Comment by relyio | Hacker News Reader

Comment by relyio | Hacker News Reader

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It doesn't bother the government when the middle class spend its hard earned money in gambling, sport events or entertainment. Somehow, there's suddenly a moral imperative to protect those poor sheep from doing as they please with their property. But, wait, only if their capital inflow will dilute the returns of established investors.

It's to protect the middle class of course, though one can only wonder why the blatant double standard. I have no idea!

The "accredited investor" regulations are a sham, an unfair and artificial barrier to entry that ought to be removed. Yes, some people will get abused. This might even create local instability. But, that is clearly the long-term optima. Those who lose money to scams can leave it to law enforcement to do their job. Others who invest more they can afford to lose into bad apples will learn that you should always hedge risk. As a whole, society gets smarter when it is allowed to make mistakes, even costly ones. Smarter and less fragile.

> It doesn't bother the government when the middle class spend its hard earned money in gambling

Isn't gambling heavily regulated in the US to the point of being barely legal in many states? Isn't that basically how many Indian tribes make money - by being outside this regulation?

I'm by no means an expert on the matter, but I believe you're thinking of running Casinos specifically. For example, scratching games or lotteries are legal in almost every state in the US. And for those states where casinos are allowed, no one will ask you questions as long as you are +21.

Running a casino is heavily regulated. Gambling at a casino is open to anyone over 21 where its legal. That was the OP's point.

Yes, and everyone entering casino is aware that it is gambling.

ICOs, on the other hand, is like entering a street shell game. Something non-regulated, where you are sure to get skinned.

There is a significant difference.

Gambling is up front about the odds and the fact that they are stacked against you.

ICOs and scam investments are not.

The issue is not about allowing people to lose their money.

The issue is about Fraud, and people lying about what they are selling, as well as promising false returns.

Casinos don't promise you anything false, and transparently offer you provable odds.

Would casinos be that honest if they didn't fear being prosecuted? Why can't ICOs be similarly managed?

After all, if someone is willing to violate the law, chances are they won't respect limitations regarding the eligibility of investors - which is, in fact, what we're seeing with ICOs.

Seems like just another example of the known results of Prohibition - prevent legal markets and you'll just have dark markets in which people get poisoned.

Regulating a casino is relatively straightforward. You demand their games actually pay out on the odds they're required to publish and periodically check they actually do so, and prohibit them from claiming that they are an investment at all.

Regulating a company that may or may not believe their pitch about making their investors rich and whose probable failure may or may not be the result of them failing to even attempt to execute on it and/or their pitch deck being a pack of lies is incredibly complicated.

So it's left to investors that have the resources to do what would otherwise be the extremely laborious regulator's job of doing due diligence, sitting on boards to see what's going on and litigating malfeasance. Who also happen to have sufficient funds not to suffer if they don't.

Prohibition isn't really an appropriate comparison since there's an abundance of alternative places for the general public to speculate, and no reason to assume that the investment opportunities investment professionals won't touch would start offering consumers better returns than a casino if everyone could advertise an SEC stamp on their ICO after filling in a few forms.

> Those who lose money to scams can leave it to law enforcement to do their job

Law enforcement rarely resolves securities disputes. It requires lawyers teeing up the evidence for courts and regulators.

Disclaimer: I am not a lawyer. Don’t do mean things with securities.

I guess it would depend how sophisticated the scam is. When I wrote that, I had outright thievery in mind.

Any *coin fiasco would take the government years to figure out. Nobody is even sure if the laws on the books would cover some of the scenarios that are popping up. A lot of it would be solved if people really understood what they're buying with these ICOs, but many just see it as "magical Internet money that's making cash obsolete".

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