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>But I am not sure that it is actually all that good for crypto in the long run. The message of this decision is that crypto companies can freely sell tokens to

>But I am not sure that it is actually all that good for crypto in the long run. The message of this decision is that crypto companies can freely sell tokens to retail investors as long as those retail investors are uninformed and the companies are secretive about it; only if they sell tokens openly to sophisticated investors will they get in trouble. That’s bad. In the 1920s, a lot of people started very shady companies and raised a lot of money by selling stock with bad and misleading disclosures, and so the securities laws were created to stop them. That did not have the result of stamping out stock issuance in the US I wish we would just let the free market work. That means prosecuting those committing fraud, but otherwise allowing investors to invest how they wish, and learn their lessons the hard way, which is to lose money. Copy-pasting my earlier comment on this: 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.

charleslmunger 3y ago
>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. * FTX * CEL * 3AC * SafeMoon * The entire NFT "ecosystem"
- ETH_start 3y ago
  None of those are token sales. FTX, CEL and 3AC were centralized custodians, and in terms of insolvencies/hacks of centralized crypto custodians, the situation was much worse in 2010-2016. There was mybitcoin.com, in 2011, which closed down after it claimed it had been hacked for 250,000 worth of customer BTC. Then there was Bitomat.pl, the third largest exchange, which closed down in 2011 after accidentally deleting their wallet.dat file and with it, 17,000 of their customers' BTC. There was MtGox - the largest exchange which at its peak accounted for 80% of crypto exchange volume - which was closed down in 2014 after it was revealed that it has been hacked for 850,000 BTC. There was Bitcoinica which shut down after it was hacked for around 100,000 BTC in 2012. There was Bitfinex which was hacked for 120,000 BTC in 2016. By 2017 the major crypto exchange had proper security in place, and major crypto exchange hacks became far less frequent. Here is a list of hacks and the dates they occured: https://chainsec.io/exchange-hacks/ https://chainsec.io/exchange-hacks/
  - charleslmunger 3y ago
    CEL is a token，FTT is a token, SafeMoon is a token, the T in NFT is for token. 3AC didn't list a token but they were an investor in obviously stupid token schemes - 20% inflationary APY with an algorithmic "stable"coin. The facts are that a lot of money was poured either directly into stupid/fraudulent tokens or into enterprises that made a big deal out of issuing their own stupid/fraudulent tokens. "only reputable teams were able to raise money" is simply not true. >the situation was much worse in 2010-2016 That might be true, but the people being scammed with lambo dreams in 2016 were a fraction of those getting scammed in 2021.
    - ETH_start 3y ago
      Of those only CEL was involved in a token sale, and it wasn't an obvious scam at the outset, so the fact that it attracted capital wasn't unreasonable. It had known functionaries, and that meant that they could be arrested later on when it became clear they were engaging in fraud. Celsius and FTX (FTT) also attracted much of their capital because reputable and established exchanges like Coinbase were prevented by regulatory gatekeeping from providing competing products. The SEC ordered Coinbase to cancel its LEND program that would have competed direct with Celsius for example. >>but the people being scammed with lambo dreams in 2016 were a fraction of those getting scammed in 2021. I have no idea what the basis of your claim is. In any case, a proper comparison is to look at what fraction of token sales were fraudulent at the beginning of the token sale era, and at the end of it, in 2018. That tells us whether free market development works to create a progressively better functioning market.

charleslmunger 3y ago

>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. * FTX * CEL * 3AC * SafeMoon * The entire NFT "ecosystem"

ETH_start 3y ago
None of those are token sales. FTX, CEL and 3AC were centralized custodians, and in terms of insolvencies/hacks of centralized crypto custodians, the situation was much worse in 2010-2016. There was mybitcoin.com, in 2011, which closed down after it claimed it had been hacked for 250,000 worth of customer BTC. Then there was Bitomat.pl, the third largest exchange, which closed down in 2011 after accidentally deleting their wallet.dat file and with it, 17,000 of their customers' BTC. There was MtGox - the largest exchange which at its peak accounted for 80% of crypto exchange volume - which was closed down in 2014 after it was revealed that it has been hacked for 850,000 BTC. There was Bitcoinica which shut down after it was hacked for around 100,000 BTC in 2012. There was Bitfinex which was hacked for 120,000 BTC in 2016. By 2017 the major crypto exchange had proper security in place, and major crypto exchange hacks became far less frequent. Here is a list of hacks and the dates they occured: https://chainsec.io/exchange-hacks/ https://chainsec.io/exchange-hacks/
- charleslmunger 3y ago
  CEL is a token，FTT is a token, SafeMoon is a token, the T in NFT is for token. 3AC didn't list a token but they were an investor in obviously stupid token schemes - 20% inflationary APY with an algorithmic "stable"coin. The facts are that a lot of money was poured either directly into stupid/fraudulent tokens or into enterprises that made a big deal out of issuing their own stupid/fraudulent tokens. "only reputable teams were able to raise money" is simply not true. >the situation was much worse in 2010-2016 That might be true, but the people being scammed with lambo dreams in 2016 were a fraction of those getting scammed in 2021.
  - ETH_start 3y ago
    Of those only CEL was involved in a token sale, and it wasn't an obvious scam at the outset, so the fact that it attracted capital wasn't unreasonable. It had known functionaries, and that meant that they could be arrested later on when it became clear they were engaging in fraud. Celsius and FTX (FTT) also attracted much of their capital because reputable and established exchanges like Coinbase were prevented by regulatory gatekeeping from providing competing products. The SEC ordered Coinbase to cancel its LEND program that would have competed direct with Celsius for example. >>but the people being scammed with lambo dreams in 2016 were a fraction of those getting scammed in 2021. I have no idea what the basis of your claim is. In any case, a proper comparison is to look at what fraction of token sales were fraudulent at the beginning of the token sale era, and at the end of it, in 2018. That tells us whether free market development works to create a progressively better functioning market.