The altcoin topic everyone wants to sweep under the rug

[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?