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Boggles my mind that the SEC would give the tick to an ICO with heavily discounted tokens. You gave founders, employees and investors tokens at $0.00012. Then y

Boggles my mind that the SEC would give the tick to an ICO with heavily discounted tokens. You gave founders, employees and investors tokens at $0.00012. Then you sold discounted tokens at $0.12. Now you're pumping the pyramid scheme further with a public sale at $0.30. It's a nice way to pump a 2500x return for yourself and investors before any exchange listing. Can't wait for the SEC to endorse that behavior across the ecosystem. /sarcasm

GraffitiTim 7y ago
How is that different/worse than a startup? Early founders/employees get stock at a lower price, and then the price goes up if the company makes progress. There's only a return if the market values it.
- treelovinhippie 7y ago
  So if an unregulated ICO does it, it's bad. But if a regulated ICO does it, that's cool, just regular startup scene behavior. Pump and dump those return multiples on unsophisticated public investors. The VC leeches will love this new short-cycle SEC-endorsed wealth channel.
  - dang 7y ago
    Please don't post in the flamewar style to Hacker News. We're trying for something a bit better than internet-usual here, and I'm sure you can make your substantive points without it. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - woah 7y ago
    Not an expert, but they basically could have listed on the stock market at the same cost and with similar parameters. At this point you’re just raging against securities and investment as a category.
- simonebrunozzi 7y ago
  That's the case for equity. Tokens here don't represent equity in the company.
ticmasta 7y ago
It gets better; there's something like 130M tokens sold to founders & other insiders that have no transfer or time lock associated with them. Guess which ones will be the first traded at full pop?
- muneeb 7y ago
  If by this you mean tokens that were locked for 1 year under Reg D and then unlock monthly since the launch of the Stacks blockchain in Nov 2018, then yes there is a subset of tokens that are unlocked following the unlocking procedures that other holders also follow. Union Square Ventures, myself, and my co-founder are one of the largest holders of such tokens. We have restrictions from the SEC on selling these on the open market (given >5% ownership of Blockstack PBC). Restrictions which are also disclosed in the offering circular. Happens all the time with IPOs.
  - lowestlatency 7y ago
    Happens all the time with IPOs so it's totes fine, right? Your greed is showing, Muneeb. Plenty of posters in this thread talk about "following you" since the beginning and having lovely things to say about your product. Truth is: There is nothing your product does that other decentralized services didn't already do, for free. Your ID service is a less-secure Sovrin and your storage is a gated IPFS. You just saw what Ethereum did and wanted a piece of the pie for yourself.
    - muneeb 7y ago
      Understand your skepticism. "Happens all the time with IPOs" refers to restrictions on significant holders and company affiliates to sell. Which I believe is a good thing. Blockstack pre-dates Ethereum and is the exact opposite of Ethereum in terms of tech design. This is a regulated token offering which is very different from what Ethereum did. Doing what Ethereum did i.e., "ICO", in my view, is a much easier but legally risky path. Love what Sovrin is doing. Blockstack pre-dates Sovrin by a couple of years. We've worked on the Decentralized Identity Foundation (DIF) with them. I don't understand your IPFS comment, can you please elaborate? Gaia provides blockchain-pointers to private data lockers, IPFS is p2p storage. You can actually plugin IPFS as a storage option with Gaia, driver here: https://github.com/blockstack/gaia/pull/129/files https://github.com/blockstack/gaia/pull/129/files
muneeb 7y ago
Thanks for pointing this out. From direct text from our FAQ: "Why were Stacks Tokens valued/sold at $0.00012 prior to the 2017 accredited sale at $0.12? Founders and early employees of Blockstack PBC received tokens at $0.00012 per token in October 2017 based on an independent valuation from Foresight Valuation Group, LLC when the Stacks Token was still in its earliest stage of development and before the publication of the token white paper at the end of that month. This grant was subject to a three-year time lock commencing upon the introduction of the genesis block to the Blockstack network in November 2018, and the nominal price reflected the early, high-risk support of founders and early employees. Holders of Blockstack's Series A convertible preferred stock who had invested a total of $5.1 million as of late 2016 and funded Blockstack's early growth and development before the decision to create a token, or the drafting or publication of any white papers—were also provided an opportunity to purchase tokens at the $0.00012 per token price. This opportunity to participate at a nominal price was given in return for their early support and in proportion to their equity ownership, and it was based on their reasonable expectation as early investors that they would receive tokens if Blockstack ever decided to create a digital token. These tokens are subject to a three-year time lock, commencing upon the introduction of the genesis block to the Blockstack network in November 2018." Now more context here: I purchased my shares in Blockstack PBC in 2013 for $42, as does any other startup founder. Will I get a 23809x return if I sell my shares for 1,000,000? No, I'm earning these by the 5+ years of work and no reasonable person would assume that it's a 23809x return. The grant is "free" or at "$0" and the $42 number (standard practice in startups) is there for a tax cost basis. Exact same logic applies to founder/employee token grants, as we structured our token grants after equity grants. We did not sell "discounted tokens" at $0.12. That was the price the market was able to bear in Fall 2017. If you consider that a "Series A" price. A 2.5x multiple for a "Series B" is, again, totally standard and rather at the low end for traditional startups. Same thing applies here. Finally, we are disclosing all this information so investors can make informed decisions. Not the standard practice in other token offerings. I believe disclosures and transparency is a good thing and that's why we took this approach and worked with regulators. My one request would be to view this from a "what would it look like in a traditional startup?" angle vs. a "how is this project trying to scam me with a pyramid scheme?" angle. Thank you!
- 7y ago

GraffitiTim 7y ago

How is that different/worse than a startup? Early founders/employees get stock at a lower price, and then the price goes up if the company makes progress. There's only a return if the market values it.

treelovinhippie 7y ago
So if an unregulated ICO does it, it's bad. But if a regulated ICO does it, that's cool, just regular startup scene behavior. Pump and dump those return multiples on unsophisticated public investors. The VC leeches will love this new short-cycle SEC-endorsed wealth channel.
- dang 7y ago
  Please don't post in the flamewar style to Hacker News. We're trying for something a bit better than internet-usual here, and I'm sure you can make your substantive points without it. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- woah 7y ago
  Not an expert, but they basically could have listed on the stock market at the same cost and with similar parameters. At this point you’re just raging against securities and investment as a category.
simonebrunozzi 7y ago
That's the case for equity. Tokens here don't represent equity in the company.

ticmasta 7y ago

It gets better; there's something like 130M tokens sold to founders & other insiders that have no transfer or time lock associated with them. Guess which ones will be the first traded at full pop?

muneeb 7y ago
If by this you mean tokens that were locked for 1 year under Reg D and then unlock monthly since the launch of the Stacks blockchain in Nov 2018, then yes there is a subset of tokens that are unlocked following the unlocking procedures that other holders also follow. Union Square Ventures, myself, and my co-founder are one of the largest holders of such tokens. We have restrictions from the SEC on selling these on the open market (given >5% ownership of Blockstack PBC). Restrictions which are also disclosed in the offering circular. Happens all the time with IPOs.
- lowestlatency 7y ago
  Happens all the time with IPOs so it's totes fine, right? Your greed is showing, Muneeb. Plenty of posters in this thread talk about "following you" since the beginning and having lovely things to say about your product. Truth is: There is nothing your product does that other decentralized services didn't already do, for free. Your ID service is a less-secure Sovrin and your storage is a gated IPFS. You just saw what Ethereum did and wanted a piece of the pie for yourself.
  - muneeb 7y ago
    Understand your skepticism. "Happens all the time with IPOs" refers to restrictions on significant holders and company affiliates to sell. Which I believe is a good thing. Blockstack pre-dates Ethereum and is the exact opposite of Ethereum in terms of tech design. This is a regulated token offering which is very different from what Ethereum did. Doing what Ethereum did i.e., "ICO", in my view, is a much easier but legally risky path. Love what Sovrin is doing. Blockstack pre-dates Sovrin by a couple of years. We've worked on the Decentralized Identity Foundation (DIF) with them. I don't understand your IPFS comment, can you please elaborate? Gaia provides blockchain-pointers to private data lockers, IPFS is p2p storage. You can actually plugin IPFS as a storage option with Gaia, driver here: https://github.com/blockstack/gaia/pull/129/files https://github.com/blockstack/gaia/pull/129/files

muneeb 7y ago

Thanks for pointing this out. From direct text from our FAQ: "Why were Stacks Tokens valued/sold at $0.00012 prior to the 2017 accredited sale at $0.12? Founders and early employees of Blockstack PBC received tokens at $0.00012 per token in October 2017 based on an independent valuation from Foresight Valuation Group, LLC when the Stacks Token was still in its earliest stage of development and before the publication of the token white paper at the end of that month. This grant was subject to a three-year time lock commencing upon the introduction of the genesis block to the Blockstack network in November 2018, and the nominal price reflected the early, high-risk support of founders and early employees. Holders of Blockstack's Series A convertible preferred stock who had invested a total of $5.1 million as of late 2016 and funded Blockstack's early growth and development before the decision to create a token, or the drafting or publication of any white papers—were also provided an opportunity to purchase tokens at the $0.00012 per token price. This opportunity to participate at a nominal price was given in return for their early support and in proportion to their equity ownership, and it was based on their reasonable expectation as early investors that they would receive tokens if Blockstack ever decided to create a digital token. These tokens are subject to a three-year time lock, commencing upon the introduction of the genesis block to the Blockstack network in November 2018." Now more context here: I purchased my shares in Blockstack PBC in 2013 for $42, as does any other startup founder. Will I get a 23809x return if I sell my shares for 1,000,000? No, I'm earning these by the 5+ years of work and no reasonable person would assume that it's a 23809x return. The grant is "free" or at "$0" and the $42 number (standard practice in startups) is there for a tax cost basis. Exact same logic applies to founder/employee token grants, as we structured our token grants after equity grants. We did not sell "discounted tokens" at $0.12. That was the price the market was able to bear in Fall 2017. If you consider that a "Series A" price. A 2.5x multiple for a "Series B" is, again, totally standard and rather at the low end for traditional startups. Same thing applies here. Finally, we are disclosing all this information so investors can make informed decisions. Not the standard practice in other token offerings. I believe disclosures and transparency is a good thing and that's why we took this approach and worked with regulators. My one request would be to view this from a "what would it look like in a traditional startup?" angle vs. a "how is this project trying to scam me with a pyramid scheme?" angle. Thank you!

7y ago