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I will repeat myself from another ICO thread last week: you cannot have investment vehicles where commiting fraud results in no punishment. It simply doesn't wo

I will repeat myself from another ICO thread last week: you cannot have investment vehicles where commiting fraud results in no punishment. It simply doesn't work. Until someone figures out a way to even somewhat integrate ICOs into the existing legal system, this will keep happening. I have proposed one possible solution to this problem here: https://news.ycombinator.com/item?id=16208325 https://news.ycombinator.com/item?id=16208325

Alex3917 9y ago
> Until someone figures out a way to even somewhat integrate ICOs into the existing legal system, this will keep happening. They're already integrated into the legal system. What new laws are needed?
- deleted 9y ago
  [deleted]
- Thriptic 9y ago
  You shouldn't be able to run one unless you're a registered company. It has to be relatively easy to come after you for fraud as an investor. Considering that this is a mechanism that is predominantly used to fund projects or companies anyway, I don't think that's an irrational requirement.
  - fuddcoinn 9y ago
    all the same laws are applicable and fraud is fraud. what is more interesting is that a variety of traditional control mechanisms appear to be ineffective at stopping the two voluntary parties from interacting whereas for banking and brokerages they are sufficient. I'd hate to see a second useless set of laws be made, similar to "hate crimes" (a crime is a crime - except when you say a certain something or think a certain way?? wtf) but how would you even enforce a law requiring specific criteria for an ICO when an anonymous 14 year old kid anywhere in the world can do it in 20 minutes??! i am of the thought that not every guerilla ICO has to be brought to justice but the "rule of law" requires some semblance of respect and obedience and I've been to countries where everything is up for negotiation and no law is "rule". slippery slope. perception of authority should not be diluted if possible. seems the nation state's reach has started to exceed it's grasp....
    - Thriptic 9y ago
      > all the same laws are applicable and fraud is fraud No, it's not the same when you can use pseudonyms and provide fake data with the intent of deceiving someone. > what is more interesting is that a variety of traditional control mechanisms appear to be ineffective at stopping the two voluntary parties from interacting whereas for banking and brokerages they are sufficient. Fraud is not two voluntary parties interacting, it's one party stealing someone's money without their consent > but how would you even enforce a law requiring specific criteria for an ICO when an anonymous 14 year old kid anywhere in the world can do it in 20 minutes??! Admittedly I'm not sure, but my off the cuff thought is that you seize assets and prevent cashing out. Any wallet associated with a dubious ICO could be tracked and anyone that facilitates transactions for them could be targeted. If an exchange facilitates their cashing out they will have their assets seized; if a tumbling service receives assets from those wallets they will be subject to criminal action; if a bank facilitates a cash out they will be banned from participating in the US financial system etc. Honestly at the end of the day it doesn't really matter. At this rate ICOs will either be outright banned or anyone with half a brain will stay far away from them and the hype will die out.
    - rootusrootus 9y ago
      I've never understood the problem some people have with hate crimes. Don't we already have plenty of crimes where the only differentiator is mental state or intent? Hard to see how a hate crime classification is any different than, say, Murder 1 versus Murder 2.
      - csydas 9y ago
        I would assume it's a perceived sense of lack of fairness in the sentencing; to be clear, I share your position on hate crimes. They exist for the same reason that we have both Murder and Manslaughter charges, because our system of law considers intent as part of the sentencing. But it is not hard to see how some would view such laws as unfair. Intent can be difficult to prove and it requires interpretation; if you believe in clear cut and easily understandable laws, then naturally Hate Crimes and other such laws probably seem like a bad idea, and I get why that is frustrating and even intimidating with how fast gossip can travel. The system itself is built with release valves, but it's likely not much comfort for the wrongly accused. I think that's a separate problem, however, which is just exacerbated by perceptions of laws like Hate Crimes as opposed to being caused by the laws themselves.
- lmm 9y ago
  Viewed solely from a US perspective, no new laws are needed; rather the SEC needs to enforce existing laws. Internationally I suspect we need a better framework for handling cases where person in country A advertises securities in an organisation set up in country B to people in country C, via an organisation that operates in country D.
- bertil 9y ago
  I’ve noticed two things around fraudulent ICOs: - the actual identity of the people behind them is not known; they are often pretending to be developers with Eastern Europe; - they are presumably outside of a jurisdiction that their victims would be familiar with. This probably means that a simple fix could be to demand to verify and publish the identity of the people behind such projects. Whether a shell corporation based in the US could raise money without clarifying who actually owns them and whether that structure allows enforcing fraud is a more nuanced question that I cannot answer. But I can answer this: new laws are probably not the solution. Extradition treaties might help but are unlikely.
IncRnd 9y ago
The picture on the article's page is of a flock of children who are following a person, presumably a pied piper, who has no head and no pipe. Doing a google image search shows the head was specifically cut off for this page! Yep. That's the state of cryptocurrencies. A picture is worth a thousand words.
- thisisit 9y ago
  That I guess is a subtle nod to the company Pied Piper in the series Silicon Valley [1]. In the last season one of the characters built an app called "SeeFood", a Shazam for food: https://www.youtube.com/watch?v=FNyi3nAuLb0 https://www.youtube.com/watch?v=FNyi3nAuLb0 The app ended being used at Periscope to detect penis which explains the ending for the website too.
  - shaki-dora 9y ago
    In case you’re wondering why your comment is all gray: people think you should go to your school and demand your money back if you think „pied piper“ was invented by the TV series. (Unless you’re not in Europe or its cultural descendants)
    - thisisit 9y ago
      I know that it is a children's story. What I meant in the comment was that the whole story about food on blockchain and the eventual ending about penis seems to reflect the SeeFood app arc in the TV series. That is why the image was used. If people thought otherwise then I guess my commenting skills are not that great.
deleted 9y ago
[deleted]
animex 9y ago
You know, unless you're Wall Street.
- teekert 9y ago
  Recommended watching: http://www.imdb.com/title/tt1596363/ http://www.imdb.com/title/tt1596363/
  - marban 9y ago
    ..."People want an authority to tell them how to value things, but they choose this authority not based on facts or results. They choose it because it feels authoritative and familiar."
    - teekert 9y ago
      animex comment is so true by the way that it is insanely ridiculous. Anything that is said about ICO can be directly applied to Synthetic CDOs that do not contain what is claimed. How many people went to jail for selling those fraudulent products? By this logic we should be using tax payers money to compensate people who suffered losses in ICOs. And we should also use tax payers money to pay the bonuses of the ICO leading CEOs afterwards. How can this be: https://www.wsj.com/articles/in-a-blast-from-a-financial-crisis-past-synthetic-cdos-are-back-1503912601 https://www.wsj.com/articles/in-a-blast-from-a-financial-cri...
      - soundwave106 9y ago
        The main difference here is that Wall Street does have more well regulated segments, such as your traditional investments like stocks and bonds. I think disclosure of the nature of investment is a key here. Even more risky areas (options and whatnot) can be approached at with at least some degree of analysis -- you are investing in companies of whom are required to maintain a series of statistics that can help you determine value. Fraud still happens even in this space, but it's not a huge moonshot like an ICO would be in the best of circumstances (let alone the completely fraudulent make-money-fast type ICO scams.) My thought on the CDO crisis and the somewhat nonchalant reaction from regulators, is that this was a sign that Wall Street needed more regulation in certain areas, their howls of protest on regulations that did appear post-2008 (eg Dodd-Frank) notwithstanding. It is worth noting that in the Savings and Loans scandal 20ish years earlier, people were jailed for selling fraudulent investment vehicles. The reaction to the CDO driven crisis in contrast was very weak IMHO.
jackpeterfletch 9y ago
What does crypto offer in this solution. You could do it without?

Alex3917 9y ago

> Until someone figures out a way to even somewhat integrate ICOs into the existing legal system, this will keep happening. They're already integrated into the legal system. What new laws are needed?

deleted 9y ago
[deleted]
Thriptic 9y ago
You shouldn't be able to run one unless you're a registered company. It has to be relatively easy to come after you for fraud as an investor. Considering that this is a mechanism that is predominantly used to fund projects or companies anyway, I don't think that's an irrational requirement.
- fuddcoinn 9y ago
  all the same laws are applicable and fraud is fraud. what is more interesting is that a variety of traditional control mechanisms appear to be ineffective at stopping the two voluntary parties from interacting whereas for banking and brokerages they are sufficient. I'd hate to see a second useless set of laws be made, similar to "hate crimes" (a crime is a crime - except when you say a certain something or think a certain way?? wtf) but how would you even enforce a law requiring specific criteria for an ICO when an anonymous 14 year old kid anywhere in the world can do it in 20 minutes??! i am of the thought that not every guerilla ICO has to be brought to justice but the "rule of law" requires some semblance of respect and obedience and I've been to countries where everything is up for negotiation and no law is "rule". slippery slope. perception of authority should not be diluted if possible. seems the nation state's reach has started to exceed it's grasp....
  - Thriptic 9y ago
    > all the same laws are applicable and fraud is fraud No, it's not the same when you can use pseudonyms and provide fake data with the intent of deceiving someone. > what is more interesting is that a variety of traditional control mechanisms appear to be ineffective at stopping the two voluntary parties from interacting whereas for banking and brokerages they are sufficient. Fraud is not two voluntary parties interacting, it's one party stealing someone's money without their consent > but how would you even enforce a law requiring specific criteria for an ICO when an anonymous 14 year old kid anywhere in the world can do it in 20 minutes??! Admittedly I'm not sure, but my off the cuff thought is that you seize assets and prevent cashing out. Any wallet associated with a dubious ICO could be tracked and anyone that facilitates transactions for them could be targeted. If an exchange facilitates their cashing out they will have their assets seized; if a tumbling service receives assets from those wallets they will be subject to criminal action; if a bank facilitates a cash out they will be banned from participating in the US financial system etc. Honestly at the end of the day it doesn't really matter. At this rate ICOs will either be outright banned or anyone with half a brain will stay far away from them and the hype will die out.
  - rootusrootus 9y ago
    I've never understood the problem some people have with hate crimes. Don't we already have plenty of crimes where the only differentiator is mental state or intent? Hard to see how a hate crime classification is any different than, say, Murder 1 versus Murder 2.
    - csydas 9y ago
      I would assume it's a perceived sense of lack of fairness in the sentencing; to be clear, I share your position on hate crimes. They exist for the same reason that we have both Murder and Manslaughter charges, because our system of law considers intent as part of the sentencing. But it is not hard to see how some would view such laws as unfair. Intent can be difficult to prove and it requires interpretation; if you believe in clear cut and easily understandable laws, then naturally Hate Crimes and other such laws probably seem like a bad idea, and I get why that is frustrating and even intimidating with how fast gossip can travel. The system itself is built with release valves, but it's likely not much comfort for the wrongly accused. I think that's a separate problem, however, which is just exacerbated by perceptions of laws like Hate Crimes as opposed to being caused by the laws themselves.
lmm 9y ago
Viewed solely from a US perspective, no new laws are needed; rather the SEC needs to enforce existing laws. Internationally I suspect we need a better framework for handling cases where person in country A advertises securities in an organisation set up in country B to people in country C, via an organisation that operates in country D.
bertil 9y ago
I’ve noticed two things around fraudulent ICOs: - the actual identity of the people behind them is not known; they are often pretending to be developers with Eastern Europe; - they are presumably outside of a jurisdiction that their victims would be familiar with. This probably means that a simple fix could be to demand to verify and publish the identity of the people behind such projects. Whether a shell corporation based in the US could raise money without clarifying who actually owns them and whether that structure allows enforcing fraud is a more nuanced question that I cannot answer. But I can answer this: new laws are probably not the solution. Extradition treaties might help but are unlikely.

IncRnd 9y ago

The picture on the article's page is of a flock of children who are following a person, presumably a pied piper, who has no head and no pipe. Doing a google image search shows the head was specifically cut off for this page! Yep. That's the state of cryptocurrencies. A picture is worth a thousand words.

thisisit 9y ago
That I guess is a subtle nod to the company Pied Piper in the series Silicon Valley [1]. In the last season one of the characters built an app called "SeeFood", a Shazam for food: https://www.youtube.com/watch?v=FNyi3nAuLb0 https://www.youtube.com/watch?v=FNyi3nAuLb0 The app ended being used at Periscope to detect penis which explains the ending for the website too.
- shaki-dora 9y ago
  In case you’re wondering why your comment is all gray: people think you should go to your school and demand your money back if you think „pied piper“ was invented by the TV series. (Unless you’re not in Europe or its cultural descendants)
  - thisisit 9y ago
    I know that it is a children's story. What I meant in the comment was that the whole story about food on blockchain and the eventual ending about penis seems to reflect the SeeFood app arc in the TV series. That is why the image was used. If people thought otherwise then I guess my commenting skills are not that great.

deleted 9y ago

[deleted]

animex 9y ago

You know, unless you're Wall Street.

teekert 9y ago
Recommended watching: http://www.imdb.com/title/tt1596363/ http://www.imdb.com/title/tt1596363/
- marban 9y ago
  ..."People want an authority to tell them how to value things, but they choose this authority not based on facts or results. They choose it because it feels authoritative and familiar."
  - teekert 9y ago
    animex comment is so true by the way that it is insanely ridiculous. Anything that is said about ICO can be directly applied to Synthetic CDOs that do not contain what is claimed. How many people went to jail for selling those fraudulent products? By this logic we should be using tax payers money to compensate people who suffered losses in ICOs. And we should also use tax payers money to pay the bonuses of the ICO leading CEOs afterwards. How can this be: https://www.wsj.com/articles/in-a-blast-from-a-financial-crisis-past-synthetic-cdos-are-back-1503912601 https://www.wsj.com/articles/in-a-blast-from-a-financial-cri...
    - soundwave106 9y ago
      The main difference here is that Wall Street does have more well regulated segments, such as your traditional investments like stocks and bonds. I think disclosure of the nature of investment is a key here. Even more risky areas (options and whatnot) can be approached at with at least some degree of analysis -- you are investing in companies of whom are required to maintain a series of statistics that can help you determine value. Fraud still happens even in this space, but it's not a huge moonshot like an ICO would be in the best of circumstances (let alone the completely fraudulent make-money-fast type ICO scams.) My thought on the CDO crisis and the somewhat nonchalant reaction from regulators, is that this was a sign that Wall Street needed more regulation in certain areas, their howls of protest on regulations that did appear post-2008 (eg Dodd-Frank) notwithstanding. It is worth noting that in the Savings and Loans scandal 20ish years earlier, people were jailed for selling fraudulent investment vehicles. The reaction to the CDO driven crisis in contrast was very weak IMHO.

jackpeterfletch 9y ago

What does crypto offer in this solution. You could do it without?