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Comment by mattbeckman | Hacker News Reader

I understand the why, but ICO regulation is shifting the power of crypto from anyone (low-, middle-, upper-class) into upper-class only.

For example, the Filecoin ICO for U.S. participants was restricted to accredited investors, which required a proof of income above $200k/year. Obviously, ICOs are risky, and we can all see why someone with less income probably shouldn't invest as much money as someone making over $200k. However, preventing someone in a lower income bracket from making ANY investment feels like economic stratification.

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The concept of accredited investors doesn’t exist in many (most?) European countries.

Private companies can sell their shares to anyone who wants to buy them, and the government has no say unless there is actual criminal fraud involved.

Americans tend to think of Europe as full of “nanny states”, but this is one instance where the United States is seriously nannying its citizens by removing a core freedom of capitalism from them.

I assert that this is the entire point of all economic intervention by the state.

Yep. And then Filecoin doesn't even sell equity! It's gross. With our company we're trying to do right by investors. We're completely in violation of the SEC memo. In fact, that's what galvanized us to 100% offer shares instead. We were going to do it before, but the SEC really set us straight: If we're going to be in violation of regulations we might as well make the most of it.

Are you saying that instead of an ICO, you've now decided to do an unregistered share offering, and you're knowingly doing this in violation of the law? You do realize you can face criminal penalties for this, right?

Based on previous comments it sounds like their business is fundamentally illegal anyway (prostitution?) and thus it's pointless for them to comply with SEC regulations. But this approach doesn't generalize.

I disagree with the assessment that because you're committing one crime, you should commit two.

For example, lots of drug dealers get busted on tax related charges. Being the pimps busted on securities laws isn't impossible, especially if you set that up as a slam-dunk case while making the other hard to prosecute.

Not commenting on their specific case, but that reasoning is dubious.

We agree. For instance, we have a very strong anti-drug stance, despite not thinking it's immoral. We just don't want to draw unnecessary attacks against our platform.

The SEC thing was probably unavoidable anyways.

Exactly. Being ethical is more important than being legal.

To be fair, our entire business model is illegal in the US, and mostly illegal in many countries. We already have to deal with the penalties for running an escort agency.

On the plus side, it's a good business model so our chance of success is pretty high. If we end up having good returns, there will be less complaints and we'll be less of a target for the SEC organically.

We intend to be the first blockchain-funded cypherpunk unicorn. It would set a bad precedent if we didn't treat investors fairly.

You know you're going to prison, right?

SEC doesn't much care if you did right by investors. Hell, you're helping prove intent - right here in this post. Add conspiracy to your charges, by the way.

Seeiously, consult a lawyer. You're going to go to prison.

It's our view that the SEC part won't be what pushes us over the edge. 100% what we're doing is not legal, it's in our business plan. SEC won't care if investors are OK, yes. But if investors are OK, they won't be filing complaints and there will be less pressure to go after us. Not a defense! Just a delaying factor. Prosecution isn't free. Far easier to shut down ICOs that aren't operating as proper anonymous extrajurisdictional companies. They can go after us, but it's a terrible ROI for them.

But that is not what we're counting on!

Basically we asked: What if everything related to sex work was legal? What would the inevitable startup look like? With modern privacy tech, we can attempt to try it. We can ignore legal issues by operating extrajurisdictionally and anonymously.

This article discusses our technical setup: https://medium.com/@PinkApp/pink-app-trading-latency-for-ano... - excuse the clickbait title. Please let me know the flaws you see! Latency could be a killer, but we think we can mitigate it.

The core team, people that know real-world ID, are very few. Within a few months we plan to move nearly exclusively to high-latency communication methods.

By having trustless contractors run public-facing aspects of the business, the core team's opsec attack surface is drastically reduced. We have contingency plans, so even in case of arrest or death, the system can be restored from backup. Maybe one day there will be private mature smart contracts and we can codify it. Meanwhile we'll rely on lawyers and other trusted parties.

It may sound crazy ... a libertarian cypherpunk dream. But think how if you told people that it'd be popular to send non-refundable Internet money to a hidden internet service that promises to give it to an anonymous drug dealer on the other side of the planet to mail you drugs via the US Postal Service and that people would willingly trust them and it'd all be safer than using the street ... well people would have called you crazy! Yet it's popular and darknet services do exist that haven't had their operators busted.

> It may sound crazy ...

I don't offer an opinion on your business methods, recovery methods, or even the morality.

Instead, I point out that you're going to go to prison. As noble as you think your cause, they most absolutely will not care. Also related: I'd not count on jury nullification.

You do what you've got to do, but you are going to prison if you follow up on this plan. There are a few things one shouldn't play with; firearms, nuclear weapons, and the SEC.

If you're okay with long term incarceration and fiscal penalties that could bankrupt Bill Gates, knock yourself out. If you can be tied to your online messages declaring intent, it's really going to make for an angry judge. I've seen angry judges, they remind me of honey badgers.

Seriously, I highly recommend you seek legal council from a qualified legal professional licensed to practice in your jurisdiction. Morality and consumer complaints aren't actually things the SEC care about. They are only marginally less aggressive than the IRS.

Prison will be unfortunate, but it's the felony record that will really end his professional life.

I never suggested morality will prevent a judge or jury. Just that doing fewer bad things results in fewer complains results in less likelihood of spending prosecutor effort on us. But probably when our share price hits $25+ we'll be big enough that someone will decide to go after us for real.

If our opsec fails, I'll end up in prison, very probably. That's what contingency plans are for: the project can keep operating without me. Meanwhile that's going to take a ton of effort and time, so I can the project to a point where I'm not vital.

Lawyers opinions are the same. No lawyer will advise their client to be the founder of an illegal enterprise. This is not much of an insight. Other than that, most lawyers are not capable of assessing opsec risk.

Oooh prison. From what I understand, most revolutions usually involve people just dying. Granted, the customary prize is obtaining power for yourself, rather than spreading most of it around by creating a new decentralized Schelling point.

At any rate, don't you think it's a bit useless to tell someone determined to obviate the government to go ask a government agent for advice?

> We can ignore legal issues by operating extrajurisdictionally and anonymously.

That's what the Silk Road folks thought.

The feds can screw up a million times. You only have to do it once.

You're right, opsec is stressful! That's why the core team's plan is to get the system running and then hire people to handle interactions. We will focus on things in the background. The core team will only use high-latency-methods like email. That reduces our opsec footprint very much.

And our contingency plans will enable another team to pick things up to restore from backups und continue operating.

As if the power of crypto doesn't lie in those that can afford server farms.

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