We understand that we did some unacceptable things. We get it. As individuals, we don't have $20k. The fine is not just a slap on the wrist, it's financially ruinous.
Yeah, it's a lot of cash, but I've been billed more than that for a night in the ER when I didn't have insurance. And seriously, it was up to you to think about the fact that this was bound to attract regulators' attention and that the time they spent on you is currently being picked up by taxpayers. I know you want to compare yourselves with bucket Shops, which you think played an important role in democratizing/disrupting finance a century ago, but this whole idea of 'a chance for regular folk to get in on the action!' is unfortunately the same sort of psychology that con artists use to qualify their marks.
Honestly, if one of you had done an ask HN about whether this was a viable thing people here would have told you why not and what you needed to do to be legit.
Edit: come to think of it, I'm surprised your mentors int he Accelerator didn't point out this very obvious pitfall to you.
Oh please, these people are what, 22? 25? They are supposed to know the basics of security law off the tops of their heads?
They got an idea and spun it up in a weekend. Yes, on reflection, allowing this sort of thing opens all sorts of loopholes for bad actors. And it had to be shut down. But it isn't as if this was done by a bunch of associates at Sullivan & Cromwell, or the interns at Goldman Sachs. They did something fun, it got afoul of the securities laws, whatever. Explain the legal breech and practical problem and tell them to pack it up, boom, we're done.
But bureaucrats are basically sycophants and / or bullies. They aren't in the job to protect the public. They're in the job to make money by connections, and to push around people without the knowledge or stones to tell them to fuck off.
No, but they should have known that it might be relevant and done some research online and/or talked to a lawyer.
Later, when Matt Levine, who is a columnist from Bloomberg and a lawyer, wrote about them in his column and said that he could not see how it is legal, specifically mentioning SEC and CFTC regulations as problem areas, that should have been a giant freaking clue that they should investigate these things. Instead, they tweeted "Cool! NYC banker hipster @matt_levine is hating on us. We must be getting too mainstream :)".
And we are not talking about doing just "anything". We are talking about a very specific thing: starting a company that is going to take real money from people, and help them do risky things with it--a company that depending on how you look at it is a securities company or a gambling company or a prediction market. According to their FAQ, they planned to have no limits on how much money someone could put into this, and they were aiming for very high volume, so if it had worked out they would be dealing with vast amounts of money.
All of those are highly regulated areas, and it is hard to believe that anyone who had even glanced in the general direction of doing a company in any of those areas would not be aware of that.
So are you seriously suggesting that it is reasonable to start a company that is going to handle, you hope, vast quantities of money for a vast number of people in a highly regulated industry, and NOT do any online research or seek legal advice to make sure that you are legal?
And do you seriously think that when a prominent writer who covers your field and is a lawyer tells you he can't see how your business is legal, it's reasonable to mockingly dismiss that?
Now if that is wrong -- if they intended to generate real revenue and profit off this thing, and raise money -- then yes, they're idiots.
But if this was something put together as a project, something fun and interesting to do, then I understand why they didn't consult a lawyer.
Not "anything". Starting a business, especially in a highly-regulated domain, OTOH, is not the same as "anything".
And, even granting that one might not be aware enough of the regulatory landscape to recognize that need, when someone who is knowledgeable points to the specific areas of risks and you just blow it off as a sign of success than someone is "hating on" you, yeah, then its arguably gone from innocent to willful ignorance.
They got an idea and spun it up in a weekend.
They ran it over a few months, publicized it, and demonstrated their knowledge of brokerage history history. Plus just about every 'How to set up a small business' guide ever written warns about setting up a structure to protect yourself such and LLC or the like.
But bureaucrats are basically sycophants and / or bullies. They aren't in the job to protect the public. They're in the job to make money by connections, and to push around people without the knowledge or stones to tell them to fuck off.
Yes, everyone is exactly the same. They're all big old killjoys who don't want you to have any fun man.
Grow up.
They are supposed to do due diligence before starting a business and accepting money. That doesn't mean knowing things "off the tops of their heads", it means doing their homework.
Generally, it's pretty easy to get a loan for college. It's more difficult to get a loan because the government fined you.
Student loans are federally subsidized (or directly issued by the federal government) and specially non-dischargeable in bankruptcy, so banks are more willing to make them than they would be to make other unsecured loans to people in similar financial circumstances. So its a bad example, unless you are aware of similar federal or federally-subsidized "pay off your SEC fine" loans.
I definitely agree that it's unfair. But life goes like that. Don't focus on the assholes. Pay your bills and move. Ten years from now, this just a really good story.
You'll be fine.