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Comment by evilantnie | Hacker News Reader

From what I'm reading here, the company misled "investors" by attaching the NFT to ownership in the company, which would be considered a security.

"The order finds that Impact Theory encouraged potential investors to view the purchase of a Founder’s Key as an investment into the business, stating that investors would profit from their purchases if Impact Theory was successful in its efforts."

When I purchase a baseball card, I do not have the expectation that there is any additional value attached to the baseball card beyond what the collector's market will pay.

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You must not be buying baseball cards in 2023. It’s gotten crazy.

Does buying a baseball card in 2023 now entail ownership in Fanatics or Panini?

If not, then it's not even remotely the same thing as what goes on with non-fungible tokens like the one here.

I don’t think these NFTs give ownership rights either. Reading the SEC order, it sounds like the reasonable expectation of a profit was the issue.

The NFTs did purport to give ownership rights in the business profits of the NFT, as represented by the value of the NFT increasing specifically because of the labor of others acting to increase the value of the NFT.

And that is part of what makes them completely different from baseball cards. Even if the value of the cards are dependent on the labors of others, with the baseball cards, the laborers (i.e., players) are not performing that labor with the intent of increasing the value of the cards; the value of the increase in the cards, if any, is wholly coincidental.

That's still just the value of what the collectors market will pay. You down own a share in MLB with the card

With baseball cards, You have an expectation that the MLB will continue to promote and develop Baseball as a top sport. You purchased an illegal security.

Do they promise you when buying them that they will gain in value if the sport does well?

There are companies that use the cards of specific players as a way of investing in that player - they better the player does, the more their cards are worth.

Wouldn't the inverse be true - baseball cards become much more rare if Baseball itself ceases to exist as a going concern.

Rare things are not automatically valuable. I still have "dragon dice" and an original deck of cards from an old lord of the rings game. Basically worthless.

Yes, baseball cards would become incredibly valuable (at least the rare ones).

This only would be the case if people continued to care about baseball. In reality, fewer people would care less and less over time. For example, there is not great value in jousting paraphenelia.

You'd best file an amicus brief with your analysis.

Unfortunately the defendant settled, instead of fighting in court like they should have.

Its also worth nothing that the SEC is losing in court, losing the support of Congress and losing the support of the White House

specifically as more people, including judges, notice this lack of distinction and the SEC’s unwillingness (and inability) to describe why there is a distinction

there is either a way to issue crypto collections and collect money for them without being a security, or all other collections sold are securities with unregistered broker dealers operating illegally and fraudulently for the past 100 years

That's not true, just wishful thinking on your part.

Not all collectibles are unregistered offerings, obviously. Being a collectible also doesn't mean it can't be an unregistered offering also. This one clearly was.

SEC just lost again on another arbitrary and capricious stance in the crypto asset space!

https://www.bloomberg.com/news/articles/2023-08-29/us-court-...

You seem to be very keen on making this rather dubious point all over this thread. Certainly more motivated than I would consider “normal” for someone just wishing to weigh in on a topic they care about. Are you connected with this, or just having a particularly manic day?

low key want to see the entire sneakerhead drop industry convulse under securities fraud and unlicensed securities exchange charges

One key difference between MTG cards (or baseball cards, or most any traditional collectible item) and NFTs: If the SEC shut down Wizards of the Coast and/or caused them to radically alter their businesses, old Magic cards would likely rise in value as a result, rather than cease having any material value whatsoever, as is the case with most digital assets.

consumers should be discerning about what they purchase and the liquidity of secondary markets are happenstance

if the primary market evaporates because of a lack of secondary market, so be it

I dont think the point you are trying to make means what you think it means to me

(although with onchain exchanges the possibility of liquidity pools being formed by any market participant is going to keep that interest)

That seems materially different from an expectation that you will make money on the card, or that the value of your card is determined by MLB's profitability and future earnings.

MLB cannot promote baseball if MLB is unprofitable and enters bankruptcy. It’s clearly connected.

That's still not a security, because if someone buys all the baseball cards, they don't control anything about MLB or have a right to its profits, for example.

With baseball cards, You have an expectation that the MLB will continue to promote and develop Baseball as a top sport. You purchased an illegal security.

No, you don't. For starters, baseball cards are not sold or marketed by the MLB, the teams, or the players, and buying a card does not entail any ownership in either the MLB, the companies making the card, the store where you bought the card, the players, or the teams. They're not sold by the companies that make them as business opportunities, and in fact most cards aren't worth anything.

But every NFT tells you that you should buy their NFT because their efforts to promote the NFT as a business will lead to it increasing in value. And legally, that makes all the difference.

Did MLB promote baseball cards saying that their profitability would lead to increased value?

Because in this case the company did exactly that.

While they didn't call them securities they marketed them as securities.

No, you don't.

Baseball cards aren’t owned by the MLB. That would be a weird expectation like buying Oakland raiders hat and expecting the hat manufacture to stop the raiders from moving to Las Vegas because it would devalue the apparel.

People buy baseball cards to collect them. I have a bunch from my childhood. They weren’t investments.

> When I purchase a baseball card, I do not have the expectation that there is any additional value attached to the baseball card beyond what the collector's market will pay.

What about music royalties rights? Those are almost always purchased with expectation of profit. Those are even explicitly marketed on the basis of how big an artist is going to be. Yet the SEC does not consider them securities

https://www.sec.gov/Archives/edgar/data/1490161/000104746910....

That’s IP law, not investment.

It's an interesting intersection because those rights produce an income stream that can be evaluated like a bond.

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