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From the article: > subpoenas... focusing on those that failed to properly ensure they sold their token exclusively to accredited investors... The idea of an

From the article: > subpoenas... focusing on those that failed to properly ensure they sold their token exclusively to accredited investors... The idea of an accredited investor in this context seems either a little silly or like a major philosophical problem for tokens, depending how you view it. What does it mean to be an accredited investor, anyway? From Matt Levine[1]: > Under U.S. law, some financial products, like hedge funds and private-company shares, are generally available only to "accredited investors." There's no actual accreditation -- there's no test -- it's just that if you have enough money you're "accredited." The theory is partly that if you have a lot of money you can afford to lose some of it on dumb private investments, and partly that if you have a lot of money then probably you know things about money and won't make dumb private investments. Both of these are terrible theories: If you have a lot of money, you still can't afford to lose all of it in dumb private investments, and there are plenty of rich dentists who don't know much about investing. The result is that it is both too easy to be an accredited investor, in that unsophisticated investors can be accredited, and too hard, in that fancy investing products are available only to the rich. (Rich-ish: The threshold is basically $200,000 in annual income or $1 million in assets.) 1: https://www.bloomberg.com/view/articles/2015-12-21/fraud-bonuses-and-accredited-investors https://www.bloomberg.com/view/articles/2015-12-21/fraud-bon...

bobthepanda 8y ago
The point is not to protect individuals, but to protect society from the blowout of every possible stupid investor getting wrecked all at the same time, by limiting the pool of stupid investors. With enough advertising, working and middle class people can be convinced to mortgage their house, their property, their cars, etc. to shovel debt into a stock market that would never go down because the advertisers told them so. That's how the Great Depression started, and this has repeated itself in every market that didn't restrict some investments to accredited investors. Is it blunt? Sure. But it's better than repeating 1929.
- pitaj 8y ago
  Personally, I think we should stop sheltering people from being able to make stupid mistakes. Then maybe people will learn to be a little more skeptical about everything.
  - awad 8y ago
    On balance, it's everyone's right to be stupid and burn their money to the ground. But realistically, in the interconnected world we live in, that will often involve burning other people as well and that's not something that should be OK. The housing crisis had greedy unchecked bankers, but it also had greedy unsophisticated (in a financial sense) individuals over-leveraging themselves and we all paid the price as taxpayers. Some people lost their homes and some people merely got a slap on the wrist, and however you feel about each, we ALL paid for it.
    - pitaj 8y ago
      The "greedy unchecked banker" narrative is cute, but it completely absolves the distortive effects government policies had on the market before the crash. This included incentivizing subprime loans, Fanny Mae and Freddy Mac, and previously bailing out banks (a signal that your risk will be subsidized in the future). There is no rule that the State must step in during bad situations, in fact many would argue that the government stepping in makes things worse. We don't all have to pay the price. The market needs those corrections to learn. If the government steps in every time, it doesn't have a chance to.
      - FabHK 8y ago
        No. The government needs to step in to prevent a total collapse. When the government refused to step in to rescue Lehman Brothers (precisely because of the moral hazard problem you allude to), all hell broke loose. Since the expectation (correctly) is that government will step in, we need regulation (before a crash) that limits risk taking, for example capital requirements (=equity) for banks. Your narrative has been, in my opinion, comprehensibly refuted by, for example, Anat Admati & Martin Hellwig in *The Bankers' New Clothes" [1], or Krugman already in 2008 [2]. An overview over the debate is given in [3], including this quote from Krugman: > “for any public figure to go with the Congress-did-it argument at this stage is for him to reveal both that he is grossly ignorant about the central policy issue of the day and that he gets his ‘analysis’ from right-wing flacks.” This is not to say that government policy has been perfect; but taking the government out of the equation is not going to fix anything. [1] http://bankersnewclothes.com http://bankersnewclothes.com [2] https://www.nytimes.com/2008/07/14/opinion/14krugman.html?_r=1 https://www.nytimes.com/2008/07/14/opinion/14krugman.html?_r... [3] https://www.outsidethebeltway.com/bloomberg-dont-blame-banks-for-mortgage-crisis/ https://www.outsidethebeltway.com/bloomberg-dont-blame-banks...
wpietri 8y ago
I'd put it differently than Levine. An accredited investor is one who can afford enough advice to somewhat level the playing field with scam artists. That serves the interests of both individual investors and of society, which wants to minimize the ROI of scams. He's right that there could be more sophisticated tests for "knows what they're doing". But this one has the advantage of being very simple and easy to enforce.

bobthepanda 8y ago

The point is not to protect individuals, but to protect society from the blowout of every possible stupid investor getting wrecked all at the same time, by limiting the pool of stupid investors. With enough advertising, working and middle class people can be convinced to mortgage their house, their property, their cars, etc. to shovel debt into a stock market that would never go down because the advertisers told them so. That's how the Great Depression started, and this has repeated itself in every market that didn't restrict some investments to accredited investors. Is it blunt? Sure. But it's better than repeating 1929.

pitaj 8y ago
Personally, I think we should stop sheltering people from being able to make stupid mistakes. Then maybe people will learn to be a little more skeptical about everything.
- awad 8y ago
  On balance, it's everyone's right to be stupid and burn their money to the ground. But realistically, in the interconnected world we live in, that will often involve burning other people as well and that's not something that should be OK. The housing crisis had greedy unchecked bankers, but it also had greedy unsophisticated (in a financial sense) individuals over-leveraging themselves and we all paid the price as taxpayers. Some people lost their homes and some people merely got a slap on the wrist, and however you feel about each, we ALL paid for it.
  - pitaj 8y ago
    The "greedy unchecked banker" narrative is cute, but it completely absolves the distortive effects government policies had on the market before the crash. This included incentivizing subprime loans, Fanny Mae and Freddy Mac, and previously bailing out banks (a signal that your risk will be subsidized in the future). There is no rule that the State must step in during bad situations, in fact many would argue that the government stepping in makes things worse. We don't all have to pay the price. The market needs those corrections to learn. If the government steps in every time, it doesn't have a chance to.
    - FabHK 8y ago
      No. The government needs to step in to prevent a total collapse. When the government refused to step in to rescue Lehman Brothers (precisely because of the moral hazard problem you allude to), all hell broke loose. Since the expectation (correctly) is that government will step in, we need regulation (before a crash) that limits risk taking, for example capital requirements (=equity) for banks. Your narrative has been, in my opinion, comprehensibly refuted by, for example, Anat Admati & Martin Hellwig in *The Bankers' New Clothes" [1], or Krugman already in 2008 [2]. An overview over the debate is given in [3], including this quote from Krugman: > “for any public figure to go with the Congress-did-it argument at this stage is for him to reveal both that he is grossly ignorant about the central policy issue of the day and that he gets his ‘analysis’ from right-wing flacks.” This is not to say that government policy has been perfect; but taking the government out of the equation is not going to fix anything. [1] http://bankersnewclothes.com http://bankersnewclothes.com [2] https://www.nytimes.com/2008/07/14/opinion/14krugman.html?_r=1 https://www.nytimes.com/2008/07/14/opinion/14krugman.html?_r... [3] https://www.outsidethebeltway.com/bloomberg-dont-blame-banks-for-mortgage-crisis/ https://www.outsidethebeltway.com/bloomberg-dont-blame-banks...

wpietri 8y ago

I'd put it differently than Levine. An accredited investor is one who can afford enough advice to somewhat level the playing field with scam artists. That serves the interests of both individual investors and of society, which wants to minimize the ROI of scams. He's right that there could be more sophisticated tests for "knows what they're doing". But this one has the advantage of being very simple and easy to enforce.