The problem was in the solicitation of people to participate in a share issuing entity that wasn't registered with the government after they paid money to parti

The problem was in the solicitation of people to participate in a share issuing entity that wasn't registered with the government after they paid money to participate. (basically selling shares). The law is setup to prevent people from buying/selling shares of hypothetical inc. without talking to the government first. Also with the raw number of people who had shares(120+) that more quickly draws the governments ire than two people trying to found a company together and it fails. Advertising for a company co-founder doesn't fall into this problem space.