Crypto enthusiasts want to buy an NBA team, after not purchasing US Constitution
npr.org
npr.org
https://www.investopedia.com/terms/h/howey-test.asp
>1. An investment of money
check
>2. In a common enterprise
check
>3. With the expectation of profit
Probably? Why else would they be buying a team for?
>4. To be derived from the efforts of others3
check.
edit: I took a look at their "Flightpaper", and in it they acknowledged that some parts of it might pass the Howey Test, and they recognize the possibility of regulatory oversight
>This funding model requires extensive SEC regulation oversight.
However, they're pretty light on details on whether it would actually be approved by the SEC or not. Also by the looks of it they haven't registered with the SEC right now, but they're already raising funds?
In the past, this meant that exchanges won't list the token to trade (or delist, with traders panic selling before the delisting events), as any asset notified as being a security requires a broker-dealer to trade it ONLY IF it is registered. But for the past 2 years, centralized exchanges aren't involved in the liquidity. The network has innovated a way to incentivize liquidity with a fundamentally different model of exchange called AMMs (automated market markers, the acronym tells you nothing about why it is different though, but thats the term to look up). AMMs let people pool liquidity onchain and there is practically zero consequence anymore from SEC action - with regard to globally accessible liquidity. And sure, maybe the numerous liquidity providers can be sanctioned but they don't care, it is extremely easy to mix your legitimate funds with Tornado Cash and come out the other side and make a liquidity pool anonymously with mixed funds. It is up the regulator to figure out who to sanction and in this case the mixer's use isn't criminal and the clean funds on the ensuing anonymous side are only a civil issue. Also, even if you want to argue the cat and mouse game favoring the government's omnipotence, liquidity can be burned making that liquidity permanent no matter what happens to the human. I would actually argue a significant bullish thesis is based on how many assets are intentionally burned in liquidity pool bearer shares. Its pretty much perfect right now (with room for improvement in the liquidity pool technology). Between permissionless AMMs and permissionless bridges, and 3 trillion USD already within the crypto ecosystem outside of exchanges, its just not really the same game as it was 3 years ago.
The SEC regulates the intermediaries and now those intermediaries have been disintermediated.
The company bit of the equation has not been disintermediated. In fact, that's the whole point of this transaction: to create a publicly traded company.
Perhaps the best part of the Green Bay Packers is that the reason they only publicly offer “stock” every 10 years or so, is they have to obtain permission from the NFL and the NFL’s official position is that the NFL must restrict the Packers public offerings because it is a “competitive advantage” over every other team backed by billionaires.
> But Packers stock does give holders the right to vote/elect a certain number of directors to the board.
The toy stock certificates they give out to the fans that buy them have no voting rights whatsoever. Or any kind of rights at all. It's basically just some packers memorabilia.
> Nearly every 10 years they raise funds through a “public offering” of “stock” amounting to hundreds of millions of dollars.
what on earth. they do not raise "hundreds of millions of dollars".
> Shareholders don't receive any power in the organization aside from an invitation to an annual shareholder's meeting with voting rights to issues decided at the meeting. The stock also pays no dividends to shareholders.
This thing is like buying a Packers jacket and trying to say you own some of the team...
Here is the Packers 2012 Public Offering Document: https://shareholder.broadridge.com/pdf/gbp/offering_document...
see page 7 for the voting rights
> On each matter submitted to a vote of the shareholders of the Corporation, the holders of outstanding shares of Common Stock are entitled to one vote per share. Among other things, shareholders vote annually to elect members of the Corporation’s Board of Directors.
In terms of the amount the public offering document includes the price $250 per stock and the range 250,000-888,000 shares. These offerings historically sell out in minutes. I could pull the most recent SEC no action letter to confirm the amounts sold, but I don’t think it’s necessary at this point.
The public offering document speaks for itself and I quoted it, so what’s overblown about the description? If you think it’s fraudulent launch your complaint with the SEC instead of arguing on HN about it and prove your intellectual superiority.
Your comments could have some credibility if you provided any information or made any point. Unfortunately you're instead saying nothing and just adding noise to an otherwise interesting discussion.
If you work with the SEC on the governance of Green Bay Packers securities, it’s alarming how loose you are with facts. I suspect “work with the SEC” boils down to got coffee for your lawyer while you were in the room, because you’re saying some plainly false things that even Wikipedia, that bastion of truth, quickly proves wrong.
Source: Shareholder.
Every other team is owned through a business organization, but no one refers to those organizations as the owner, they refer to the private individual billionaires (ie no one says the Kraft Group is the owner of the Patriots, they refer to Robert Kraft as the owner. Or Mark Cuban is the owner of the Dallas Mavericks). No one would argue in good faith they are not the owners.
Your personal attacks are sad, FYI I am a lawyer.
The official stock website [2] also says the following about the voting rights.
“Q: How many votes will I receive for purchasing Common Stock?
A: You will have one vote for each share of Common Stock you purchase.”
I’m not sure what those votes actually count for, but they at least exist.
[0]: https://www.packers.com/community/shareholders [1]: https://www.nbc15.com/2021/11/25/packers-stock-sale-nets-mor... [2]: https://packersstock.com/faq
>Common stock does not constitute an investment in “stock” in the common sense of the term. Purchasers should not purchase common stock with the purpose of making a profit.
> You cannot sell, assign or otherwise transfer shares of Common Stock to a third party, except that you may transfer shares to an “immediate family” member by gift or in the event of death. “Immediate family” is defined as the spouse, children, mother, father, brothers, sisters, or any lineal descendent of a shareholder.
More recently Wyoming passed a law creating a “DAO LLC” which is pretty novel and allows “algorithmic management” of the LLC. The only entity I am aware of that has used it is CityDAO LLC, you can look them up and review their Articles on the Wyoming Secretary of State website. I’m not overly familiar with them but understand they are experimenting with owning a parcel of land.
Hypothetically say there were a DAO that got sued, without a legal entity it is a very real legal risk all participants of the DAO could be jointly and severally liable (which could include personal liability above beyond the DAO funds). Legally the concept of a DAO LLC is giant, because it creates a legal mechanism to shield participants of a DAO from personal liability.
I have a trademark application from March that has been approved by the USPTO examining attorney and been published (~10 more days left of publication), then I will set up a Wyoming DAO LLC and assign the DAO the trademark (I think it will be the first registered trademark owed by a DAO). It’s very simple, minimal risk of liability (unlike property) and I think will provide a solid legal framework moving forward (almost like an anti-troll mechanism for IP). It’s a real problem in the space, just as an example there have been bad-faith actors filing trademark applications for Doge and Dogecoin, which if left unchecked could lead to all sorts of legal problems.
My takeaway is that what makes DAO LLC unique is that it allows for "algorithmic management".
I'm familiar with LLC management, where there are owners, wondering what advantage the algorithmic aspect adds. I'll go read up on CityDAO. Congrats on the upcoming project)!
Indeed, one with no water or access to water, or anything else.
Ownership is just a bunch of rights. In any case, why not securitize a sports team?
If this DAO did give its members ownership rights, then obviously it would be a security and their raise would be a regulated public offering, unless it met an exemption. That is an idea baked into my original comment, where I simply say “maybe” as to 3 and it is dependent on the rights the DAO conveys.
As to why not securitize a sports team, that would be great and a DAO would be a potential vehicle for that, but a DAO wouldn’t be needed either. From a practical point of view, the reason we don’t see billionaire owners IPOing their team and reaping the financial windfall of an IPO is because the NFL, NBA, MLB don’t allow it. The leagues maintain very tight controls on who may own teams. For example a few years back there was a owner of a major - billion dollar plus - team that made some racially charged statements to the media and the league forced the owner to sell the team. Again the NFL even controls when the Packers can raise funds by issuing stock. Nothing prevents the leagues from changing their policy, but historically the leagues don’t like giving up control.
Umm no. I have the expectation of loss but am putting a small amount money to insure myself against the emotional distress of if I missed a big mooning opportunity. The default expectation is that the money is all lost.
So no, it's not a security.
If you invest $100 with the expectation that it will be lost with 99% probability, and that it will become $100,000 with 1% probability, you are expecting a profit of $901.
That is an "expectation of profit" my friend.
No, it would be stupid to "expect" a profit of $901 because there is no scenario in which you would gain $901. You would either have -$100 or +$100000 and never +$901 in your stated scenario.*
In your case since there is a 99% probability of -$100, my "expectation" would be -$100 and if "surprise" of $100000 happens that is "surprise", not part of the "expectation".
* I realize there is a term called "expectation value" and I hate that term with a passion because in any distribution that doesn't roughly resemble a bell curve it would be stupid to "expect" the mean value. Statistics like the mean are not a good way to establish a strategy for a game that you only get to play once.
GGP said "you are expecting a profit of $901" -- I'm not, personally. I'm "expecting" -$100. How about we take a bet? I'll expect -$100, you expect $901. If I win you give me $100, if you win I give you $100, and if neither of us wins we split the $100K. Deal?
This is a game theory problem, NOT a statistics problem. In my case the utility of losing -$100 is zero, the utility of gaining $100K is very positive, the utility of missing out on the $100K is extremely negative.
I don't know about you but if you have a coin labeled 0 and 1 and flip it it would be mind-bogglingly stupid to expect a 0.5 out of this coin. Just like if you have a coin labeled A and C it would be stupid to expect a B to come out of it. You'd be better off picking either A or C and expecting that instead.
No statistics class I took said that a coin with sides A and C can give you a B, or that you could "expect" 0.5 from a bimodal distribution with a delta function at 0 and a delta function at 1. The mean value may be 0.5 but it's not something you would expect to actually happen; if you wanted to maximize the probability that your prediction is correct you'd be better off picking 0 or 1.
It’s like having a huge argument about a physics problem claiming “force” isn’t mass times acceleration because nobody is “forcing” you to do anything.
Back to your 0 or 1 example. 0.5 is the meaningful value to know over any kind of large sampling because that is what matters for “expected value”. It tells me what I should expect overall if I play 1000 times.
What you want is called the “mode”. Given a single instance of an event, what is the most frequent value.
I already know that.
My point is it's shitty terminology, even though it's somehow become a standard.
Stats 101 also does NOT tell you to "expect" the expected value to happen.
GGGGGP however seems to actually use the value to formulate a strategy, and that's where I'm pointing out that this entire formulation of using stats to approach this problem is flawed. You don't have enough chances at the game such that the mean is a meaningful number to consider.
That's also why I always refer to it as the mean even if other people call it "expected value". I hate the term with a passion and I will not yield to the wise guys who wrote the books.
Honestly I'd rather not have this discussion in English because this isn't a problem in many other languages. In many languages mean is not called "expected" anything.
Calculating utility, or the expected value, is entirely statistics.
"Expected value" and its derivatives is a specific term, with a specific calculation. You can't just throw around words and expect others to understand you don't mean the actual definition when you say them.
While ongoing profit from the investment itself is nice it's not legally required. For example, stock in Uber is a regulated security, even though Uber has a history of losses and is not expected to be profitable in the near or distant future, if ever.
Similarly, loss companies were once frequently sold to savvy investors needing losses to offset their taxable earnings from other sources, and those investments were similarly regulated securities even though there was clearly no expectation of profits.
Yes, more or less. Or call it an insecurity, I don't care, whatever is needed so the SEC can stay out of this.
Or obviously an ETF, or obviously a mutual fund, or obviously a market maker, or obviously The Fed.
There is literally a 1-1 attempt at mimicking the current financial system under the label "DeFi".
The problem is that the vast majority of the participants don't care about this. They care about 720,687% APY as of this posting on things like this, which anyone should realize is nonsense:
That's $100 to $3 billion in two years.
Good luck with that.
Your dollar yield will be the token yield minus the change in token price.
Perhaps they should be more transparent about this, because I can end homelessness in the United States right now with $100 based on their reported APY.
The only people who are attracted to this misinformation are amateur investors, and I fear that is the whole point.
But this is my point, it takes an understanding of finance and an understanding of what’s actually happening with these smart contracts. Retail will get slaughtered.
The parent comment is pointing out that this looks like it meets the same definition as those other things and needs to follow the same laws, no matter how much people like it, want it, think it's better than what's it's "replacing"
> Probably? Why else would they be buying a team for?
Teams are money sinks. The reason to buy a team is political power. To the extend that the state will turn a blind eye or two (see ^2). A totally random example[1], less random examples: Juventus, AC Milan, Olympiacos[^2] and countless others.
Just pointing the obvious, I agree that this transaction should be regulated, all I'm saying is that (3) is not _necessarily real_ in this or other cases.
[^1]: https://en.wikipedia.org/wiki/Joan_Laporta#Political_activit...
[^2]: https://newrepublic.com/article/159252/noor-one-vampire-ship...
And for your Barcelona example, it isn't a good one. It's a fan owned club, the president is elected and isn't an owner and can't really invest in it bar some special cases.
For good or ill, a common pattern is (1) someone just does it. (2) it attracts regulatory oversight/action/whatnot (3) regulation becomes actually functional.(3.5) the incumbent now has advantage. PayPal, Uber, etc.
What's the alternative? Ban it? Create a framework regulating something that does not exist?
All that said, crypto-ish ownership of a sports team isn't a bad idea.
- A group of people pool some money together.
- The money is used to buy assets/fund projects.
- Members vote on spending, governance etc., with their vote being proportional to their investment.
- They can raise money by issuing more "tokens" for new investors.
- Existing members can sell their tokens to someone else.
Like, congrats crypto community, you just invented a...public company?
It’s like what Amazon did. People could buy stuff before, but now they could buy stuff with much more ease (search, order, return etc).
I don't see how it improves any part of the process.
Other than that, how was the play, Mrs. Lincoln?
This though seems pretty cut and dry “is a security” and all sorts of compliance will apply early.
The owners aren’t providing labour. Votes are tied to shares—one person can have more than one vote. And the shares are acquired with capital. Closer to corporation than coöp.
If the DAO committed to turning the team over to its players or fans, and then fixed one vote one member, that would resemble a coöperative.
Totally agree. There is no reason a coöp couldn’t run on a blockchain.
This DAO is not that.
I was going to ask you about it but Wikipedia gave a sufficient explanation, so commenting for the benefit of other readers.
https://www.newyorker.com/culture/culture-desk/the-curse-of-...
In a public company, ownership and management are separated, for a good reason. You want to be able to own a company, without necessarily being involved in its management. Otherwise, you're severely limiting the number of companies people can invest in and preventing the owners from having other jobs, or you end up with a bunch of amateurs managing the company in their spare time.
But this time when a DAO executes a rug-pull, or the token crashes to 0, the regulators are not going to save you.
I'm not saying I necessarily agree with those laws, I just see much of the "DAO revolution" as designed to "free the people" into investing anonymously and without accredited investor requirements, without directly trying to change the laws.
One thing I think it does that most don't talk about: allows people to register a global company/org. Right now, I think the highest level to register an org is the nation-state level, not much, if anything, exists at a global level.
So then we have global things often being regulated by national laws, which, seems to be a conundrum I see happening more and more.
In other words, do you think there would be as much of a need for DAOs if a company could register with a global authority, had globally aligned taxes, etc?
Why this is supposed to be a good thing is never explained.
Storing data in a blockchain doesn't mean that local laws don't still apply. Even if the FBI can't prevent you sending money to a terror organisation with a smart contract, they will still arrest you for it.
Being able to reason with someone can be an advantage. With imperfect rules, having authorities involved that are allowed to have some discretion can be a huge boon.
And not having to hire lawyers? Well, you still have to hire someone who understands smart contracts, someone who writes them, and someone to negotiate them with whoever you want to close your contract with.
Second, you're aware the "congrats, you've just invented" argument is a ridiculous fallacy that can be used against any kind of innovation. It's also has a very bad record as it's been used against the internet, smartphones, social media etc.
Here's a piece by Vitalik I found compelling: https://vitalik.ca/general/2021/08/16/voting3.html
It’s about having software that runs the regulation schemes surrounding those financial instruments without needing human regulators.
2. Even if it was, the league wouldn't approve a sale to...whoever/whatever this is
3. Even if they did, the cheapest team is currently valued at $1.3B and the actual sale price would be a lot more than that. The last such effort raised $40M and got outbid.
> the group of some 2,000 members raised the equivalent of $4 million U.S. in the cryptocurrency Ethereum in six days.
Even after the ConstitutionDAO situation, using the same cryptocurrency which is bringing in the same problems.
The supporters of this hopelessly utopian endeavor seem to never learn and will end up bag-holding for years.
Spending more money for less than nothing.
Commerce finds a way. If this thing raised $10bn and passed regulatory muster, one could “sell” a team with a moderating layer for governance. Long story short, the league is unlikely to be the blocking factor per se.
>we anticipate the NBA will not be favorable to giving majority ownership to any faceless DAO/corporation in the near or medium term regardless of $$ offer.
If you were trying to derisk this project, the NBA should not be a concern.
Also, sports team owners feel keeping detailed financial info secret gives them an advantage in negotiations with the players' unions. This is why the NFL banned public teams like the Packers. Having so many owners would make it improbable that they could keep a lid on proprietary info, which in the end will cost them money.
2. I think this is the biggest issue - not even that the league won't approve the transaction, but that it won't pass the legal requirements. The owner probably needs to be an individual or a corporation, and DAO is... neither of these. Who knows how it'll change in the next few years though, maybe there'll be a way to fit DAOs into the legal framework.
3. And if this DAO ever raises $1.3b, by that time the cheapest team will be worth $2b! I don't think it'll ever happen in NBA, but maybe some lower division in English football? It would be interesting to see, if some DAO owns a small club to see how the management process would look like in practice.
They keep stress-testing different systems to see what's possible.
Most of them are terrible ideas, but it only takes one to succeed.
Then 6 years later Coinbase changes its name to DAO-verse or something.
Computer, e-commerce, electric vehicles, all of these things have been written off. So? You can’t expect people to be able to see the future. They have to make decisions for the present.
Those decisions don’t damn a technology though. Crypto has plenty of attention-over-time to mature and that’s all it needs.
If it’s ever mature and everyone is writing it off and all the early adopters are leaving, that’d be a problem.
I'm honestly not sure if the fact that every week there's some other harebrained MLM type crypto scheme going up in flames is somehow suggesting that there's some massive success around the corner
The whole thing with cryptocurrencies is just people excited about money laundering rebranded as something cool. Take that away (as no serious national government would allow such a thing) and what you have is more or less indistinguishable from Visa.
> the group said it had 17,437 donors with a median donation of $206.26... One user on the Discord said that in order to get $400 refunded, they would have to pay $168 in gas (https://www.bbc.com/news/technology-59392827)
Presumably there are people who donated $100 and it isn't worth getting the money back. Are these pots of money a good way for a scammer to get a lot of money input and then only have to refund 75% of the donated money? If they raised $40M and only $30M gets refunded, who controls the remaining $10M?
At some point it seems like it would be ripe for a scam. Even if this case has some protections, it seems like it would be easy for someone to do something unprotected in the future.
Everyone send me bitcoin and if we hit $2B in bitcoin in the account, we'll buy an NBA team and all share ownership in proportion to our investment. If we aren't able to buy a team, you can get a refund. Oh, 1% of people forgot about it and didn't claim their refund within the 2-year refund window? Well, that's $20M for me.
Has this been solved and I just don't know it?
The first couple of times the scammers may win, who knows.
Just following the HN guideline: "please use the original title, unless it is misleading or linkbait; don't editorialize." from https://news.ycombinator.com/newsguidelines.html with a minor change to the original title to fit length restrictions.
Not sure if the NPR headline writers understood the DAO difference or just wanted to generate more interest in the story.
So unless one of them have at least $12M laying around, I don't see any of them being able to do this.
In an early, conservative implementation, all of that could be offline except the shareholder votes, which would be automated on chain. The board would be beholden to the chain decisions via normal lawsuits in offline courts.
In a more radical setup, the board votes could also be done in software. More radical still would force arbitration onto the chain.
What will be interesting to watch in the coming decades is to see how much of the workings of a company can be done in software on-chain.
It seems uncontroversial to say you could do shareholder votes there though… and that’s the minimum required for the scheme like this.
You will definitely be able to short this stuff on a crypto exchange.
Just like a USD short account you’d have to stake some capital, probably in BTC or ETH or something like that. And you’d have to hold enough crypto to pay your recurring short fees. And in the even of a margin call you might need to put up more capital.
I highly doubt it will ever materialize, but it's ok to dream big and work towards that dream! I imagine this community might educate themselves in how to run a business like a sport club, what are different responsibilities there, etc. They have funds that they can use to invite some guests from NBA to talk about the work behind the scenes. Yeah they will never actually own a club, but as long as everyone there believes that it's the journey that matters - have fun!
It's the ultimate dumb move for somebody who won the lottery (either real or figurative)
When things go well the public falls in love with the players, when things go south the owners are the first in line of the firing squad . Fans , media, talk show hosts...they get attacked by everybody, maybe only the coach has it worse but at least he can leave.