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The laws need to change. The SEC should only get involved when someone defrauds another party through misrepresentation. Mandatory disclosure, registration, and

The laws need to change. The SEC should only get involved when someone defrauds another party through misrepresentation. Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract. That the poorest households spend 9% of their income on state-run lotteries, yet people can't try their hand at investing their own money in businesses/projects that haven't been vetted by a centralized government agency, shows the opportunistic and disingenuous appeal to virtue that's used to sell the public on the need to be controlled.

empath75 8y ago
> The SEC should only get involved when someone defrauds another party through misrepresentation. So basically ICOs, then.
- CryptoPunk 8y ago
  If you can prove a token sale organizer defrauded token buyers by misrepresenting facts, then they should face legal consequences. But painting an entire category of financial transactions as fraudulent, based on crude generalizations, is not just.
- jarsin 8y ago
  Exactly. The average ICO made buzzword promises much more insane and fraudulent than even Theranos. As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day.
  - CryptoPunk 8y ago
    >>As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day. I don't like people promising the moon to hype up speculative investments, but there are non-government solutions to this, like reputation markets. In fact we see these non-government solutions working already: token investors today are unrecognizable from those that were giving a website with a white paper $40 million worth of cryptocurrency in 2016. This transformation has occurred completely independently from any regulatory action. The collective intelligence of the market has increased from hard-won lessons in the need to do due diligence, and the emergence of numerous sites for rating token sales (mind you, there's still a lot of room improvement in the curation market). Regulations can obviously address some of these problems too, but any restriction on how consenting parties choose to interact is going to have massive unintended consequences, and in my estimation the unintended consequences do much more harm than what's alleviated by the regulations. Also worth mentioning is that the regulations that the SEC is trying to impose on token sales go far beyond prohibiting issuers from promising big gains. They try to micromanage how an offering is conducted with inflexible cookie cutter rules that inhibit innovation and make the entire market dependent on a centralized gatekeeper, which is a monopolistic and fragile situation prone to systemic failures. It's obvious to me that a free society should not tolerate this level of control being exerted on how people engage in voluntary interactions with other consenting adults. The problem is that the idea that we ought to be free to do with our money what we wish threatens many powerful special interests, so we get a never-ending stream of rationalizations and emotional appeals for restricting people's contracting rights, and for funnelling commerce through centralized gatekeepers.
    - stale2002 8y ago
      I mean, ok. But you are basically arguing that fraud should be allowed, because it is between "consenting adults". If that's what you want, fine. But you should be open and honest about the fact that you believe that financial fraud should be legal. And I'd like to point out that fraud is not a new concept. It is something that has been explored in many aspects of society, and most people oppose fraud. Fraud on a Blockchain is still fraud.
      - CryptoPunk 8y ago
        Fraud by definition is non-consensual, since it means someone not consenting to a material fact that was withheld from them about the interaction. It's fundamentally theft through misrepresentation of facts and should always be illegal. Someone saying "We believe this token will go up 200% in two years" is probably not a misrepresentation of facts, and thus not fraud, and should probably be allowed, and they should suffer the reputational damage when their predictions don't pan out. But if we created laws that did prohibit people from hyping up the investment potential of a token they put for sale, or laws that require token sale organizers to disclose the general risks around investing in speculative assets, like requiring them to include a statement on their website like "this is a highly speculative asset that has not been registered with the SEC. Speculative investments have a high likelihood of losing all of their value. It is recommended that you get professional investment advice before making an investment into a speculative instrument like this, and that you avoid investing a large portion of your wealth in them", that would probably be fine. It wouldn't be a major impediment to voluntary exchange. Like I said though, what the SEC is seeking to do goes far beyond barring token sale organizers from hyping their project's profit potential, or requiring such warning messages on their websites. If that's all the SEC wanted to do, I wouldn't be nearly as opposed, if at all.
s73v3r_ 8y ago
"Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract." No, they don't. This is like saying the 13th Amendment infringes on your right to sell yourself into slavery.
- CryptoPunk 8y ago
  Well the 13th amendment does deny you a right to sell yourself into slavery, so you're not substantiating your claim that these laws don't infringe on your right to privacy and free contract. In any case, that's an extremely dishonest comparison. In no way is spending money that your past self left to your present self however you wish (e.g. investing in a out-there idea called "Bit Coin" in 2010, instead of wasting it on state-run lotteries that the government advertises), comparable to selling your future self's freedom away. The latter violates the rights of someone who is arguably not you. The former violates no one's rights and should not be prohibited in a free society.
  - s73v3r_ 8y ago
    "Well the 13th amendment does deny you a right to sell yourself into slavery, so you're not substantiating your claim that these laws don't infringe on your right to privacy and free contract." I'm saying your complaint is like that. Yes, it does prevent you from doing that. Nobody cares, however. Just like you are trying to complain that you are prevented from buying a security where you get absolutely no insight, knowledge, or reporting whatsoever. I just cannot take that complaint seriously at all, and any legitimate investment doesn't either.
    - CryptoPunk 8y ago
      You wrote: >>No, they don't. Now you admit that they do. So you're resorting to misleading rhetoric to try to blunt the common sense argument I'm making, which is that in a free society, no one has a moral right to tell someone else how they can spend their money. People should have more humility, and not assume their understanding of the world is so far superior to the common man's that they have a right to exert their will on the common man. The call for these types of regulatory restrictions appeals to shallow unthinking narcissism, and nothing more, which is why it needs to be supported with inappropriate and inflammatory comparisons to selling yourself into slavery.
jimmaswell 8y ago
Exactly this. Half of the regulations the SEC enforces look more to me like nothing but revenue generation and entrenching existing players. Day trading rules are a flagrant example - only rich people are allowed to buy stocks and sell them the same day, not proles.
- CryptoPunk 8y ago
  Former securities lawyer Louis Cammarosano claimed back in July 2017 that 1. token sales are a threat to Silicon Valley and Wall Street, 2. that the SEC doesn't want to bring an enforcement action because they fear that a court will disagree with their interpretation: https://youtu.be/psqCMwhDxZo?t=12m29s https://youtu.be/psqCMwhDxZo?t=12m29s I guess time will tell.

empath75 8y ago

> The SEC should only get involved when someone defrauds another party through misrepresentation. So basically ICOs, then.

CryptoPunk 8y ago
If you can prove a token sale organizer defrauded token buyers by misrepresenting facts, then they should face legal consequences. But painting an entire category of financial transactions as fraudulent, based on crude generalizations, is not just.
jarsin 8y ago
Exactly. The average ICO made buzzword promises much more insane and fraudulent than even Theranos. As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day.
- CryptoPunk 8y ago
  >>As someone who watched all this quite closely back in the day I cannot believe the amount of money these hucksters pulled out of people and still are to this day. I don't like people promising the moon to hype up speculative investments, but there are non-government solutions to this, like reputation markets. In fact we see these non-government solutions working already: token investors today are unrecognizable from those that were giving a website with a white paper $40 million worth of cryptocurrency in 2016. This transformation has occurred completely independently from any regulatory action. The collective intelligence of the market has increased from hard-won lessons in the need to do due diligence, and the emergence of numerous sites for rating token sales (mind you, there's still a lot of room improvement in the curation market). Regulations can obviously address some of these problems too, but any restriction on how consenting parties choose to interact is going to have massive unintended consequences, and in my estimation the unintended consequences do much more harm than what's alleviated by the regulations. Also worth mentioning is that the regulations that the SEC is trying to impose on token sales go far beyond prohibiting issuers from promising big gains. They try to micromanage how an offering is conducted with inflexible cookie cutter rules that inhibit innovation and make the entire market dependent on a centralized gatekeeper, which is a monopolistic and fragile situation prone to systemic failures. It's obvious to me that a free society should not tolerate this level of control being exerted on how people engage in voluntary interactions with other consenting adults. The problem is that the idea that we ought to be free to do with our money what we wish threatens many powerful special interests, so we get a never-ending stream of rationalizations and emotional appeals for restricting people's contracting rights, and for funnelling commerce through centralized gatekeepers.
  - stale2002 8y ago
    I mean, ok. But you are basically arguing that fraud should be allowed, because it is between "consenting adults". If that's what you want, fine. But you should be open and honest about the fact that you believe that financial fraud should be legal. And I'd like to point out that fraud is not a new concept. It is something that has been explored in many aspects of society, and most people oppose fraud. Fraud on a Blockchain is still fraud.
    - CryptoPunk 8y ago
      Fraud by definition is non-consensual, since it means someone not consenting to a material fact that was withheld from them about the interaction. It's fundamentally theft through misrepresentation of facts and should always be illegal. Someone saying "We believe this token will go up 200% in two years" is probably not a misrepresentation of facts, and thus not fraud, and should probably be allowed, and they should suffer the reputational damage when their predictions don't pan out. But if we created laws that did prohibit people from hyping up the investment potential of a token they put for sale, or laws that require token sale organizers to disclose the general risks around investing in speculative assets, like requiring them to include a statement on their website like "this is a highly speculative asset that has not been registered with the SEC. Speculative investments have a high likelihood of losing all of their value. It is recommended that you get professional investment advice before making an investment into a speculative instrument like this, and that you avoid investing a large portion of your wealth in them", that would probably be fine. It wouldn't be a major impediment to voluntary exchange. Like I said though, what the SEC is seeking to do goes far beyond barring token sale organizers from hyping their project's profit potential, or requiring such warning messages on their websites. If that's all the SEC wanted to do, I wouldn't be nearly as opposed, if at all.

s73v3r_ 8y ago

"Mandatory disclosure, registration, and KYC requirements are all infringements on the right to privacy and free contract." No, they don't. This is like saying the 13th Amendment infringes on your right to sell yourself into slavery.

CryptoPunk 8y ago
Well the 13th amendment does deny you a right to sell yourself into slavery, so you're not substantiating your claim that these laws don't infringe on your right to privacy and free contract. In any case, that's an extremely dishonest comparison. In no way is spending money that your past self left to your present self however you wish (e.g. investing in a out-there idea called "Bit Coin" in 2010, instead of wasting it on state-run lotteries that the government advertises), comparable to selling your future self's freedom away. The latter violates the rights of someone who is arguably not you. The former violates no one's rights and should not be prohibited in a free society.
- s73v3r_ 8y ago
  "Well the 13th amendment does deny you a right to sell yourself into slavery, so you're not substantiating your claim that these laws don't infringe on your right to privacy and free contract." I'm saying your complaint is like that. Yes, it does prevent you from doing that. Nobody cares, however. Just like you are trying to complain that you are prevented from buying a security where you get absolutely no insight, knowledge, or reporting whatsoever. I just cannot take that complaint seriously at all, and any legitimate investment doesn't either.
  - CryptoPunk 8y ago
    You wrote: >>No, they don't. Now you admit that they do. So you're resorting to misleading rhetoric to try to blunt the common sense argument I'm making, which is that in a free society, no one has a moral right to tell someone else how they can spend their money. People should have more humility, and not assume their understanding of the world is so far superior to the common man's that they have a right to exert their will on the common man. The call for these types of regulatory restrictions appeals to shallow unthinking narcissism, and nothing more, which is why it needs to be supported with inappropriate and inflammatory comparisons to selling yourself into slavery.

jimmaswell 8y ago

Exactly this. Half of the regulations the SEC enforces look more to me like nothing but revenue generation and entrenching existing players. Day trading rules are a flagrant example - only rich people are allowed to buy stocks and sell them the same day, not proles.

CryptoPunk 8y ago
Former securities lawyer Louis Cammarosano claimed back in July 2017 that 1. token sales are a threat to Silicon Valley and Wall Street, 2. that the SEC doesn't want to bring an enforcement action because they fear that a court will disagree with their interpretation: https://youtu.be/psqCMwhDxZo?t=12m29s https://youtu.be/psqCMwhDxZo?t=12m29s I guess time will tell.