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What was remarkable to me was how quickly the token sale investment sector evolved between 2016 and 2018. When token sales began in 2016, a white paper alone w

What was remarkable to me was how quickly the token sale investment sector evolved between 2016 and 2018. When token sales began in 2016, a white paper alone was enough to raise $40 million worth of cryptocurrency. By the end of the brief experiment, which ended with the SEC's entry into the sector in early 2018, the typical token investor was highly discerning, with the result being that only reputable teams were able to raise money. This transformation occurred completely independently from any regulatory action. The collective intelligence of the market increased from hard-won lessons in the need to do due diligence, and the emergence of numerous internet resources that advised on how to effectively invest in token sales. My preference would be for the government to not intervene with regulatory regimentation of the token sale market, but that obvious frauds - where a team promises the moon and then uses the money raised to buy themselves lamborghinis - be punished after the fact. In other words, that the government establish the rules of a free market - no prior restraint, but consequences if you are found to have committed fraud. Yes people would still lose money, but at least the fraudsters wouldn't learn that crime pays, and survive to defraud another day. This would provide the benefits of free market evolution, while still removing bad actors from the market.

BoiledCabbage 4y ago
> Yes people would still lose money, but at least the fraudsters wouldn't learn that crime pays, and survive to defraud another day. So to be clear, your solution is that the victims will still be the victims. all scammers will get away with their scams, and that of those that steal millions and choose not to hop to another country that some percentage of the will be punished? And as a result that's reasonable? There is a reason the police respond to bank robberies in progress and don't just wait to try to collect stolen cash via an investigation after the fact. The number of attempted bank robberies would be through the roof. And the reason for ignoring all of this crime is what? Because a percentage of the people presumed to be running scams might actually be doing something legit? Didn't something like half of all coins fail? With some very large percentage of the being flat our rug pulls? It's incredible the knots crypto people will twist to try to justify it. Create a whole new set of problems, then poorly solve a portion of them, worse than they are solved in other forms and then try to claim it's a breakthrough. Hopefully most of those scammers move to AI where it's harder to just directly rip people off.
- ETH_start 4y ago
  >>So to be clear, your solution is that the victims will still be the victims. all scammers will get away with their scams, and that of those that steal millions and choose not to hop to another country that some percentage of the will be punished? And as a result that's reasonable? Not sure how you can read my statement, which included "but at least fraudsters wouldn't learn that crime pays, and survive to defraud another day", and interpret it that way. I'd like aggressive prosecution of actual fraud (as opposed to prosecuting people for failing to follow the processes regimented by regulations). >>Didn't something like half of all coins fail? That's the nature of venture capital investment. Failure is okay. Critically, much more more was earned by token sale investors than they invested in the aggregate. And the technology allowed much smaller investors to benefit from these returns, by massively expanding financial inclusivity: https://link.springer.com/article/10.1007/s11408-020-00366-0 https://link.springer.com/article/10.1007/s11408-020-00366-0 "The average ICO has almost 4700 contributors. The median contributor invests a relatively small amount. The ICO market appears to have successfully given access to the financing of innovation to a new class of investors, which is a long-standing public policy issue"
  - BoiledCabbage 4y ago
    You're trying to chase down the horses after they've left the barn. There is no way the govt is going to be able to catch them all or even most. They don't remotely have the resources. The reward for fraud is some enormous sum. It is 1000x better to drastically minimize the occurrences of, or prevent fraud, than try to catch everyone afterwards.
    - ETH_start 4y ago
      I think the government can catch nearly all token sale fraudsters. They leave mountains of evidence. It just requires putting in the resources to conduct the investigations and following through with laying charges and prosecuting the cases. The government spends trillions of dollars each year. Any serious effort to track down and punish fraudsters can be fully funded. And the costs of enforcement will rapidly decline as the government establishes credibility that it will consistently punish fraud. IMHO, our society should show zero tolerance for predatory behavior.
gotorazor 4y ago
> My preference would be for the government to not intervene with regulatory regimentation of the token sale market, but that obvious frauds - where a team promises the moon and then uses the money raised to buy themselves lamborghinis - be punished after the fact. In other words, that the government establish the rules of a free market - no prior restraint, but consequences if you are found to have committed fraud. Yes people would still lose money, but at least the fraudsters wouldn't learn that crime pays, and survive to defraud another day. > no prior restraint, but consequences if you are found to have committed fraud The problem is that --- how does the government catch crooks without a regulations or laws? Like what are the criteria that you would need proof that fraud --- not incompetenance --- lost all the money. I mean, if you can just get people to buy your useless algo stable coin, you can pay yourself millions to buy Lambo's and it would still be all legit. It was all from salaries and performance bonuses.
- ETH_start 4y ago
  What constitutes fraud, as opposed to just incompetence, is defined by case law. There will still be a gray area where unscrupulous actors stay technically within the law, while bilking investors with poorly planned projects that still profit them. The example you gave of algo stablecoins, made famous with Terra/LUNA, is a good one. To some extent, this would have to be dealt with via reputation markets. Assuming it's found that Do Kwon didn't break any laws and is free to create new tokens, one would hope that investors will stay away from those projects, and more generally, projects like Terra Luna that promise to algorithmically maintain a stable value. Perhaps the SEC can help investors without the risks associated with blanket restrictions by publishing guidelines for how to assess token sale offerings, along with red flags to watch out for, and even perhaps a voluntary/opt-in certification program for token sales.

BoiledCabbage 4y ago

> Yes people would still lose money, but at least the fraudsters wouldn't learn that crime pays, and survive to defraud another day. So to be clear, your solution is that the victims will still be the victims. all scammers will get away with their scams, and that of those that steal millions and choose not to hop to another country that some percentage of the will be punished? And as a result that's reasonable? There is a reason the police respond to bank robberies in progress and don't just wait to try to collect stolen cash via an investigation after the fact. The number of attempted bank robberies would be through the roof. And the reason for ignoring all of this crime is what? Because a percentage of the people presumed to be running scams might actually be doing something legit? Didn't something like half of all coins fail? With some very large percentage of the being flat our rug pulls? It's incredible the knots crypto people will twist to try to justify it. Create a whole new set of problems, then poorly solve a portion of them, worse than they are solved in other forms and then try to claim it's a breakthrough. Hopefully most of those scammers move to AI where it's harder to just directly rip people off.

ETH_start 4y ago
>>So to be clear, your solution is that the victims will still be the victims. all scammers will get away with their scams, and that of those that steal millions and choose not to hop to another country that some percentage of the will be punished? And as a result that's reasonable? Not sure how you can read my statement, which included "but at least fraudsters wouldn't learn that crime pays, and survive to defraud another day", and interpret it that way. I'd like aggressive prosecution of actual fraud (as opposed to prosecuting people for failing to follow the processes regimented by regulations). >>Didn't something like half of all coins fail? That's the nature of venture capital investment. Failure is okay. Critically, much more more was earned by token sale investors than they invested in the aggregate. And the technology allowed much smaller investors to benefit from these returns, by massively expanding financial inclusivity: https://link.springer.com/article/10.1007/s11408-020-00366-0 https://link.springer.com/article/10.1007/s11408-020-00366-0 "The average ICO has almost 4700 contributors. The median contributor invests a relatively small amount. The ICO market appears to have successfully given access to the financing of innovation to a new class of investors, which is a long-standing public policy issue"
- BoiledCabbage 4y ago
  You're trying to chase down the horses after they've left the barn. There is no way the govt is going to be able to catch them all or even most. They don't remotely have the resources. The reward for fraud is some enormous sum. It is 1000x better to drastically minimize the occurrences of, or prevent fraud, than try to catch everyone afterwards.
  - ETH_start 4y ago
    I think the government can catch nearly all token sale fraudsters. They leave mountains of evidence. It just requires putting in the resources to conduct the investigations and following through with laying charges and prosecuting the cases. The government spends trillions of dollars each year. Any serious effort to track down and punish fraudsters can be fully funded. And the costs of enforcement will rapidly decline as the government establishes credibility that it will consistently punish fraud. IMHO, our society should show zero tolerance for predatory behavior.

gotorazor 4y ago

> My preference would be for the government to not intervene with regulatory regimentation of the token sale market, but that obvious frauds - where a team promises the moon and then uses the money raised to buy themselves lamborghinis - be punished after the fact. In other words, that the government establish the rules of a free market - no prior restraint, but consequences if you are found to have committed fraud. Yes people would still lose money, but at least the fraudsters wouldn't learn that crime pays, and survive to defraud another day. > no prior restraint, but consequences if you are found to have committed fraud The problem is that --- how does the government catch crooks without a regulations or laws? Like what are the criteria that you would need proof that fraud --- not incompetenance --- lost all the money. I mean, if you can just get people to buy your useless algo stable coin, you can pay yourself millions to buy Lambo's and it would still be all legit. It was all from salaries and performance bonuses.

ETH_start 4y ago
What constitutes fraud, as opposed to just incompetence, is defined by case law. There will still be a gray area where unscrupulous actors stay technically within the law, while bilking investors with poorly planned projects that still profit them. The example you gave of algo stablecoins, made famous with Terra/LUNA, is a good one. To some extent, this would have to be dealt with via reputation markets. Assuming it's found that Do Kwon didn't break any laws and is free to create new tokens, one would hope that investors will stay away from those projects, and more generally, projects like Terra Luna that promise to algorithmically maintain a stable value. Perhaps the SEC can help investors without the risks associated with blanket restrictions by publishing guidelines for how to assess token sale offerings, along with red flags to watch out for, and even perhaps a voluntary/opt-in certification program for token sales.