3 ms·

Former SEC Attorney Explains Which Ethereum ICOs Will Be Targeted with Action

20 points by endswapper 9y ago

jjn2009 9y ago
>In Morgan’s view, the key part of the Howey Test in terms of ICOs is whether the expectation of profit relied on the effort of others This makes sense and is precisely how its been done, nothing new here but.. >What [the SEC are] trying to do is decide whether the investors are really passive investors or whether they’re actively involved in creating value Is this to say that the decision to take action is based on perceived investment opportunity rather than something that is explicitly sold as an investment opportunity? This would be a quite dramatic change in the ICO world.
- CryptoPunk 9y ago
  >Is this to say that the decision to take action is based on perceived investment opportunity rather than something that is explicitly sold as an investment opportunity? I am not a lawyer and this is not legal advice, but that is not my reading of it. I believe he means that tokens for applications that gain value from the activity of users, like Bitcoin or Ethereum, would fall outside the definition of a security, while tokens of applications dependent mostly on the activity of a management team to earn revenue, like the DAO vis-à-vis Slock.it - which the SEC concluded was expected to manage the projects the DAO voted on - would fall within the definition of a security.
  - jjn2009 9y ago
    I see, that makes much more sense. I wasn't entirely sure what was meant by that statement.
Animats 9y ago
So this guy thinks the SEC will act only for really blatant scams. It's a great time to run a scam.
dmitrygr 9y ago
In addition to complaints from disgruntled investors, Morgan pointed out that the SEC’s whistleblower program could be another source of an investigation. Through this program, whistleblowers are awarded a percentage of monetary remedies that are imposed and collected by the SEC if and when enforcement action takes place. According to Morgan, some bounties in the SEC’s whistleblower program have been worth tens of millions of dollars. “I wouldn’t be surprised, particularly given the difficult nature of enforcing the securities laws in this context, if an ICO case comes out of a whistleblower seeking a bounty,” said Morgan. OH YEAH!

20 points by endswapper 9y ago

jjn2009 9y ago

>In Morgan’s view, the key part of the Howey Test in terms of ICOs is whether the expectation of profit relied on the effort of others This makes sense and is precisely how its been done, nothing new here but.. >What [the SEC are] trying to do is decide whether the investors are really passive investors or whether they’re actively involved in creating value Is this to say that the decision to take action is based on perceived investment opportunity rather than something that is explicitly sold as an investment opportunity? This would be a quite dramatic change in the ICO world.

CryptoPunk 9y ago
>Is this to say that the decision to take action is based on perceived investment opportunity rather than something that is explicitly sold as an investment opportunity? I am not a lawyer and this is not legal advice, but that is not my reading of it. I believe he means that tokens for applications that gain value from the activity of users, like Bitcoin or Ethereum, would fall outside the definition of a security, while tokens of applications dependent mostly on the activity of a management team to earn revenue, like the DAO vis-à-vis Slock.it - which the SEC concluded was expected to manage the projects the DAO voted on - would fall within the definition of a security.
- jjn2009 9y ago
  I see, that makes much more sense. I wasn't entirely sure what was meant by that statement.

Animats 9y ago

So this guy thinks the SEC will act only for really blatant scams. It's a great time to run a scam.

dmitrygr 9y ago

In addition to complaints from disgruntled investors, Morgan pointed out that the SEC’s whistleblower program could be another source of an investigation. Through this program, whistleblowers are awarded a percentage of monetary remedies that are imposed and collected by the SEC if and when enforcement action takes place. According to Morgan, some bounties in the SEC’s whistleblower program have been worth tens of millions of dollars. “I wouldn’t be surprised, particularly given the difficult nature of enforcing the securities laws in this context, if an ICO case comes out of a whistleblower seeking a bounty,” said Morgan. OH YEAH!