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All these ICO's have been avoiding any SEC regulation regarding private security sales by claiming the tokens are just a method to use/exchange services on thei

All these ICO's have been avoiding any SEC regulation regarding private security sales by claiming the tokens are just a method to use/exchange services on their platform, not as an investment. However, when ICO's like this one keep happening where only 100 "accounts" own 99% of the ICO offering, you pretty much lose that argument of the tokens only being there for use of the platform. It's a private security sale, and I only see one way this will end. The SEC will make a case out of one of the ICO's 100%. They do not take advertising to unaccredited investors lightly. My only suggestion, if you are involved in any way with an ICO (developer, investor on the team pre-ICO, etc.), either get out of the U.S. now and/or make sure all operations are happening outside the U.S. I was almost involved with a company doing essentially what these ICO's are doing (not blockchain/crypto currencies), and fortunately I figured it out before being involved, but it did not end pretty for them. Like the IRS, the SEC/others will come down hard, not a matter of if at this point, it's when and who gets the beating first. They love making cases out of someone to set precedent. With the general public playing into an overbought token market fueled by Asian countries for the most part, the regulators/SEC will come down extremely hard on this. I think investing in Ethereum/Bitcoin is fine, just know what you're doing, record your cost basis for when you bought it. And seeing first hand what the IRS does to people who avoid paying taxes, just make your life easy, when you exchange back to a currency that is considered a currency by the IRS, just pay your capital gains on it and move on with life. The IRS will catch up and many people will go to jail for tax evasion. Don't be one of them. Obviously, all this only pertains to the U.S.. Also for fun, if you really want to see the hysteria around the Ethereum price right now, check out r/ethtrader/ or even the Ethereum FB group. People are throwing their entire savings into this while not knowing anything about it besides everyone in the group hyping it up amongst themselves. It's really sad. Ethereum is now actively pumped heavily on MLM sites/blogs. It's beyond gross. I believe Ethereum is an amazing project and am worried that this hype fueled hysteria, once it collapses on itself, will give Ethereum a bad reputation. It is a great protocol.

seibelj 9y ago
But if you own a token, you own nothing in the company, no equity, no promises, no contract signed, you don't have any right to any profits and Brave can say tomorrow that all the tokens are worthless. It's not so straight-forward that they raised investment, really they sold $35mil of a product. But IANAL, and you could easily be right, I'm just saying it isn't so cut and dry.
- DennisP 9y ago
  Depends on the token. In some cases, there's deployed code that enforces various rights...perhaps a share of fee revenue, or access rights to the platform. Whether the code is already deployed, or depends on further development effort by the team, is one aspect of the Howey Test, according to Coinbase which released the results of some legal research on the subject: https://blog.coinbase.com/2016-12-07-blockchain-token-securities-law-a66ef03c383f https://blog.coinbase.com/2016-12-07-blockchain-token-securi...
  - seibelj 9y ago
    From the FAQ: > What do BATs represent? > BATs are tokens in a new Blockchain and attention-based digital advertising platform. They are not refundable, nor are they securities or for speculation. There is no promise of future performance. There is no suggestion or promise that BAT has or will hold a particular value. BATs give no rights in the company and do not represent participation in the company. BATs are sold as a functional good. Any value received by company may be spent without conditions. BATs are meant only for experts in cryptographic tokens and blockchain-based software systems.
    - Spivak 9y ago
      Which is a fine attempt by their legal team to wash themselves of all liability by declaring that their coins are basically nothing, but words wont matter in the eyes of judges and regulators when a speculative market appears.
hal9000xp 9y ago
I think the notion of accredited investor is very discriminatory to small investors. It's basically says - if you already wealthy then you have an access to attractive investment opportunities with huge upside (and of course, huge risk), if you are just a middle class man then stay where you are (since your investment options with huge upside are severely limited and you don't have enough capital to make sense from investing in index). The better version of requirements for accredited investors would be some sort of exam (hard enough to make sure you have solid knowledge about financial markets, financial instruments and risk/return relationship).
- wmf 9y ago
  Equity crowdfunding by non-accredited investors is recently legal in the US due to the JOBS Act, yet none of these ICOs use it.
  - DennisP 9y ago
    To raise from the public under the JOBS Act, you have to do your ICO through a regulated platform. As far as I know, none of those support blockchain projects, so it's not actually an option yet. Plus you can't raise more than a million dollars or so that way. And there's a limit per person, so instead of just sending ETH, everybody would have to go through the platform's KYC, and declare how much income/assets they have. In the meantime, people in countries with more economic freedom than the U.S. can just deploy a couple pages of code, make some basic efforts to block U.S. investors, and be done with it.
    - Cshelton 9y ago
      Also, to raise under the JOBS act, you pretty much have to do a full accounting audi to the same level as a publically traded company. And I think there is a limit of $50k for each person you raise from with a certain max in total raised. All in all, half of the money raised would go to paying for the funding to begin with, making it very very seldom used.
- Cshelton 9y ago
ThrustVectoring 9y ago
>an overbought token market fueled by Asian countries for the most part Chinese capital controls has a huge amount of blame here. Because the Chinese government prevents the foreign exchange market from clearing at a lower price, there's tons of unmet demand for converting Renminbi to anything that isn't subject to such restraints. Similarly, on the demand side - there's folks that would be induced to sell their foreign assets at a higher price if it was allowed. So essentially, there's a "you can use this to avoid capital controls on your Renminbi" premium on all sorts of things. Real estate in Vancouver. Cryptocurrencies. Chinese companies acquiring foreign subsidiaries with no real business purpose behind it.
- solotronics 9y ago
  so doesn't this validate the usefulness of cryptocurrency? if people are using it to store and move value around the world in spite of government controls and fiat manipulations that is exactly why it was invented.
  - ThrustVectoring 9y ago
    Move? Yes. Store? As little as possible. Chinese capital controls just means that the USD/Renminbi trade gets split into USD/BTC and BTC/Renminbi with an "arbitrage opportunity" against the official exchange rate that fairly compensates people for eluding capital controls. With this process, it doesn't matter if BTC is trading at $1 or $1000. Chinese citizens can convert the maximum allowed from Renminbi to USD, buy bitcoins in USD, sell those bitcoins for Renminbi, and pocket the spread.
maksimum 9y ago
> People are throwing their entire savings into this while not knowing anything about it besides everyone in the group hyping it up amongst themselves. Yeah reading /r/ethtrader it's 95% hype and 5% caution. I keep feeling conflicted for not buying in at ~$120-$130, and every day I think about whether I should buy in. But then I try to answer the question "what about Ethereum makes me believe it will be worth more than $(today's price) a year from now?" and I can't come up with anything other than speculation... Any advice?
- sanswork 9y ago
  Realize that sometimes you miss out on high returning investments and sometimes you miss out on BreX.
- brianwawok 9y ago
  That is a clear sign not to buy.
- nunez 9y ago
  My go to gut feeling is that if EVERYONE is doing it, where it is something that's speculative, then that's when you avoid
jszymborski 9y ago
Made me think of the OneCoin story The Atlantic just put out: https://www.theatlantic.com/technology/archive/2017/05/cryptocurrency-ponzi-schemes/528624/ https://www.theatlantic.com/technology/archive/2017/05/crypt...

seibelj 9y ago

But if you own a token, you own nothing in the company, no equity, no promises, no contract signed, you don't have any right to any profits and Brave can say tomorrow that all the tokens are worthless. It's not so straight-forward that they raised investment, really they sold $35mil of a product. But IANAL, and you could easily be right, I'm just saying it isn't so cut and dry.

DennisP 9y ago
Depends on the token. In some cases, there's deployed code that enforces various rights...perhaps a share of fee revenue, or access rights to the platform. Whether the code is already deployed, or depends on further development effort by the team, is one aspect of the Howey Test, according to Coinbase which released the results of some legal research on the subject: https://blog.coinbase.com/2016-12-07-blockchain-token-securities-law-a66ef03c383f https://blog.coinbase.com/2016-12-07-blockchain-token-securi...
- seibelj 9y ago
  From the FAQ: > What do BATs represent? > BATs are tokens in a new Blockchain and attention-based digital advertising platform. They are not refundable, nor are they securities or for speculation. There is no promise of future performance. There is no suggestion or promise that BAT has or will hold a particular value. BATs give no rights in the company and do not represent participation in the company. BATs are sold as a functional good. Any value received by company may be spent without conditions. BATs are meant only for experts in cryptographic tokens and blockchain-based software systems.
  - Spivak 9y ago
    Which is a fine attempt by their legal team to wash themselves of all liability by declaring that their coins are basically nothing, but words wont matter in the eyes of judges and regulators when a speculative market appears.

hal9000xp 9y ago

I think the notion of accredited investor is very discriminatory to small investors. It's basically says - if you already wealthy then you have an access to attractive investment opportunities with huge upside (and of course, huge risk), if you are just a middle class man then stay where you are (since your investment options with huge upside are severely limited and you don't have enough capital to make sense from investing in index). The better version of requirements for accredited investors would be some sort of exam (hard enough to make sure you have solid knowledge about financial markets, financial instruments and risk/return relationship).

wmf 9y ago
Equity crowdfunding by non-accredited investors is recently legal in the US due to the JOBS Act, yet none of these ICOs use it.
- DennisP 9y ago
  To raise from the public under the JOBS Act, you have to do your ICO through a regulated platform. As far as I know, none of those support blockchain projects, so it's not actually an option yet. Plus you can't raise more than a million dollars or so that way. And there's a limit per person, so instead of just sending ETH, everybody would have to go through the platform's KYC, and declare how much income/assets they have. In the meantime, people in countries with more economic freedom than the U.S. can just deploy a couple pages of code, make some basic efforts to block U.S. investors, and be done with it.
  - Cshelton 9y ago
    Also, to raise under the JOBS act, you pretty much have to do a full accounting audi to the same level as a publically traded company. And I think there is a limit of $50k for each person you raise from with a certain max in total raised. All in all, half of the money raised would go to paying for the funding to begin with, making it very very seldom used.
Cshelton 9y ago

ThrustVectoring 9y ago

>an overbought token market fueled by Asian countries for the most part Chinese capital controls has a huge amount of blame here. Because the Chinese government prevents the foreign exchange market from clearing at a lower price, there's tons of unmet demand for converting Renminbi to anything that isn't subject to such restraints. Similarly, on the demand side - there's folks that would be induced to sell their foreign assets at a higher price if it was allowed. So essentially, there's a "you can use this to avoid capital controls on your Renminbi" premium on all sorts of things. Real estate in Vancouver. Cryptocurrencies. Chinese companies acquiring foreign subsidiaries with no real business purpose behind it.

solotronics 9y ago
so doesn't this validate the usefulness of cryptocurrency? if people are using it to store and move value around the world in spite of government controls and fiat manipulations that is exactly why it was invented.
- ThrustVectoring 9y ago
  Move? Yes. Store? As little as possible. Chinese capital controls just means that the USD/Renminbi trade gets split into USD/BTC and BTC/Renminbi with an "arbitrage opportunity" against the official exchange rate that fairly compensates people for eluding capital controls. With this process, it doesn't matter if BTC is trading at $1 or $1000. Chinese citizens can convert the maximum allowed from Renminbi to USD, buy bitcoins in USD, sell those bitcoins for Renminbi, and pocket the spread.

maksimum 9y ago

> People are throwing their entire savings into this while not knowing anything about it besides everyone in the group hyping it up amongst themselves. Yeah reading /r/ethtrader it's 95% hype and 5% caution. I keep feeling conflicted for not buying in at ~$120-$130, and every day I think about whether I should buy in. But then I try to answer the question "what about Ethereum makes me believe it will be worth more than $(today's price) a year from now?" and I can't come up with anything other than speculation... Any advice?

sanswork 9y ago
Realize that sometimes you miss out on high returning investments and sometimes you miss out on BreX.
brianwawok 9y ago
That is a clear sign not to buy.
nunez 9y ago
My go to gut feeling is that if EVERYONE is doing it, where it is something that's speculative, then that's when you avoid

jszymborski 9y ago

Made me think of the OneCoin story The Atlantic just put out: https://www.theatlantic.com/technology/archive/2017/05/cryptocurrency-ponzi-schemes/528624/ https://www.theatlantic.com/technology/archive/2017/05/crypt...