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Posted this in a different thread: A quick chat with an attorney who is an SEC specialist basically said "if it breathes" i.e. involves money that ICO is seen

Posted this in a different thread: A quick chat with an attorney who is an SEC specialist basically said "if it breathes" i.e. involves money that ICO is seen as a security. The SEC putting together the digital division which covers cryptocurrency tokens is part of what led to him saying this. Basically fish in a barrel. It is in my opinion that any US-based ICO is now in a lottery as to whether they get the SEC visit. Not legal advice at all, just sharing an excerpt from a coffee chat.

JumpCrisscross 9y ago
I can second this view, not only at the SEC but also a few attorneys’ general offices around the country. A lot of people see a promotion or Senate seat in bagging (i.e. fining, shutting down and jailing) ICOs and their promoters.
- Gargoyle 9y ago
  I find it unlikely an ICO conviction would help anyone electorally. Only tiny proportion of voters would even understand what happened. It's not like high profile corruption or murder or something everyone gets. That's not to say they wouldn't do it to advance themselves internal to the justice system, where that kind of conviction would have forward-looking value.
  - chimeracoder 9y ago
    > I find it unlikely an ICO conviction would help anyone electorally. Only tiny proportion of voters would even understand what happened. It's not like high profile corruption or murder or something everyone gets. It'd be so easy to spin ICOs as a matter of fraud that's taking advantage of uninformed investors, a Ponzi scheme, or any of the other buzzwords that historically work pretty well in convincing voters of criminal financial activity. Whether or not you actually view ICOs as any of these things is incidental to whether or not an AG with career ambitions would be able use that rhetoric to gain votes.
    - CPLX 9y ago
      > It'd be so easy to spin ICOs as a matter of fraud that's taking advantage of uninformed investors, a Ponzi scheme, or any of the other buzzwords that historically work pretty well in convincing voters of criminal financial activity. Indeed. The fact that ICO's have generally been fraudulent get rich schemes aids greatly in this "spin" of which you speak.
    - TeMPOraL 9y ago
      Even worse. ICOs are based on crypto magic money. Crypto means computers. Computers means Silicon Valley, which is the current go-to elite to hate. I can see a way to spin this politically that could resonate with plenty of the US population.
      - saint_fiasco 9y ago
        It is the current go-to elite to hate by other elites. Most normal people don't feel strongly about Silicon Valley.
        TeMPOraL 9y ago
        Given the recent deluge of anti-SV (and anti-tech sphere in general) articles in mass media, I'm not sure about that. People do read and share this stuff.
        evilDagmar 9y ago
        I think the phrase you're looking for is stalking horse.
  - JumpCrisscross 9y ago
    > I find it unlikely an ICO conviction would help anyone electorally I've never held elected office. I defer my opinion to those who do. They say ICOs represents a golden trifecta between (a) fraud against moms and pops, (b) complicated financial instruments and (c) Silicon Valley arrogance.
- wrench604 9y ago
  Can you elaborate on what you mean by shutting down? AFAIK, most ICOs are closed off to us citizens already (and for those that are available to us citizens, it requires the investors to be accredited).
deleted 9y ago
[deleted]
olegkikin 9y ago
By that logic Linden Dollars (from Second Life) and PLEX (Eve Online) are securities too.
- vkou 9y ago
  When you turn PLEX -> USD using official means, can you withdraw that USD from Eve Online? Or can that USD only be spent on subscriptions/in-game items? If it's the former, Eve Online is at minimum, a money transferrer. If it's the latter, it's just a store that accepts gift cards.
  - Isomatik 9y ago
    Officially, PLEX can only be redeemed for subscriptions, but it can also be traded as an in game item for ISK (standard in game currency). The only real difference between it and a cryptocoin is that selling PLEX on a secondary market is against the ToS. You will get flagged if you're trading away PLEX ingame for nothing in return, because they assume you're selling it.
    - AlexCoventry 9y ago
      > You will get flagged if you're trading away PLEX ingame for nothing in return, because they assume you're selling it. I'm pretty sure that is enough to avoid it being deemed a security under the SEC's jurisdiction. There needs to be an expectation of future profit. (Not a lawyer.)
      - xorcist 9y ago
        > There needs to be an expectation of future profit. I hear this statement repeated a lot, but that seems unlikely to be an absolute requirement. That is, even if every instrument sold for future profit is a security, that doesn't mean everything else isn't. Do you have a source for that statement?
        AlexCoventry 9y ago
wrench604 9y ago
What kind of regulation do you think would come? ICOs are already restricted in the us to accredited investors (if i understand correctly). Do you see something beyond this?
- AlexCoventry 9y ago
  The majority of ICOs are not restricted to accredited investors. There will be penalties for failure to register securities, for failure to meet reporting and other registered securities requirements, and shareholder clawback lawsuits.
  - wrench604 9y ago
    The majority of those ICOs are not available to us citizens though. Can you name a recent ICO that allowed non-accredited us investors to participate?
    - AlexCoventry 9y ago
      > Switzerland-based Tezos said it did not specifically exclude investors from any country from participating. https://www.cnbc.com/2017/07/18/hot-digital-currency-trend-minting-millions-off-limits-to-us-investors.html https://www.cnbc.com/2017/07/18/hot-digital-currency-trend-m...
      - relyio 9y ago
        There were lots of disclaimers saying: >"Every potential participant in the fundraiser is responsible for determining the legality of participation within their jurisdiction."
        AlexCoventry 9y ago
        It was totally legal for US residents to participate, as far as I know. I believe almost all the securities-law obligations resulting from the sale are on Tezos. (Not a lawyer.) The only obligation on buyers might be that they can't resell it without being guilty of selling an unregistered security themselves.

JumpCrisscross 9y ago

I can second this view, not only at the SEC but also a few attorneys’ general offices around the country. A lot of people see a promotion or Senate seat in bagging (i.e. fining, shutting down and jailing) ICOs and their promoters.

Gargoyle 9y ago
I find it unlikely an ICO conviction would help anyone electorally. Only tiny proportion of voters would even understand what happened. It's not like high profile corruption or murder or something everyone gets. That's not to say they wouldn't do it to advance themselves internal to the justice system, where that kind of conviction would have forward-looking value.
- chimeracoder 9y ago
  > I find it unlikely an ICO conviction would help anyone electorally. Only tiny proportion of voters would even understand what happened. It's not like high profile corruption or murder or something everyone gets. It'd be so easy to spin ICOs as a matter of fraud that's taking advantage of uninformed investors, a Ponzi scheme, or any of the other buzzwords that historically work pretty well in convincing voters of criminal financial activity. Whether or not you actually view ICOs as any of these things is incidental to whether or not an AG with career ambitions would be able use that rhetoric to gain votes.
  - CPLX 9y ago
    > It'd be so easy to spin ICOs as a matter of fraud that's taking advantage of uninformed investors, a Ponzi scheme, or any of the other buzzwords that historically work pretty well in convincing voters of criminal financial activity. Indeed. The fact that ICO's have generally been fraudulent get rich schemes aids greatly in this "spin" of which you speak.
  - TeMPOraL 9y ago
    Even worse. ICOs are based on crypto magic money. Crypto means computers. Computers means Silicon Valley, which is the current go-to elite to hate. I can see a way to spin this politically that could resonate with plenty of the US population.
    - saint_fiasco 9y ago
      It is the current go-to elite to hate by other elites. Most normal people don't feel strongly about Silicon Valley.
      - TeMPOraL 9y ago
        Given the recent deluge of anti-SV (and anti-tech sphere in general) articles in mass media, I'm not sure about that. People do read and share this stuff.
      - evilDagmar 9y ago
        I think the phrase you're looking for is stalking horse.
- JumpCrisscross 9y ago
  > I find it unlikely an ICO conviction would help anyone electorally I've never held elected office. I defer my opinion to those who do. They say ICOs represents a golden trifecta between (a) fraud against moms and pops, (b) complicated financial instruments and (c) Silicon Valley arrogance.
wrench604 9y ago
Can you elaborate on what you mean by shutting down? AFAIK, most ICOs are closed off to us citizens already (and for those that are available to us citizens, it requires the investors to be accredited).

deleted 9y ago

[deleted]

olegkikin 9y ago

By that logic Linden Dollars (from Second Life) and PLEX (Eve Online) are securities too.

vkou 9y ago
When you turn PLEX -> USD using official means, can you withdraw that USD from Eve Online? Or can that USD only be spent on subscriptions/in-game items? If it's the former, Eve Online is at minimum, a money transferrer. If it's the latter, it's just a store that accepts gift cards.
- Isomatik 9y ago
  Officially, PLEX can only be redeemed for subscriptions, but it can also be traded as an in game item for ISK (standard in game currency). The only real difference between it and a cryptocoin is that selling PLEX on a secondary market is against the ToS. You will get flagged if you're trading away PLEX ingame for nothing in return, because they assume you're selling it.
  - AlexCoventry 9y ago
    > You will get flagged if you're trading away PLEX ingame for nothing in return, because they assume you're selling it. I'm pretty sure that is enough to avoid it being deemed a security under the SEC's jurisdiction. There needs to be an expectation of future profit. (Not a lawyer.)
    - xorcist 9y ago
      > There needs to be an expectation of future profit. I hear this statement repeated a lot, but that seems unlikely to be an absolute requirement. That is, even if every instrument sold for future profit is a security, that doesn't mean everything else isn't. Do you have a source for that statement?
      - AlexCoventry 9y ago

wrench604 9y ago

What kind of regulation do you think would come? ICOs are already restricted in the us to accredited investors (if i understand correctly). Do you see something beyond this?

AlexCoventry 9y ago
The majority of ICOs are not restricted to accredited investors. There will be penalties for failure to register securities, for failure to meet reporting and other registered securities requirements, and shareholder clawback lawsuits.
- wrench604 9y ago
  The majority of those ICOs are not available to us citizens though. Can you name a recent ICO that allowed non-accredited us investors to participate?
  - AlexCoventry 9y ago
    > Switzerland-based Tezos said it did not specifically exclude investors from any country from participating. https://www.cnbc.com/2017/07/18/hot-digital-currency-trend-minting-millions-off-limits-to-us-investors.html https://www.cnbc.com/2017/07/18/hot-digital-currency-trend-m...
    - relyio 9y ago
      There were lots of disclaimers saying: >"Every potential participant in the fundraiser is responsible for determining the legality of participation within their jurisdiction."
      - AlexCoventry 9y ago
        It was totally legal for US residents to participate, as far as I know. I believe almost all the securities-law obligations resulting from the sale are on Tezos. (Not a lawyer.) The only obligation on buyers might be that they can't resell it without being guilty of selling an unregistered security themselves.