6 ms·

SEC Commissioner's “safe harbor” proposal for ICOs will only enable scammers

40 points by davidgerard 7y ago

geraldbauer 7y ago
FYI: I've put together some classic ICO myths in the "Awesome Initial Coin Offerings (ICO) Truths" page [1] with the subtitle "The Art of the Steal - The Scammers' Big Lies". [1]: https://github.com/openblockchains/awesome-ico-truths https://github.com/openblockchains/awesome-ico-truths
- nullc 7y ago
  Thanks for the link. That's a resource I'll find useful to share in the future.
  - DyslexicAtheist 7y ago
    :D I also got so annoyed that I started curating blogs and videos (as myth-busters) to help me bring the point across in discussions. My experience with this is sadly that changing anyone's mind who has already made it up is _really_ hard. Here is my list: Blockchains Are a Bad Idea (James Mickens) https://www.youtube.com/watch?v=15RTC22Z2xI https://www.youtube.com/watch?v=15RTC22Z2xI Hacking Blockchain (Konstantinos Karagiannis, Chief Technology Officer, Security Consulting, BT) https://www.youtube.com/watch?v=0gL6DsR6vGg https://www.youtube.com/watch?v=0gL6DsR6vGg Myth Busting: Can a blockchain save healthcare? https://blog.andreacoravos.com/myth-busting-can-a-blockchain-save-healthcare-d398cdebf0c1 https://blog.andreacoravos.com/myth-busting-can-a-blockchain... Blockchain Graveyard https://magoo.github.io/Blockchain-Graveyard/ https://magoo.github.io/Blockchain-Graveyard/ Response to Blockchain & Blockcerts Critiques from Privacy Researcher https://community.blockcerts.org/t/response-to-blockchain-blockcerts-critiques-from-privacy-researcher/308 https://community.blockcerts.org/t/response-to-blockchain-bl... Blockcerts: Using blokchain for identity management is (mostly) ridiculous https://blog.xot.nl/2017/09/06/blockcerts-using-blokchain-for-identity-management-is-mostly-ridiculous/ https://blog.xot.nl/2017/09/06/blockcerts-using-blokchain-fo... Blockchains from a Distributed Computing Perspective https://cs.brown.edu/courses/csci2952-a/papers/perspective.pdf https://cs.brown.edu/courses/csci2952-a/papers/perspective.p... Do you need a Blockchain? https://eprint.iacr.org/2017/375.pdf https://eprint.iacr.org/2017/375.pdf IOTA Tweets from cybergibbons: https://twitter.com/search?q=iota%20cybergibbons https://twitter.com/search?q=iota%20cybergibbons
lawn 7y ago
I'm a big cryptocurrency supporter, and I even wrote a chapter about some possible benefits of tokens in my book[0], but I agree that ICOs are almost always pump-and-dump schemes or straight up scams. This is also acknowledged by many cryptocurrency supporters, and I can't really understand why the SEC would do this. [0]: https://whycryptocurrencies.com/tokens.html https://whycryptocurrencies.com/tokens.html
aakilfernandes 7y ago
This article doesn't even bother to explain the proposal
- davidgerard 7y ago
  Summarised in the second paragraph. That's all it has for substance.
  - aakilfernandes 7y ago
    You wrote that tokens in the safe harbor will need less registration and disclosure, but no comment on what that registration or disclosure will entail, or why it is less than sufficient.
thehazard 7y ago
Horribly written article -- doesn't go into any detail about the proposal, uses anecdotal data, and author is extremely biased. Seems like the author has an axe to grind. The proposal from Peirce is novel and much superior to the current SAFT framework; The SEC proposal is definitely worth a read.
- arcticbull 7y ago
  Anything in particular you disagree with or think is an unfair characterization? It all seemed right to me.
  - thehazard 7y ago
    You don't think it's a bit biased...? > "The field was literally composed of BS." > "I think I’ve literally never seen an ICO white paper idea that wasn’t palpable nonsense."
    - arcticbull 7y ago
      That’s all fair because crypto is a solution in search of a problem space. When all you’ve got is a bicycle you’re going to try and ride that bad boy everywhere even if it’s not at all appropriate. Blockchain folks are enamored by the technology and have no concept of the problems they’re trying to solve with it so naturally fail.
seibelj 7y ago
Wow, this guy is biased! Brief selection of non-scammy ICOs: MakerDAO https://makerdao.com/ https://makerdao.com/ Ethereum https://ethereum.org/ https://ethereum.org/ Cosmos https://cosmos.network/ https://cosmos.network/ Augur http://www.augur.net/ http://www.augur.net/ Binance Coin https://www.binance.com/ https://www.binance.com/ Basic Attention Token https://basicattentiontoken.org/ https://basicattentiontoken.org/ By non-scammy, I mean projects that 1) Raised money via ICO, 2) Delivered what they promised, and 3) [a huge bar!] are succeeding! Even if 99% are scams, the successes make up for the failures, which appears to be similar odds to normal startups. I would absolutely say that ICOs are way too founder-friendly, but to say every single one of them is a pump-and-dump scam is ridiculous. I would also say that VC funding is far too investor-friendly, and it makes me happy that the pendulum swung in the opposite direction for once. I think the market will find a better medium, which is what the SEC is proposing with their safe harbor. This author seems extremely unhappy that Bitcoin is about to hit $10,000. The "never-crypto" people are losing their minds...
- arcticbull 7y ago
  > Even if 99% are scams, the successes make up for the failures, which appears to be similar odds to normal startups. Which is exactly why we have accredited investor rules in the first place, to make sure mom and pop don’t lose their shirts to the 99% of hot garbage out there. This proposal is meant to make circumventing those rules easier. > This author seems extremely unhappy that Bitcoin is about to hit $10,000. The "never-crypto" people are losing their minds... Uh, I’m not sure you’re old enough to recall 2017 but the author (and I) definitely remember 10K. It’s not anger, it’s disappointment lol
- davidgerard 7y ago
  > Even if 99% are scams, the successes make up for the failures If you think regulators will put up with any field that's 99% scams, you are deeply incorrect in your understanding of anything about the world of actual money. I mean, seriously - you're going to go to the SEC and say "you should enable our fabulous investment field, it's only 99% crooks"? Not even Hester Peirce would give that one a pass. Everything you listed there is to squeeze yet more of the increasingly rare actualdollars from the most degenerate of crypto day traders. It's a "use case" insofar as it addresses problems created by using crypto in the first place.
woah 7y ago
Not many ICOs led to efficient product development, but most of them were also not scams. Most teams that ICOed had a profile similar to early stage tech startups. The outcome was usually what you’d expect if you gave a bunch of inexperienced seed stage companies series B-sized piles of cash. They didn’t have the urgency developed by running on a shoestring in an earlier stage of the company and they didn’t have the direction of having actual users, so they generally have been puttering along and taking their sweet time on the tech. That being said, most ICOs were not put together by scammers, and many of them have made an honest effort to produced technically advance systems that are often not useful in the real world. The fact that this author needs to insist that every single ICO was totally fake and has stock photography portraits of fake developers shows that he has an axe to grind and casts doubt on the article.
- geraldbauer 7y ago
  To quote from an academic study and the commentary from a world-class economist from the article titled "Initial Coin Scams" it reads "There are now nearly 1,600 cryptocurrencies, and the number continues to rise. It is time to start recognizing their issuers' utopian rhetoric for what it is: self-serving nonsense meant to separate credulous investors from their hard-earned savings. [..] 81% of ICOs are scams created by con artists, charlatans, and swindlers looking to take your money and run." [1] [1]: https://www.project-syndicate.org/commentary/ico-cryptocurrency-scams-by-nouriel-roubini-2018-05 https://www.project-syndicate.org/commentary/ico-cryptocurre... About the author David Gerard - The Book "Attack of the 50 Foot Blockchain" [2] is an unmatched gem in a sea of 24-hour non-sense crytpo promotion. Ironically another voice of reason is "pseudonymous" Trolly McTrollface [3] [2]: https://davidgerard.co.uk/blockchain/table-of-contents/ https://davidgerard.co.uk/blockchain/table-of-contents/ [3]: https://bitsblocks.github.io/bitcoin-maximalist https://bitsblocks.github.io/bitcoin-maximalist
- empath75 7y ago
  Name one single ico that produced a useful product.
  - deleted 7y ago
    [deleted]
RichardHeart 7y ago
People are caught in a local maxima of thinking securities laws alone stop scams. Theranos, Madoff, Enron were all securities. There are 3 ways to stop scams. 1. Better enforcement of the laws we have (doesn't work in harsher parts of the world.) It's usually post-facto and rarely recovers funds from those harmed. 2. Yell at people to be smarter. Your speech isn't funded as well as the scammers, and your pitch isn't as compelling, you often bring awareness to the scam and thus victims for free. 3. Out-compete the scams for money by marketing to their would-be victims things that aren't scams. Maybe that's an index fund, maybe it's a business opportunity, that can scale, and work everywhere. The only scalable solution to the scamming problem is similar marketing tactics for honest projects. Starve the scams of resources.
- empath75 7y ago
  > The only scalable solution to the scamming problem is similar marketing tactics for honest projects. The only way for honest projects to use similar marketing tactics is for them to lie. It’s worthwhile to invest in a vanguard fund but it’s not a get rich _quick_ scheme and never can be.

40 points by davidgerard 7y ago

FYI: I've put together some classic ICO myths in the "Awesome Initial Coin Offerings (ICO) Truths" page [1] with the subtitle "The Art of the Steal - The Scammers' Big Lies". [1]: https://github.com/openblockchains/awesome-ico-truths https://github.com/openblockchains/awesome-ico-truths

nullc 7y ago
Thanks for the link. That's a resource I'll find useful to share in the future.
- DyslexicAtheist 7y ago
  :D I also got so annoyed that I started curating blogs and videos (as myth-busters) to help me bring the point across in discussions. My experience with this is sadly that changing anyone's mind who has already made it up is _really_ hard. Here is my list: Blockchains Are a Bad Idea (James Mickens) https://www.youtube.com/watch?v=15RTC22Z2xI https://www.youtube.com/watch?v=15RTC22Z2xI Hacking Blockchain (Konstantinos Karagiannis, Chief Technology Officer, Security Consulting, BT) https://www.youtube.com/watch?v=0gL6DsR6vGg https://www.youtube.com/watch?v=0gL6DsR6vGg Myth Busting: Can a blockchain save healthcare? https://blog.andreacoravos.com/myth-busting-can-a-blockchain-save-healthcare-d398cdebf0c1 https://blog.andreacoravos.com/myth-busting-can-a-blockchain... Blockchain Graveyard https://magoo.github.io/Blockchain-Graveyard/ https://magoo.github.io/Blockchain-Graveyard/ Response to Blockchain & Blockcerts Critiques from Privacy Researcher https://community.blockcerts.org/t/response-to-blockchain-blockcerts-critiques-from-privacy-researcher/308 https://community.blockcerts.org/t/response-to-blockchain-bl... Blockcerts: Using blokchain for identity management is (mostly) ridiculous https://blog.xot.nl/2017/09/06/blockcerts-using-blokchain-for-identity-management-is-mostly-ridiculous/ https://blog.xot.nl/2017/09/06/blockcerts-using-blokchain-fo... Blockchains from a Distributed Computing Perspective https://cs.brown.edu/courses/csci2952-a/papers/perspective.pdf https://cs.brown.edu/courses/csci2952-a/papers/perspective.p... Do you need a Blockchain? https://eprint.iacr.org/2017/375.pdf https://eprint.iacr.org/2017/375.pdf IOTA Tweets from cybergibbons: https://twitter.com/search?q=iota%20cybergibbons https://twitter.com/search?q=iota%20cybergibbons

lawn 7y ago

I'm a big cryptocurrency supporter, and I even wrote a chapter about some possible benefits of tokens in my book[0], but I agree that ICOs are almost always pump-and-dump schemes or straight up scams. This is also acknowledged by many cryptocurrency supporters, and I can't really understand why the SEC would do this. [0]: https://whycryptocurrencies.com/tokens.html https://whycryptocurrencies.com/tokens.html

aakilfernandes 7y ago

This article doesn't even bother to explain the proposal

davidgerard 7y ago
Summarised in the second paragraph. That's all it has for substance.
- aakilfernandes 7y ago
  You wrote that tokens in the safe harbor will need less registration and disclosure, but no comment on what that registration or disclosure will entail, or why it is less than sufficient.

thehazard 7y ago

Horribly written article -- doesn't go into any detail about the proposal, uses anecdotal data, and author is extremely biased. Seems like the author has an axe to grind. The proposal from Peirce is novel and much superior to the current SAFT framework; The SEC proposal is definitely worth a read.

arcticbull 7y ago
Anything in particular you disagree with or think is an unfair characterization? It all seemed right to me.
- thehazard 7y ago
  You don't think it's a bit biased...? > "The field was literally composed of BS." > "I think I’ve literally never seen an ICO white paper idea that wasn’t palpable nonsense."
  - arcticbull 7y ago
    That’s all fair because crypto is a solution in search of a problem space. When all you’ve got is a bicycle you’re going to try and ride that bad boy everywhere even if it’s not at all appropriate. Blockchain folks are enamored by the technology and have no concept of the problems they’re trying to solve with it so naturally fail.

seibelj 7y ago

Wow, this guy is biased! Brief selection of non-scammy ICOs: MakerDAO https://makerdao.com/ https://makerdao.com/ Ethereum https://ethereum.org/ https://ethereum.org/ Cosmos https://cosmos.network/ https://cosmos.network/ Augur http://www.augur.net/ http://www.augur.net/ Binance Coin https://www.binance.com/ https://www.binance.com/ Basic Attention Token https://basicattentiontoken.org/ https://basicattentiontoken.org/ By non-scammy, I mean projects that 1) Raised money via ICO, 2) Delivered what they promised, and 3) [a huge bar!] are succeeding! Even if 99% are scams, the successes make up for the failures, which appears to be similar odds to normal startups. I would absolutely say that ICOs are way too founder-friendly, but to say every single one of them is a pump-and-dump scam is ridiculous. I would also say that VC funding is far too investor-friendly, and it makes me happy that the pendulum swung in the opposite direction for once. I think the market will find a better medium, which is what the SEC is proposing with their safe harbor. This author seems extremely unhappy that Bitcoin is about to hit $10,000. The "never-crypto" people are losing their minds...

arcticbull 7y ago
> Even if 99% are scams, the successes make up for the failures, which appears to be similar odds to normal startups. Which is exactly why we have accredited investor rules in the first place, to make sure mom and pop don’t lose their shirts to the 99% of hot garbage out there. This proposal is meant to make circumventing those rules easier. > This author seems extremely unhappy that Bitcoin is about to hit $10,000. The "never-crypto" people are losing their minds... Uh, I’m not sure you’re old enough to recall 2017 but the author (and I) definitely remember 10K. It’s not anger, it’s disappointment lol
davidgerard 7y ago
> Even if 99% are scams, the successes make up for the failures If you think regulators will put up with any field that's 99% scams, you are deeply incorrect in your understanding of anything about the world of actual money. I mean, seriously - you're going to go to the SEC and say "you should enable our fabulous investment field, it's only 99% crooks"? Not even Hester Peirce would give that one a pass. Everything you listed there is to squeeze yet more of the increasingly rare actualdollars from the most degenerate of crypto day traders. It's a "use case" insofar as it addresses problems created by using crypto in the first place.

woah 7y ago

Not many ICOs led to efficient product development, but most of them were also not scams. Most teams that ICOed had a profile similar to early stage tech startups. The outcome was usually what you’d expect if you gave a bunch of inexperienced seed stage companies series B-sized piles of cash. They didn’t have the urgency developed by running on a shoestring in an earlier stage of the company and they didn’t have the direction of having actual users, so they generally have been puttering along and taking their sweet time on the tech. That being said, most ICOs were not put together by scammers, and many of them have made an honest effort to produced technically advance systems that are often not useful in the real world. The fact that this author needs to insist that every single ICO was totally fake and has stock photography portraits of fake developers shows that he has an axe to grind and casts doubt on the article.

geraldbauer 7y ago
To quote from an academic study and the commentary from a world-class economist from the article titled "Initial Coin Scams" it reads "There are now nearly 1,600 cryptocurrencies, and the number continues to rise. It is time to start recognizing their issuers' utopian rhetoric for what it is: self-serving nonsense meant to separate credulous investors from their hard-earned savings. [..] 81% of ICOs are scams created by con artists, charlatans, and swindlers looking to take your money and run." [1] [1]: https://www.project-syndicate.org/commentary/ico-cryptocurrency-scams-by-nouriel-roubini-2018-05 https://www.project-syndicate.org/commentary/ico-cryptocurre... About the author David Gerard - The Book "Attack of the 50 Foot Blockchain" [2] is an unmatched gem in a sea of 24-hour non-sense crytpo promotion. Ironically another voice of reason is "pseudonymous" Trolly McTrollface [3] [2]: https://davidgerard.co.uk/blockchain/table-of-contents/ https://davidgerard.co.uk/blockchain/table-of-contents/ [3]: https://bitsblocks.github.io/bitcoin-maximalist https://bitsblocks.github.io/bitcoin-maximalist
empath75 7y ago
Name one single ico that produced a useful product.
- deleted 7y ago
  [deleted]

RichardHeart 7y ago

People are caught in a local maxima of thinking securities laws alone stop scams. Theranos, Madoff, Enron were all securities. There are 3 ways to stop scams. 1. Better enforcement of the laws we have (doesn't work in harsher parts of the world.) It's usually post-facto and rarely recovers funds from those harmed. 2. Yell at people to be smarter. Your speech isn't funded as well as the scammers, and your pitch isn't as compelling, you often bring awareness to the scam and thus victims for free. 3. Out-compete the scams for money by marketing to their would-be victims things that aren't scams. Maybe that's an index fund, maybe it's a business opportunity, that can scale, and work everywhere. The only scalable solution to the scamming problem is similar marketing tactics for honest projects. Starve the scams of resources.

empath75 7y ago
> The only scalable solution to the scamming problem is similar marketing tactics for honest projects. The only way for honest projects to use similar marketing tactics is for them to lie. It’s worthwhile to invest in a vanguard fund but it’s not a get rich _quick_ scheme and never can be.