Would you invest in a bitcoin company if you could own actual equity?

[Viceroy]

Crowdfunding is coming to America.  I don't mean kickstarter-like where people "give away" money I mean actual crowd source funding.

What is happening is that the SEC is finally revisiting an 80 year old law that prevents entrepreneurs from advertising their offering (to sell shares) to the public.  In 1933 the federal government put an end to public offerings by requiring that all lenders be "accredited" or "sophisticated"; what they really meant was "rich".

There are two kinds of investors in America, those with more than $1 million and everyone else.  Under Obama's administration the president signed the JOBS ACT last year which allows non-millionaires to now invest directly in small start up companies.  So far only Kansas and Georgia have come on board but soon the rest of the states will follow suit.

Would you invest up to $5000 in a startup company if you could own shares in that company?



http://www.businessweek.com/articles/2013-06-20/kansas-and-georgia-beat-the-sec-on-crowdfunding-rules-dot-now-others-are-trying

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[Viceroy]

If you live in Kansas put your X here: https://bitcointalk.org/index.php?topic=271894.0

Georgia based lenders holla over here:  https://bitcointalk.org/index.php?topic=271895.0

[Luckybit]

. This exemption would allow use of the internet "funding portals" registered with the government, the use of which in private placements is extremely limited by current law. One of the conditions of this exemption is a yearly aggregate limit on the amount each person may invest in offerings of this type, tiered by the person's net worth or yearly income. The limits are $2,000 or 5% (whichever is greater) for people earning (or worth) up to $100,000, and $100,000 or 10% (whichever is less) for people earning (or worth) $100,000 or more. This exemption is intended to allow a form of crowd funding.[2
http://en.wikipedia.org/wiki/Jumpstart_Our_Business_Startups_Act

It's capped. Why is this law considered good if it gives the government the ability to cap everyone at $2000? $2000 is crazy in how low it is.

This is an area where there can be reforms to update the law and make it better. $2000 is a cap and a very low cap for crowdfunding for an entire year. Also there has to be laws which update to take into account the latest technologies of cryptofinance.

[Viceroy]

The reason it's capped is that non-sophisticated investors are not sophisticated and the cap prevents them from investing too heavily in something they have probably not fully investigated.  The cap is a good thing and it is raised in the presence of a sophisticated investor.

In my humble opinion.

[ahbartsch]

'Yes, absolutely' and 'Where can I sign up?' are the same thing. I suggest amalgamating them.

[twentyseventy]

So, are you asking because you'd like to get invested with GA and KS investors? Or are you merely disseminating the information here?

[Luckybit]

The reason it's capped is that non-sophisticated investors are not sophisticated and the cap prevents them from investing too heavily in something they have probably not fully investigated.  The cap is a good thing and it is raised in the presence of a sophisticated investor.

In my humble opinion.

That is just bullshit elitism. Who are the non-sophisticated investors? Poor people? Why cap the poor and not cap the rich?

NO CAPS.

[Nagle]

That is just bullshit elitism. Who are the non-sophisticated investors? Poor people? Why cap the poor and not cap the rich?

Because of the long history of investment scams.

The Bitcoin world, in a few short years, has already had almost every common investment scam - bucket shops, Ponzi schemes, front-running, big stores, embezzlement of customer funds, and simply taking the money and running. It's embarrassing.

[Luckybit]

That is just bullshit elitism. Who are the non-sophisticated investors? Poor people? Why cap the poor and not cap the rich?

Because of the long history of investment scams.

The Bitcoin world, in a few short years, has already had almost every common investment scam - bucket shops, Ponzi schemes, front-running, big stores, embezzlement of customer funds, and simply taking the money and running. It's embarrassing.

You can't protect everybody from everything. There perhaps should be a certification test or exam to pass in order to remove the cap but it definitely should not be based on net worth or how rich you are. That is just allowing rich people to own more shares just because they are rich and "sophisticated".

[Viceroy]

Yep, that is the current law.  Welcome to 1933.

[nameface]

The reason it's capped is that non-sophisticated investors are not sophisticated and the cap prevents them from investing too heavily in something they have probably not fully investigated.  The cap is a good thing and it is raised in the presence of a sophisticated investor.

In my humble opinion.

That is just bullshit elitism. Who are the non-sophisticated investors? Poor people? Why cap the poor and not cap the rich?

NO CAPS.

+1

When he says: "the cap is a good thing", he's implying it's in the best interest of the unsophisticated investor that their liberty be minimized. But do you really think he believes his own statement? I doubt it. It's elitist bullshit.

[Viceroy]

Let's try to attack the idea, not the person... eh monkey boy?

[nameface]

Let's try to attack the idea, not the person... eh monkey boy?

Ok sorry.
Can you convince me why you think the limits are good?

[Viceroy]

Let me start by saying I am not a "sophisticated investor".  Then I'll say I like that the government is trying to protect little old ladies from unscrupulous snake oil salesmen.  The basic idea is that people who are millionaires can better manage their money and even if they lose a large chunk they are not likely to see their lifestyle change whereas a little old person who is sold an investment by con artist (pirateat40) salesmen have more to lose. 

I do not believe the "average joe" is not sophisticated in the ways of money and I believe he needs protection from snake oil salesmen.
That is the basic mission of the Securities and Exchange Commission.  They were formed in response to Charles Ponzi's scheme and the great depression of 1929.  They require that anyone offering a public security to non-sophisticated investors is forced to register that security.

While I applaud the new program I honestly think hedge funds will manipulate the rules to steal peoples money and just like the Glas-Steagle Act we probably should have left the system alone.  Without the cap in place the hedge funds would just take everyone's money.  At least with the cap a little old person would need to be ripped off by 20 separate "salesmen" before they can get it all.  (Another restriction is that a single investor can hold no more than 5% unless they are a director).

[worldinacoin]

I wont, the risks are too high

[nameface]

I share your concern about the lay-investor getting taken advantage of. But the snake oil salesmen swindles no matter what the laws are. We're talking about IPOs for legitimate businesses. I see lower limits as being great for small business/entrepreneurs. Ponzis will always be illegal.

I think it's especially hypocritical to have limits in a society with legalized gambling.

[Viceroy]

I think it's especially hypocritical to have limits in a society with legalized gambling.

I agree.  I was thinking as I was writing "what's the point if you can bet it all on red on the roulette wheel"?

[Luckybit]

Let me start by saying I am not a "sophisticated investor".  Then I'll say I like that the government is trying to protect little old ladies from unscrupulous snake oil salesmen.  The basic idea is that people who are millionaires can better manage their money and even if they lose a large chunk they are not likely to see their lifestyle change whereas a little old person who is sold an investment by con artist (pirateat40) salesmen have more to lose. 

I do not believe the "average joe" is not sophisticated in the ways of money and I believe he needs protection from snake oil salesmen.
That is the basic mission of the Securities and Exchange Commission.  They were formed in response to Charles Ponzi's scheme and the great depression of 1929.  They require that anyone offering a public security to non-sophisticated investors is forced to register that security.

The problem is they don't give people who aren't "average joe" or little old ladies any legal way around the cap. If they merely made it harder but not impossible then I would be fine with it. They put a cap, they could have put certification requirements, make people take a college course, but they put a cap. This reduces everyones liberty without providing any reasonable recourse to restore it, without any exemptions, so that the finance professor is in the same boat at the retired little old lady just because of their class.

While I applaud the new program I honestly think hedge funds will manipulate the rules to steal peoples money and just like the Glas-Steagle Act we probably should have left the system alone.  Without the cap in place the hedge funds would just take everyone's money.  At least with the cap a little old person would need to be ripped off by 20 separate "salesmen" before they can get it all.  (Another restriction is that a single investor can hold no more than 5% unless they are a director).

These restrictions are to steal away liberty and nothing else. It's fine to offer recommendations, it's fine to require a license for investors, or a certification, something which can be overcome by studying, or by hard work, or by becoming "sophisticated", but to make "sophisticated" be based entirely on net worth is to corrupt the entire economy to favor rich investors. It's true that rich investors have more to lose so they probably have a buffer, and they might also have more experience investing in most cases, but that doesn't make them any better at investing just because they have more.

Ultimately I don't think the government should tell people what to do with their life savings, their money, etc. The government can make it difficult to lose it all, but a cap isn't just making it difficult, it's dictating what you can and cannot do with your money.

That isn't about protecting people anymore, it's about control. You can protect people by requiring all investors get licensed. This cap is more like putting a cap on the amount of guns or bullets a person can buy and basing it on something like race, gender, age or some other arbitrary criteria. If you invest and lose a lot of money and you were licensed (which means you knew all the risks and got certified) then it's on you. You should be allowed to take risks in this world.

[Viceroy]

One would think the finance professor could use his magical skill to day trade or some other such technique whereby said professor becomes one of the elite class long before retirement.  The same to the little old lady... there is nothing preventing her from become an accredited investor and she can demonstrate her worthiness by amassing $1MM.

There are further 'loopholes' for friends and family of an entrepreneur.  If you wish to provide private funding to a friend's startup the cap is different or non-existent depending on your state.

That isn't about protecting people anymore, it's about control. You can protect people by requiring all investors get licensed. This cap is more like putting a cap on the amount of guns or bullets a person can buy

You should move to Colorado and argue that any person should not be restricted in the amount of marijuana they can hold.  It's not fair to have only a one-ounce limit!

[faiza1990]

no very highly risk involve in this