less content sharing and other chicken and egg dilemmas).

Also I have pointed out that the economics of advertising is the most someone could expect to earn by being paid to share (the AMPs model) is perhaps about $1 (in developing world) to $10 (first-world) per day and probably not that much. It simply isn't worth anyone's time. People don't join social networks to be paid some palty income. They join for other more important reasons. Thus I've argued the economic model for the AMPS is fundamentally flawed.

Thus I have argued they are preselling shit which no market.

Also I don't really understand the process calculus well enough to know if it is technobabble bullshit or not, but it sure looks like it to me. It looks like ivory tower shit that has no real implications in the real world. What did BizTalk do that was relevant? I did a Google search and it seems basically no one used it? Excuse me for being skeptical but the selling of ICOs is becoming too lucrative and attractive for every Joe who has some technobabble to make n00bs drool.

Smooth is not involved in my JAMBOX project at all. I occasionally trade ideas with him about technology. My JAMBOX project will when it is crowdsourced (not for tokens just for Tshirts!) will explain that it targets compelling features and economics. I have not yet announced that, because for one thing is that at the moment I am working on potentially creating a new programming language based on top of Rust, or perhaps contributing to Rust. Because JAMBOX is based on the concept of empowering mobile apps, and so I need to be sure the language we are using is the best in severals ways one of which is JIT compilation.

I don't hate Synereo's people. I just wish they hadn't done a vaporware ICO, both for the legal reasons of selling unregistered investment securities to non-accredited USA investors apparently in violation of securities law as provided for by the Supreme Court's Howey test and simply because it is the antithesis of the objective ethics (i.e. no zero-sum games) of meritocratic software development to sell vaporware.

[TPTB_need_war]

Until I receive a formal apology from sasha in this thread for calling me delusional and then telling people to Google my history to see how I'm a "bad actor", there is no possibility of collaboration.

My company and its partners will not work with projects or people who personally attack our personnel or management.

Charles I did this because I couldn't really understand your behavior and what you actually wanted. It was in the heat of the moment and I apologize for this.  I have to mention that I know Alex from NXT community since at least a couple years, we've met at a conference, I've been following Scorex and his articles closely at least since October or November last year. It was a very obvious choice for me to build on scorex, since I liked the approach and it would obviously speed up the development. Of course Scorex is not production-ready but no one was going to put it into production immediately.

I know Alex as a member of NXT community and NXT developer, not as an IOHK employee. I can somehow understand your position now but you should also understand mine. Crypto is about cooperation, and I really expect people to cooperate, especially when they seem interested, like you did. So these developments were unexpected for me,  and I made these remarks.   This situation does not do any good to either party.  Please let's finish this and move on to building products.

Actions speak louder than words. Have you removed the misleading statements from your website and inserted a disclaimer that your interactions on the open source Scorex do not constitute an endorsement, commitment, nor assistance from IOHK?

I think you don't understand well the predicament Charles is in, considering that he is running a global corporation and is ostensibly a USA citizen. He can't at any costs be later claimed to have contributed to the promotion of illegal investment securities to non-accredited USA investors (and regulatory issues in other jurisdictions). Although he won't come right out and say this, you need to respect and understand that this issue is most definitely lurking (unless Charles specifically states here that is not an issue for him). He is being diplomatic but it is up to you to have a brain and read between the lines so there won't be a misunderstanding. This is not a small matter. Jail time is potentially involved.

Disclaimer: IANAL so consult your own. And I have had no discussions with Charles on this matter, nor on legal issues, nor any private communication with Charles since 2014 (before he formed Ethereum) afair.

[noobtrader]

 did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

[TPTB_need_war]

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

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.

[noobtrader]

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

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.

OMG... the answer resemble exactly the title of this thread  sweep under the rug that monero has infinite supply

https://www.reddit.com/r/Monero/comments/3z527f/does_monero_have_a_maximum_cap_like_bitcoin_21/

[–]Ant-n 8 points 3 months ago
Monero is a bit different that bitcoin about money supply.
Once the total number of moneroj will reach 18.3 million then money supply will stop decreasing and stay at a constant rate of 0.3 Monero per minute.
This is meant to provide incentive to secure the blockchain even after the 18.3 million coins will be distributed.
Note that it's a constant amount so it will be about 1% the first year and it will reduce every year but never reach 0.
permalink

[TPTB_need_war]

I've started reading your post (the first page), and the related one with the votes.

I think I understand what you mean by illegal, correct me if im wrong,
You say that ICO's can be illegal if their tokens are ecosystem related or not, and if their buying price is significant or not.
actually I voted for option 4, stating its illegal only if its a significant cost without use in the coin's ecosystem.

But since this entire market is still unregulated, and maybe it cant be.. yet.
So if there's no law about it. its neither legal nor illegal.

Thanks and have a nice weekend btw

Thanks agreed happy we cooled it down. Same to you.

Your understanding appears to be entirely off in an incorrect direction. It doesn't have anything to do with the coin's ecosystem afaics. Rather it all hinges on whether the n00b investors are basing their expectations of future profit on the future actions of a centralized entity (i.e. the issuers of the ICO and the developers). That is what 'security' means, i.e the centralized entity is 'securing' your future profit.

Note I originally started that linked discussion thinking that one could do an ICO as long as they did not use that raised money in the enterprise of making the project ongoing and if they gave up managerial control. 2112 was more knowledgeable about the law and was steering me to the Howey test so I could learn that I was incorrect.

So I actually started out ignorant. As I studied the issue more in depth, I realized that just about any ICO sold to "unsophisticated, non-accredited" (<-- legal terms with definitions) USA investors is ostensibly illegal and the issuers of the ICO (and potentially also the accomplice promoters) are subject to SEC action even if they are foreign entities.

The test that is applied to determine whether an investment vehicle is a regulated investment security under USA law, is known as the Supreme Court's Howey test.

In the thread I linked for you, the requirements of the test are discussed in great detail. I suggest reading the entire thread so you don't miss any of the nuanced points.

ICO is not illegal, it's just crowdfunding. If you do some projections about future profits this is illegal.
Actually when you do ICO you're selling a product - token in a value transfer system.

That is sort of what I originally thought, but then I realized I was wrong.

The Supreme Court has said it will look past all obfuscations to the economic reality of whether the n00b investors were basing their expectations of future profit on the future actions of the centralized party issuing the tokens and developing the enterprise which the investors are investing in.

Realize I am doing you a big favor. Cancel the ICO immediately and keep yourself out of trouble. Stay focused on being a developer and not involve yourself in this legal tarpit.

But isnt the fact that its all traded for BTC, not standard fiat, changes the entire picture?
Since bitcoin is not recognized as a currency in the usa (and europe..)
No banks or private institutions are involved in the invesments' exchanges.

fiat -> btc -> ico token - process, solves this issue imo.
if it was a credit card / wire transfer, this would be an issue obviously.

And I'll read the rest of the thread later on, it certainly got my interest

Again the Supreme Court decisions have more than once emphasized that they will look past obfuscating circumstances and make the determination based on the economic reality. So no, BTC's classification by any one has nothing to do with the fact that BTC can transfer value. The term 'value' is used in the Howey test, not only 'money'.

Disclaimer: IANAL, so please consult your own.

I don't hate Synereo's people. I just wish they hadn't done a vaporware ICO, both for the legal reasons of selling unregistered investment securities to non-accredited USA investors apparently in violation of securities law as provided for by the Supreme Court's Howey test and simply because it is the antithesis of the objective ethics (i.e. no zero-sum games) of meritocratic software development to sell vaporware.

That`s so nice of you not to hate them. What I like about the vaporware AMPs is that no one has to buy them and at the same time people like you have no possibility to hinder me to do so.
I can buy it as freely as I can ignore your T-Shirts. Freedom is awesome.

Well originally that was my thought too given I am a minanarchist. I was very defiant of 2112's attempt to help me and ridiculed his attempt to teach me that I was incorrect. Today I was reminded to PM him a "mea culpa".

Because the reality is that USA society (at least and probably simiilarly in other jurisdictions) has decided that snakeoil salesmen (i.e. hypesters and pumpers) have too much leverage over "unsophisticated, non-accredited" USA investors, and thus has adjudicated that the selling (and ostensibly promoting) of ICOs to USA n00bs (residents or expat citizens) even when promulgated by foreign entities. I understand a prison sentence is a possibility.

Meaning it is not freedom to allow murders and rapists. It is also not freedom to allow hypesters to prey on the ignorance of n00bs, or at least that is what society has decided. If the law changes, then we can talk about the new reality. Until then, I can't help create/code/develop freedom from prison. I suggest you go read the appropriate thread from start to finish:

https://bitcointalk.org/index.php?topic=1218399.msg14546242#msg14546242

[smooth]

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

Yes and you can verify it was always there in archive.org. Off topic here, please continue on a Monero thread if you have other questions.

[TPTB_need_war]

I am told to stop trying to inform investors and altcoin developers about the legal implications and instead exclusively expend my time on coding. Hey it isn't bad advice on that point, but I think it was also very necessary for me to understand this thread for my own plans and to the extent I can share it with others, I think that has been a positive action on my part:

So the Synereo team is what exactly? Snakeoil Salesmen? Hypester? Pumpers?

Are you alleging that they are? What are the legal definitions of those terms?

I was talking about the general legal matter and informally summarizing my IANAL understanding of the securities law and the purpose for the existence of the law.

Do I think Synereo's ICO violated the law? Yes probably in my IANAL personal opinion. But that is just my opinion and I am free to express my opinion on a forum that exists to share opinions on matters such as these.

And what has the "US Society" "decided" about libel?

Why don't you explain precisely by citing the case law the relevance of your question. It appears to be irrelevant to what I wrote in the prior post and appears to be an attempt to scare me into not expressing my opinions.

Oh and how exactly does one compare an ICO to murder and rape?

On the abstraction notion of freedom. Society doesn't think we should be free to murder and rape. Society has also decided we should not be free to issue unregistered investment securities to "unsophisticated, non-accredited" USA investors. That is the law. Go complain to society if you disagree. It is not my opinion that matters.

I am confused

Obviously.

, because at the ICO you can say "no" and not be harmed, while the point in murder and rape is that you can`t.

I didn't make the law. Society did. Society ostensibly feels that you can purchase a gun to defend yourself if you don't want to be murdered or raped. And society ostensibly feels that n00bs lack the information to make informed investment decisions and are easily suckered into being victims and thus in effect are actually psychologically powerless because they were salivating over getting rich quickly and lost their objectivity.

BTW, for the records, I am a Synereo ICO "victim" myself. Must be stockholm syndrome, that I feel fine so far

The initial pump of Synereo was ostensibly very lucrative for the ICO investors. I am not surprised you are not crying. You are only angry now because punchbowl might be taken away.

and I would even if Synereo turned out to be a total failure, because...well, that`s the risk one takes when investing and I could not find a single hint a fraudulent behavior by the team so far.

Thanks for being an example how n00bs are fooled. You didn't even conceive of the fact that selling an illegal security is already a fraud. And also you didn't know the facts I have been explaining about how slim the chances of Synereo's adoption really are. You were only fed the hype "Attention Model" will revolutionize...

I am no native english speaker, so I am in no way able to compete with your rhetorical skills, it`s just that I can`t stand unfairness and libel.

Then you aren't going to respect USA securities law. I have noticed this that so many non-USA citizens here think they can give a middle finger to the SEC.

You will as usual have the last (many many) words, but maybe you should spend more time proving the world what a genius you are with a real finished project/product, instead of spending your time pretending to protect people from what your competition does (and to call you a "competitor" is actually pretty generous, as you haven`t delivered ANYTHING as far as I can tell).

Competition? How is selling ICO vaporware competition? Is the Dash scam competition? Is the Bitshares scam competition? I already showed the statistics that these altcoins have no adoption (not even 1/1000th of Bitcoin's measily adoption).

This is all mining the speculators. That is all it is. And you are fooled.

[Macno]

You are not being told to do anything, at least not by me, as you insinuate. It`s just an advice I very well know you are not going to take.
As for "scaring people etc": that`s what YOU keep doing by alleging "scam" and SEC prosecution all over the place.
GO CALL THE COPS if what you say is true! Go to the SEC! Isn`t it your duty after all? You are soooo worried about the poor "n00bs" here, so please, go the the SEC/CIA/NSA/US Army and please protect the shit out of everybody!

[TPTB_need_war]

You are not being told to do anything, at least not by me, as you insinuate. It`s just an advice I very well know you are not going to take.

There are multiple definitions of the word 'told'. It doesn't always mean 'commanded'. It can just be the past tense of 'tell' or 'inform', which was my intended meaning.

Why would you think I would not take it when I already stated it was good advice.

As for "scaring people etc": that`s what YOU keep doing by alleging "scam" and SEC prosecution all over the place.

Correct. I am trying to stop the scams. Is that bad? I am also helping the ICO issuers minimize their future problems by making sure investors were informed and thus "sophisticated". I am actually helping to reduce their potential future liability, because they can argue I was informing all the n00bs. Also by reducing the popularity of their ICOs, that is less money involved and so I presume less likely the SEC will bother.

So you tried to scare me with libel because you don't want the illegal scams to stop. Careful. Be careful what you are promoting.

GO CALL THE COPS if what you say is true! Go to the SEC! Isn`t it your duty after all? You are soooo worried about the poor "n00bs" here, so please, go the the SEC/CIA/NSA/US Army and please protect the shit out of everybody!

The SEC has its own determination of when they will crack down. I already quoted their January 2016 warning. They are aware already. I have postulated that they are first letting as many people incriminate themselves first, so as to maximize the dramatic effect when they do crackdown and snare as many criminally minded persons as they can. Afaik, the SEC usually doesn't get involved until the monetary sums are large.

[Macno]

You are not being told to do anything, at least not by me, as you insinuate. It`s just an advice I very well know you are not going to take.
As for "scaring people etc": that`s what YOU keep doing by alleging "scam" and SEC prosecution all over the place.
GO CALL THE COPS if what you say is true! Go to the SEC! Isn`t it your duty after all? You are soooo worried about the poor "n00bs" here, so please, go the the SEC/CIA/NSA/US Army and please protect the shit out of everybody!

He won't, because he can't, our little friend here can't afford an interaction with said agencies..........

But between you and I, let's let him continue to the be the BIG MAN on bitcointalk.

He is at least our little muse, a DASH court jester if you will.  

Well, in that case he was kindly protecting me from another alleged scam (Synereo/AMP), but yes, he is also protecting me in the DASH case.
It`s just that I am appaled by his hypocrisy. I would not waste my time on internet forums if I was witnessing alleged crimes comparable to rape and murder (his words) but go straight to the authorities.

[TPTB_need_war]

The problem here appears to be incompatible cultures.

Wow! What a politically correct post! No more "USA is superior and all Russians are crooks" vibe? It seems my words have penetrated that wall of insanity in your head.

Yeah
I really wanted to reply to this too. But, I won't post in this thread, before Charles and Alex do

A difference in culture doesn't necessarily imply someone is a crook. What I have observed thus far since I got into crypto-currency (which has been my first exposure to Russians and Eastern Europeans), many of you on this forum appear to have a different system of values than we typically do in the USA and not just about investments. Someone even said your governments had a law against everything, so they learned that laws are made to be broken. Whereas, Americans (perhaps excluding inner city poverty regions) are generally under the impression that a lawful society is a more just and well-functioning society. I am not claiming that ideology is positive, because in fact the USA imprisons more people per capita than any nation on earth and many ostensibly incorrectly imprisoned. And I even know that much business law is abused by the powers-that-be. Nevertheless, I also don't like our software development industry to be dragged into the mud of fly-by-night promotional scams.

The defensive way you reacted to my speculation is I think quite telling. You accuse me when it is both of you who are selling, marketing, promoting, or defending the selling of ICOs to USA n00bs in defiance of our securities laws. I didn't make that decision for you. It might just be a statistical fluke (small sample size) that we have a high correlation between developers from that Communist culture involved with public ICOs which haven't blacklisted USA n00bs (which our law appears to require).

I'd respect you both much more if you were out there creating great software, raising money from private placement to launch profitable ventures, then selling stocks through the legal venues such as Seedr.

Or I'd respect you both for doing pure open source contribution not for profit, if that is your preference.

But I don't respect the marriage of software development with Pink Sheet stock speculation. Software development isn't fly-by-night gold and silver mining companies and other crap listed on the Pink Sheets. And those listed on the Pink Sheets do at least abide by our securities laws.

When Charles says you don't yet have the governance structure set up, I presume he is alluding to the fact that you ostensibly don't even have an attorney advising you properly. And I don't blame him for not wanting his reputation to be associated with entirely unregulated selling of "slices of the next big thing" to unsophisticated investors who can't discern technological fact from hype.

I don't personally have anything against Russian culture (I'm even a bit curious about it). But if I continue to see that people from (former) Communist countries don't have basic common sense about how to operate in the international business arena on any scale other than some fly-by-night promotions, then I will eventually start to be forewarned about being cautious.

[TPTB_need_war]

It`s just that I am appaled by his hypocrisy. I would not waste my time on internet forums if I was witnessing alleged crimes comparable to rape and murder (his words) but go straight to the authorities.

You said it is all about freedom. I retorted you by pointing out that society decides which actions are free to do and not to do. I am being consistent in my logic. You are being arbitrary. You want to obey, respect, and enforce society's laws against rape and murder, yet you want to disobey, disrespect, and avoid enforcement of society's laws against selling hyped investment securities to n00bs. Sometimes civil disobedience is justified. But how can you justify fooling n00bs for your own profit in a zero-sum game. There is no idealistic outcome from that. It is a race to the gutter.

If you continue to be disingenuous in your argumentation, I will just ignore you as impossible to have a rational debate with. Ceti can guide you with irrational and disingenuous logic.

Edit: I caught him being disingenuous again:

It is easy to say "the information is out there" but it isn't always easy to find everything especially for people (such as Tone and Trace) who are involved with a lot of different activities and have limited time to spend researching any particular coin.

That`s why I had suggested you compile a document with all the info you consider vital to be put on Dash.org. I would support that. I am all in favor of transparency and imho the DASH team has nothing to hide.
Of course (audiatur est altera pars), the DASH team would be allowed to a response.
In case you kept bitching about the instamine after that, it would help the poor new investors in determing what your agenda actually is.
Who knows, maybe you and your buddies are the ones they should be warned about?

That information has already been compiled:

https://bitcointalk.org/index.php?topic=999886.0

smooth don't fall for this disingenuous game. This is a well known obfuscation tactic. The opposer will demand you do more work to repeat the work you already did, and will demand this over and over again even after you repeat it N times, until you get tired and give up.

[Macno]

It`s just that I am appaled by his hypocrisy. I would not waste my time on internet forums if I was witnessing alleged crimes comparable to rape and murder (his words) but go straight to the authorities.

You said it is all about freedom. I retorted you by pointing out that society decides which actions are free to do and not to do. I am being consistent in my logic. You are being arbitrary. You want to obey, respect, and enforce society's laws against rape and murder, yet you want to disobey, disrespect, and avoid enforcement of society's laws against selling hyped investment securities to n00bs.

If you continue to be disingenuous in your argumentation, I will just ignore you as impossible to have a rational debate with. Ceti can guide you with irrational and disingenuous logic.

I just want you to be consistent and go the authorities if you think you are witnessing such tremendous crimes.
In my (german) society there is the concept of "unterlassene Hilfeleistung" which google translates as  "failure to render assistance", which is a crime in itself where I come from. To me you are guilty of either that or of hypocrisy.

[TPTB_need_war]

I just want you to be consistent and go the authorities if you think you are witnessing such tremendous crimes.
In my (german) society there is the concept of "unterlassene Hilfeleistung" which google translates as  "failure to render assistance", which is a crime in itself where I come from. To me you are guilty of either that or of hypocrisy.

I am rendering assistance with all my research here.

You have no right to compel me to force the SEC to do something, which I don't have the power to force them to do. That is entirely disingenuous. You are playing a game here. Re-read my prior post; I added another example of your disingenuous tactics.

In german law there is the concept of "unterlassene Hilfeleistung", "failure to render assistance".  You areI am culpable of not doing everything in yourmy power to save those poor new investors, which makes youme a culprit/co-conspirator as well. Up to 5 years in prison in Germany, don`t take that lightly ("Nichtanzeige geplanter Straftaten"; § 138 of german penal law).

ftfy

I don't live in Germany. We have no such law in the USA. Do you enjoy incriminating yourself.

In german law there is the concept of "unterlassene Hilfeleistung", "failure to render assistance".  You areI am culpable of not doing everything in yourmy power to save those poor new investors, which makes youme a culprit/co-conspirator as well. Up to 5 years in prison in Germany, don`t take that lightly ("Nichtanzeige geplanter Straftaten"; § 138 of german penal law).

ftfy

I don't live in Germany. We have no such law in the USA. Do you enjoy incriminating yourself.

Poor USA. How can the "society" turn a blind eye on the vicious people witnessing severe crimes without helping?
I can`t see the crimes, so I have no reason to go to the police and I am confident that a judge would believe me.
But you and smooth are sooooooooooooooooooooooooo sure about ongoing crimes you are witnessing for 2 years and you STILL do nothing to stop it. GO. TO. THE. POLICE. Fast.

Quoted for your government's future investigations. In addition to your boastful defiance of USA law and I suspect international treaties of the G20 to mutually enforce each other's laws, you may have an even bigger problem. Apparently you may be promoting and condoning what may be illegal actions under German securities law:

http://uk.practicallaw.com/1-501-2097#a165703 (pay attention to the "open market" case)
http://uk.practicallaw.com/1-501-2097#a376738

[TPTB_need_war]

ICO is not illegal, it's just crowdfunding. If you do some projections about future profits this is illegal.
Actually when you do ICO you're selling a product - token in a value transfer system.

That is sort of what I originally thought, but then I realized I was wrong.

The Supreme Court has said it will look past all obfuscations to the economic reality of whether the n00b investors were basing their expectations of future profit on the future actions of the centralized party issuing the tokens and developing the enterprise which the investors are investing in.

Realize I am doing you a big favor. Cancel the ICO immediately and keep yourself out of trouble. Stay focused on being a developer and not involve yourself in this legal tarpit.

Where is the "value transfer system"? I see only tokens sold to speculators hoping to make a profit on the rise in exchange price on a few centralized exchanges populated only by speculators. Afaik, the Waves product isn't even ready to ship to actual users of a "value transfer system", how could it be a value transfer system.

The tokens were not distributed for use as a currency. There is no significant use of the tokens for exchanging value for any purpose other than speculation on the price of the tokens.

One way to make it even less dubious, is don't sell the tokens to the adopters of the "value transfer system" so that they don't need to be speculators to justify obtaining the tokens.

You're a troll and you know it

How so?

Hey I am genuinely trying to launch a "value transfer system". So I think I know the difference between selling tokens versus creating a "value transfer system". What is your rationalization that what you are pre-selling is primarily a currency and not a primarily a speculation  

I mean come on, just give me one reasonable argument. Isn't it obvious that you are no where near having a currency, but do have many pumpers running around this forum with a Waves banner on their signature.

You can sell an ICO legally I presume. One thing you could have done is get a lawyer and have him advise, e.g. blacklisting USA non-accredited investors.

[TPTB_need_war]

wait a sec shelby. shouldnt this be the job of the US non-accredited investors to decide what they can or cant do.

Originally I supported this perspective, which also seems to be supported by the actual history of the blueksky laws in the USA:

http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2679&context=fss_papers

What changed my mind is the altcoin arena has turned totally away from any sane decentralized designs to the proof-of-shit/stake designs which are really just MLM investment scams in disguise that prey on the gambling instinct in humans.

It is regressing the progress of our technologies, not advancing them.


More abstractly, you are essentially arguing that every member of society is an island and can protect him/herself from every threat alone.

Shouldn't it be the job of every citizen of a nation to defend themselves against a nuclear bomb using their handgun.

The reason the USA protects the little man from his own gambling instinct is because it is known to be an impoverishing addiction that leads to deleterious outcomes for society. Whether it didn't entirely come about for that reason, the public seems to support the regulation of gambling.

My more abstract generative essence statement on regulation is as follows. Any market which is not self-regulating, i.e. which is dysfunctional and not behaving as a free market, will end up regulated by special interests. My definition of "free market" is decentralized market. So the reason the altcoin market is not decentralized and is dysfunctional, is because of asymmetric information. The speculators entirely lack the ability to understand the technobabble. They entirely rely on a few "experts" to guide them. And thus the market does not function. It regresses.

You need a Nash equilibrium for security aspects, but you also need one for adoption.  If someone premines the entire coin and has the market cornered by design on day one, there's zero incentive for anyone to adopt it when the issuer and his cronies have such advantage over everyone else.  You're just replicating central banking except the value of central banking units is derived through coercion, and without it, it would have no value.

Which is precisely why it can't become a "value transfer system" where that is supposed to mean a currency and unit-of-exchange, and not a transfer of value from gamblers and fools to snakeoiltechnocoolbabble salesmen.

[Come-from-Beyond]

wait a sec shelby. shouldnt this be the job of the US non-accredited investors to decide what they can or cant do.

Originally I supported this perspective, which also seems to be supported by the actual history of the blueksky laws in the USA:

http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2679&context=fss_papers

What changed my mind is the altcoin arena has turned totally away from any sane decentralized designs to the proof-of-shit/stake designs which are really just MLM investment scams in disguise that prey on the gambling instinct in humans.

It is regressing the progress of our technologies, not advancing them.


More abstractly, you are essentially arguing that every member of society is an island and can protect him/herself from every threat alone.

Shouldn't it be the job of every citizen of a nation to defend themselves against a nuclear bomb using their handgun.

The reason the USA protects the little man from his own gambling instinct is because it is known to be an impoverishing addiction that leads to deleterious outcomes for society. Whether it didn't entirely come about for that reason, the public seems to support the regulation of gambling.

My more abstract generative essence statement on regulation is as follows. Any market which is not self-regulating, i.e. which is dysfunctional and not behaving as a free market, will end up regulated by special interests. My definition of "free market" is decentralized market. So the reason the altcoin market is not decentralized and is dysfunctional, is because of asymmetric information. The speculators entirely lack the ability to understand the technobabble. They entirely rely on a few "experts" to guide them. And thus the market does not function. It regresses.

What a pile of bull shit. Laws related to finances have only one real purpose - to help banksters to keep the current status quo. Of course, lawmakers pretend they work hard to protect us against terrorists/pedophiles/immigrants. There are only few people here who believes them.

[TPTB_need_war]

wait a sec shelby. shouldnt this be the job of the US non-accredited investors to decide what they can or cant do.

Originally I supported this perspective, which also seems to be supported by the actual history of the blueksky laws in the USA:

http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2679&context=fss_papers

What changed my mind is the altcoin arena has turned totally away from any sane decentralized designs to the proof-of-shit/stake designs which are really just MLM investment scams in disguise that prey on the gambling instinct in humans.

It is regressing the progress of our technologies, not advancing them.


More abstractly, you are essentially arguing that every member of society is an island and can protect him/herself from every threat alone.

Shouldn't it be the job of every citizen of a nation to defend themselves against a nuclear bomb using their handgun.

The reason the USA protects the little man from his own gambling instinct is because it is known to be an impoverishing addiction that leads to deleterious outcomes for society. Whether it didn't entirely come about for that reason, the public seems to support the regulation of gambling.

My more abstract generative essence statement on regulation is as follows. Any market which is not self-regulating, i.e. which is dysfunctional and not behaving as a free market, will end up regulated by special interests. My definition of "free market" is decentralized market. So the reason the altcoin market is not decentralized and is dysfunctional, is because of asymmetric information. The speculators entirely lack the ability to understand the technobabble. They entirely rely on a few "experts" to guide them. And thus the market does not function. It regresses.

What a pile of bull shit. Laws related to finances have only one real purpose - to help banksters to keep the current status quo. Of course, lawmakers pretend they work hard to protect us against terrorists/pedophiles/immigrants. There are only few people here who believes them.

You don't even comprehend what I wrote. It is far above your abstraction capacity.

When markets don't have decentralization (which in this case is centralized due to asymmetric information which is why only accredited or sophisticated investors are allowed because they have more motivation to become informed and have proven they will do their DD), then those effectively centralized markets WILL BE INEVITABLY regulated/captured by special interests. It is an inevitable outcome of the lack of a free market due to centralization (in this case asymmetry of information is a form of centralization of the market). Thus the market can't anneal to productive investment, due to the lack of decentralized decision making (e.g. all the fools rely on the information from a few "experts" who manipulate them).

And you forgot to point out that you are one of the special interests who are milking the fools and just as culpable as the banksters you try to deflect their attention to.

You are pretending you are the good car salesman and the banksters are the bad car salesmen. Nice one!  

You’ll be greeted by a friendly sales person—and if he’s any good at what he does, he’s also personable and disarming.

What follows is a classic episode of the good-cop-bad-cop game with your salesman pretending to be arguing for you. I say pretending because the manager and your salesman work for the same organization, are both on commission, and both stand to benefit from you paying a higher price. They’re on the same side, get it?

This sad comedy plays out several times during the negotiations with the salesman conducting a physically impressive begging routine, while his manager makes exaggerated side to side motions with his face as if to say “definitely not”—all playing out in a corner office with glass walls so you can see the drama unfold inside. Finally, after your salesman has done “all he can”, the manager makes a quick guest appearance to deliver the let-me-give-you-our-bottom-line speech.

[Come-from-Beyond]

You don't even comprehend what I wrote.

Didn't read the rest, not interested in new excuses. Put me back on ignore, please.

[TPTB_need_war]

Those giving the middle finger to the SEC are really risk takers:

He had paid over $35 million in assets handing them to his former attorneys in 2002 for restitution in the criminal case. He argued that the SEC has failed to show he had not been compliant with the government. The SEC contended that Durante was still on the hook for over $25 million to them.

So in other words, every agency can go after you for the same amount of money because Walker effectively held that if you paid even in full to one agency, it does not matter and cannot be credited toward another. There is absolutely no foundation in law for Judge Walker’s abusive pro-government decision.

Now this week, another contempt was imposed in New York City federal court confirming anyone who has any account tied to a New York entity should get the hell out of town and fast.  New York U.S. District Judge Paul A. Engelmayer on Tuesday said the founder of defunct hedge fund ThinkStrategy Capital Management LLC, who owes the SEC and others nearly $30 million, is still in contempt of court and must remain incarcerated indefinitely. Engelmayer said he was troubled by the lack of effort on the part of Chetan Kapur to show that he doesn’t have access to significant assets or to help his attorneys gain access to an email account which may shed light on whether or not he has funds in overseas bank accounts. In other words, he is in prison and will not be released until he PROVES he has no money overseas. The SEC has flipped the law so you are now guilty until you prove yourself innocent.

Many argue you cannot do business in Russia or China because they still lack the RULE OF LAW. I am sorry, but so does New York City. When I asked a lawyer in New York why the government never charges bankers; his response was telling: “You do not shit where you eat.” There is simply no hope to save the system anymore without a complete crash and burn.

[TPTB_need_war]

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

As I explained the key distinction upthread, those are free markets because they are decentralized and there is no significant asymmetry of information which makes it otherwise.

It pisses me off when readers waste my expensive time by ignoring what I already wrote twice in this thread. This makes three times. Please readers don't make me teach this again by writing another post which ignores my prior points.

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

1. I already provided the link to the thread two or three times in this thread, which explains that ICOs sold to non-accredited USA investors are ostensibly illegal.

I hate ICOs by now for other reasons:

2. They contribute to the mainstream thinking that crypto-currency is a scam and thus we will have great difficulty getting CC widely adopted if don't put a stop to these scams.

3. They extract capital to a few scammers, which could be better used to build our real ecosystems which are not vaporware and have real decentralized designs, such as Bitcoin and Monero.

4. They prey on the ignorance of n00b speculators, thus can never be a free market.

5. They can never attain adoption because they destroy the Nash equilibrium and decentralization of the ecosystem:

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.

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

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:

The problem with Emunie, as I talked about in the IOTA thread, is that any system that doesn't have permanent coin turnover via mining, removes mining completely, or puts some type of abstraction layer between mining and block reward (as in the case of IOTA), is a permissioned ledger.  People got too caught up in trying to improve on consensus mechanisms and forgot what actually constitutes a decentralized currency in the first place.

When Maxwell said he "proved mathematically that Bitcoin couldn't exist" and then it did exist, it was because he didn't take open entropy systems into account.  He already knew stuff like NXT or Emunie could exist, but nobody actually considered them to be decentralized.  They're distributed but not decentralized.  Basically stocks that come from a central authority and then the shareholders attempt to form a nash equilibrium to...siphon fees from other shareholders in a zero sum game because there is no nash equilibrium to be had by outsiders adopting a closed entropy system in the first place...

Take for example the real world use case of a nash equilbrium in finance.  There's many rival nations on earth and they're all competing in currency wars, manipulating, devaluing, etc.  They would all be better off with an undisputed unit of account that the other can't tamper with for trade.  In order to adopt said unit, it would have to be a permissionless system that each nation has access to where one of the group isn't suspected to have an enormous advantage over the others, otherwise they would all just say no.

This is why gold was utilized at all.  Yea, some territories had more than others, but nobody actually knew what was under the ground at the time.  Everyone just agreed it was scarce, valuable, and nobody really had a monopoly on it.  There are really no circumstances where people on an individual level or nation-state level can come together to form any kind of nash equilibrium in a closed entropy system.  The market is cornered by design, and for value to increase, others need to willingly submit to the equivalent of an extortion scheme.  The only time systems like that have value at all is when governments use coercion to force them onto people.

6. Because they are not decentralized and rely on expectation of profits based on the performance of a core group, ICOs turn what should be a competition for creating the best technology into a fist fucking fest of ad hominem and political games:

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.

This thread serves mainly to deflect attention away from Dash's instamine scam.

+1 for conscious reason.

The subconscious reason this thread exists is the psychological phenomenon that it is better to destroy everyone, than to fail alone.

"I dropped my ice cream in the mud, so now I am throwing mud on your ice cream so we are the same, because God hates us equally".

This is what socialism built. Equality is prosperity, because fairness is the uniformity of nature's Gaussian distribution. Equality is a human right! Didn't you know that!

They would rather waste the time of important coders whose time would be better spent coding a solution for humanity, so as to satisfy their inability to accept their mistakes and jealousy.

7. ICOs have less liquidity because they are not widely distributed and due to #5:

you can read my observations here.

Interesting post.

The salient quote is of course:

Why litecoin? Liquidity. These guys own 5 and 6 digits amount of BTC. They need massive liquidity to increase their holdings by any significant degree. And as such litecoin has been a blessing. Will history repeat itself?

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.

[TPTB_need_war]

Dash got "distributed" in the two crashes of 2014 and 2015

OK, we'll just take your word on that, mate.

And before you start showing us pretty pictures, be sure those pictures have owners' names attached. Makes for even prettier pictures.

Market theory insures he is incorrect. The majority buys at the top and sells at the bottom. The insiders have the advantage of seeing what percentage of the float is real (not them), so they know exactly where the bottom is and can buy it.

Market theory insures he is incorrect. The majority buys at the top and sells at the bottom

That wasn't the point. The point was availability.

A market is not a socialist politburo charged with ensuring equal distribution.

[...]

Thats why I don't have much sympathy with the accusations levelled at Dash on the basis of mining history. It's irrelevant now [...]

You move the goal posts but that still doesn't absolve your error.

The point is an overly centralized distribution can't become less centralized to attain a normal equilibrium that would have been possible without the instamine.

Free market is synonymous with decentralized market.

[TPTB_need_war]

https://www.fbi.gov/about-us/investigate/cyber

[smooth]

https://www.fbi.gov/about-us/investigate/cyber

Key Priorities: ... Fraud

Common Internet Scams: .... Investment Fraud

The wheels of justice grind slowly...

[TPTB_need_war]

You think all "ICOs" are manipulation.

I am confident they are ILLEGAL if publicly marketed to USA investors.

And no those weren't just my opinions. You will always try to distort what I wrote. How about you just state what you think about Synereo and stop trying to tell readers what I said. They can read my posts to see what I wrote.

Greg @ Synereo is avoiding explaining all the specification and technology to us in terms we can understand. No excuses you can make for that which are valid. He is selling AMPs and not giving us information we can verify. That is an illegal prospectus. If Synereo didn't sell AMPs to the public, Greg et al would have no obligation to explain the technology in detail to us in terms we can understand and verify.

[TPTB_need_war]

This blog post was obviously written about STEEM:

https://bytemaster.github.io/article/2016/03/27/How-to-Launch-a-Crypto-Currency-Legally-while-Raising-Funds/

IMO (and IANAL), that is a very, very, very astute blog post.

[TPTB_need_war]

STEEM IS A SCAM

Here is what i first read by eclipse crypto dev


[...]

Here's how they did it:

First, they did a typical instamine/flashmine/freemine scam (yes scam) where they released

(1) no compiled wallets
(2) no instructions to build
(3) incomplete and inaccurate instructions to mine

This wasn't bad enough. After the first 12 or so hours of mining, all their miners crashed, exposing that they were mining to 100 different witnesses to hide the fact that they (he) was one entity. The devs wouldn't have been caught except that their mining instructions were wrong, and no one else was mining because, even if they couldn't get the client to build, they entered mining commands that caused them to get no blocks. The devs will claim this isn't on purpose, but check the original thread. You'll see that no one mined a block when the dev's miners were down.

Then, as I have stated many times, when their miners crashed again, I mined a significant amount of steem that night in their absence. To prevent my vesting that and driving the price of vests up on them, they relaunched to ensure COMPLETE CONTROL AND CENTRALIZATION.

After the relaunch, no one would challenge them on mining because if they did, the devs would just relaunch this scamcoin again. So, no one who pays attention (and the people who have the means to procure whatever hashes they want are also the people who are paying attention), would challenge them on the hashes. As they hoped, no one did and they completely dominated the hashes for 1 week.

Now after 1 week of hashing, they dump all their coins into vests, where the price of a vest goes up with the amount vested. This is not your typical stakeholding where one unit of currency is worth one stake. This is on purpose so that they can COMPLETELY CONTROL THIS COIN IN A CENTRALIZED WAY after just 1 week.

Vests don't cost 1 STEEM anymore like they did when the devs bought them. They now cost 5 STEEM. That means that you will need to dominate all the hashes for 5 weeks just to match the control the devs have after 1 week. They have driven your costs up by 5, not using the market, as should be done, but by using this freemine/threat-of-relaunch scam.

So, why don't we all just mine for 5 weeks and decentralize control ourselves? There are two main reasons.

First, anyone who is paying attention (this includes all smart people with BTC to throw at things like this) won't dump money on a scam like this. So you are going to get a bunch of gullible small timers who don't have the foresight to convert to vests anyway, even if vests were legit. The small timers just want to get a profit asap.

Second, there's only 3 more weeks left of true mining before delegated mining kicks in. Delegated mining is when the devs pick 19 "witnesses" to mine. Maybe they might pick one or two legit miners, but the most likely scenario, given the scam they have perpetrated so far, is that they will pick at least 17 instances of themselves to mine.

In other words, it's impossible now to decentralize this coin because the devs have rigged it since the beginning. Not only that, they will be getting all the coins, unchallenged, for as small of a price as they want to pay.

Dash's scheme on steroids. Wow.

[TPTB_need_war]

You think all "ICOs" are manipulation.

I am confident they are ILLEGAL if publicly marketed to USA investors.

Maybe that's why it's important to know that the managers of these are not in the US, and in this case, neither is the company.
However, regardless of either of our ideas, if they were truly as "illegal" as you state (out of context), then there would be action being taken, and I don't see that going on.  (not to say that there are not scams, and intentional fraud, etc - a small %, like in every industry)

Also: citation?  If it's illegal, it has a link stating so clearly.  Of course, you've employed circular reasoning by using the term "investment", and begged the question.  Crytpocurrency is neither a currency, nor an investment in the eyes of the law.

Details of USA Securities Law is covered in the following thread:

https://bitcointalk.org/index.php?topic=1218399.0

Making AMPS publicly available for sale to non-accredited USA investors makes the unregistered investment securities illegal even if issued by foreigners.

Greg Meredith will have a difficult time arguing that he was not promoting this, and he is a USA citizen. In my opinion he is taking a huge risk.

Greg @ Synereo is avoiding explaining all the specification and technology to us in terms we can understand. No excuses you can make for that which are valid. He is selling AMPs and not giving us information we can verify. That is an illegal prospectus. If Synereo didn't sell AMPs to the public, Greg et al would have no obligation to explain the technology in detail to us in terms we can understand and verify.

Edit: it is rather useless if I go expend my scarce time to become an expert in process calculi so that I could find game theory flaws in Synereo's process calculi approach to their hyped Attention Model feature. Because it would still be an asymmetric information market for the investors, as then they would be required to trust either my conclusions or Greg's (Synereo's). The only solution is for Greg to do proper disclosure by explaining the technology in terms that all AMP investors can understand. They have the time to produce a very exquisite website and consume hours every week on video Hangouts that do hyped handwaving on technical details, then they should also have enough time to explain the technology in sufficient detail that we can analyze without requiring us to become one of the few process calculi researchers on earth.

Greg never avoids explaining.  In fact, I've never heard him not add an invitation for more explanation if needed, to what he says in hangouts.

Verbal handwaving is not technical explaining. It is clever marketing to fool n00bs, but I know better.

Ask an informed question, and you'll get an informed answer.

I have stated what is needed. When the appropriate technical documents are made available, which expert programmers such as myself and smooth can understand and verify without needing to become process calculi researcher. We need sufficient technical detail so that we can verify if the system will do what he is claiming it will do.


Please don't reply to my post with more diversionary bullshit. It is getting very repetitive.

[TPTB_need_war]

He's smart, he knows to diversify unlike n00b "investors" stampeding into hot potato du jour.

^This

Seems they got wind of my posts about the legality of ICOs and disclosure.

[Come-from-Beyond]

Seems they got wind of my posts about the legality of ICOs and disclosure.

Frankly saying, you overestimate your influence. Their asses are covered by legal entities created by a team of lawyers. Even if you are smarter than that team only the company will take the hit.

[TPTB_need_war]

Seems they got wind of my posts about the legality of ICOs and disclosure.

Frankly saying, you overestimate your influence. Their asses are covered by legal entities created by a team of lawyers. Even if you are smarter than that team only the company will take the hit.

Hope their lawyers were really, really good:

There are a number of situations in which, where an offence is committed by a company and it is proved to have been committed with the ‘consent or connivance’ of a director, manager or other senior person, that person is also guilty of the offence. Examples of such provisions are to be found in many statutes creating criminal offences, including the Theft Act 1968, the Fraud Act 2006 and, more recently, the Bribery Act 2010. The rationale behind them is to enable the prosecution and punishment not only of the corporate entity but, where sufficiently culpable, those who control it. In other words, they provide a means of holding to account those who are complicit in offences committed by companies. 


So, under s14 of the Bribery Act, where an offence under s1 (bribing another person), s2 (receiving bribes) or s6 (bribery of foreign public officials) of the Act is committed by a company and that offence is proved to have been committed with the consent or connivance of a senior officer of the company, the senior officer as well as the company will be guilty of the offence. This provision only applies to the substantive offences under the Bribery Act – there can be no individual director liability in respect of the corporate offence of failing to prevent bribery.


Under this and similar provisions in other statutes, the corporate entity and the senior person who consented or connived are both guilty of the main offence, ie there is no separate offence of ‘consent or connivance’. A relatively recent example is Director of The Serious Fraud Office v Mabey Engineering (Holdings) Ltd [2012], where the engineering group Mabey & Johnson pleaded guilty to breaching UN sanctions by paying kickbacks to Saddam Hussein’s regime and three senior executives were subsequently convicted of the same offences on the basis of their consent or connivance. There is in fact no requirement that the company itself be prosecuted, provided the offence can be proved against it. Any prosecution of the relevant senior person would have to establish, to the satisfaction of a jury, that the company had committed the offence in question. 

Negligence


There are also a number of statutes creating criminal offences that extend the ‘consents or connives’ provision to include an offence committed by the body corporate that is attributable to any neglect on the part of the individual director or senior person. An example is s37 of the Health and Safety at Work Act (HSWA) 1974, which applies to all the criminal offences created by the Act (the vast majority of which, since January 2009, carry a prison sentence of up to two years). This broader basis for imposing liability is not, however, limited to health and safety matters. Similar provisions affect offences under statutes as wide-ranging as the Trade Descriptions Act 1968, the Companies Act 2006 and the Private Security Industry Act 2001, many of which carry significant custodial sentences.


The potential for criminal liability in these circumstances is more akin to the position in the United States where, in relation to certain offences concerned with public welfare (such as those relating to environmental protection and food safety), the ‘Responsible Corporate Officer’ (RCO) doctrine imposes criminal liability on officers who, because of their position in the corporation, had the responsibility and authority to prevent or correct infringements of the law.2 Crucially, corporate officers can be prosecuted under the RCO doctrine even if they were unaware of the particular conduct within the corporation, provided they: 


    knew that such conduct was unlawful;

    were ‘in a responsible relation to public danger’3 (ie had authority to exercise control over the specific activities that caused the unlawful conduct); and

    failed to prevent the conduct, for example by failing to implement suitable systems and controls.4 


Penalties under the RCO doctrine can be significant. In 2007, for example, Purdue Frederick Company was accused of misbranding the painkiller OxyContin. Its CEO, general counsel, and medical director were also charged under the RCO doctrine and pleaded guilty to charges of misbranding a drug. They were each sentenced to extensive community service, fined $5,000 and excluded from participating in federal healthcare programmes for 12 years.5 They were also collectively ordered to pay approximately $34.5m in disgorgement.


[Come-from-Beyond]

Hope their lawyers were really, really good:

No chance Vitalik was a director or a manager. Tech guys hate such positions because they distract from tech stuff.

[TPTB_need_war]

Hope their lawyers were really, really good:

No chance Vitalik was a director or a manager. Tech guys hate such positions because they distract from tech stuff.

That is your defense   (joke, because you and I both know Iota is too small a fish for the SEC to fry any way, not much less the issue of layers of legal hurdles in between the SEC and Iota/you ... thus it is silly to allege any serious chance of action being taken against you personally[1])

Seriously you are undoubtedly correct in the overall scope of this, although one could argue that he is likely thought by the public investors to be on the level of a board member in terms of how he was making public statements about how much ETH they were selling and this would finance them for 4.5 years. I think he may crossed the line with that statement. But good lawyers can work around that mistake.

[1] my only point to you is really that I wouldn't play legal jurisdiction game theory unless I had no other good options. I personally wouldn't do it for ethical reasons of trying to respect other cultures and their legal systems. If I thought it was absolutely necessary (in some Libertarian idealism) to achieve some greater good for society, I could perhaps justify it. And that is why I never intended to get into a war with you, but your iotatoken partner is a hot-head who couldn't resist making a war in this thread. And it spread. I care a little bit about not siphoning off all the crypto gamblers' funds to insiders of altcoins which are going no where, but I thought you had enough interesting technology in Iota to justify earning $100,000 or so on it. I thought you'd be satisfied with the $500,000, but I guess I must realize you only get what maybe 12.5% of that? Any way, I'd like to not see altcoins dominated only by get quick rich and not some serious attempts to fix Bitcoin's flaws and create a large adoption market. But the more I think about this, the more I realize if that ever happens it will be largely outside of this forum. This forum is a gambler's paradise. I need to remind myself that I we here are in an enclave.

[Come-from-Beyond]

I think he may crossed the line with that statement. But good lawyers can work around that mistake.

In most civilized countries any doubts are treated to defendant's benefit. Vitalik doesn't need to worry.

[TPTB_need_war]

I think he may crossed the line with that statement. But good lawyers can work around that mistake.

In most civilized countries any doubts are treated to defendant's benefit. Vitalik doesn't need to worry.

In the USA that is only for criminal (not civil nor class action) cases and even then it is "beyond reasonable doubt".

I added to my prior post. Re-read please.

Also note class action cases can subpoena foreign entities. I learned that from a recent Armstrong blog. Wait  I will find the link and edit this post.

Edit: the audio is at the bottom of this blog post:

https://www.armstrongeconomics.com/markets-by-sector/precious-metals/selling-bullshit/

[TPTB_need_war]

At the moment, they don't really have any competition or at least any that markets their services very well.

Potentially another manipulated market such as the argument about Mt.Gox bubble upthread. We could be witnessing a cashing out from recent altcoin bubbles while buying from himself to create the illusion of a rising price while doing so as they ostensibly did for the ETH bubble, e.g. Vitalik using Coinbase to cash out from ETH -> BTC -> USD.

Free markets = decentralized markets.

When you have whales and most volume going through 1 or 2 exchanges, you don't have decentralized markets.

Seems they got wind of my posts about the legality of ICOs and disclosure.

You think this has anything to do with you, a random stranger on the Internet just like me and the next guy? Wow, this is pretty intense

You need to read the Ethereum Paradox and "The altcoin topic everyone wants to sweep under the rug" threads to understand I am not a random stranger. Didn't you know I am alleged to be Satoshi?

Re: [POLL] Should Alternative Currencies Have Their Own Forum Section ?

Although philosophically I'd like to vote "yes", I voted "no" because the reality is the scams are the BTC economy:

Any way, I'd like to not see altcoins dominated only by get quick rich and not some serious attempts to fix Bitcoin's flaws and create a large adoption market. But the more I think about this, the more I realize if that ever happens it will be largely outside of this forum. This forum is a gambler's paradise. I need to remind myself that I we here are in an enclave.

At the moment, they don't really have any competition or at least any that markets their services very well.

Potentially another manipulated market such as the argument about Mt.Gox bubble upthread. We could be witnessing a cashing out from recent altcoin bubbles while buying from himself to create the illusion of a rising price while doing so as they ostensibly did for the ETH bubble, e.g. Vitalik using Coinbase to cash out from ETH -> BTC -> USD.

Free markets = decentralized markets.

When you have whales and most volume going through 1 or 2 exchanges, you don't have decentralized markets.

Nobody invests into BTC or mining equipment anymore. When did you bought ASICs valued 10.000 USD last time? Aren't those USD you now use to buy BTC just been taken from former BTC sales?

Bitcoin cannot do without Alts, both built up a complete whole economy. Remember people are not buying/selling anything using BTC, they just gamble on Alts. Basically I do agree on BTC up causing Alts going down and vice verse. Enclosed system like two water tanks with a flexible tube connecting them.

I agree the two go hand in hand. Since alt coins are really the biggest thing you can purchase with BTC, ...

This is true. Most people don't want to trade their BTC for a non-CC asset, because this their gambling money. They can't buy mining equipment with BTC to increase their holdings of crypto-currency. This is why ICOs have become more popular than mined distribution, with the ASIC resistant Monero as an exception.

ASICs killed the mining ecosystem. This has been r0ach's point, that if the coins don't circulate, then the ecosystem dies. Bitcoin is dying. Only the altcoin circulation kept Bitcoin alive.

[TPTB_need_war]

Details of USA Securities Law is covered in the following thread:

https://bitcointalk.org/index.php?topic=1218399.0

Making AMPS publicly available for sale to non-accredited USA investors makes the unregistered investment securities illegal even if issued by foreigners.

Alt currencies are not investments in the eyes of existing law anyway.

With that strawman statement which does not address the points of the Howey test, you obviously do not comprehend the thread that was provided to you. You probably didn't even read it or read it carefully.

Verbal handwaving is not technical explaining. It is clever marketing to fool n00bs, but I know better.

If you are the guy who doesn't get it, and almost everyone else does

No one understands the details including yourself. For if you did, you would explain it here in sufficient technical detail so as to be unambiguous statements.

You are BS and you know it.

We need sufficient technical detail so that we can verify if the system will do what he is claiming it will do.

It has been in commercial operation for a couple years.

You are referring to components of the system such as Special K or Microsoft's use of process calculi, but the devil is in the details. This usage of some components of his research has no bearing on whether any of this is applicable to Synereo. Without the details, we can't tell you exactly why you are wrong.

And you certainly don't know the technical details either.

Any way, I don't have more time to waste on your nonsense.

So, again, please cease and desist with the negative misinformation and claims.
Ask your father for a refresher on Libel & Slander.

Sue me in the USA (which is the only jurisdiction which you can enforce on me). Hahaha. So we can go in court and talk about selling illegal unregistered investment securities. There is nothing slander nor libel in demanding proper disclosure with all the technical details explained so that laymen investors can evaluate if this AMP token is a worthwhile investment.

Any way, this is all a waste of my time because Synereo will fall and JAMBOX will not. And JAMBOX isn't selling and hyping tokens. Talk to me again in 6 - 9 months. Until then, any thing other than technical details from you is hot air.

Lol, Synereo with a $9 million marketcap and only $0.016 million ($16,000) of probably fake (insiders buying from themselves) daily volume. You snakeoil salesmen having a hard time getting fools to buy this fake market cap now.

[BitFomo]

First the government doesn't really seem that interested or get involved to the level of paranoia people have unless people... And a lot of people are outright raped with things that are illegal regardless of crypto classification.  Paycoin, BFL and mtgox.  Their actions seem to indicate that they are interested in prosecuting people for the most famous outright scams to try to encourage a tiny bit of accountability.

I have been overseas for six months in three very different countries and I have an entirely new respect for how the government protects the dollar and attacks those who threaten it.  Foreign entities with monetary policies and domestic entities trying to remain private.

If the government is as bad as you say then if and when they take aim at crypto - the swipe of a pen by some appointed official can and will make things in crypto they want to be against the law illegal regardless of what is / isn't legal now.  You may have the chance to abide by the new rules (report all your Bitcoin keys, etc), exit crypto and pay taxes or become a target.  I'm not sure abiding by current rules is going to save or help much with a government that already is in violation of its own constitution and numerous other laws on a consistent basis.  If they decide to attack crypto on a whole - today's legal standing will not matter.  Crypto will exist inside of their new rules or be strong enough to stand outside of them.  I do not perceive existing laws to be any type of protection against fighting against the USD if the government decides their is a big conflict of interest.

At this stage I think tracking the blockchain provides them with far more value than threats when it comes to illegal activity (or that is their impression)

[TPTB_need_war]

BitFomo, the argument that the government won't care about the securities law violations in crypto IPOs, instamines, PoS coins, masternode coins, coins paying debasement to the developers (Z.cash), seems reasonable because the elite have bigger fish to fry.

However, the period of 2018 to 2020 is going to be utter scorched earth economic collapse followed by a coordinated monetary reform into a one-world reserve currency system, thus we could see governments become very totalitarian in terms of going after all illegal actions wherein they can confiscate people's money due to some law broken. They will hunt those with significant money, not nickels and dimes.

I would steer clear of violating laws as much as possible, if you have any money. As for thinking you can hide your money from the government in Bitcoin, the centralization (centralized control) of Bitcoin will eventually kill that.

Do you really think TPTB, the mainstream capital flows that are short the dollar+gold+Bitcoin, and the world's socialism is going to allow the "rich" (i.e. the upper middle class) to ride away with gains in gold and Bitcoin as the rest of the people become impoverished by the economic collapse

If you want to ride through this coming apocalypse unscathed, then you need to be extra diligent on not providing simple legal justification for confiscation of your wealth.

[TPTB_need_war]

Alt currencies are not investments in the eyes of existing law anyway.

With that strawman statement which does not address the points of the Howey test, you obviously do not comprehend the thread that was provided to you. You probably didn't even read it or read it carefully.
>>
There is nothing slander nor libel in demanding proper disclosure with all the technical details explained so that laymen investors can evaluate if this AMP token is a worthwhile investment.

Notice how when you start with the fact that AMPs are not an investment, you don't have an argument?

An AMPs investment security that is not "worthwhile" is still an investment security.

I'll be quoting this in the thread for future SEC investigations since you are disingenuously misrepresenting the facts to intentionally promote an unregistered investment security to n00b USA investors on this forum.

The technical details have been made available anyway, and every week, you have a chance at asking Greg whatever question you want.

Provide a link to all the complete written specifications written in terminology and explanation that non-process calculi experts can analyze. This has not been provided.

Handwaving in video Hangouts is irrelevant and is the way you disingenuously mislead the n00bs speculators here.

Face it dude, you aren't going to win a debate about truth with me, because I am on the right side of truth and you are not. And I am smart enough to unweave your manipulative words.

y it's someone else's fault that you haven't learned.

It has been in commercial operation for a couple years.

You are referring to components of the system such as Special K or Microsoft's use of process calculi, but the devil is in the details. This usage of some components of his research has no bearing on whether any of this is applicable to Synereo.

Of course it has bearing, it's a content delivery network - that's what it does.  They are not simply components, they are the foundation, and the tech stack that does the work.

You need to learn at least enough to be able to voice your specific questions, if you have doubts.

Ad hominem attacks are not going to get you there.

I mean of course in the context of my prior comments that SpecialK may have no bearing on whether this Synereo system as a whole will function without game theory failure as a whole. One can't apply what is true about a component as evidence of what is true about an amalgamation of components w.r.t. to game theory. Duh!

There is nothing ad hominem in my statements. I speak only to the facts (and the lack of written non-technobabble, non-handwaving facts providers by Synereo) of the matter.

[sockpuppet1]

https://daohub.org/index.html

This looks to be a much more effective way to crowdfund than to run a typical ICO.

Pitching the word 'revolution' in the first marketing sentence is a more effective way to start another ETH style pump.

Here we go again with the inane fantasies of the Delirium (Bitalik Vuterin) ecosystem.

No it's not, because it's basically the same as any other ICO.

No there is a very significant difference.

> If you had a project which needed to be funded, why would you create a DAO

IMO, this is the backwards way to think about this. The people that are providing funds to companies might (should) start insisting that they work with DAOs that they are part of. This allows investors to retain leverage and power over their money. In ICOs the investors usually have little to no power after their investment and lead to a lot of situations where the investors get taken advantage of.

You seem to not believe and/or understand why direct democracy results in abject failure.

I do not believe in the smart crowd.

This is quite an interesting paradox. There are two very famous sayings that demonstate this.

The wisdom of the crowd is positive: "Two heads are better than one."

The wisdom of the crowd is negative: "Too many cooks spoil the broth."

Direct democracy has never existed and never will, because organization of work is incongruent with such a flat decision hierarchy. It is one of the reasons that Communism ends up as despotism.

Switzerland, despite being applauded as a role model of direct democracy in a modern society, actually applies an indirect democracy instead. However, its political system leaves room for direct election and referendum.

Direct democracy lacks procedures, promotes rigid uniformity. It restrains society, and causes despotism.

Such a democracy demands all citizens to have an unambiguous, either-yes-or-no opinion, which is quite often extreme, on each and every issue.

It ignores the complexity and ambiguity of issues, thus this decision-making often encourages people to resort to their basic emotions instead of their rational judgement.

This way of decision-making leads to a strict uniformity well known to the Chinese population, discounting the fact that citizens often don’t have a clear-cut position on many issues.

Athens was run by the merchant class. There was no direct democracy. There never has been and there never will be, because flat structures do not function. The uniform distribution doesn't exist in nature, it is only a delusion of man.

Can you imagine a ship at sea in a storm with 100 people at the helm fighting over each navigation decision.

What you will end up with is a normal corporate structure with a board and the investors will vote to elect the board which oversees and makes the decisions for the corporation.

This is no different than an ICO that matures into being a real company with shareholders.

The real issue here is that crypto-currency which is not distributed by decentralized proof-of-work is masquerading as an illegal unregistered investment security. Thus the desire to side-skirt securities law by creating a token that can vote on governance. But this functionally must end up the same as a voting share in a corporation, thus it is still an illegal, unregistered investment security.

Please quote my post before it is deleted by the mods.

[sockpuppet1]

http://www.coindesk.com/liberty-reserve-founder-20-years/

He was not careful w.r.t. running arguably afoul of laws preventing the use the word "dollar" in ways that might offend the US Treasury.

This is one of the reasons I created the following linked thread to make sure I understood well the laws that might govern the creation of an altcoin:

https://bitcointalk.org/index.php?topic=1218399.0

[sockpuppet1]

Re: DAU replaces DAO

3) Finally, this fund-raise is now of a size that it's going to attract SEC attention. If it were a $1m raise, it could be a great experiment, grow with network, and not attract undue legal attention this early. But it looks like it may flirt with $100m. Already at over $75m, this is something the SEC will care about. But what can they do, you might ask? Well, they can declare the project to be an illegal securities offering (Slock.it's language in their terms doesn't matter; only the SEC's interpretation matters), and then track the ETH payments that come out of the DAO and freeze them (by making it clear to exchanges that the funds represent illegal flows). Then holders would be forced to go through dubious (and largely trackable) channels in order to access their funds.

Maybe none of the above would happen; maybe the SEC won't care, etc, but with such large value already locked in the DAO, it's become a significant and increasing risk in my opinion.

tldr: this has gotten out of hand, both for the network/ecosystem in organic terms, and in terms of attracting SEC scrutiny.

The rise in price of DAO is inevitable, at the end of the month it will be the highest funded crowdfunding project to date.

R0ach.  The reason is because the way the contract is setup before any proposals are voted on pre-investors can withdraw 100% of their originally invested Ethereum (assuming they purchased in the first 14 days).  After the first 14 days the price goes up by 5% a day until it's at 150% (the additional price bumps can't be withdrawn).

I suspect it's people gambling on supply and demand - "If someone is willing to pay 150% on day 31 then I'll be able to sell it on open market for 150%.  Also it will never be worth less than what I paid for it in Eth because I can just cash it out (until crowdfunding starts using the money to fund stuff).

SEC sent out a warning in January 2016. Hope the pumpers are preparing for their jail time:

There is a reason why the SEC issued a warning about Crypto coins calling them scams..
Read it yourselves.. https://www.sec.gov/investor/alerts/ia_virtualcurrencies.pdf (Issued Jan 4th 2016)

We are concerned that the rising use of virtual currencies
in the global marketplace may entice fraudsters to lure
investors into Ponzi and other schemes in which these
currencies are used to facilitate fraudulent, or simply
fabricated, investments or transactions. the fraud may
also involve an unregistered offering or trading platform.
these schemes often promise high returns for getting in
on the ground floor of a growing Internet phenomenon.
Fraudsters may also be attracted to using virtual
currencies to perpetrate their frauds because transactions
in virtual currencies supposedly have
greater privacy
benefits and less regulatory oversight than transactions in
con
ventional currencies. Any investment in securities in
the United states remains subject to the jurisdiction
of the seC regardless of whether the investment is made
in U.s. dollars or a virtual currency.
In particular,
individuals selling investments are typically subject
to federal or state licensing requirements.

[sockpuppet1]

The Devastation that man wrecks on himself (in short society is a power vacuum that requires a strong tyrant to beat the men into not defecting from the good of society):

Change the record you're boring

This forum has turned into a circus of lies and ponzi scams speculation:

https://bitcointalk.org/index.php?topic=1219023.msg14853958#msg14853958 (Vcash deleted posts)

Do not expect me to market anything which is "fair" to this audience. They don't want fair.

I am okay with that. Peace. You get yours and I'll get mine. That is the new world order you want.

Collectivism is a power vacuum and the argument is always about who gets to steal for and from whom.

Bernie: "Socialism can be repaired as long as I can be in charge of the stealing to insure it is fair".
Trump: "Stealing can be optimized if I am Dicktator-in-chief"
Clinton: "You'll tolerate my theft (for myself and my cronies) because as a Democrat I'll steal some for you too (and not remind you I funded it all by expanding an egregious future debt on your children's back)"

Stealing (scams, oligarchy, etc) is not the exception, rather it is the norm of human nature. Always will be.

The Lord warned us that this is the nature of man.

Don't forget the Iron Law of Political Economics.

[sockpuppet1]

DAO crap is as crap as ETH !

"Crap I failed to buy that 1000% ROI crap."

We were crazy for ignoring what Bernie SandersMadoff was selling, until the clawbacks[1]...

Oh so you aren't aware they can come take your profits long after you've disposed of the asset. This is a clawback.[1]

[1]	http://www.businessinsider.com/the-truth-behind-how-gerald-celente-got-screwed-by-mf-global-2011-11 http://www.businessinsider.com/two-mf-global-clients-share-their-stories-2011-11

[iamnotback]

• I was incorrect to waste my time badgering other coins about their ethics. I followed smooth's lead on that. I have already explained that the issuers and promoters may or may not have to answer to the legal repurcussions in the future, but that is irrelevant. Also the key breakthrough in my legal understanding is when I recently realized that if the source code is open source , the protocol is decentralized, and the issuers aren't in ongoing control of trading (which was Ripple's mistake that caused them to run afoul of FinCEN KYC/MSB regulations), then it doesn't likely matter under the Howey investment securities test (which is orthogonal to the FinTech regulations such as FinCEN) how the tokens were issued, because the speculators are in control of their future expectation of profits (return on investment) and thus nothing is secured by the issuer. Forks of the source code and copycat coins are evidence of that reality. I opened my eyes and decided to understand the reality of the nature of speculation. The amount of $ flowing into altcoins is miniscule compared to the other scams going on daily since the beginning of mankind, including for example the fraud of the Federal Reserve and fiat money. The Climate Change carbon tax clusterfuck is many $billion greater fraud than anything going on in altcoin ecosystem, and at least the altcoin ecosystem has the chance to spawn an actual breakthough that helps mankind.
• You seem to have originated from a Communist/Socialist philosophy wherein you think it is the role of society to determine what is fair and how to best top-down regulate the flow of capital. This is incredibly myopic because there is nothing the government can't make worse by regulating it.
  
  "Elephant: a mouse built to government specifications." — Lazarus Long
  
  

  The joke is on you not understanding that Armstrong is writing about the medium-term when he is bullish, and in the shorter-term his reversals are guiding us through bounces and dips until we get the V crash slingshot that sets up the medium-term blast off.
  
  Your lack of reading comprehension is the joke. AltcoinUK enjoins you in that handicap.
  

  
  slingshot that feeable puppet mind of yours.... guiding useless scenario after the fact.
  

  
  As MA has explained, there will always be dumb people to be the bagholders in the market. There is nothing anyone could do to change that.
  

by now he is a law enforcement material

What enforcement   Copious tough talking diarrhoea flowing out one end but zero action forthcoming.

Indiegogo doesn't even enforce their own policy against selling prohibited perks that are negotiable instruments.

AnonyMint documented the reasons ICOs can be considered harmful, but it is irrelevant.

Decentralized, open sourced tokens are probably not investment securities regardless of how they were issued, but many of these recent schemes such as the DAO appear to not be actually sufficiently decentralized to avoid being classified as investment securities. But that is the potential legal problem for the issuers and perhaps promoters, but not for the readers here who are just the speculators.

There are too many self-important do-nothing talking heads on this forum. At least the scammers are risking their own future legal problems to provide the market here a semblance of what it craves.

So keep on babbling talking heads. That is a symptom of the disease of the incapable.

So if you really think your goal is to invest to better the true adoption and goals of a decentralized economy, then stop whining and go make it a reality. Stop blaming the scammers for your own inability to invest in and/or launch something that really addresses that goal.

Being less worse, doesn't make it an accomplishment. Two wrongs don't make it right.

Too much useless verbal diarrhoea on BCT.

And then he claims to know what is expert coding   Ah pardon me, but being an active coder yourself would allow you to be a peer. Otherwise you are just a rocking chair, finger up his anal-yst. Yeah I know you scored 16 touchdowns in 1932 for the Brooklyn Browns with half your ear torn off. How many times have you repeated that story? Btw, we wear helmets now and take steriods. And ES6 with modules on Node.js isn't your grandmother's Java threads.

[iamnotback]

...

He will perhaps try to argue that a stealth mine is a free market and thus is not the same deception as an instamine. I will say bullocks, they are all free market activities. You are either a Libertarian or you aren't. Choose.

Legality is a different issue. But except for The DAO (and DAOs) where the legal risk seems to involve all participants, that legal risk appears to apply mostly only to the insiders and maybe the promoters.

smooth is making some money, if he wasn't affiliated with the devs there's no problem, he just got lucky to hear about the launch before the crowd

Dash insiders were just making some money also. That didn't stop smooth from fiercely attacking their reputation.

if the launch was public knowledge, and there was no funny business with changing coin supply, or some people had access to better miners etc, then it's OK IMO

DASH was a conspiracy, this just looks like a stealth mine, so if anyone was lucky enough to get on early good luck to them. It doesn't meet my requirements for a good investment though, but it doesn't look corrupt. A good launch it wasn't, but that's not smooth's fault

I say bullocks on your arbitrary distinction:

I think he has every right to mine and promote what ever he wants to. I would applaud him stating he respects that everyone else should also have that same free will and we don't need any sheriffs in the altcoin discussion. I expect though he is somewhat conflicted. So I am curious to read his response.

He will perhaps try to argue that a stealth mine is a free market and thus is not the same deception as an instamine. I will say bullocks, they are all free market activities. You are either a Libertarian or you aren't. Choose.

Legality is a different issue. But except for The DAO (and DAOs) where the legal risk seems to involve all participants, that legal risk appears to apply mostly only to the insiders and maybe the promoters.

Stealth mining is like hiding the prospectus if you want to compare it to investment norms.

Either you have fair and wide distribution or you don't. But I say ethics has nothing to do with it. Choose which forms of distribution you think make the most sense business wise. Ethics just drags us in the arbitrary mud slinging.

[iamnotback]

Attorneys comment on the likelihood of SEC or other regulation/action against DAOs or crypto-currency in general:

https://www.youtube.com/watch?v=RHcLKrkwPLQ#t=7789

[kiklo]

Attorneys comment on the likelihood of SEC or other regulation/action against DAOs or crypto-currency in general:

https://www.youtube.com/watch?v=RHcLKrkwPLQ#t=7789

Side note, you see those dark circles under that guys eyes in the video.
Symptoms of Liver Stress or Damage, not good.


 

[dste123]

With the increased publicity altcoins has been getting combined with the hacks, i get the feeling gov't oversight / regulation will be stepped up at some point...no idea how effective they'll be though

[iamnotback]

Steem issued the shares via PoW and mined them themselves as a legal loophole instead of IPO.

What legal loophole

Steem (and its founding whales at the helm) failed to qualify for the criteria needed to not be classified as an investment security according to the Howey test, so that investors' expectations aren't secured for future gains by a controlling party:

• decentralized, leaderless organization
• forks allowed (Steem license prevents this)
• widely held so that investors so no party effectively controls the trading market

Afaics, there is nothing illegal about issuing tokens to yourself in a premine when you launch a decentralized, leaderless, open source project unless by doing so you destroy one of the criteria above.

Edit: I guess you could argue that by mining for their personal shares, then even though the Steemit Inc. corporation is legally culpable to have registered the shares given the failure to qualify for the above criteria, then at least @dan, @dantheman, and @ned, aren't legally complicit.

[iamnotback]

I am the progenitor of a Bitcointalk.org thread which discusses in detail the SEC and FinCEN regulations.

IANAL, yet my non-expert interpretation is @dan (aka @dantheman) misinterpreted the FinCEN guidelines and he may have overestimated the SEC investment securities implications.

1. Do not pre-allocate any currency to yourself or others.
2. Do not sell currency directly to others
3. Aways sell through a regulated exchange.
4. Complete the currency and protocol prior to launch.

Pertaining the first 3 items, let's quote directly from Dan's blog:

By contrast, a person that creates units of convertible virtual currency and sells those units to another person for real currency or its equivalent is engaged in transmission to another location and is a money transmitter. In addition, a person is an exchanger and a money transmitter if the person accepts such de-centralized convertible virtual currency from one person and transmits it to another person as part of the acceptance and transfer of currency, funds, or other value that substitutes for currency.

“In undertaking such a conversion transaction, the user is not acting as an exchanger, notwithstanding the fact that the user is accepting a real currency or another convertible virtual currency and transmitting Bitcoin, so long as the user is undertaking the transaction solely for the user’s own purposes and not as a business service performed for the benefit of another. A user’s conversion of Bitcoin into a real currency or another convertible virtual currency, therefore, does not in and of itself make the user a money transmitter.”

The Guidance also defines an administrator of virtual currency as a person or entity “engaged as a business in issuing (putting into circulation) a virtual currency, and who has the authority to redeem (to withdraw from circulation) such virtual currency.”

Note the phrases which I emphasize in bold, italic in the above FinCEN guidance quotes.

Therefor if I am issuing virtual currency but do not have the authority to redeem it (and note Ripple was doing both thus acting as an exchanger), I do not exchange it for real currency (noting that BTC is a virtual currency and is not yet equivalent to real currrency), and I ame doing these transactions for my personal use, then I've got 3 ways that I've avoided falling under classification as a regulated MSB. If any of those 3 hold up, then my non-expert interpretation is that I am not subject to FinCEN regulation, even though I am a US citizen.

As for the SEC's jurisdiction to regulate investment securities and the applicable case law such as the Supreme Court Howey test, I came to the conclusion near the end of the aforementioned BCT thread, that for as long as the token system's protocol is open source, then the users of the system have the control to fork the system and thus they are not relying solely on any one third party for their future expectations of gain, thus it is not investment security. Security means some party is securing (responsible for the gains from) the investment of another. Thus I do not think the protocol needs to be cast in stone, but rather it just needs to be open source. It also probably helps the argument of users' self-responsibility, if there isn't just one monolithic developer or group in control of the ecosystem.

However, note that the Steem blockchain has a non-forkable license, thus appears to be in vulnerable to classification as an investment security from that standpoint alone. They would probably argue that the DPOS witnesses and voting system decentralizes control and places responsibility in the hands of the users. And that this is more like a DAC than an investment security. I don't know if the court will view it that way. The court has said it would look past any obfuscations to the economic reality. The economic reality of Steem appears to be some insiders in control of the system and the users dependent on them. But this is a gray area and IANAL.

[iamnotback]

Just to correct factual errors.

...

ICO's are bad except when i do it  

Did you forget that on June 08, 2016, TPTB_need_war wrote that he discovered that he probably had the wrong interpretation of the law and ethics, because if the blockchain is open source, then the investors are free to fork it.

Again I will give you the last word, for as long as you don't distort any facts.

[iamnotback]

Repeating the revelation I had upthread:

You anal motherfuckers and those who want to regulate our pink shits ecosystem are really fucking loonie (and that includes you Spoetnik because you said you want regulation, lol).

Come on men, wake up to reality. Our pimple sized market cap gambling casino is just analogous to any other late night infomercial for breast enlargement pills. Okay there is a pooling of funds in our case, but apparently there is no global law against this. And each investor owns his own copy of the software and can fork the blockchain if he wants. We are buying software tokens, not company shares. Nobody owns the blockchain.

[iamnotback]

Just wanted to remind you all again i don't think law / regulation = death of crypto.
There is laws for the New York Stock Exchange right ? Well they still trade "penny stocks"

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

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

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

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

I grow tired of pointing out the hypocrisy.

Yeah we grow tired of your hypocrisy.

Why don't you just admit human nature instead of lying to yourself?

[jacaf01]

Which crypto-tokens are ILLEGAL, unregistered "investment securities" as defined by USA securities regulation law?

I don't think I need to bother about your question once I'm not a US citizen.

Crypto is a new type of asset that is even given the regulators problem to regulate. If you read some of the terms and conditions of some of these ICO, they classified ICO token as a software of the company or a license to use the application in future

[iamnotback]

Which crypto-tokens are ILLEGAL, unregistered "investment securities" as defined by USA securities regulation law?

I don't think I need to bother about your question once I'm not a US citizen.

Crypto is a new type of asset that is even given the regulators problem to regulate. If you read some of the terms and conditions of some of these ICO, they classified ICO token as a software of the company or a license to use the application in future

The buyer of the token is apparently not legally culpable (or not greatly so). The SEC investment securities regulation seems to be most onerous for the developers and promoters of the ICO. I will explain this is more detail in my next post which is forthcoming.

It affects you as an investor only in that if for example the SEC decided to take action against ANY PROJECT which might cause all ICO projects' valuations to collapse on the markets.

In other words, all those who are currently invested in any project that had a history that could be suspect, might see their coins collapse in value if the SEC took any action against any project for the similar type of violation.

Note the SEC action against Ripple (which is covered in greater detail upthread) was related to Ripple being an exchanger, i.e. both selling and repurchasing its own tokens. So that is why it did not cause a selloff in projects which weren't acting as their own exchanger. But I posit that if the SEC attacked a coin for a violation of the Howey test of the investment securities law, we would see a collapse of the price of many ICO projects and other projects which had a centralized structure that violates the Howey test.

I will explain more in the next post.


Disclaimer: I am not a professional adviser on this topic. Consult your own professional adviser.

[Come-from-Beyond]

Which crypto-tokens are ILLEGAL, unregistered "investment securities" as defined by USA securities regulation law?

I don't think I need to bother about your question once I'm not a US citizen.

Crypto is a new type of asset that is even given the regulators problem to regulate. If you read some of the terms and conditions of some of these ICO, they classified ICO token as a software of the company or a license to use the application in future

The buyer of the token is apparently not culpable. The SEC investment securities regulation seems to be most onerous for the developers and promoters of the ICO. I will explain this is more detail in my next post which is forthcoming.

It affects you as an investor only in that if for example the SEC decided to take action against ANY PROJECT which might cause all ICO projects' valuations to collapse on the markets.

In other words, all those who are currently invested in any project that had a history that could be suspect, might see their coins collapse in value if the SEC took any action against any project for the similar type of violation.

Note the SEC action against Ripple (which is covered in greater detail upthread) was related to Ripple being an exchanger, i.e. both selling and repurchasing its own tokens. So that is why it did not cause a selloff in projects which weren't acting as their own exchanger. But I posit that if the SEC attacked a coin for a violation of the Howey test of the investment securities law, we would see a collapse of the price of many ICO projects and other projects which had a centralized structure that violates the Howey test.

I will explain more in the next post.

Last time I checked the political map of the world it had more than 1 jurisdiction. If you think that the USA is able to export democracy on global scale then google for North Korea, China and Russia.

[iamnotback]

Last time I checked the political map of the world it had more than 1 jurisdiction. If you think that the USA is able to export democracy on global scale then google for North Korea, China and Russia.

I am talking about the impact on the market price (given most exchanges are within the G20's jurisdictional reach). Not whether the SEC can put you personally in jail since I heard you live in Belarus.

Please wait for my next post which will reiterate which types of projects I think are not subject to the Howey test. I will reiterate my revelation where I became less worried about regulation.

[Come-from-Beyond]

I am talking about the impact on the market price. Not whether the SEC can put you personally in jail since I heard you live in Belarus.

Please wait for my next post which will reiterate which types of projects I think are not subject to the Howey test. I will reiterate my revelation where I became less worried about regulation.

Ok, I'll wait for it. I hope it won't imply again that Americans is the superrace and 90% of the world should care about the laws set by the remaining 10%...

[iamnotback]

Ok, I'll wait for it. I hope it won't imply again that Americans is the superrace and 90% of the world should care about the laws set by the remaining 10%...

China is also showing a willingness to regulate what it can and recently they stated this was to protect investors from excesses. Ditto Singapore, Japan, etc..

The G20 is becoming ever more coordinated on harmonizing regulation with each other. This year they start sharing information on financial crimes and illegal taxation shelters activity.

I hope you won't imply again that your backwater country is relevant to what the major axis powers of the world could do to the exchange price of an altcoin project if they ruled it was in violation of common sense investment securities regulation and investor protections.

So the more relevant question is what type funding and organizational arrangements are truly decentralized and which are just obfuscations of a company share structure with escrow agents, board of directors, and expectations from ICO investors reliant on the actions of those centralized parties.

The argument that the token holder is the owner of a software token and copy of the software blockchain which he is free to manage as he pleases (in the words of the Supreme court) must not fail the test of economic reality and common sense.

My post is still forthcoming...

[Come-from-Beyond]

I hope you won't imply again that your backwater country is relevant to what the major axis powers of the world could do the exchange price of an altcoin project if they ruled it was in violation of common sense investment securities regulation and investor protections.

My "backwater country" is a part of Russia-Kazakhstan-Belarus union. As long as ICOs are allowed in Russia, I don't care about SEC opinion on the matter. Also, in civilized countries the laws are not retrospective (which means that existing projects will be unaffected).

EDIT: If one day you change your mind and start an ICO, do it via a Russian company. It will be able to serve even customers from the USA.

[iamnotback]

I hope you won't imply again that your backwater country is relevant to what the major axis powers of the world could do the exchange price of an altcoin project if they ruled it was in violation of common sense investment securities regulation and investor protections.

My "backwater country" is a part of Russia-Kazakhstan-Belarus union. As long as ICOs are allowed in Russia, I don't care about SEC opinion on the matter. Also, in civilized countries the laws are not retrospective.

Your token's investors (owners) will care if the G20 crashes the price of your project's token on the exchanges in Western markets.

I don't know how likely that is to happen or not. But normally governments let new paradigms run amok, then crack down later as they catch up to the new paradigms.

But all the past history is not gone. They can go back and attack any history that was illegal.

[Come-from-Beyond]

Your token's investors (owners) will care if the G20 crashes the price of your project's token on the exchanges in Western markets.

Since when Western markets are relevant? I can't recall even a single pump or dump starting on a Western exchange.

[iamnotback]

Your token's investors (owners) will care if the G20 crashes the price of your project's token on the exchanges in Western markets.

Since when Western markets are relevant? I can't recall even a single pump or dump starting on a Western exchange.

Poloniex and Kraken are both in the USA.

Where do you think people trade these days?

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

[Come-from-Beyond]

Poloniex and Kraken are both in the USA.

Where do you think people trade these days?

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

I think people trade in China. If Poloniex and Kraken stop trading some tokens then trading will move to other exchanges.

[iamnotback]

Poloniex and Kraken are both in the USA.

Where do you think people trade these days?

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

I think people trade in China. If Poloniex and Kraken stop trading some tokens then trading will move to other exchanges.

They can't move the tokens:

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

And China is I bet very intent on regulating exchanges:

China is also showing a willingness to regulate what it can and recently they stated this was to protect investors from excesses. Ditto Singapore, Japan, etc..

The global elite are all in the same club. And we ain't in that club.

[Come-from-Beyond]

Poloniex and Kraken are both in the USA.

Where do you think people trade these days?

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

I think people trade in China. If Poloniex and Kraken stop trading some tokens then trading will move to other exchanges.

They can't move the tokens:

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

And China is I bet very intent on regulating exchanges:

China is also showing a willingness to regulate what it can and recently they stated this was to protect investors from excesses. Ditto Singapore, Japan, etc..

The global elite are all in the same club. And we ain't in that club.

If the USA and Chine stop trading then trading will move to another jurisdiction. Economics laws are as strong as Physics ones.

[iamnotback]

Poloniex and Kraken are both in the USA.

Where do you think people trade these days?

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

I think people trade in China. If Poloniex and Kraken stop trading some tokens then trading will move to other exchanges.

They can't move the tokens:

Another big problem is the private keys for the tokens are held by these exchanges (note I have a solution to this which will be revealed in my white paper).

And China is I bet very intent on regulating exchanges:

China is also showing a willingness to regulate what it can and recently they stated this was to protect investors from excesses. Ditto Singapore, Japan, etc..

The global elite are all in the same club. And we ain't in that club.

If the USA and Chine stop trading then trading will move to another jurisdiction. Economics laws are as strong as Physics ones.

No the trading will move to tokens which aren't doing the illegal activity and which are thus compatible with all global jurisdictions. Your illegal shit can move to Russia and be ignored, after all the tokens on the Western exchanges have been confiscated or frozen.

You are trolling this thread now. Make a non-dumb point or please take a break, so I can finish the information I wanted to share.

(P.S. it might be instructive to you that all non-USA and China exchanges are being attacked/hacked, e.g. Bitfinex and MtGox. Think maybe the USG and Chinese covert agencies don't have anything to do with this  ).

I thought Bitcoin was illegal in Russia, or has that changed.

[Come-from-Beyond]

No the trading will move to tokens which aren't doing the illegal activity and which are thus compatible with all global jurisdictions. Your illegal shit can move to Russia and be ignored, after all the tokens on the Western exchanges have been confiscated or frozen.

You are trolling this thread now. Make a non-dumb point or please take a break, so I can finish the information I wanted to share.

(P.S. it might be instructive to you that all non-USA and China exchanges are being attacked/hacked, e.g. Bitfinex and MtGox. Think maybe the USG and Chinese covert agencies don't have anything to do with this  ).

We have hit a deadend in this part of convo.

I thought Bitcoin was illegal in Russia, or has that changed.

Bitcoin is the same as Monopoly money in Russia.

[iamnotback]

Iconomi apparently understands ICOs are not legal if sold to USA citizens and residents:

Are ICONOMI services available to US citizens?

Due to the uncertain legal system, ICONOMI services are not available to citizens of USA at the moment. As soon as a clear decision is made, these restrictions will be removed.

Perhaps they secretly realize the following is true:

...

It affects you as an investor only in that if for example the SEC decided to take action against ANY PROJECT which might cause all ICO projects' valuations to collapse on the markets.

...

See the discussion above this post between Come-from-Beyond and myself, which provides more details on the above red highlighted hypothesis.

Carrying on from that above quoted point I made upthread...

Repeating the revelation I had upthread:

You anal motherfuckers and those who want to regulate our pink shits ecosystem are really fucking loonie (and that includes you Spoetnik because you said you want regulation, lol).

Come on men, wake up to reality. Our pimple sized market cap gambling casino is just analogous to any other late night infomercial for breast enlargement pills. Okay there is a pooling of funds in our case, but apparently there is no global law against this. And each investor owns his own copy of the software and can fork the blockchain if he wants. We are buying software tokens, not company shares. Nobody owns the blockchain.

The bolded logic is what ICOs are using to justify selling software tokens:

Update: Information given to me by the team clearly express that this is an application token with no rights or ownership of the company etc. All of this should be covered in a full legal disclosure document that if I understand correctly will be distributed together with the whitepaper once the ICO is ready to launch. They are also working together with an established law firm to make sure the token is designed in a way to be compliant with US SEC regulation.

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

So the more relevant question is what type funding and organizational arrangements are truly decentralized and which are just obfuscations of a company share structure with escrow agents, board of directors, and expectations from ICO investors reliant on the actions of those centralized parties.

The argument that the token holder is the owner of a software token and copy of the software blockchain which he is free to manage as he pleases (in the words of the Supreme court) must not fail the test of economic reality and common sense.

Note the Howey test was discussed in great detail upthread, so I won't repeat that.

So I am not backtracking from the revelation that I had in the summer of 2016 wherein I sort of disowned this thread, because I still agree that if the users buy tokens without any prospectus and have access to the open source software, then they are each individually in control of their ownership of the token and the blockchain which runs it. They can fork whenever they want. No centralized entity has made any commitments to them.

But ICOs seem to entirely violate this concept and thus seem fall under the purview of the Howey test.

I noted (from one of his videos) that Charles Hoskinson apparently also tried to warn Ethereum about this and about not selling to unqualified USA investors because of this. But he was pushed out of Ethereum because he wanted to do issuance and governance correctly. Since that time, the EU has been getting more organized on federalizing their legal system and unifying on every kind of regulation including presumably securities law.

Ethereum might be a trap and one day it could be like another MtGox where all the ETH on the exchanges is confiscated or frozen. Ditto other ICO projects.

I wonder if the Bitcoin received in the ICO could also be frozen, but this wouldn't affect all Bitcoin investors thus probably wouldn't harm Bitcoin as much as it would devastate Ethereum.

I think it will come one day where ICO projects become locked and frozen on the Western exchanges. And with the global collapse of Europe accelerating after the French and German national elections this year, the EU may need to confiscate more funds. So they may cooperate on opportunities to do so. They will become desperate and look for every excuse to take funds.

ICO looks very risky to me. I am considering not doing one with my project. I welcome fair-minded discussion in response to this post. I would like to know of any strong counter-arguments.

Even if the SEC would not confiscate the tokens on Western exchanges, they could still send developers and promoters within their legal reach to jail and file for their extradition from cooperating Western countries.

Re: ICO obligations

And what happens when the escrow people have different judgement than some or many of the ICO investors?
Discord? "Oh well"? Suckers!

That is why the escrow has to be trusted. You need to have faith that the escrow will take the right decision in case of a dispute.
Obviously, it there is a dispute between the investors and the coin developers, the escrow's judgment will make one of the parties unhappy.

What if the investors disagree with each other and the developers? Who does the escrow agent follow? So the escrow agent becomes entrusted as the "controlling" owner of the project (which may make him culpable to the SEC regarding investment securities law).

Note I also think projects that are receiving funding under the guise of decentralized governance which is an obfuscation of actual insider whales centralized control (even if obscured by a sneaky scheme) may also fail the Howey test and/or FinCEN regulations. Examples of these might be Dash and Steem. Dash has the masternode obfuscation. And Steem has the witnesses and curation rewards which skew income to whales.

In short, if there is centralized control of the flow of money from investors to the activities that token investors base their investment expectations on, then the Howey test seems to be met.


Disclaimer: I am not a professional adviser on this topic. Consult your own professional adviser.

[Spoetnik]

I am glad to you considering what might happen shorter term.
I am pretty sure there will be legal surprises for us all as we continue on.
This needs to be highlighted to "investors"

[CryptocurrencyNetwork]

Hi all,

It is good to see some conversation going on.

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

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

[iamnotback]

Someone made an important point to me in a private message, which is that even if the regulated exchanges don't have to confiscate or freeze the tokens subjected to a regulation action, then even just delisting would be enough to cause liquidity and prices to crash.

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

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

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

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

...

In short, if there is centralized control of the flow of money from investors to the activities that token investors base their investment expectations on, then the Howey test seems to be met.

[iamnotback]

Re: Vitalik and Tual going to end up in jail?

Still think they're going to jail?

I think they are very likely culpable under securities law.

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

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

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

Who knows. My popcorn is ready.

[iamnotback]

Coinbase's Securities Law Framework applied to every ICO

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

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



Founders beware

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

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

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

Consensus amidst crisis

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

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

Watch Out, the ICOs Are Coming

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

Startup diligence is pretty light

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

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

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

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

Token utility linkage is not always there

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

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

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

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

The marketing hype is frightening

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

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

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

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

Financial engineering has its traps

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

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

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

The legal grounds are still shaky

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

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

Crashing the party or priming a launch

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

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

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

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

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

Rationality and the economics of interest

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

If a team has built up a lot of hype about a project, it will create a sense of FOMO — fear of missing out. From this point, the project can continue on one of two trajectories. A quality project combined with a lot of initial interest and a high, yet reasonable cap on the fundraise will quickly drive the crowd to fill the ICO. In a nutshell — everybody loves a winner!

[HadiHussain]

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

[TrueAnon]

I suggest you guys watch new name (soon) WBB very closely now and for coming months!!!

[noobtrader]

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

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

[iamnotback]

did the monero wrote that fact about infinite supply in their ann Huh   if i was an investard in monero i would feel cheated if it isnt

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

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

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

You retards don't even know the difference between an asymptotic limit and an actual money supply. An "infinite money supply" can't ever exist. Duh. Dashtards.

[iamnotback]

Should devs be held accountable

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

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

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

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

I am not anonymous. I am a dev.

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

And so now we have Roger Ver associated with DASH and QTUM, so that is allegedly two scams already.

[iamnotback]

When I started reading your message, it sounded like a fight. By the time I got to the end, I realized you are just really hoping I won't throw away my chance. You should worry less.

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

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

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

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

Satoshi disappeared as Bitcoin moved into mass awareness.

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

With the necessary funding no smartass (maybe the one who is manipulating you not to launch an ICO and get the funding you need) can copy your work - because its open source - throw in some 100s of 1000s and hire a bunch of developers and crush you before you are able to stand on your feet,

What do you think man? That I don't have plan.

If I emit a currency with which anyone will be able in the future to buy skins, infrastructures and equipment in a yet to be commercialized online game or create discount codes to use a platform to, say, order food online or rent an apartment or some other non existent fantastic sharing idea (airbnb and deliveroo come to mind) for a 80% discount on fees for 50 cents a pop (you now pay 6-12% of the booking and 3 euro respectively) and distributed to early birds, gamers and enthusiasts in exchange for valuable funding, do you really believe the fucking SEC and DOJ will have something to say about if you deliver your game or platform and is not as widely used as everyone thought it would be?

And then go create a $trillion marketcap with his identity full known to the authorities. You just aren't thinking man. I am thinking big. You are thinking small.

Don't you understand that regulators are the criminals. If they see a huge phenomenon, they will want a cut of the action. The more leverage they have, the larger cut they can demand. Do you live in a fairytale inside the recesses of your one-track mind.

And if the SEC wants to, what kinda entrepreneur and hacker are you for fucks sake?! find a workaround, create a shell of a shell company in Hong Kong or Switzerland to distribute the tokens and once the ball is rolling create a Foundation and enjoy a well deserved retirement after all the draining hard work and wasted hours in this forum.

You are advising me to cash out my reputation as all the ICOs do. Instead of actually focusing on delivering the goods.

All the time I would spend managing that ruckus and other programmers, would end up like Ethereum and never make an accomplishment that actually solves anything. Have you heard of the Mythical Man Month. I'd end up spending all my time managing communication with others and very little actually doing any technical work.

It is much better if your collaborators come to you organically via their interest in working on the code you've already accomplished. Trying to predict how new hires will integrate is a crap shoot. Enormously inefficient.

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

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

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

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

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

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

The protocol I want to implement will distribute tokens to millions of people.

[iamnotback]

I want to acknowledge that @Skalpell has a valid point about needing to accelerate by getting others involved.

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

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

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

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

I don't know if I can achieve this. I go forward step-by-step, just as I did when I thought I had no good health future over the past years of being ill. I just went step-by-step and worked my way towards a solution. In hindsight, if I had known to get a TB test 4.5 years ago, then I would not have lost 4 years. So if there is some analogous insight which could help accelerate my plans now, then I hope I am able to realize it as the recurrent fatigue and cognitive deficiencies clear out (16 more days to go on the 4-drug medication, then 16 more weeks on the 2-drug regimen).

[bet101]

Just wanted to remind you all again i don't think law / regulation = death of crypto.
There is laws for the New York Stock Exchange right ? Well they still trade "penny stocks"

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

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

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

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

I grow tired of pointing out the hypocrisy.

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

Why don't you just admit human nature instead of lying to yourself?

[Traxo]

https://www.coindesk.com/icos-eu-will-slow-giant-regulate-tokens/

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

EDIT (07/29):

How do you answer this:

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

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

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

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

EDIT:
How many ICOs are complying with legal disclosures?

EDIT (08/28):
https://bitcointalk.org/index.php?topic=2129166.msg21285511#msg21285511

[theheolyn]

Re: Is Fraud and Scam killing the Altcoins?

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

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

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

…

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

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

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

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

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

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

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

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

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

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

If the department overseeing illegal fundraising activities found a fundraising without proper permission, or a fundraising that violates the relevant provisions of the State, and if one of the following circumstances is found, the department shall launch an administrative investigation. Other relevant departments shall cooperate with the investigation.
….
(2) to raise funds in the name of issuing or transferring equity, raising funds, selling insurance, or engaging in asset management activities, virtual currency, leasing, credit cooperation and mutual funds..."

[Traxo]

Are Most Cryptocurrencies Doomed to Collapse — because they’re “ICO-issued”?

[Hyperme.sh]

WARNING: those who are trading and promoting ICO issued tokens to non-accredited investors in G20 nations (even via an exchange) may be incriminating themselves. Even the European Union has a criteria for accredited investors (and even Ethereum didn’t restrict its ICO accordingly):

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

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

https://bnktothefuture.com/icos

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

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

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

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

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

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

[Hyperme.sh]

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

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

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

Disclaimer: IANAL. This is not legal advice.

[CornCube]

The altcoin topic everyone wants to sweep under the rug

Latest update.

[CRED.me]

And the ICO cease & desist orders begin:

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

And the European regulator is coming:

http://archive.is/heVFi

G20 coordinated regulation coming:

The international mood toward Bitcoin has continued to tighten, particularly with US Treasury secretary Steven Mnuchin stating that the G20 nations will begin working together to make sure that Bitcoin and other cryptocurrencies are properly regulated.