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Comment by aetherspawn | Hacker News Reader

How this works: You have 1 billion coins. You sell 100 coins to someone for $100. Now you have nearly a billion dollars (market cap). But, do you really? Actually, you don't. Not if nobody is willing to pay you for the rest of the coins. The market cap is a bad estimate when the actual liquidity is small ($100). When you try and sell the rest of the coins, the market cap bubble will normalize.

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Economics Explained talked about something similar w/ art. [1]

- Buy N paintings form one artist for $1 million USD a piece.

- Put 1 painting up for auction.

- Have coconspirators bid the painting up to say $20 million.

- Buy your own painting for $20 million, and imply that your other paintings by the same artist are also worth $20 million.

- Donate a "$20 million" painting to an art museum (that maybe you control) & save $10 million in taxes.

- Complain about tax hikes on the rich as the not-rich subsidize your art collection

[1] The Economics Of The Art Market: Why This Painting Isn't Worth $450 Million -- https://youtu.be/V5sOuET8UWA

That was insightful

You still have to take a capital gain on $1 million -> $20 million when selling it, right? I suppose the charitable offset is much better?

Nope. You don't sell it. You donate it. It's considered a charitable contribution, not a sale, and that makes it 100% tax deductible. [1]

I guess you'd have to spend $20 million on the painting, but you're buying it from yourself, so in reality you're only on the hook for the 2% fee from the auction house.

[1] https://www.usa.gov/donate-to-charity#item-211605

Before that though, when you bought your own painting for $20M. I'd imagine it would be pretty difficult to write off that purchase as a business expense or something. The IRS is going to notice a $20M write-off for a business with no additional income pretty quick. But you will have to pay taxes on the $20M income, even if it is coming from yourself.

In the above example you pay capital gains on the one (1) $20m initial painting that allows you to then donate N "equal value" paintings. So you can dilute the capital gains % indefinitely (1/N).

But your tax basis in the other paintings is still $1M. If you donate them claiming they're worth $1M, you don't get a $20M deduction. If you claim they're worth $20M then transferring them is a realization event and you owe capital gains on $19M. Then you get a $20M deduction which cancels out the capital gains and leaves you with just the original $1M deduction for what you actually paid, right?

What people really do this for is insurance fraud. Buy some paintings for $1M each, get them appraised and insured for $20M each, then somebody "steals" them or you have a convenient structure fire and make the N*$20M insurance claim.

Unless paintings are different than other assets commonly donated (e.g. stocks), this doesn’t sound right. If I donate a stock that has appreciated in value, I pay no capital gains tax and am still able to deduct the full market value of the stock (up to certain limits).

As another poster said, assuming paintings are treated like stock, as long as you've held it for more than one year, donating an aprechiated asset is magic.

In this example, you get a $20M deduction and you don't have to realize the $19M gain.

Depending on how the shill purchase in the hypothetical is arranged, you might have realized a gain there... but then again, maybe you just pay the auction fees.

EDIT: this was wrong, did research and you actually have to hold for a year

Original: Holding a year or not doesn't matter for donating appreciated assets, AIUI

If you don't hold it for the year you still don't realize the capital gains, but you only get to deduct the cost basis. After a year you get to deduct the current value.

> If you claim they're worth $20M then transferring them is a realization event and you owe capital gains on $19M. Then you get a $20M deduction which cancels out the capital gains and leaves you with just the original $1M deduction for what you actually paid, right?

Nope. Think of it this way:

- you lobby government to make charitable donations tax deductible, meaning you can reduce your income by the stated value of the donation

- you use the auction house hack to inflate the value of the painting from $1_000_000 USD to $20_000_000 USD buy buying it from yourself

- No one will buy your painting for $20_000_000 USD, so it's not really worth that in the open market, but the art museum (in your backyard & founded by you) will give you a receipt stating the art is worth $20_000_000 USD

- Unless you reduce your income, your tax rate is 50%, so you donate the inflated art piece (to your art museum in your backyard), give yourself a receipt for the donation

- You attach that receipt to your tax return, lowering your taxable income from $A_LOT to $A_LOT minus $20_000_000, which at a 50% tax rate saves you $10_000_000 in taxes

- you use the auction house hack to inflate the value of the painting from $1_000_000 USD to $20_000_000 USD buy buying it from yourself

Isn't that a realization event right there?

Obviously, the described scheme could still work if you sold one painting to yourself, and then donated N paintings based on that valuation.

"The federal tax code allows you to contribute long-term appreciated securities—such as stocks, bonds, and mutual fund shares—directly to a charity without paying capital gains tax on the appreciated value, as you would if you sold it first and then contributed cash to the charity." [1]

[1] https://www.fidelity.com/viewpoints/personal-finance/tax-bre...

Sure the donation isn't taxed, but why wouldn't the original (fraudulent) sale be taxed?

Selling an item at auction and buying it yourself isn't exactly a charitable contribution.

You don't pay (an income or capital gains) tax when you buy something. Only when you sell it. Maybe there's some other tax, like VAT or luxury or sales that are all based on the purchase price.

You can of course donate $20 mil to a charity that you can influence (a foundation of a relative or a friend’s family, say) and get that charity to buy the first painting at auction.

This way you pay cap gains on 19 million but can offset 20 million of charity donations against the gain.

Donating assets to charity is not a realization event under US tax law. This is why donor-advised funds are a thing - this rule applies to publicly traded securities, which means you can donate appreciated stock to a DAF and have the fund distribute cash to charity on your behalf, avoiding the capital gains you would incur if you normally sold appreciated stock and donated the proceeds.

So I think I'm wrong. I'm doing the math for selling the asset and donating the money. In theory just donating the asset shouldn't make any difference -- either it's a realization and that cancels with the donation, or you're donating at the original tax basis, and either way the net deduction is the original tax basis. Because otherwise it's double counting and you get all kinds of bizarre incentives and rich people not paying any taxes.

For example, if you bought $1 of a stock that appreciated to $1000 and they increased the capital gains rate to 60%, you wouldn't pay any taxes. The IRS would take in less money from the higher rate. Because even if you don't care about charity at all, you'd donate half the stock to a charity when you go to sell the other half and keep 50% of the money instead of 40%. The IRS would get nothing instead of whatever they got at the lower rate.

But the tax code is full of bizarre incentives and rich people not paying any taxes, so apparently this is one of them. (Which at least has the benefit of encouraging charitable donations.)

Yeah I agree that it's weird, unintuitive, and not how the ideal tax code should work. It shouldn't matter whether you or the charity sells the stock. Similarly, it shouldn't matter whether you or your heirs sell your stock, but it does, and that's a whole other can of tax optimization worms.

This is because the cost basis of assets "steps up" on the owner's death to the fair market value at that date - without any capital gains owed. So if you own $10m of non-dividend paying stock, you can comfortably borrow and spend $200k/yr against it, pay no income or capital gains taxes, and when you die your heirs don't owe any capital gains either and can sell off a portion to repay the loan.

Any charitable giving of over a low threshold would be audited for value to prevent this type of grift. You'd likely end up in serious tax trouble.

For example: "Donating non-cash items to a charity will raise an audit flag if the value exceeds the $500 threshold for Form 8283, which the IRS always puts under close scrutiny. If you fail to value the donated item correctly, the IRS may deny your entire deduction, even if you underestimate the value."

https://budgeting.thenest.com/much-should-donate-charity-tax...

Yes if you're poor, that would stick out on your tax returns. If you're rich and other parts of the tax returns are even more complex, I think this would fly without any problem.

From rich friends' experience, that's not how it works. The bigger the fish, the more resources get thrown at it. A friend got audited and they came up with the most absurdly tiny mistakes in really complex things. It turned out they couldn't find anything they thought was more than a mistake, but their thoroughness was pretty incredible.

The difference is that the rich have the lawyers to deal with that. You shouldn't worry about them. An audit for a rich person is just another annoyance that they pay to go away, it is not gonna change their behavior.

On average, the more money you have and the more complex your taxes the less likely you are to be audited.

https://projects.propublica.org/graphics/eitc-audit

This is why you hire someone to appraise the value of the item and document the third-party appraisal. If someone else says your painting was worth $20m on the day you donated it, and they're wrong in the view of the IRS, well, it's an honest mistake on your part and at worst you just have to pay some money for getting caught.

That is why you hire a tax pro, and have an appraiser so the donated item is valued correctly.

Once it's valued correctly by a proper appraiser you will not get the tax scam to work. They are not as dumb as this chain of posts assumes. Neither is the IRS.

OMG, I wonder if this is why Trump has his own charities that also happen to make frequent donations of paintings!?

That’s a bingo.

(Sometimes it is just bribery or money laundering, transferring worthless hard-to-value art for millions is ideal not just for tax fraud.)

There is a hole in this logic. It’s perfectly legal in the US to create your own religion proclaiming you as a deity whose boredom will destroy the universe and thus you need lots of expensive toys to keep your boredom from collapsing the universe. Any religion can have a nonprofit organization formed around it, making it acceptable and even expected that any donations made to that religious nonprofit are used to carry out the observance of that religions doctrine, that being the purchase of more expensive toys to prevent your boredom from ending the universe. Any donations to the religion would be not taxable.

> You still have to take a capital gain on $1 million -> $20 million when selling it, right?

Sure, the idea is that you only realize the gain on one work by the artist, and then can donate multiple. But even at one work “sold” and one donated its a win if you hold the piece for a year and a day before selling, since you (assuming you are at the top marginal rate for income and cap gains for simplicity) pay cap gains on $19 million @ 20% ($3.8 million) and then get a deduction of $20 million against income that would be taxed @ 37% (saving $7.4 million) for a net savings (even after the $2 million cost of purchasing the paintings) of $1.6 million.

Couldn’t it be said that by holding onto the coin instead of selling it /avoiding the taxable event you are inherently depriving the government of the interest they would have made from the taxes on that amount?

How does that save $10 million in taxes?

The $10M figure is incorrect because donating a $20M painting doesn't save you $20M in taxes, it only allows you to deduct $20M from your income, and even that amount is capped. The actual amount of taxes you save is roughly $20M * your marginal rate. There's also the $10M you spent to acquire the painting, which eats into the savings.

That said the general premise is valid. The loophole comes from the fact that when you donate something, you don't have to pay capital gains on it, yet you can deduct the full value from your returns[1].

[1] "If you donate long-term appreciated assets like bonds, stocks or real estate to charity, you generally don’t have to pay capital gains, and you can take an income tax deduction for the full fair-market value." https://www.fidelitycharitable.org/guidance/charitable-tax-s...

If you take state income tax into account, it's possible to hit a marginal rate of about 50% if you live in, say, California.

I'm guessing that doesn't really gel well with the $10k SALT deduction cap in place at the moment.

I'm not sure if I see your point. The SALT deduction is completely separate from the deduction for charitable contributions.

Maybe before the cap, you could argue that the true combined marginal rate was lower than 50% since the deduction for the state income tax would offset some of the federal tax, but a $10k deduction doesn't matter much to someone who's making enough to be in the top income brackets.

A little under $8 million, but same difference.

Because your taxable income is $20 million less after the donation, and the top marginal tax rate (if you're rich enough to be playing this kind of game) is 37%.

The waters get a bit muddier with the capital gains tax you might be paying on the original sale, but presumably with the right accountant you're still saving some millions, whether 3 or 8 or 10.

>A little under $8 million, but same difference.

You also have to subtract the cost of the painting, unless you consider that a sunk cost (ie. you were already planning on buying the $10M painting)

One person buys the painting at the auction, but then hundreds of others can deduct the tax if they already had a painting they purchased at a much lower value.

That only works if the IRS considers the price of the art to be $20m. If it were that easy then you could just donate anything at whatever price you want.

High art is valuable because high art is expensive. I'm not losing $450 million when I buy a $450 million painting any more than I lose money when I buy a house.

This whole thing is a conspiracy theory created by judgemental people with null knowledge of art to complain about the latest modern art pieces and it spiraled out of control to an urban myth in the level of "the Facebook app is secretly using your microphone" or "vaccines give you tracking microchips".

Do you have any links explaining how art valuation works?

Bachelors of Fine Art degree holder here,

Everything is made up and the example cited above is very close to the story of “For The Love of God” by Damien Hirst [0]

The sculpture is more of a pointer, or some direct object upon which could be acted the work of art which was the financing valuation and theoretical sale of the work

In most experiences, it starts with how anything is priced. How long did it take to make it and how much money did it take to do so. Plus some. And then what will someone pay for it.

But that’s just “most” and that never makes headlines or anecdotes

[0] https://en.m.wikipedia.org/wiki/For_the_Love_of_God

You cannot "donate anything" and get away with this. You need to go through a proper art collection selling process, that's the whole point.

This has been replicated in the NFT market, with a slightly different structure: sell NFTs to yourself to "paint the tape" and create the impression that a hot resale market exists, then sell to random suckers looking for appreciating assets.

Someone minted 1 million Neeraj Agrawal (cryptocurrency advocate* who's big on Twitter) NFTs, sent him 999,999 without his consent, and kept the other to sell. Which leads to the interesting question, should Neeraj report the 999,999 as a gift receipt if they have some value, and is he in a bad position that the tax value of the gift is large due to the price being determined by the 1 that was sold?

(I don't understand NFTs so I may be incorrect on details).

*edited, said “VC” prior

Neeraj isn’t a VC. He works for coin center, a advocacy/lobbying org.

If the 999,999 were worthless at the time they were initially transferred, then there is no taxable event.

Now if they become worth $1 each and he sells them at that price then it is a taxable event. The threshold may have changed with respect to gifts but if the coins were worth $1 at the time they were initially transferred there may be a taxable event, I think it used to be $50k was tax free.

People aren’t in control of who sends their wallets coins and unless there is a notification system setup it seems like the tax responsibility would arise when they attempt to use the coin. Also if everyone were responsible for every trade that occurs within their wallets, and have say with one trade they make a large profit and owe the government taxes, then in the next trade they lose the profit, are they responsible for loss of government property? Also what about an auto trading bot that is run by a neural network that makes trading decisions based off key words in the news, if it is responsible for losing the would be taxes, who is to blame? It’s creator? The philosophical questions from this stuff pick apart out we normally think about this.

Economics Explained is somewhat of a hack when it comes to topics outside of basic supply and demand. On the internet, every struggling business and every collectible hobby is a front for money laundering. While there is certainly a lot of money laundering and tax evasion in the high art world, that's only because they can hide their transactions behind the majority of legitimate transactions. In the case of the Salvator Mundi painting, the valuation of the painting skyrocketed because allegedly the last two bidders were both Arab princes who thought the other bidder was from their mutual rival, the Qatari royal family. $450 million was the legitimate market value if the painting to the Saudi royal family.

If I question the legitimacy of Economics Explained, then I'll be forced to asses the value of the honorary PhD in economics that I gave myself from my prestigious, non-accredited university, and I don't want to do that.

If you want to see this played on a massive scale: https://www.cnbc.com/2021/04/28/samsung-inheritance-lee-fami...

“The late Chairman Lee’s collection of antiques, Western paintings and works by Korean artists — approximately 23,000 pieces in total — will be donated to national organizations,” they said, in recognition of his passion for art collection and “his belief in the importance of passing on our cultural heritage to new generations.”

I wonder what the pieces will be valued at.

Matt Levine wrote about something similar today in his column "Money Stuff" (the third story, "Tax Law"):

> You have zero-basis stock that is “really” worth $100, but that happens to be trading at $300 right now because the market doesn't know the bad news that you know. If you sell it, you get $300, pay 20% tax, keep $240, and go to prison for insider trading. Or you can wait until the news is public, sell it for $100, pay 20% tax, keep $80 and avoid prison.

> But if you donate it while it’s still trading at $300, you get a $300 tax deduction, which is worth $120, which is more than $80. And you don’t go to prison because you never traded the stock while you had inside information.

https://www.bloomberg.com/opinion/articles/2021-04-28/elon-m...

I’ve had a similar scam explained to me by someone who said they do it for their own tax obligations (on a much smaller scale).

I have no clue why non-liquid donations are allowed. Stock with a clear market value (publicly traded) seems fine, but everything else should require an arm’s length transaction to liquidate the asset.

(And maybe you would be able to 1) book the donation in the year you initiate the sale to account for assets that take a long time to sell, and 2) still have gains exempt provided all proceeds are going towards a donation.)

Exactly. The whole concept of "market cap" for commodities and currencies is ridiculous.

As a refresher for folks, the term comes from stocks. For example, the Nuance stock was trading at $43.58 on April 9. Multiply that times the number of shares and you get about $13 billion. That's the market capitalization. This is a meaningful number because if another company wants to buy it, they'll have to pay at least that much. And indeed, when Microsoft bought it, they paid $19.7 billion. [1]

But commodities and currencies don't work that way. If you want to buy a little gold, you pay $57k/kilo. But if you want to buy all the gold? There's not enough money in the world. If you discover a mountain of gold, can you sell at that price? No way. In both cases, the price is a balance point between supply and demand at the moment. If you change supply or demand, you get big price swings. You can calculate "market cap" for USD or gold, but it's not a meaningful number.

That's even more true for cryptocurrencies. Dollars and gold at least flow freely. But supply of cryptocurrencies are, as this article shows, totally arbitrary. And demand, both actual and apparent, is heavily manipulated. Using the term "market cap" is just another way to make raw speculation look like investment.

[1] https://www.forbes.com/sites/joecornell/2021/04/20/microsoft...

Just because you can't hoard the entire market cap doesn't mean it is ridiculous or not a useful measure. If you have a very liquid currency or commodity then it is very useful.

But "very liquid" is relative to the amount of the entire commodity you could theoretically sell.

Stocks are "very liquid" because, outside of some share classes, you could theoretically buy nearly all the stocks. Even more importantly, you could almost always sell your entire portfolio in a single day if you wanted to, for the vast majority of stocks.

BitCoin, is that "very liquid?" There are thousands of trades every day, but what would actually happen if someone tried to unload "all" of the coins? If Satoshi popped up and tried to sell their coins, which are nominally worth over $8 billion, could they do it? Almost certainly not.

The same applies to stocks, you definitely could not unload (or buy) the entire float in a day. I don't think crypto is too different in this respect.

Something like $50-$100B in bitcoin is traded every day. It's not the NYSE but that is pretty liquid in my opinion.

The bulk of that is stablecoins though, of dubious backing. You couldn’t cash out billions in dollars.

I agree with your point, also worth remembering that much of crypto trading is wash trading, but the point stands that if you bought crypto in the past 10 years you almost certainly can sell it all today at the market price.

My down payment on the new mortgage I'm taking out at the bank is not wash trading.

Whether you believe something has value or not doesn't matter. Velocity and liquidity matter.

No Satoshi can't sell his billions in a day but he can milk the market for millions daily. The market is that mature _today_

> because you can't hoard the entire market cap doesn't mean it is ridiculous or not a useful measure

It sort of does. We can talk about the monetary base, but it's not a great way to understand the value of an individual dollar because the whole isn't really meaningful in a precise way. A whole company can be purchased and still have value. That gives market cap, as a metric, grounding.

Ok. I'll bite, just to see where this goes. Please name 3 productive uses for the number. Then apply the same methods to show how they're useful with both USD and gold. Thanks!

I can make the same statement you made about stock price about commodities and coins, in that I have to pay at least shares_outstanding * current_price to acquire all of a commodity or a coin.

The metric works, it's just that people keep making false claims from it.

> I can make the same statement you made about stock price about commodities and coins, in that I have to pay at least shares_outstanding * current_price to acquire all of a commodity or a coin.

You don't, though. The price would change if you attempted to do so. You can buy a company because you offer the company a value for all their shares; if enough of their shareholders approve the deal, it's done.

You can't do the same with Bitcoin, or copper. Each requires reaching out to individual owners/producers, and the sales affect the price for the next purchase. If you tried to buy all BTC in existence, the price would go up. If you tried to offload a bunch, it'd crash.

It's highly unlikely you could sell $1T worth of BTC without driving the price massively downwards.

Exactly. You can't buy all the gold in the world at the imaginary "market cap". Or all of a currency. And if you did buy all of a currency, it would be worthless, because the whole point of a currency is as a medium for exchange. Indeed, that's how they take a currency out of service, as they did when they launched the Euro.

> Exactly. You can't buy all the gold in the world at the imaginary "market cap"

Nobody said that. We clearly acknowledge that it is at least market cap.

No. They decreed that the respective currencies stopped being legal tender (against the will of the people in many cases, btw) and so the people had no choice but to swap their money for Euros. The exchange rate was fixed and the currency was never bought on a free market. They couldn't have because many people would not have sold and then you'd have ended up with multiple competing currencies. The government has a monopoly on national currency, it's very different from gold and cryptocurrencies that are properly decentralized and freely traded.

The name cryptocurrency is a misnomer for many of the new generation blockchains. They are not just currencies and they're also not a commodity like gold. You can think of a currency like Ethereum more like a decentralized company offering infrastructure services. It also has aspects of a currency and of a commodity. It's a bit of everything.

People could and did hold onto them. I should know; I have a small collection of defunct notes. But they were in negligible amounts, because a currency isn't intrinsically valuable. What's the market cap of the Italian Lira? It was a meaningless question both before and after the Euro cutover.

If I choose to buy a company the price will adjust upwards as well. The centralization of shares in a system does not change the fact that coins and commodities underlie the same market principles.

> It's highly unlikely you could sell $1T worth of BTC without driving the price massively downwards.

Same goes for any stock.

All the cryptocurrency shenanigans suddenly made sense when I read someone’s HN comment last year who said something like ‘ e-coin is stock you can buy to invest in a company that has no assets and produces nothing.’ In that sense, it makes complete sense why some people intentionally use the term “market cap”, so you’re absolutely right.

You’re buying the right to make changes to an extremely secure ledger.

Not only that, it's non-voting stock in a company that has no assets and produces nothing.

That's useful!

Reminds me of a joke:

Q. What do you call a dog without legs?

A. Doesn't matter, it won't come when you call.

Whether or not the token explicitly defines governance, the owner of a token does have some authority over any governance action involving a hard fork, because the success of the fork depends on the buy in from the economic actors.

You do get meaningful voting rights, but the governance process is quite a bit different from a traditional company.

The main claim is it's almost as bad a fiat currencies; in which case you're buying stock in a company that produces nothing, has no assets, is being constantly inflated, and has a bunch of rules about who you can give it to and how.

Indeed. If you start a religion, and get a single person to join it, you can (truthfully!) claim you've doubled the size of your congregation!

The reason this scammy verbiage works is because it violates "linguistic norms". Congregations are "large" things in peoples minds, so when you claim to double it, the image that comes to mind is adding a substantial number. By violating these norms, you can lie without lying. It's a neat trick, the use of which has been mastered by the legal profession. But the technique clearly has wider applications, sadly.

This technique is the basis for politics

There is a reason why virtually 100% of Congress are lawyers. (Not sure where to look up the stats on that, though.)

Edit: I was wrong. It's "only" ~50% of Congress, assuming the numbers are roughly the same since 2016. source: https://www.vox.com/polyarchy/2016/6/30/12068490/too-many-la... That's still a huge number, compared to the % of general population who are lawyers. In the US there are 1.4M lawyers; if the pop is 350M then they are 0.4% of the population - and a much smaller fraction of the adult working population (roughly .02%).

I was with you til the last sentence. The adult working population is about half of the total population, so approx 0.8% are lawyers, not 0.2%, and certainly not 0.02%.

>There is a reason why virtually 100% of Congress are lawyers.

Yeah, I mean - there's a reason people that write software are mostly engineers.

This seems to be about supply and demand, not linguistics.

There's a $100 million dollar deli in new Jersey running this playbook. Been in the news recently.

And due to news articles people have been buying? Everything seems to be a pump and dump but get out before everyone else does i guess.

This is called speculative investing(gambling) and happens in frothy markets. Such speculation occurs in bubbles, and they pop eventually. Its like a game of musical chairs: someone will be left out and hurt by it.

The deli had been running this playbook (low volumes giving an inflated cap). But since it got famous? Volumes are actually decent, and the price is still ridiculous. People are apparently deliberately buying into a market failure/scam/whatever-it-is.

It's the same with cryptocurrency, Tesla stock, Gamestop. The market-cap bubbles become a self-justifying cycle. Theoretically everything comes back down to earth, but only when it runs out of fuel. But the fuel is human insanity, which may be unlimited.

The market can remain irrational longer than you or I can stay solvent

Not sure about unlimited. Crashes do happen. Predicting those is the holy grail.

“Fraud creates alpha”

About that deli, it's actually not $100 million any more...

https://www.bloomberg.com/opinion/articles/2021-04-20/hometo...

Reminds me of the books as a kid that told you what each hockey card was worth.

In reality they probably count on most people not circulating them.

Some people don't only look at market cap, they look at trade volume which again can be faked using wash trading.

Market cap is still useful to compare projects but you do have to look at it in combination with liquidity.

E.g. I work on a Cross-chain bridge project (currently for BSC-Polygon) [0] and technically we have a market cap of 1.4m right now but practically the liquidity in exchanges is still just in the thousands so that's all you can cash out if you try to.

On the other hand, comparing e.g. ETH and BTC's market cap is a lot more useful since they have a lot of and comparable enough liquidity.

0. https://wpnt.org/

That’s true sometimes, but Doge was incredibly liquid so its market cap was more indicative of reality. You can look at volume to see if this effect is happening for any specific coin, but I’m not seeing SCAM listed anywhere to check.

This is a problem with Market Cap in general even for the largest and most solid businesses like Amazon and Apple.

It’s a statistic, not a measure.

And yet, if you do this and then give 100 million of those tokens to your friend, your friend now owes the IRS $40 million USD.

Go figure

"I didn't want them, though."

"Tough shit, pay up."

Is there an IRS mechanism for rejecting an un-rejectable transfer?

Don't sell the tokens for fiat. The token transfer itself isn't taxable (at least in my jurisdiction it works like this).

This doesn't work in the US. The IRS guidance states that the moment you received the tokens, you've incurred a tax burden. Refusing to sell the tokens protects you from capital gains taxes, but capital gains taxes only applies to tokens you purchased in the first place. Tokens you were gifted counts as income.

yes, but that's not quite what happened here. If I post a more comprehensive comment I'll link you.

edit, the more comprehensive comment: https://news.ycombinator.com/item?id=26968635

37SIGNALS VALUATION TOPS $100 BILLION AFTER BOLD VC INVESTMENT

https://signalvnoise.com/posts/1941-press-release-37signals-...

What's is at now?

Reply on news.ycombinator.com