5 ms·

That SEC memo was weak. They should have made much more forceful statement. Thousands (likely tens of thousands) of US citizens are still investing in ICOs, the

That SEC memo was weak. They should have made much more forceful statement. Thousands (likely tens of thousands) of US citizens are still investing in ICOs, there needs to be much stronger action taken to stop their gambling.

dmichulke 9y ago
Because you and the SEC know much better than all of them? You know we're talking about the same SEC that didn't saw the real estate bubble coming in 2007/08 (size > trillions, CDOs are obviously fine) or the dotcom bubble in 2000 (size > trillions, they approved the IPOs, right)? If so, please give me reasons (instead of opinions or references to SEC "authority") as to why the ICOs in a 175 bn market are "dangerous".
- richardknop 9y ago
  My opinion is not important. The issue is lots of unsophisticated investors are betting their savings / money they can't afford to lose on cryptocurrency in hopes to flip their investment quickly and get rich. This is something which should be regulated so you can't just randomly dump your IRA/401k to buy some random cryptocurrency generated over a weekend by some person in a garage with shell company in Cayman Islands.
  - omarchowdhury 9y ago
    If someone has the knowledge to create a cryptocurrency in a weekend, in a garage, and have the foresight to operate from a friendly jurisdiction, and convinces people to buy it; then please let me know who that person is so I can invest in them. I'd love to get them out of a garage and into an office to see what they can really do.
    - hohenheim 9y ago
      You took the comment literally. I think OP's point is still valid. There should be regulations around sophisticated scams.
    - richardknop 9y ago
      I can create a new cryptocurrency over a weekend. It's not really that hard and most of these ICOs are just copycats with few parameter changes. Projects which actually develop something new are very few so kudos to them. Majority are just quick copies of existing code and rebranding.
      - rothbardrand 9y ago
        No. 2013 was a lot of clones of bitcoin with a few parameters changed. Nowadays ICOs I'm seeing involve a lot of very hard work. The risk is that the teams may way under-estimate how much work it is (And I think that's what's going to cause them to fail) but they are a lot more ambitious than you are characterizing.
        davidgerard 9y ago
        This doesn't appear to be an accurate description of the ICO market as it exists. The hardest work in ICOs is the marketing. At the back end, they literally put in the fine print that the thing you just bought is worthless. https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bubble-machines/ https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bu... Look up the EOS fine print. They took down the PDF, but I kept a spare: https://davidgerard.co.uk/blockchain/references/EOS%20Token%20Purchase%20Agreement%20-%20June%2022,%202017.pdf https://davidgerard.co.uk/blockchain/references/EOS%20Token%... TODO this evening: write up a blog post on the ICO for (I am not making this up) synthetic rhino horn dick pills.
        dingo_bat 9y ago
        It's literally saying "Give us your money and we will give you nothing in return"! WTF?!
        davidgerard 9y ago
        And EOS has been one of the biggest ICOs. Also, despite the "no US citizens" bit, it's been advertising to the general public in the US (and in the UK). They are selling an ERC-20 magic bean to be traded on the bubble machines, and both buyers and sellers are going nod-nod wink-wink.
    - Nursie 9y ago
      From an HN link just under two weeks ago - http://build-a-co.in/ http://build-a-co.in/ (https://news.ycombinator.com/item?id=15077117 https://news.ycombinator.com/item?id=15077117) You can build an altcoin in basically no time, on-demand using a web frontend. How hard the shell company piece is I have no idea. It really doesn't take a lot of talent or hard work to launch a coin from your garage these days.
      - omarchowdhury 9y ago
        Right. Now convince me to buy the coins, that's the challenge.
        Nursie 9y ago
        At the moment, the convincing doesn't seem to need to be very much, particularly where ICOs are involved. Copy someone else's white paper, post in a few forums with the word ICO splashed around liberally, and Bob's your uncle. I think that's kinda why people are welcoming this move - there's a lot of trash coins and trash ICOs with no hope of anything ever coming from them, with a relatively low input of time and effort. But because they offer trade-able tokens and some of them might take off, and at least some of them might get a hype-cycle and increase in value whether there's any underlying value or not, and it's all new, shiny, crypto-magic-money...
        aleclarsoniv 9y ago
        I'm not sure this argument holds much weight. All investments have inherent risk. It's the job of the investors to assume how much risk they're taking. You cannot ban all digital currencies simply because a large amount of ICOs are poorly thought through, if not malicious. That would block a huge amount of innovation in a technology with huge potential to revolutionize many markets, if not all markets. It's the equivalent of banning startups to protect investors from stupid/malicious founders, which has obvious negative effects on the economy. And with crowdfunding making its way to startup investment, it's not a reach to compare the two.
  - evilDagmar 9y ago
    A guy who has his own garage would have some assets... which would be a step up for most ICOs.
- verroq 9y ago
  Most of these ICOs are utter garbage and the only reason people "invest" in a garbage coin is because they think there is some greater fool that will buy it off them. To give them credit people have made many times their money buying and reselling but it would be idiotic to let this madness continue.
  - ryanlol 9y ago
    >it would be idiotic to let this madness continue. Why? Inevitably the fools will just run out of money. This "problem" seems to take care of itself.
    - verroq 9y ago
      Because these "fools" once they run out of money will be out on streets taking social security. Then it becomes our problem again.
      - Zarath 9y ago
        Isn't moral hazard awesome?
        Nursie 9y ago
        Yup, it is. Without something akin to moral hazard, we'd have a much more risk averse society, much slower economy etc. We'd also have hoards of people starving in the street, as humans are not good at long term planning, or risk assessment. So yeah, I'm all for "moral hazard".
      - CryptoPunk 9y ago
        Then force them to save a certain amount per month. What they do with their disposable income should be left to their discretion.
        Nursie 9y ago
        So now you are going to decide what consenting adults can do with their money, by deciding they can't invest in ICOs and other scam^H^H^H^H unregulated schemes until they have put enough away to satisfy you. I'm not sure this is qualitatively different to a ban, really.
- ig1 9y ago
  If you want to learn more about the history what you want to look for is "Blue Sky Laws" there's a brief history here: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2679&context=fss_papers http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic... The context was unsophisticated investors were being exploited without appreciating the risks involved. They thought they were investing when they were essentially gambling and the underlying security was essentially worthless.
- kchoudhu 9y ago
  Blue sky laws exist for a reason. Go ahead and google the term.
bhaak 9y ago
No, the SEC memo wasn't weak. It basically said "we are watching this space" which will frighten anybody who knows that the SEC isn't in a hurry to investigate. They can get you for things from years past (IIRC 10), so they don't have to rush things.

dmichulke 9y ago

Because you and the SEC know much better than all of them? You know we're talking about the same SEC that didn't saw the real estate bubble coming in 2007/08 (size > trillions, CDOs are obviously fine) or the dotcom bubble in 2000 (size > trillions, they approved the IPOs, right)? If so, please give me reasons (instead of opinions or references to SEC "authority") as to why the ICOs in a 175 bn market are "dangerous".

richardknop 9y ago
My opinion is not important. The issue is lots of unsophisticated investors are betting their savings / money they can't afford to lose on cryptocurrency in hopes to flip their investment quickly and get rich. This is something which should be regulated so you can't just randomly dump your IRA/401k to buy some random cryptocurrency generated over a weekend by some person in a garage with shell company in Cayman Islands.
- omarchowdhury 9y ago
  If someone has the knowledge to create a cryptocurrency in a weekend, in a garage, and have the foresight to operate from a friendly jurisdiction, and convinces people to buy it; then please let me know who that person is so I can invest in them. I'd love to get them out of a garage and into an office to see what they can really do.
  - hohenheim 9y ago
    You took the comment literally. I think OP's point is still valid. There should be regulations around sophisticated scams.
  - richardknop 9y ago
    I can create a new cryptocurrency over a weekend. It's not really that hard and most of these ICOs are just copycats with few parameter changes. Projects which actually develop something new are very few so kudos to them. Majority are just quick copies of existing code and rebranding.
    - rothbardrand 9y ago
      No. 2013 was a lot of clones of bitcoin with a few parameters changed. Nowadays ICOs I'm seeing involve a lot of very hard work. The risk is that the teams may way under-estimate how much work it is (And I think that's what's going to cause them to fail) but they are a lot more ambitious than you are characterizing.
      - davidgerard 9y ago
        This doesn't appear to be an accurate description of the ICO market as it exists. The hardest work in ICOs is the marketing. At the back end, they literally put in the fine print that the thing you just bought is worthless. https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bubble-machines/ https://davidgerard.co.uk/blockchain/icos-magic-beans-and-bu... Look up the EOS fine print. They took down the PDF, but I kept a spare: https://davidgerard.co.uk/blockchain/references/EOS%20Token%20Purchase%20Agreement%20-%20June%2022,%202017.pdf https://davidgerard.co.uk/blockchain/references/EOS%20Token%... TODO this evening: write up a blog post on the ICO for (I am not making this up) synthetic rhino horn dick pills.
        dingo_bat 9y ago
        It's literally saying "Give us your money and we will give you nothing in return"! WTF?!
        davidgerard 9y ago
        And EOS has been one of the biggest ICOs. Also, despite the "no US citizens" bit, it's been advertising to the general public in the US (and in the UK). They are selling an ERC-20 magic bean to be traded on the bubble machines, and both buyers and sellers are going nod-nod wink-wink.
  - Nursie 9y ago
    From an HN link just under two weeks ago - http://build-a-co.in/ http://build-a-co.in/ (https://news.ycombinator.com/item?id=15077117 https://news.ycombinator.com/item?id=15077117) You can build an altcoin in basically no time, on-demand using a web frontend. How hard the shell company piece is I have no idea. It really doesn't take a lot of talent or hard work to launch a coin from your garage these days.
    - omarchowdhury 9y ago
      Right. Now convince me to buy the coins, that's the challenge.
      - Nursie 9y ago
        At the moment, the convincing doesn't seem to need to be very much, particularly where ICOs are involved. Copy someone else's white paper, post in a few forums with the word ICO splashed around liberally, and Bob's your uncle. I think that's kinda why people are welcoming this move - there's a lot of trash coins and trash ICOs with no hope of anything ever coming from them, with a relatively low input of time and effort. But because they offer trade-able tokens and some of them might take off, and at least some of them might get a hype-cycle and increase in value whether there's any underlying value or not, and it's all new, shiny, crypto-magic-money...
        aleclarsoniv 9y ago
        I'm not sure this argument holds much weight. All investments have inherent risk. It's the job of the investors to assume how much risk they're taking. You cannot ban all digital currencies simply because a large amount of ICOs are poorly thought through, if not malicious. That would block a huge amount of innovation in a technology with huge potential to revolutionize many markets, if not all markets. It's the equivalent of banning startups to protect investors from stupid/malicious founders, which has obvious negative effects on the economy. And with crowdfunding making its way to startup investment, it's not a reach to compare the two.
- evilDagmar 9y ago
  A guy who has his own garage would have some assets... which would be a step up for most ICOs.
verroq 9y ago
Most of these ICOs are utter garbage and the only reason people "invest" in a garbage coin is because they think there is some greater fool that will buy it off them. To give them credit people have made many times their money buying and reselling but it would be idiotic to let this madness continue.
- ryanlol 9y ago
  >it would be idiotic to let this madness continue. Why? Inevitably the fools will just run out of money. This "problem" seems to take care of itself.
  - verroq 9y ago
    Because these "fools" once they run out of money will be out on streets taking social security. Then it becomes our problem again.
    - Zarath 9y ago
      Isn't moral hazard awesome?
      - Nursie 9y ago
        Yup, it is. Without something akin to moral hazard, we'd have a much more risk averse society, much slower economy etc. We'd also have hoards of people starving in the street, as humans are not good at long term planning, or risk assessment. So yeah, I'm all for "moral hazard".
    - CryptoPunk 9y ago
      Then force them to save a certain amount per month. What they do with their disposable income should be left to their discretion.
      - Nursie 9y ago
        So now you are going to decide what consenting adults can do with their money, by deciding they can't invest in ICOs and other scam^H^H^H^H unregulated schemes until they have put enough away to satisfy you. I'm not sure this is qualitatively different to a ban, really.
ig1 9y ago
If you want to learn more about the history what you want to look for is "Blue Sky Laws" there's a brief history here: http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=2679&context=fss_papers http://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?artic... The context was unsophisticated investors were being exploited without appreciating the risks involved. They thought they were investing when they were essentially gambling and the underlying security was essentially worthless.
kchoudhu 9y ago
Blue sky laws exist for a reason. Go ahead and google the term.

bhaak 9y ago

No, the SEC memo wasn't weak. It basically said "we are watching this space" which will frighten anybody who knows that the SEC isn't in a hurry to investigate. They can get you for things from years past (IIRC 10), so they don't have to rush things.