Coinbase's Securities Law Framework applied to every ICO

[iamnotback]

This thread should be about scoring every ICO and project based on Coinbase's Securities Law Framework (c.f. page 24).

I will update this list in this OP based on feedback in the thread.

Happy ICO shredding! Here we go...

A total score of 100+ on every one of the 3 major categories means "Very likely" for a token to be an investment security subject to SEC regulation.

The Common Enterprise items are determining whether the token holder has the ability to effect his own destiny without depending on actions of some group that received the Investment of Money.

The Expectation of Profits are if the token holders are expecting to receive collectivized profits from the ongoing operation of the enterprise or system. However the Howey test also refers to expectation of gains, so that would also include investment gains. So IMO the expectation of profits is tied into whether the token holders' potential investment gains depend on some group that received the Investment of Money. If so, then I am going to give at least 100 points for that category.

Note if your project and token is truly decentralized, you will receive a 0 scoring on every category. So please don't tell me this regulation is interring with our ability to have decentralized systems. The law exists for a very good reason. The authorities are standing back and allowing us to reap what we sow, before they are forced to regulate eventually if we don't build truly decentralized systems.

Crowdsales that sell some product that will be produced by the funding raise (was Kickstarter's original model) are not investments with an expectation of profit. The only expectation is to receive the goods purchased. Selling tokens can be considered a s/w product, if there is no expectation of profit and/or investment gain dependency on the group that received the money invested. Regulatory-compliant crowd equity sites already exist on the Internet for companies that want to raise equity funding.

Bitcoin

Points	Item
0	Investment of Money: Crowdsale
0	Common Enterprise: Pre-deployment
0	Common Enterprise: Fully operational protocol, not just a mockup
0	Common Enterprise: Live network is operational
0	Common Enterprise: egalitarian returns without ongoing effort
0	Common Enterprise: variable returns based on ongoing effort
0	Expection of Profit: Ownership or equity interest in a legal entity
0	Expection of Profit: Entitlement to a share of profits/gains of the enterprise
0	Expection of Profit: No function of token
0	Expection of Profit: Pre-deployment
0	Expection of Profit: Fully operational protocol, not just a mockup
0	Expection of Profit: Voting on budgets
0	Expection of Profit: Voting on governance
0	Expection of Profit: Marketed as an ICO, not as network access token

Totals	Item
0	Investment of Money
0	Common Enterprise
0	Expection of Profit

Dash

Points	Item
100	Investment of Money: Crowdsale (invest money in masternodes in an enterprise run allegedly by "Evan Inc.")
0	Common Enterprise: Pre-deployment
0	Common Enterprise: Fully operational protocol, not just a mockup
0	Common Enterprise: Live network is operational
25	Common Enterprise: egalitarian returns without ongoing effort (masternode ROI)
0	Common Enterprise: variable returns based on ongoing effort
0	Expection of Profit: Ownership or equity interest in a legal entity
100	Expection of Profit: Entitlement to a share of profits/gains of the enterprise (masternode ROI)
0	Expection of Profit: No function of token
0	Expection of Profit: Pre-deployment
0	Expection of Profit: Fully operational protocol, not just a mockup
0	Expection of Profit: Voting on budgets (there is, but obfuscates that allegedly "Evan Inc." has controlling interest)
0	Expection of Profit: Voting on governance (there is, but obfuscates that allegedly "Evan Inc." has controlling interest)
0	Expection of Profit: Marketed as an ICO, not as network access token

Totals	Item
100	Investment of Money
25	Common Enterprise
100	Expection of Profit

Ethereum

Points	Item
100	Investment of Money: Crowdsale
70	Common Enterprise: Pre-deployment
60	Common Enterprise: Fully operational protocol, not just a mockup
50	Common Enterprise: Live network is operational
0	Common Enterprise: egalitarian returns without ongoing effort
0	Common Enterprise: variable returns based on ongoing effort
0	Expection of Profit: Ownership or equity interest in a legal entity
100	Expection of Profit: Entitlement to a share of profits/gains of the enterprise
0	Expection of Profit: No function of token
20	Expection of Profit: Pre-deployment
10	Expection of Profit: Fully operational protocol, not just a mockup
0	Expection of Profit: Voting on budgets
0	Expection of Profit: Voting on governance
50	Expection of Profit: Marketed as an ICO, not as network access token

Totals	Item
100	Investment of Money
180	Common Enterprise
180	Expection of Profit

Monero

Points	Item
0	Investment of Money: Crowdsale
0	Common Enterprise: Pre-deployment
0	Common Enterprise: Fully operational protocol, not just a mockup
0	Common Enterprise: Live network is operational
0	Common Enterprise: egalitarian returns without ongoing effort
0	Common Enterprise: variable returns based on ongoing effort
0	Expection of Profit: Ownership or equity interest in a legal entity
0	Expection of Profit: Entitlement to a share of profits/gains of the enterprise
0	Expection of Profit: No function of token
0	Expection of Profit: Pre-deployment
0	Expection of Profit: Fully operational protocol, not just a mockup
0	Expection of Profit: Voting on budgets
0	Expection of Profit: Voting on governance
0	Expection of Profit: Marketed as an ICO, not as network access token

Totals	Item
0	Investment of Money
0	Common Enterprise
0	Expection of Profit

Steem

Points	Item
0	Investment of Money: Crowdsale
0	Common Enterprise: Pre-deployment
0	Common Enterprise: Fully operational protocol, not just a mockup
0	Common Enterprise: Live network is operational
0	Common Enterprise: egalitarian returns without ongoing effort
-20	Common Enterprise: variable returns based on ongoing effort
0	Expection of Profit: Ownership or equity interest in a legal entity
0	Expection of Profit: Entitlement to a share of profits/gains of the enterprise
0	Expection of Profit: No function of token
0	Expection of Profit: Pre-deployment
0	Expection of Profit: Fully operational protocol, not just a mockup
0	Expection of Profit: Voting on budgets (yet but controlled by a few whales due to the sneaky mine)
0	Expection of Profit: Voting on governance (yet but controlled by a few whales due to the sneaky mine)
0	Expection of Profit: Marketed as an ICO, not as network access token

Totals	Item
0	Investment of Money
-20	Common Enterprise
0	Expection of Profit

WeTrust

Points	Item
100	Investment of Money: Crowdsale
70	Common Enterprise: Pre-deployment
60	Common Enterprise: Fully operational protocol, not just a mockup
50	Common Enterprise: Live network is operational
0	Common Enterprise: egalitarian returns without ongoing effort
-20	Common Enterprise: variable returns based on ongoing effort
0	Expection of Profit: Ownership or equity interest in a legal entity
100	Expection of Profit: Entitlement to a share of profits/gains of the enterprise
0	Expection of Profit: No function of token
20	Expection of Profit: Pre-deployment
10	Expection of Profit: Fully operational protocol, not just a mockup
0	Expection of Profit: Voting on budgets
0	Expection of Profit: Voting on governance
50	Expection of Profit: Marketed as an ICO, not as network access token

Totals	Item
100	Investment of Money
160	Common Enterprise
180	Expection of Profit

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[iamnotback]

Added Bitcoin, Dash, Ethereum, Monero, and Steem to the OP.

[memequiserle]

what is coinbase about ico security
coinbase can open service iso selling, same with yobit, bitrex, c-cex and more, or what is about coinbase ico service equal title youre thread
iam visit youre link in title pdf only about framework

[ccccccc7]

This thread should be about scoring every ICO and project based on Coinbase's Securities Law Framework (c.f. page 24).

Seeing the table you referenced then I think Zcash would be highly likely to face SEC regulation, however, Zclassic would not right?

[BitcoinNational]

ok.

ETC.
WAVES.
LSK.
ARDOR.
BTS.
STRAT.
ZEC.
FCT.

[BitcoinNational]

and any assets on those platforms.

[iamnotback]

I am reviewing my logic on the scoring of Steem in the OP compared to Dash.

In Dash there is investment money in a masternode to receive a return that is the same for every other masternode (deposited in the same period). The is a common enterprise that depends on the core team for its promotion and future development that drives the expectation of profit. It is presented as DAC (decentralized autonomous corporation) because there is voting and thus claimed to be decentralized governance. But it is alleged that "Evan Inc." controls a majority of the masternodes and thus controls the enterprise. So this is what allegedly makes Dash likely to be subject to SEC regulation (and thus likely in an illegal circumstance currently unless it will be grandfathered).

Steem has delegates and witnesses which are elected which receive a return, but it is not based on the investment of money. Although the whales do in effect control the governance and the sneaky mine did enable a high concentration of the money supply, the sneaky mine was announced in advance (although not very conspicuously). So it was only sneaky because most of us were not paying careful attention to the ANN threads. In Dash's case, it has been shown convincingly that Evan's group deliberately exacerbated the instamine (in his favor) in a non-transparent (at the time) way.

Although one can argue that Steem is an ongoing common enterprise that investors based their expectation of gains, and I might think this is subject to being an investment security per SEC regulations and the Howey test, it doesn't seem to fit Coinbase's scoring items well.

So I am saying that Steem is also perhaps culpable, but Dash is more clearly so. And even Dash is not as unarguably culpable as most (if not all) of the ICOs.

[iamnotback]

About Monero versus Dash:

Your other report topic for example lambasted Dash and gave Monero an almost perfect score.

Are you referring to Coinbase's Securities Law Framework scoring system?

Well in that system Monero is decentralized and not culpable.

You love to forget about King Risto's shenanigans.
If he had not poured money it into it non stop running the coin Monero would not be here today.

That doesn't make it a security. Why don't you go learn about the Howey test and stop talking about irrelevant matters.

What ever Risto did was his own decision. There was no Common Enterprise which received an Investment of Money from the token.

There was some stupid MEW group for a while, but it didn't receive any money from Monero's protocol, unlike the masternode scam of Dash.

Please your technological ignorance is unbearable.

I didn't like what Risto did but that didn't make it liable under the Howey test. Please have more accurate discernment skills.

[jlp]

iamnotback:

How would you score NEM?

Based on their description here:

https://forum.nem.io/t/not-claiming-nemstake-why-it-is-no-longer-possible-and-the-history-of-the-process/2859

it would seem that there was an "Investment of Money" and "Expectation of Profit" but I don't know about "Common Enterprise".

[Mac0ni]

So how would the DAPPS being built on Ethereum be rated? For instance, I have my eye on Bancor currently. It lets you exchange coins, buy into funds (multiple coins), or make your own currency (think reward points or what not). It has its own token and that appears to be the only way to get an investment return that I can see (like most cryptocurrencies).