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Comment by mrwong | Hacker News Reader

Why dont we regulate everything like that. Why do we allow people to spend 2M$ on a Car or 6k$ on a bag? Why do we allow people to buy unlimited lottery tickets or gamble everything away in the casino?

Those examples have cleary less benefit for society then the dumbest investment strategy. Let people invest, sure tons if people will lose their shirt but they will learn from it and stay away. Everyone else in the society gets to Enjoy the increased liquidity in the society. Why does anyone think that its ok that we created this random gatekeeps in the society that block ordinary people from investing beciase they are to “stupid”. The accredited investors sheme is a fraud, the arbitrary number on 1m$ networth to be an accredited investor is a joke. Thats means that even a Business Prof. Can’t invest because the SEC deems him to be to stupid.

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> Those examples have cleary less benefit for society then the dumbest investment strategy

They also carry less risk. Few people who "lose their shirt" say "oh well, I didn't do my diligence." Instead, they blame the system. Their anger becomes political capital. Moreover, inept investment combined with leverage can decimate an economy in a way frivolous personal spending does not.

If you want to learn about why these regulations appeared, in more or less similar form, many times independently across the world, start by reading on the history of free banking, the Panic of 1907, the post World War I securities market and the debates surrounding the Securities and Exchange Acts of '33 and '34.

Disclaimer: I am not a lawyer. This is not legal nor securities advice.

>> Why dont we regulate everything like that. Why do we allow people to buy unlimited lottery tickets or gamble everything away in the casino?

> They also carry less risk. Few people who "lose their shirt" say "oh well, I didn't do my diligence."

No they don't. Plenty of people lose their entire life savings in casinos, and plenty of poor people spend money on lottery tickets when they should be spending money on food.

You have not sufficiently explained how gambling is less risky than investing.

Because those things are not in and of themselves scams. Is it a bad idea to buy a $2M car or a 6k hand bag? Probably but at the end of the day you still get something out of it, an overpriced car or bag. The very nature of some of these ICO's is that you are getting literally someones word that something with no intrinsic or useful value will be worth something in the future. That's fine if you actually understand the risk, and are prepared for that but because these ICOs are open to anyone with a BTC you can't really make that assumption of those investors the same way you can with an accredited investor. This would all be fine and dandy but because of the sheer amount of money involved in this it can theoretically have destabilizing effects on other money markets. Not to mention the huge potential for money laundering, ponzi schemes and other financial chicanery

#1 reason for privat bankruptcy in Germany are consumer credit default. From buying/leasing expensive cars and gadgets.

So people are going broke by the masses from buring money on shit they don’t need to impress people they hate cus advertisement told them to.

Shutting people off from investing their own money however they like is Elitist thinking!

The problem is not people spending money on "worthless/ frivolous" things.

Investor protection are about Fraud protection. NOT, because it is good or bad to spend money on something.

If you spend 2 Million dollars on a car, you are getting exactly what you were sold. If you buy a lottery ticket, you are getting exactly the odds that were promised to you.

But investments are a different story. Someone is trying to promise you that your investment will go up. They are making claims that they cannot guarantee.

That is why investments are regulated.

> promise you that your investment will go up.

I challenge you to find a single ICO which says that (or something very similar) in their terms and conditions, homepage, or white/yellow papers. So far, every single one I have read about said it was a risky investment with no guaranteed return.

Now check out lottery advertisement for a different message: https://i.pinimg.com/736x/c8/95/f6/c895f66260e1517e2b2437d8a...

> If you buy a lottery ticket, you are getting exactly the odds that were promised to you.

Casinos and the state lotteries do everything they can to convince people they will make profit. Do you think a regular Joe can calculate the expected value of a scratch card? Sure, he knows he has a 1/1,000,000 chance of winning the jackpot and a 1/25 chance of winning $20. He is being misled.

Therefore, since gambling companies are legally allowed to mislead regular people, then there is no reason to protect them from investing and maybe actually making a profit.

No ICO is ever sold as investment (as far as I know). In a many cases they explicitly say that the tokens are completely useless to not get in trouble with the regulators. For example:

"The EOS Tokens do not have any rights, uses, purpose, attributes, functionalities or features, express or implied, including, without limitation, any uses, purpose, attributes, functionalities or features on the EOS Platform."

It's (almost) impossible to find words like "invest" or "investment" on ICO websites or white papers.

The difference is that no one buys a $2 million car because they think it will be worth $3 million in a year.

The only example of yours that is close to equivalent is a casino gambler, and even then, we DO heavily regulate the casino industry. It is either outright banned in many places, or there is some agency that is in charge of making sure the gambling is legit (i.e. the rate of return for a slot machine is what it is supposed to be, and isn't simply taking money)

> Why do we allow people to spend 2M$ on a Car or 6k$ on a bag?

Soviet Union famously regulated this very well. These luxury goods were only available to accredited investors aka the Party elite.

It seems to me that back then this behavior was condemned by the people of the Land of the Free.

The party elite wasn't particularly rich compared to other countries; that was one reason they went to a new oligarchical system. c.f. https://img.huffingtonpost.com/asset/5994af682700003100d4f5f...

It would be more akin to spending $2M on a car and not getting the car because the dealer fled with your money.

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