legality of US investors buying "shares" on sites like crypto-trade/havelock/etc

[dogechode]

Does anyone have any information about the legality of US citizens buying "shares" on all these sites that seem to be popping up where you can acquire "shares" of companies but it all doesn't seem to be regulated by the SEC?

Appreciate any info.

[1715659844]

1715659844

[1715659844]

1715659844

[1715659844]

1715659844

[1715659844]

1715659844

[1715659844]

1715659844

[runam0k]

Isn't it a case of issuer's responsibility not to sell to x or y? It's not illegal per se (for the buyer of "shares"), but he or she might get stung.

[dogechode]

The seller might get stung or the buyer might get stung? Stung how? And is it illegal to buy them? I mean people sometimes invest (legally) in businesses that are not corporations for a percent of equity don't they?

[runam0k]

To clarify: not illegal for US citizens to buy shares as far as I know, but the laws are there to protect US citizens. You could, as a buyer of shares, get stung if eg the business is shut down and the shares become worthless.

I suspect most issuers here, in offering shares (publicly) to US citizens, are falling foul of US securities laws.

[Fundmanager23]

People buy shares in their neighbor's start up all the time. There are certain exemptions for private transactions. There are also exemptions for high net worth investors.  There are also issues with the advertisement of securities for sale.   The larger question that remains to be answered is what is being invested.  The SEC regulates the sale of securities for value.  The term ‘‘sale’’ or ‘‘sell’’ shall include every contract of sale or disposition of a security or interest in a security, for value. The other question in the sale of securities relates to state laws. Every state regulates the sale of securities under something called "Blue Sky" laws.   These laws assume people are paying with US dollars or Euros or some other previously recognized currency.  I'm not sure it would be possible to file a registration statement with the US SEC saying we intend to sell securities for bitcoin.   A very basic registration statement is $50,000 so it would be an interested exercise to see what position the Commission took as to whether or not bitcoin is considered a value.  The penalty for buying shares as an individual is your possible risk of total loss similar to walking into a Las Vegas casino. Being stupid is penalty enough.

[dogechode]

so if a US citizen bought shares on such an exchange, and profited, and paid the appropriate tax on those profits - no harm no foul?

[Entropy-uc]

so if a US citizen bought shares on such an exchange, and profited, and paid the appropriate tax on those profits - no harm no foul?

It's that "profited" bit that is going to give you problems.  The bitcoin securities market is a giant sheep herding program.  Now, as a sheep thinking about joining the crowd heading for the pens you should ask yourself: Are they looking to shear me for some wool or does the owner want a new leather jacket and some lamb chops?

[DeathAndTaxes]

so if a US citizen bought shares on such an exchange, and profited, and paid the appropriate tax on those profits - no harm no foul?

Sure.  However most likely it is buy shares on exchange, turns out to be scam. You have bought nothing but air, have no legal right, and lose all your money.

Sellers of said shares (and the exchanges) may be violating US law but the buyer isn't breaking the law.  Still that is little comfort when you lose everything.  "Hooray all my bitcoins are gone but I didn't break the law".

[dogechode]

so if a US citizen bought shares on such an exchange, and profited, and paid the appropriate tax on those profits - no harm no foul?

It's that "profited" bit that is going to give you problems.  The bitcoin securities market is a giant sheep herding program.  Now, as a sheep thinking about joining the crowd heading for the pens you should ask yourself: Are they looking to shear me for some wool or does the owner want a new leather jacket and some lamb chops?

See now, if I was a sheep and the owner started trying to herd me into a pen, I'd be thinking "oh god am I in minnesota?!" wayyy before I worried about being turned into a leather jacket.

[MikeMark]

There is an expert in these matters available here, MSantori.

Here's a link to his last posts:

https://bitcointalk.org/index.php?action=profile;u=118100;sa=showPosts

I highly recommend you read what he's written. He's willing and wanting to talk about these issues. You may even be able to phone him.

Basically, many, maybe even most of the so-called securities here are not compliant with US SEC law.

That doesn't mean you cannot buy them, but if they get taken out by the SEC, you will simply be waiting in line like everyone else for your now meager piece of the pie.

The unwritten history of bitcoin securities markets is that there have been three or more that have been purposely taken out by government action. Some who saw the writing on the wall for what it was may have profited. I believe most lost at least some money in whatever form.

There was even one that lasted a little longer by not allowing US investors to buy shares, BitFunder. However, it seems that other problems plague them now, probably due to lack of liquidity. US investors represent something like 90% of funding. Take that away and...

There are some advertising restrictions on "unlisted" securities that mean that a company is not allowed to use public media to acquire investors. That means advertising shares for sale on something public like bitcointalk will mean non-compliance.


Read Marco Santori for more clarity. IANAL. He is. 


Enjoy,

-MikeMark