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Well it was about the damn time! A lot of ICOs are borderline (or just straight) scams. There have been even cases where the ICO funds have been "stolen" but r

Well it was about the damn time! A lot of ICOs are borderline (or just straight) scams. There have been even cases where the ICO funds have been "stolen" but rumours say the founders just took the money and ran. A lot of the so called "products" and "businesses" pitched by these ICO companies are just well known already working models somehow forced into the blockchain with the only reason being the ability to do an ICO (and generate an absurd amount of money for the founders). Another common feature of ICOs: there's never any equity on the table. The founders are gonna cash in on the ICO and then later do an exit (sell the company, IPO, whatever). ICO "investors" are not gonna get much for their money here. At least during the dotcom bubble some companies made it and the investors then got real equity for their money.

kenbaylor 9y ago
That's by design. If there's equity or promise of profits, it automatically trigger the 'it's a security' lever. The SEC DAO paper (linked below) acknowledges the same. Your point that many are 'forced into the blockchain' to get an ICO is 100% correct.
- CryptoPunk 9y ago
  >>That's by design. If there's equity or promise of profits, it automatically trigger the 'it's a security' lever. That is not true. There are other components to the Howey Test besides expectation of profit. The DAO was one of the most security-like token issued so far, and the DAO investigative report went over how the SEC believed it met all the conditions for classification as a security. Securities laws might not apply to a great many other tokens.
KGIII 9y ago
The whole thing is just a ball of insanity. I'm not sure what it is about cryptocurrency and ICOs, but it seems the representation is heavily populated with insane people. I will recommend reading this sub-thread: https://news.ycombinator.com/item?id=15369840 https://news.ycombinator.com/item?id=15369840 Now, there is someone bragging that they are intentionally and willfully going to break multiple laws. They are already breaking laws, so they are also going to break some SEC regulations. They think that being nice is going to keep them from going to prison. On top of this, they are posting about it in an open forum. They quite happily admit their criminal acts and intent to commit more. If you're curious, their profile has more information. I'm no psychiatrist and a few Internet posts aren't enough to diagnose someone, but I'm pretty sure they are crazy. Not 'so crazy they might just get away with it' crazy, but 'should seek professional care' crazy. Also, a lawyer... They should also seek legal council. I'm not sure if it is the ICO and cryptocurrency that attracts crazy people, but it seems to have strong correlation. It may just be the cryptocurrency?
- beager 9y ago
  I suppose that if cryptocurrency/ICOs have democratized investing, they have also democratized morally (and legally) ambivalent greed.
  - KGIII 9y ago
    Greed I can understand, the seeming insanity I can't. I'm not sure how many times I've seen stuff like, "They can't stop me!" That's pretty crazy, because it's well known that they can, and will, stop someone who gets their negative attention. They may not be able to fully prevent an activity, but they sure as hell can stop a person. Maybe the greed makes them insane? I dunno, psychiatry is not really my domain. I find it curious behavior.
    - beager 9y ago
      I can't speak to the psychology of it, but I imagine the same sort of invincibility complex exists for big movers in traditional business/finance/politics. We're just being made aware of it here now because of the democratization of the entire system.
      - sillysaurus3 9y ago
        For what it's worth, KGIII is mischaracterizing their position. In no way do they feel invincible. They're keenly aware of how vulnerable they are and are hyper-vigilant about their opsec. I'm pretty sure their #1 fear is to make a dumb mistake that gives away their identity. The idea that they think they're untouchable or that "They think that being nice is going to keep them from going to prison" is just flat-out a blatant misrepresentation of their words and persona. Also, this is amusing: https://news.ycombinator.com/item?id=15371053 https://news.ycombinator.com/item?id=15371053 >> It may sound crazy ... > I don't offer an opinion on your business methods, recovery methods, or even the morality. Followed by I'm no psychiatrist and a few Internet posts aren't enough to diagnose someone, but I'm pretty sure they are crazy. Not 'so crazy they might just get away with it' crazy, but 'should seek professional care' crazy. I suspect people are simply bothered by the idea that his venture could actually succeed, which manifests itself as "He's crazy." Yes, obviously you have to be a little nuts to go up against the full weight of the law. But there is method underpinning the madness, and he seems to be holding up his end of the bargain so far. He could've disappeared with the money and no one could trace him. We'll see if that happens, but until then it's worth keeping an open mind. It all depends whether he can execute and actually deliver the app.
jboles 9y ago
It’s e-gold all over again. Was going to be the dream libertarian non-fiat currency of the future but ended up being used mostly by scams. At least e-gold was (theoretically) redeemable for real gold delivered, whereas crypto currencies are ‘backed’ by a whole lot of sunk costs in the form of big electrical bills.
LrnByTeach 9y ago
The best definition ICO - by KEVIN ROOSE NYTimes https://www.nytimes.com/2017/09/15/business/cryptocurrency-bubble-doge.html?_r=0 https://www.nytimes.com/2017/09/15/business/cryptocurrency-b... Imagine that a friend is building a casino and asks you to invest. In exchange, you get chips that can be used at the casino’s tables once it’s finished. Now imagine that the value of the chips isn’t fixed, and will instead fluctuate depending on the popularity of the casino, the number of other gamblers and the regulatory environment for casinos. Oh, and instead of a friend, imagine it’s a stranger on the internet who might be using a fake name, who might not actually know how to build a casino, and whom you probably can’t sue for fraud if he steals your money and uses it to buy a Porsche instead. That’s an I.C.O.
- vkou 9y ago
  Yeah, but I'll still invest with the hopes that I'll resell the chips to a bigger fool tomorrow.
mbrumlow 9y ago
I feel vindicated https://news.ycombinator.com/item?id=13886125 https://news.ycombinator.com/item?id=13886125 People were pushing this a while back and the only thing I could see is easy exit for founders and everybody else left holding the bag. Founders should have no early exit and ICOs make it so they can.
yuhong 9y ago
>Another common feature of ICOs: there's never any equity on the table. The founders are gonna cash in on the ICO and then later do an exit (sell the company, IPO, whatever). ICO "investors" are not gonna get much for their money here. Which interestingly makes escaping regulation easier.
testman 9y ago
Why do people just throw their money at random ICO's? It makes no sense. All they read is a whitepaper, and badabing badaboo...there goes your money. There is literally a site that lists coins deemed safe. That is sad that people in crypto need that. However their forecasts are spot on: https://www.cryptonaire.com https://www.cryptonaire.com I think they are also working with regulators to help with this ICO stuff.

kenbaylor 9y ago

That's by design. If there's equity or promise of profits, it automatically trigger the 'it's a security' lever. The SEC DAO paper (linked below) acknowledges the same. Your point that many are 'forced into the blockchain' to get an ICO is 100% correct.

CryptoPunk 9y ago
>>That's by design. If there's equity or promise of profits, it automatically trigger the 'it's a security' lever. That is not true. There are other components to the Howey Test besides expectation of profit. The DAO was one of the most security-like token issued so far, and the DAO investigative report went over how the SEC believed it met all the conditions for classification as a security. Securities laws might not apply to a great many other tokens.

KGIII 9y ago

The whole thing is just a ball of insanity. I'm not sure what it is about cryptocurrency and ICOs, but it seems the representation is heavily populated with insane people. I will recommend reading this sub-thread: https://news.ycombinator.com/item?id=15369840 https://news.ycombinator.com/item?id=15369840 Now, there is someone bragging that they are intentionally and willfully going to break multiple laws. They are already breaking laws, so they are also going to break some SEC regulations. They think that being nice is going to keep them from going to prison. On top of this, they are posting about it in an open forum. They quite happily admit their criminal acts and intent to commit more. If you're curious, their profile has more information. I'm no psychiatrist and a few Internet posts aren't enough to diagnose someone, but I'm pretty sure they are crazy. Not 'so crazy they might just get away with it' crazy, but 'should seek professional care' crazy. Also, a lawyer... They should also seek legal council. I'm not sure if it is the ICO and cryptocurrency that attracts crazy people, but it seems to have strong correlation. It may just be the cryptocurrency?

beager 9y ago
I suppose that if cryptocurrency/ICOs have democratized investing, they have also democratized morally (and legally) ambivalent greed.
- KGIII 9y ago
  Greed I can understand, the seeming insanity I can't. I'm not sure how many times I've seen stuff like, "They can't stop me!" That's pretty crazy, because it's well known that they can, and will, stop someone who gets their negative attention. They may not be able to fully prevent an activity, but they sure as hell can stop a person. Maybe the greed makes them insane? I dunno, psychiatry is not really my domain. I find it curious behavior.
  - beager 9y ago
    I can't speak to the psychology of it, but I imagine the same sort of invincibility complex exists for big movers in traditional business/finance/politics. We're just being made aware of it here now because of the democratization of the entire system.
    - sillysaurus3 9y ago
      For what it's worth, KGIII is mischaracterizing their position. In no way do they feel invincible. They're keenly aware of how vulnerable they are and are hyper-vigilant about their opsec. I'm pretty sure their #1 fear is to make a dumb mistake that gives away their identity. The idea that they think they're untouchable or that "They think that being nice is going to keep them from going to prison" is just flat-out a blatant misrepresentation of their words and persona. Also, this is amusing: https://news.ycombinator.com/item?id=15371053 https://news.ycombinator.com/item?id=15371053 >> It may sound crazy ... > I don't offer an opinion on your business methods, recovery methods, or even the morality. Followed by I'm no psychiatrist and a few Internet posts aren't enough to diagnose someone, but I'm pretty sure they are crazy. Not 'so crazy they might just get away with it' crazy, but 'should seek professional care' crazy. I suspect people are simply bothered by the idea that his venture could actually succeed, which manifests itself as "He's crazy." Yes, obviously you have to be a little nuts to go up against the full weight of the law. But there is method underpinning the madness, and he seems to be holding up his end of the bargain so far. He could've disappeared with the money and no one could trace him. We'll see if that happens, but until then it's worth keeping an open mind. It all depends whether he can execute and actually deliver the app.

jboles 9y ago

It’s e-gold all over again. Was going to be the dream libertarian non-fiat currency of the future but ended up being used mostly by scams. At least e-gold was (theoretically) redeemable for real gold delivered, whereas crypto currencies are ‘backed’ by a whole lot of sunk costs in the form of big electrical bills.

LrnByTeach 9y ago

The best definition ICO - by KEVIN ROOSE NYTimes https://www.nytimes.com/2017/09/15/business/cryptocurrency-bubble-doge.html?_r=0 https://www.nytimes.com/2017/09/15/business/cryptocurrency-b... Imagine that a friend is building a casino and asks you to invest. In exchange, you get chips that can be used at the casino’s tables once it’s finished. Now imagine that the value of the chips isn’t fixed, and will instead fluctuate depending on the popularity of the casino, the number of other gamblers and the regulatory environment for casinos. Oh, and instead of a friend, imagine it’s a stranger on the internet who might be using a fake name, who might not actually know how to build a casino, and whom you probably can’t sue for fraud if he steals your money and uses it to buy a Porsche instead. That’s an I.C.O.

vkou 9y ago
Yeah, but I'll still invest with the hopes that I'll resell the chips to a bigger fool tomorrow.

mbrumlow 9y ago

I feel vindicated https://news.ycombinator.com/item?id=13886125 https://news.ycombinator.com/item?id=13886125 People were pushing this a while back and the only thing I could see is easy exit for founders and everybody else left holding the bag. Founders should have no early exit and ICOs make it so they can.

yuhong 9y ago

>Another common feature of ICOs: there's never any equity on the table. The founders are gonna cash in on the ICO and then later do an exit (sell the company, IPO, whatever). ICO "investors" are not gonna get much for their money here. Which interestingly makes escaping regulation easier.

testman 9y ago

Why do people just throw their money at random ICO's? It makes no sense. All they read is a whitepaper, and badabing badaboo...there goes your money. There is literally a site that lists coins deemed safe. That is sad that people in crypto need that. However their forecasts are spot on: https://www.cryptonaire.com https://www.cryptonaire.com I think they are also working with regulators to help with this ICO stuff.