What a gem of a post we have here, hilarious and true at the same time. In the outside world, for such claims, a real security can be destroyed with the CEO facing serious accusations, yes, just for a speculation!
So we have two possible cases here:
1) He knows this and he doesn't care as he is either anonymous or in a safe heaven where he can't be touched.
2) He is so ignorant and stupid that he doesn't even know that it is illegal to do what he is doing.
Which one is it?
Thinking globally here, not just about the China ban.
Presumably they think they that the global securities regulators will not be able to get sufficiently organized to go after them. They also presume that if all the ICO investors end up making a profit, then the securities regulators will not bring an enforcement case.
Also they have offered to refund investors and they think that is another way to prevent investors from complaining to the regulators.
Also they may be hoping that their issuance is eventually classified as not being a security or grandfathered.
And they may be presuming that in a worst case scenario, they made so much profit that they can afford the best attorneys.
Given that the
SEC has issued their first enforcement case which as
I had expected, is a case of fraud where the investors are likely to have losses, it appears that enforcement against ICOs will first be focused on cases of fraud, obvious scams that have no real value, and
on increased capital contols.
Thus it appears the ICO bubble will continue upwards for a while still, and perhaps more focused on projects that are not vaporware.
I still think in the end game, there will be a graveyard of ICO issued tokens that have no value.
It it is not clear to me if securities regulators will be bypassed by decentralized exchanges. I think in the case of a token that trades mostly spending on goods and services as opposed to trading between speculators (aka investors), it is quite unlikely that regulators would attempt to declare such P2P decentralized trading to be illegal even if the security had initially been issued as a security. Because the public will have demonstrated that the token is useful not as just a speculative investment.
Whether such a token would continue to be legal to trade on unregistered centralized exchanges (that obviously mostly cater to speculative investment), I'm less confident but it's a possibility.
I think it is important to emphasize that it implausible to issue a security which legally publicly trades between speculators all over the world (unless perhaps held initially for 3 years by the initial investors) even if registering or not registering the securities. This is because the nation-state securities regulations are not unified.
Thus ICO issuance is a sort of purgatory in the sense that there is no assurance of how it will end up. It could end up encumbering the tokens such that they are illegal to trade for investors who do itemized reporting of capital gains on tax returns (assuming regulators get coordinating with tax reporting). Yet I think due to the easy and extreme money to be made, participants are throwing caution aside.
What I would like to see and what I intend to do with my project is fundraising that is not issuing tokens as securities. So as to make it very clear that there won't be this purgatory hanging over the project ongoing.
