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Do you have any evidence for that? There are other ways of addressing fraud besides violating people's right to freely contract with other consenting adults, l

Do you have any evidence for that? There are other ways of addressing fraud besides violating people's right to freely contract with other consenting adults, like punishing those who commit fraud to deter others from committing the crime, and public education campaigns. The idea that the government has a right to deem a certain class of investors as "unsophisticated", and thus better off deprived of the right to decide for themselves what to invest in, and prohibit an entire class of interactions, on the basis that too many instances of that class are fraudulent, upends basic principles of liberal society. The poorest households in the US spend 9% of their income on lottery tickets, showing that you can't legislate people out of misusing their funds. If anything, the attempt to do so deprives them of better investment opportunities, and better opportunities to learn how the investment world works. And this isn't free market idealism. The crypto/token investment market has become vastly more sophisticated over the last 4 years. Token sales that would have raised millions 4 years get nothing today. People need to have a bit more faith in other people, and in freedom.

alanh 7y ago
not to be that guy, but… username checks out! (inb4 hn is turning into reddit)
- CryptoPunk 7y ago
  Yea I believe that consensual interactions, whether it's in the civil sphere, with high-risk sexual practices, or the economic sphere, with high-risk investments, should not face any government prohibition.
  - workingpatrick 7y ago
    I'd argue that for the interaction to be truly consensual, both parties must be fully informed about the risks and rewards of the interaction that they are choosing to participate in. My reading of the SEC press release leads me to believe that the primary reason for requiring filing with the SEC for a sale of this nature is to ensure that all relevant information is available for the parties involved, thus allowing the interaction to be truly consensual.
    - CryptoPunk 7y ago
      You don't prohibit an entire class of interactions, and then approve them on a case-by-case basis when the centralized authority deems that the interaction is consensual. Approval-encumbered interaction is not consistent with how free society works, where people are presumed innocent, and not burdened with restrictions, until proven guilty. Speech used to be like that. You had to get approval from the state, before being allowed to publish. This was to prevent things like libel. It was called Prior Restraint. Eventually courts ruled it violated the Freedom of Speech, and we are all vastly better for that ruling. In practice it's also not flexible enough for innovation. It regiments only one acceptable way to establish an informed and consensual interaction, which precludes innovative new ways opened up by technology.
  - james_s_tayler 7y ago
    we ran that experiment in 2017 and everyone got rekt
  - ibejoeb 7y ago
    Likely that the majority here agrees in principal, but those things you're describing are different practices. You might liken an underground ICO to a bug chaser party where some participant doesn't even know what that is. That kind of stuff is a real problem, and there are plenty of scenarios where government prohibition isn't overstepping. In those cases, we're not protecting you from yourself, but rather protecting everyone else from you and your poor decisions that make your misfortune a burden to society.
    - CryptoPunk 7y ago
      >>You might liken an underground ICO to a bug chaser party where some participant doesn't even know what that is. The vast majority of people applauding restrictions on securities offerings would vote against any party that advocated similar restrictions on high-risk sexual activity. That shows that most people are just conforming to the popular viewpoint, and not independently and critically thinking about the issue. That is dangerous, because these issues are too complex, and too important, to decide on nothing more than what position is the popular fad. They have very significant consequences for huge numbers of people. We as a society need every single voter to fully understand the principle behind every law, and be able to justify it, because the consequence for violating the laws is that a person has their property seized, or their freedom taken away. Also, I think your analogy is inappropriate. People investing in crypto tokens is not going to do damage anywhere close to that done by "bug chaser parties". It's just money, if that (much of it is in the form of other crypto-tokens, so we're not even talking about fiat currency being risked). Even if you accept that people bankrupting themselves is a terrible outcome for society, the fact remains that people have plenty of other ways to blow their money. I can't see how these investments not being prohibited would make the problem any worse. But what a lack of prohibitions and a free market in soliciting and making investments would do is provide people with valuable exposure to the real investment world, and allow them to get a better understanding of how marketing hype, and speculative bubbles work, and how to identify real value. It would also allow people in much lower socio-economic groups to raise capital. Finally, no one is saying that victimizing behaviour, like fraud, should be legal. The question is, how do you address predatory behaviour. The answer in the West has traditionally been to punish those convicted of committing it. Cookie-cutter rules that subordinate every participant in an industry to a centralized gatekeeper, are disproportionate to the threat of fraud and inconsistent with the principles of a free society, like the presumption of innocence and the freedom of association and contract. They overly regiment the market, which inhibits innovation, and create barriers to entry to various sectors of the economy that exacerbate income inequality.
  - arcticbull 7y ago
    You’re also likely the first to whine when someone “steals” your coins (not your keys, not your coins) and about how wildly unregulated the exchange that exit scammed you is. This conversation plays out regularly in pro crypto subreddits. Privatized gains, socialized losses.
eganist 7y ago
> The idea that the government has a right to deem a certain class of investors as "unsophisticated", and thus better off deprived of the right to decide for themselves what to invest in, and prohibit an entire class of interactions, on the basis that too many instances of that class are fraudulent, upends basic principles of liberal society. Counterpoint: The government declares which investors are savvy or not ("accreditation" based on the rules) only partly because they believe certain people are unqualified to make certain investment decisions based on knowledge. The other major factor is whether an investor is more likely to lose amounts material to their survival. Two items to consider: 1. A person making enough spare income to take such risks is someone who likely won't suffer nearly as much if the risk goes south. Someone making 200,000/y (ok, excluding SF/NY since apparently legislators hardcoded a value like idiots) or who has 1mil assets after the primary home will probably feel pretty bad if a 25,000 investment goes to zero, but they probably won't be going on public assistance. 2. That said, regarding qualification to actually make the decision, a person who has the net worth or the income flow to qualify for accreditation may also be in a better position to invest in concepts being developed by people with past track records or increased odds of success. This may be a general result of being connected to such people (what you might call "the old boys' club," but this can broadly apply to any network of people) or may simply stem from being better positioned to evaluate/diligence the concept e.g. because they're applying their specialized knowledge to evaluate a new idea which they feel has value. --- Idealism is one thing, but if you're more likely to be preyed upon because you don't have the knowledge or connections to make more informed investment decisions and are more willing to increase the tax burden on your fellow person as a result of investment decisions gone sour, that's where the government steps in to protect the general population. As a reminder, this is one of the few responsibilities the government actually has in any society, even the most libertarian. Anyway, this isn't really a debate. If you disagree, you're empowered to do what you wish; I've made my counterpoint above and don't intend to go further.
- dnautics 7y ago
  > If you're more likely to be preyed upon because you don't have the knowledge or connections to make more informed investment decisions and are more willing to increase the tax burden on your fellow person as a result of investment decisions gone sour, that's where the government steps in to protect the general population. As a reminder, this is one of the few responsibilities the government actually has in any society, even the most libertarian. I don't know where you get your ideas of what libertarians are or aren't but, the general basis of libertarianism is that government gives your recourse for physical harm, defrauding via lies of commission (on principle and independent of the individual's ability to protect themselves), and typically property rights (though libertarians often disagree why). Generally the truth is considered to be an absolute defense against an accusation of fraud, and the justification of fraud is not a function of government having to 'bail people out', and in general, libertarianism does not consider it the role of government to "protect the general population". Typically, libertarians believe this under the premise that so often governments have done (and continue to do) shady things under the "guise of protecting the general population".
arcticbull 7y ago
You’ve got this backwards. Anyone can sell securities to any investor if the company they’re selling shares in can commit to providing regular audited financial disclosures showing they’re not frauds. It’s on the product being brought to market to show it’s fit for sale, not for the investor to show they’re “sophisticated.” If they show they’re sophisticated they can elect to waive the reporting requirements. You could do this for your personal C Corp, it’s just a lot of overhead you may deem not a good use of capital. Kik is choosing not to become a “public” company in that they don’t want to file disclosures. They’re trying to circumvent the rules that show they’re operating above board.
- atomical 7y ago
  It's more than that. They received money from "investors" without giving away any equity.
  - arcticbull 7y ago
    Good point, I didn’t address that.
- colechristensen 7y ago
  >Anyone can sell securities to any investor can being the operative word. There is a very significant market for investments where "sophisticated" – er – Accredited Investors get access to purchase securities that are not available to the public. Frustration from people who want to but cannot access this market is real and arguably valid, a balancing act between preventing fraud and granting access which is tipped a bit too far towards not necessarily preventing fraud but restricting access for the benefit of a few. (on the other hand before you go public there is a benefit to only having investors that really know what they are doing, the rabble of small time less knowledgable investors can be a business risk before your company is ready for the public) What I am saying is that the people spouting nonsense come from a place where there is truth, but so many people know so little about it that good discussions are hard to come by.
  - arcticbull 7y ago
sjg007 7y ago
Same story different day: https://www.history.com/news/roaring-twenties-scams-ponzi-wall-street https://www.history.com/news/roaring-twenties-scams-ponzi-wa...
lkrubner 7y ago
About this: “The poorest households in the US spend 9% of their income on lottery tickets, showing that you can't legislate people out of misusing their funds.” You’ve explained why it’s urgent that we outlaw lottery tickets. For most of USA history Protestant and Catholic leaders were unified in their opposition to all forms of gambling, and so lottery tickets were unthinkable for most of USA history. And every progressive activist that I know personally would like to see an end to lottery tickets and other forms of de facto regressive taxation. Lottery tickets, like other forms of gambling, tend to undermine habits of thrift and sobriety. I agree with your implied analogy — ICOs are like lottery tickets. That’s why they should be banned.
- colechristensen 7y ago
  >ICOs are like lottery tickets Not all of them, though maybe nearly all of them. There is nothing at all wrong with using a crypto-system to distribute ownership of your business. The SEC is actively working to make this a reality. It is just a different market to do the same thing. There is however so very much wrong with doing this outside regulation. Black market shares of your company are bad. Making up the nth new coin and selling its nonsense to the unwise in pump and dump schemes is wrong. In order to do so legally you have to be extraordinarily careful to completely divorce yourself from the US financial system and doing business on US soil. Banks themselves are starting to use crypto-coins to operate. They're just a tool, when used in the right way they aren't an exciting anarchist revolution usurping The Man, they're just a different sort of database/API. JPMorgan is setting something up for business-to-business transactions because they think it could be a better replacement for the current complex frameworks they have for keeping track of money. Most ICOs are like bad lottery tickets, but it's not the technology underlying it at fault.
- wavefunction 7y ago
  People derive enjoyment from lotteries and scratch tickets. I agree that some people exhibit problematic behavior by spending some of their limited funds on these items but that is their right. I'd rather these entertainment sources be captured by the state for the good of all its people than administered privately or clandestinely.
colechristensen 7y ago
I can't resist the snark, but it's serious too. Lottery tickets have better returns than early stage startups.

alanh 7y ago

not to be that guy, but… username checks out! (inb4 hn is turning into reddit)

CryptoPunk 7y ago
Yea I believe that consensual interactions, whether it's in the civil sphere, with high-risk sexual practices, or the economic sphere, with high-risk investments, should not face any government prohibition.
- workingpatrick 7y ago
  I'd argue that for the interaction to be truly consensual, both parties must be fully informed about the risks and rewards of the interaction that they are choosing to participate in. My reading of the SEC press release leads me to believe that the primary reason for requiring filing with the SEC for a sale of this nature is to ensure that all relevant information is available for the parties involved, thus allowing the interaction to be truly consensual.
  - CryptoPunk 7y ago
    You don't prohibit an entire class of interactions, and then approve them on a case-by-case basis when the centralized authority deems that the interaction is consensual. Approval-encumbered interaction is not consistent with how free society works, where people are presumed innocent, and not burdened with restrictions, until proven guilty. Speech used to be like that. You had to get approval from the state, before being allowed to publish. This was to prevent things like libel. It was called Prior Restraint. Eventually courts ruled it violated the Freedom of Speech, and we are all vastly better for that ruling. In practice it's also not flexible enough for innovation. It regiments only one acceptable way to establish an informed and consensual interaction, which precludes innovative new ways opened up by technology.
- james_s_tayler 7y ago
  we ran that experiment in 2017 and everyone got rekt
- ibejoeb 7y ago
  Likely that the majority here agrees in principal, but those things you're describing are different practices. You might liken an underground ICO to a bug chaser party where some participant doesn't even know what that is. That kind of stuff is a real problem, and there are plenty of scenarios where government prohibition isn't overstepping. In those cases, we're not protecting you from yourself, but rather protecting everyone else from you and your poor decisions that make your misfortune a burden to society.
  - CryptoPunk 7y ago
    >>You might liken an underground ICO to a bug chaser party where some participant doesn't even know what that is. The vast majority of people applauding restrictions on securities offerings would vote against any party that advocated similar restrictions on high-risk sexual activity. That shows that most people are just conforming to the popular viewpoint, and not independently and critically thinking about the issue. That is dangerous, because these issues are too complex, and too important, to decide on nothing more than what position is the popular fad. They have very significant consequences for huge numbers of people. We as a society need every single voter to fully understand the principle behind every law, and be able to justify it, because the consequence for violating the laws is that a person has their property seized, or their freedom taken away. Also, I think your analogy is inappropriate. People investing in crypto tokens is not going to do damage anywhere close to that done by "bug chaser parties". It's just money, if that (much of it is in the form of other crypto-tokens, so we're not even talking about fiat currency being risked). Even if you accept that people bankrupting themselves is a terrible outcome for society, the fact remains that people have plenty of other ways to blow their money. I can't see how these investments not being prohibited would make the problem any worse. But what a lack of prohibitions and a free market in soliciting and making investments would do is provide people with valuable exposure to the real investment world, and allow them to get a better understanding of how marketing hype, and speculative bubbles work, and how to identify real value. It would also allow people in much lower socio-economic groups to raise capital. Finally, no one is saying that victimizing behaviour, like fraud, should be legal. The question is, how do you address predatory behaviour. The answer in the West has traditionally been to punish those convicted of committing it. Cookie-cutter rules that subordinate every participant in an industry to a centralized gatekeeper, are disproportionate to the threat of fraud and inconsistent with the principles of a free society, like the presumption of innocence and the freedom of association and contract. They overly regiment the market, which inhibits innovation, and create barriers to entry to various sectors of the economy that exacerbate income inequality.
- arcticbull 7y ago
  You’re also likely the first to whine when someone “steals” your coins (not your keys, not your coins) and about how wildly unregulated the exchange that exit scammed you is. This conversation plays out regularly in pro crypto subreddits. Privatized gains, socialized losses.

eganist 7y ago

> The idea that the government has a right to deem a certain class of investors as "unsophisticated", and thus better off deprived of the right to decide for themselves what to invest in, and prohibit an entire class of interactions, on the basis that too many instances of that class are fraudulent, upends basic principles of liberal society. Counterpoint: The government declares which investors are savvy or not ("accreditation" based on the rules) only partly because they believe certain people are unqualified to make certain investment decisions based on knowledge. The other major factor is whether an investor is more likely to lose amounts material to their survival. Two items to consider: 1. A person making enough spare income to take such risks is someone who likely won't suffer nearly as much if the risk goes south. Someone making 200,000/y (ok, excluding SF/NY since apparently legislators hardcoded a value like idiots) or who has 1mil assets after the primary home will probably feel pretty bad if a 25,000 investment goes to zero, but they probably won't be going on public assistance. 2. That said, regarding qualification to actually make the decision, a person who has the net worth or the income flow to qualify for accreditation may also be in a better position to invest in concepts being developed by people with past track records or increased odds of success. This may be a general result of being connected to such people (what you might call "the old boys' club," but this can broadly apply to any network of people) or may simply stem from being better positioned to evaluate/diligence the concept e.g. because they're applying their specialized knowledge to evaluate a new idea which they feel has value. --- Idealism is one thing, but if you're more likely to be preyed upon because you don't have the knowledge or connections to make more informed investment decisions and are more willing to increase the tax burden on your fellow person as a result of investment decisions gone sour, that's where the government steps in to protect the general population. As a reminder, this is one of the few responsibilities the government actually has in any society, even the most libertarian. Anyway, this isn't really a debate. If you disagree, you're empowered to do what you wish; I've made my counterpoint above and don't intend to go further.

dnautics 7y ago
> If you're more likely to be preyed upon because you don't have the knowledge or connections to make more informed investment decisions and are more willing to increase the tax burden on your fellow person as a result of investment decisions gone sour, that's where the government steps in to protect the general population. As a reminder, this is one of the few responsibilities the government actually has in any society, even the most libertarian. I don't know where you get your ideas of what libertarians are or aren't but, the general basis of libertarianism is that government gives your recourse for physical harm, defrauding via lies of commission (on principle and independent of the individual's ability to protect themselves), and typically property rights (though libertarians often disagree why). Generally the truth is considered to be an absolute defense against an accusation of fraud, and the justification of fraud is not a function of government having to 'bail people out', and in general, libertarianism does not consider it the role of government to "protect the general population". Typically, libertarians believe this under the premise that so often governments have done (and continue to do) shady things under the "guise of protecting the general population".

arcticbull 7y ago

You’ve got this backwards. Anyone can sell securities to any investor if the company they’re selling shares in can commit to providing regular audited financial disclosures showing they’re not frauds. It’s on the product being brought to market to show it’s fit for sale, not for the investor to show they’re “sophisticated.” If they show they’re sophisticated they can elect to waive the reporting requirements. You could do this for your personal C Corp, it’s just a lot of overhead you may deem not a good use of capital. Kik is choosing not to become a “public” company in that they don’t want to file disclosures. They’re trying to circumvent the rules that show they’re operating above board.

atomical 7y ago
It's more than that. They received money from "investors" without giving away any equity.
- arcticbull 7y ago
  Good point, I didn’t address that.
colechristensen 7y ago
>Anyone can sell securities to any investor can being the operative word. There is a very significant market for investments where "sophisticated" – er – Accredited Investors get access to purchase securities that are not available to the public. Frustration from people who want to but cannot access this market is real and arguably valid, a balancing act between preventing fraud and granting access which is tipped a bit too far towards not necessarily preventing fraud but restricting access for the benefit of a few. (on the other hand before you go public there is a benefit to only having investors that really know what they are doing, the rabble of small time less knowledgable investors can be a business risk before your company is ready for the public) What I am saying is that the people spouting nonsense come from a place where there is truth, but so many people know so little about it that good discussions are hard to come by.
- arcticbull 7y ago

sjg007 7y ago

Same story different day: https://www.history.com/news/roaring-twenties-scams-ponzi-wall-street https://www.history.com/news/roaring-twenties-scams-ponzi-wa...

lkrubner 7y ago

About this: “The poorest households in the US spend 9% of their income on lottery tickets, showing that you can't legislate people out of misusing their funds.” You’ve explained why it’s urgent that we outlaw lottery tickets. For most of USA history Protestant and Catholic leaders were unified in their opposition to all forms of gambling, and so lottery tickets were unthinkable for most of USA history. And every progressive activist that I know personally would like to see an end to lottery tickets and other forms of de facto regressive taxation. Lottery tickets, like other forms of gambling, tend to undermine habits of thrift and sobriety. I agree with your implied analogy — ICOs are like lottery tickets. That’s why they should be banned.

colechristensen 7y ago
>ICOs are like lottery tickets Not all of them, though maybe nearly all of them. There is nothing at all wrong with using a crypto-system to distribute ownership of your business. The SEC is actively working to make this a reality. It is just a different market to do the same thing. There is however so very much wrong with doing this outside regulation. Black market shares of your company are bad. Making up the nth new coin and selling its nonsense to the unwise in pump and dump schemes is wrong. In order to do so legally you have to be extraordinarily careful to completely divorce yourself from the US financial system and doing business on US soil. Banks themselves are starting to use crypto-coins to operate. They're just a tool, when used in the right way they aren't an exciting anarchist revolution usurping The Man, they're just a different sort of database/API. JPMorgan is setting something up for business-to-business transactions because they think it could be a better replacement for the current complex frameworks they have for keeping track of money. Most ICOs are like bad lottery tickets, but it's not the technology underlying it at fault.
wavefunction 7y ago
People derive enjoyment from lotteries and scratch tickets. I agree that some people exhibit problematic behavior by spending some of their limited funds on these items but that is their right. I'd rather these entertainment sources be captured by the state for the good of all its people than administered privately or clandestinely.

colechristensen 7y ago

I can't resist the snark, but it's serious too. Lottery tickets have better returns than early stage startups.