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I get that the SEC exists for very good reasons - but a part me wishes that ICOs and cryptocurrencies as a whole could remain unregulated. Sort of like an econo

I get that the SEC exists for very good reasons - but a part me wishes that ICOs and cryptocurrencies as a whole could remain unregulated. Sort of like an economic free-for-all zone: risky, experimental, not for the faint of heart. At the same time, I guess the only way for these to become mainstream is for them to be regulated. Hopefully regulations help them thrive rather than dampen growth. Time will tell. Regardless I'd like to see the SEC at least send a warning shot Floyd's way, cause he seems out of his depth and he's trying to bring his fans with him.

wmf 9y ago
You can create whatever crazy investment you want as long as you limit it to qualified investors. But those people mostly won't fall for pump-and-dump ICOs.
- kgwgk 9y ago
  You overestimate how much qualification is needed to be a qualified investor.
  - etjossem 9y ago
    Qualified doesn't mean clever, it just means "losing isn't a big deal." The only people to whom losing a 50-100k investment won't be life-changingly bad are either high net worth or high income. There is a lot of frustration from this crowd about not being able to invest a sensibly small amount of money in an ICO / early stage startup / other risky thing. As a curious technologist who can handle a bit of risk, I can empathize! But we're not who the SEC is designed to protect. They're there to stop situations where people get half their life savings ripped off, and that is completely sensible.
- api 9y ago
  Could you write a smart contract requiring someone to prove that they control enough currency to qualify ?
  - infinite8s 9y ago
    Real world currency? How would that be enforced in a way that couldn't be spoofed?
  - SilasX 9y ago
    There's long been talk of having web-portable, cryptographically secure endorsements for things you want to prove about your identity: that you've over 18, that you hold a valid driver's license, etc, but they've never gotten off the ground. Basically, same as CAs, except for validating that "this identity has that attribute". This would be another use case. Edit: if you meant proving you own enough ETH tokens, rather than USD, that's a lot easier and (I assume) possible now.
  - tylersmith 9y ago
    If the currency was a cryptocurrency with support on the smart contract platform, yes.
- adventured 9y ago
  Those people regularly fall for far worse. During the dotcom bubble, there was a guy that moved from the East Coast, New Jersey or similar, to Orange County CA. He had next to no technical ability or background. When he moved, it was on the last thread of his pants, he was broke. The story (in The Industry Standard or Wired or similar at the time) included an example of that poverty: him pulling his own cracked tooth out with some help from a bottle of jack, on his way out to California. He gets to Orange County, settles in, and has a bright idea. To defraud people by starting a new tech company that is going to be in the media player / streaming space. He proclaims that his company has invented an advanced new codec, among other things. He proceeds to raise something like $16 million from wealthy people in Orange County, using each investor as a referral to the next (dentists, doctors, wealthy older people, and so on). His product, used in demonstrations to said wealthy people, consisted of a skin over top of Microsoft's media player. People started to very gradually get suspicious, so he hired armed guards to stand outside his office, supposedly to protect him from death threats that had been made (actually to prevent people, employees and investors, from getting easy access to him). The rest of his story melts down from there, with him essentially wiping out the ~$16 million he defrauded investors out of. His side of the story of course, was that they were going to build an amazing new media player, and that investors conspired to make him look bad and blah blah. Those qualified investors fall for all sorts of dumb schemes.
  - repomies69999 9y ago
    16 million is like nothing. Bancor claims to have raisen 250 million (by public records, though you don't know how much they recycled their own money through that ico)
    - adventured 9y ago
      Based on that response I have to assume you weren't in the tech industry in the 1990s. $16 million was considered a large sum of venture capital during the mid 1990s, just a few years prior to the story taking place. By 1998/1999 it was still considered a large amount of venture capital, despite the wave of capital that would make companies like Webvan infamous.
    - 9y ago
deleted 9y ago
[deleted]
nilved 9y ago
Bitcoin exists to avoid regulation. If laws are built around it, then either Bitcoin or the law will be changed.
- dmreedy 9y ago
  I dunno, I get the feeling that Matt Levine and the other finance pundits' analysis, though understandably smarmy to believers, is a bit closer to the mark; "The conventional wisdom is that cryptocurrency is about re-learning all of the lessons of modern finance in a sped-up way." https://www.bloomberg.com/view/articles/2017-07-26/tokens-vaults-ties-and-taxes https://www.bloomberg.com/view/articles/2017-07-26/tokens-va...
joe_the_user 9y ago
The reason for the SEC to prevent fraud, Ponzi-schemes and related shenanigans before they implode isn't to protect the individual fools and their money - courts could prosecute that stuff after the fact. Rather, regulation happens because the collapse of this kind of scheme tends to have collateral damage impacting people beyond those who chose to use such investments - the employees of companies that go bankrupt, the homeowners who first pay high prices for home and then can't pay their mortgages when the economy tanks, etc don't have any choice their implicit participation in any "economic free-fire zones".
- pjc50 9y ago
  While you can prosecute people after the fact, it's rare to recover all or even most of the money. The worst case for Ponzi schemes was probably Albania: http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm

wmf 9y ago

You can create whatever crazy investment you want as long as you limit it to qualified investors. But those people mostly won't fall for pump-and-dump ICOs.

kgwgk 9y ago
You overestimate how much qualification is needed to be a qualified investor.
- etjossem 9y ago
  Qualified doesn't mean clever, it just means "losing isn't a big deal." The only people to whom losing a 50-100k investment won't be life-changingly bad are either high net worth or high income. There is a lot of frustration from this crowd about not being able to invest a sensibly small amount of money in an ICO / early stage startup / other risky thing. As a curious technologist who can handle a bit of risk, I can empathize! But we're not who the SEC is designed to protect. They're there to stop situations where people get half their life savings ripped off, and that is completely sensible.
api 9y ago
Could you write a smart contract requiring someone to prove that they control enough currency to qualify ?
- infinite8s 9y ago
  Real world currency? How would that be enforced in a way that couldn't be spoofed?
- SilasX 9y ago
  There's long been talk of having web-portable, cryptographically secure endorsements for things you want to prove about your identity: that you've over 18, that you hold a valid driver's license, etc, but they've never gotten off the ground. Basically, same as CAs, except for validating that "this identity has that attribute". This would be another use case. Edit: if you meant proving you own enough ETH tokens, rather than USD, that's a lot easier and (I assume) possible now.
- tylersmith 9y ago
  If the currency was a cryptocurrency with support on the smart contract platform, yes.
adventured 9y ago
Those people regularly fall for far worse. During the dotcom bubble, there was a guy that moved from the East Coast, New Jersey or similar, to Orange County CA. He had next to no technical ability or background. When he moved, it was on the last thread of his pants, he was broke. The story (in The Industry Standard or Wired or similar at the time) included an example of that poverty: him pulling his own cracked tooth out with some help from a bottle of jack, on his way out to California. He gets to Orange County, settles in, and has a bright idea. To defraud people by starting a new tech company that is going to be in the media player / streaming space. He proclaims that his company has invented an advanced new codec, among other things. He proceeds to raise something like $16 million from wealthy people in Orange County, using each investor as a referral to the next (dentists, doctors, wealthy older people, and so on). His product, used in demonstrations to said wealthy people, consisted of a skin over top of Microsoft's media player. People started to very gradually get suspicious, so he hired armed guards to stand outside his office, supposedly to protect him from death threats that had been made (actually to prevent people, employees and investors, from getting easy access to him). The rest of his story melts down from there, with him essentially wiping out the ~$16 million he defrauded investors out of. His side of the story of course, was that they were going to build an amazing new media player, and that investors conspired to make him look bad and blah blah. Those qualified investors fall for all sorts of dumb schemes.
- repomies69999 9y ago
  16 million is like nothing. Bancor claims to have raisen 250 million (by public records, though you don't know how much they recycled their own money through that ico)
  - adventured 9y ago
    Based on that response I have to assume you weren't in the tech industry in the 1990s. $16 million was considered a large sum of venture capital during the mid 1990s, just a few years prior to the story taking place. By 1998/1999 it was still considered a large amount of venture capital, despite the wave of capital that would make companies like Webvan infamous.
  - 9y ago

deleted 9y ago

[deleted]

nilved 9y ago

Bitcoin exists to avoid regulation. If laws are built around it, then either Bitcoin or the law will be changed.

dmreedy 9y ago
I dunno, I get the feeling that Matt Levine and the other finance pundits' analysis, though understandably smarmy to believers, is a bit closer to the mark; "The conventional wisdom is that cryptocurrency is about re-learning all of the lessons of modern finance in a sped-up way." https://www.bloomberg.com/view/articles/2017-07-26/tokens-vaults-ties-and-taxes https://www.bloomberg.com/view/articles/2017-07-26/tokens-va...

joe_the_user 9y ago

The reason for the SEC to prevent fraud, Ponzi-schemes and related shenanigans before they implode isn't to protect the individual fools and their money - courts could prosecute that stuff after the fact. Rather, regulation happens because the collapse of this kind of scheme tends to have collateral damage impacting people beyond those who chose to use such investments - the employees of companies that go bankrupt, the homeowners who first pay high prices for home and then can't pay their mortgages when the economy tanks, etc don't have any choice their implicit participation in any "economic free-fire zones".

pjc50 9y ago
While you can prosecute people after the fact, it's rare to recover all or even most of the money. The worst case for Ponzi schemes was probably Albania: http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm http://www.imf.org/external/pubs/ft/fandd/2000/03/jarvis.htm