US SEC killed an ICO

[ammosov]

What surprises most is that one of the tiniest ICOs was targeted.

"Protostarr raised roughly $45,000 worth of ether to build an earnings distribution D-App (Decentralized Application) during its ICO that started two weeks ago. 

“On August 24, 2017, we were contacted by the United States Security and Exchange Commission regarding the initial coin offering of Protostarr tokens to fund the development of our Ethereum decentralized application,” explains the startup’s recent announcement.

After consultation with multiple lawyers, we have decided to cease further operations and refund Ethereum collected in our crowdsale that began on August 13, 2017."

https://news.bitcoin.com/a-phone-call-from-sec-pressures-ico-startup-to-close-operations/

[Warry]

What surprises most is that one of the tiniest ICOs was targeted.

"Protostarr raised roughly $45,000 worth of ether to build an earnings distribution D-App (Decentralized Application) during its ICO that started two weeks ago. 

“On August 24, 2017, we were contacted by the United States Security and Exchange Commission regarding the initial coin offering of Protostarr tokens to fund the development of our Ethereum decentralized application,” explains the startup’s recent announcement.

After consultation with multiple lawyers, we have decided to cease further operations and refund Ethereum collected in our crowdsale that began on August 13, 2017."

https://news.bitcoin.com/a-phone-call-from-sec-pressures-ico-startup-to-close-operations/

Yeah, this is good news for ICO token community and investor of ICO market. We will see an ICO market fresh in next time, do not have any shit project and we can peace of mind when invest to this market.

[DigitalLemming]

Wow I guess they are just getting their feet wet before going after some of the bigger fish. Will be interesting to see how this plays out in the future. Hopefully the market will end up better.

[rearwheels]

I hope it will help to refresh market of huge number of ICOs. But on other side i think it will be more complicated to participate for small investors (<200$). Anyway time will show it )

[pavelna07]

What surprises most is that one of the tiniest ICOs was targeted.

"Protostarr raised roughly $45,000 worth of ether to build an earnings distribution D-App (Decentralized Application) during its ICO that started two weeks ago. 

“On August 24, 2017, we were contacted by the United States Security and Exchange Commission regarding the initial coin offering of Protostarr tokens to fund the development of our Ethereum decentralized application,” explains the startup’s recent announcement.

After consultation with multiple lawyers, we have decided to cease further operations and refund Ethereum collected in our crowdsale that began on August 13, 2017."

https://news.bitcoin.com/a-phone-call-from-sec-pressures-ico-startup-to-close-operations/

Yeah, this is good news for ICO token community and investor of ICO market. We will see an ICO market fresh in next time, do not have any shit project and we can peace of mind when invest to this market.

I agree, the situation is getting out of the hand with all the new ICO’s launching daily, majority of them are plagued with

Knowingly exaggerated goals/revenues
Unreasonable timelines
Team with Minimum experience to handle project complexity
Poor ICO preparation and/or execution
Greed of developers
Limited or nonexistent accountability
 

We all knew it is only matter of time before Securities and Exchange Commission (SEC) targets Projects issuing Tokens as an Equity stake.

“The Report seems to distinguish between Ether, labeled a virtual currency, and DAO Tokens, labeled a security. Market participants may take comfort in this distinction, as it supports the view that not all blockchain tokens are securities under the U.S. Federal Securities Laws. - Devebois & Plimpton LLC”

I believe there are great projects out there, managed by the new generation of innovators who deserve our support in their effort to better our lives 

[gluedog]

So does anyone know if Protostarr founders were located in the US or not?

[perla]

they only want the investor safe and not get scammed by ICO that don't really have good project, but now i see some ICO have disclaimer that US citizen can't join some ICOs

[ammosov]

So does anyone know if Protostarr founders were located in the US or not?

Seems VERY likely.

https://protostarr.io/whitepaper.pdf

[gluedog]

So does anyone know if Protostarr founders were located in the US or not?

Seems VERY likely.

https://protostarr.io/whitepaper.pdf

Ah yes.

Their co-founder even worked for the US dept. of defense.

Now it makes sense why the SEC targeted such a small ICO ($42k raised):

They couldn't have an employee from the department of defense be part of an "illegal" issuance of securities - it would look extremely bad for the US.
So they took action. Took it down before anything else could happen.

[Zeeks]

Hope this will stop the influx of ico's, let's get back to "normal" projects 

[ammosov]

So does anyone know if Protostarr founders were located in the US or not?

Seems VERY likely.

https://protostarr.io/whitepaper.pdf

Ah yes.

Their co-founder even worked for the US dept. of defense.

Now it makes sense why the SEC targeted such a small ICO ($42k raised):

They couldn't have an employee from the department of defense be part of an "illegal" issuance of securities - it would look extremely bad for the US.
So they took action. Took it down before anything else could happen.

I do not think so. DoD employs close to 100 000 civilians, and they are not under any special restrictions. However they could deem a US citizen in breach of Reg D regarding exempt fundraising. In brief if you solicit funds in the US from US residents and do not want to register you MUST NOT do this in public. This is a 80 year old rule.

[steamon]

I don't think it's the amount of money raised but more the rules that are in place. If you are the first they grab its most likely a message they wanna give to the rest of the ICOS that are planning to begin or start one. Does not matter how big or small it is. It's not allowed unless the rules change in the united states. Well, I do believe it will become regulated one day. Currently, it is walking out of hand with the ICOS launching like plants. So some proper rule implantation is needed in this new hype of upcoming icos.

[olliejjc16]

The issue was their token was a security plain and simple, if it was a utility token the sec would have left it alone.

[ammosov]

The issue was their token was a security plain and simple, if it was a utility token the sec would have left it alone.

Strictly speaking, it was closer to utility than to security. At least I am not sure if SEC test would work as described on them. 

[shinratensei_]

they only want the investor safe and not get scammed by ICO that don't really have good project, but now i see some ICO have disclaimer that US citizen can't join some ICOs

US SEC don't kill the ico, But it looks an awareness for the US investors to not join in the ico, I mean as you can see a lot of the projects were not based in the US. And is the world wide is not only USA.
The ico will still run its operation.