SEC Halts a Real Initial Coin Offering | Hacker News Reader

SEC Halts a Real Initial Coin Offering

bloomberg.com

90 pointsdsri19 comments

Most of the SEC's concerns about ICOs are related to marketing promises (amazing returns, we won't just steal your money and run away, etc etc.), and justifiably so.

I'm actually impressed with how well the SEC has been able to differentiate between legitimate cryptocurrencies and scam projects.

I suggest you read the article. The point of it is that, in this case, the SEC does not object to marketing promises (though they probably could have).

The SEC objects that this ICO has an investment component. That is, that it is sold to people hoping to make money from it.

Basically they are enforcing that if there is an investment component, the coin is a security and needs to comply with security offering law.

It sounds like the basis for claiming this ICO has an investment component was that Munchee made marketing promises about how much money you'd stand to gain from participating.

The SAFT lets you sell tokens to speculative investors, without having the tokens themselves be securities: You wrap the tokens in securities for the speculators, and then unwrap them for the eventual users.
There are still open questions about whether and how that or other approaches will work.

...But for a long time now, I and a lot of other people have thought that the basic strategy of a lot of ICO issuers -- issue tokens for money, call them "utility tokens," hype their speculative benefits, and watch the money roll in -- was obviously illegal, and the SEC didn't seem to be paying attention. Now we know it is.

Discussed earlier here: https://news.ycombinator.com/item?id=15906305

For the SEC looks like there’s a clear difference between pure crypto-for-its-value and as utility to run a network (like ETH or BTC) and tokens which are sold in some ICO with the promise of gains in return (or shares in some structure), even if the second kind of token also has some utility.

https://techcrunch.com/2017/12/11/with-markets-going-crypto-...

I'm very impressed with this stance by SEC. It's very well informed and it reflects the practical reality and nature of those crypto tokens. They move in to regulate what needs to be regulated (tokens susceptible to scams against naive users), and leave what doesn't need to be regulated alone.

good job SEC.

Yes, thanks SEC for preventing free people from entering into voluntary transactions.

Well, yes, that's one of its major functions. Every con artist in the history of the world has depended on people making voluntary transactions.

Charles Ponzi didn't coerce anyone.

419 scammers depend on your voluntary stupidity.

Telemarketers don't hold a gun to your head.

The thing is, it's one thing to have a legal system that can provide for redress and restitution in the case of actual fraud. It's quite another thing to have a legal system that prevents voluntary transactions simply because some of them might be fraud.

The legal system can't reliably provide for redress and restitution in the case of actual fraud, because the legal system can't pull money from thin air. In something like a classical Ponzi scheme, the fraudster simply does not have enough assets to give everyone back what they're owed.

> Yes, thanks SEC for preventing free people from entering into voluntary transactions.

Allowing free people to enter into whatever voluntary transactions they would like is basically the definition of anarchism. It's surprising to see people advocating for anarchism on HN this often, especially in obscured fashions like this rather than explicitly. Anarchy was never the vision for our society and is not generally seen as a desirable end goal.

[Edited for clarity.]

Anarchy was never the vision for our society and is not generally seen as a desirable end goal.

According to who? There are two or three of us who absolutely see anarchy as a desirable end goal. In the case of a lot of hackers, it's more specifically "anarcho-capitalism" or "voluntaryism" as opposed to what a lot of people call anarchy (what I'd probably call left-anarchism or socialist anarchism). But anarchy of a sort nonetheless.

>> is not generally seen as a desirable end goal.

> According to who? There are two or three of us who absolutely see anarchy as a desirable end goal

2-3 people? What claim are you even contesting? I said it's not generally seen as desirable, not that there exists nobody on this planet who sees it as desirable. Are you somehow under the the US population is generally anarchist?

Sorry, I though the intentional hyperbole there was completely obvious, but it looks like you read that dead-pan / literal. Never mind, I don't have time to invest in this right now.

I think anarchism is more a lack of any government that prevents involuntary transactions, such as theft. If you have a government that only prevents involuntary transactions, while allowing all voluntary ones, what you actually have is minarchist libertarianism.

(But a minarchist also includes fraud in prohibited transactions, which does take out some of these ICOs.)

What does your comment bring to the conversation?

If you are getting scammed into a transaction (by providing you fake or consciously misleading information, misleading possibilities of monetary gains, etc.) - is that really a "voluntary" transaction?

I think "voluntary" should mean that both parties know what this transaction would realistically mean for both of them and the actual risks involved. When you are being scammed (by many of the ICOs (not all of them)) - that does not sound like a voluntary transaction to me.

Reply on news.ycombinator.com