This is an excellent comment. To be a bit more clear on jdmichal's point, the reason for the SEC is to allow any - real - startups to be funded at all. If you

This is an excellent comment. To be a bit more clear on jdmichal's point, the reason for the SEC is to allow any - real - startups to be funded at all. If you didn't have the SEC, you wouldn't be able to be an accredited investor and invest in all the startup offers in the world, who all have to play by the rules. It really is a good thing. If you're a startup, it's a good thing because you can just build something and monetize it, and then when you're doing well, you can get investment in a protected investment market in a regulated way. If you're doing something normal. I mean just juxtapose this (from the article): "For added credibility, we randomly generated trading histories for each company going all the way back to last year..... We pasted descriptive text cribbed from the websites of banks and registered exchanges to make our website look like a serious business." Source: https://medium.com/@eiaine/how-startup-growth-hacks-resulted-in-a-formal-investigation-from-the-sec-cd04598fe58 https://medium.com/@eiaine/how-startup-growth-hacks-resulted... With what Ivanplenty said in this thread: "'Sand Hill Exchange' accepted items of real value (USD and BC) that could be used to 'purchase' (or bet on) things named after real securities that trade (or are expected to trade) on public markets for a profit." (Source https://news.ycombinator.com/item?id=9642353 https://news.ycombinator.com/item?id=9642353) What a scary world if the SEC didn't shut these guys down with a slap on the wrist! (Assuming Ivanplenty is correct and they monetized as he stated.) I mean they are literally inventing trading histories and collecting bitcoins and dollars to trade on them. That's the kind of market that sends real investors scurrying away from it, and I'm glad the SEC protects investors from that happening, by simply shutting it down. It is positively a good thing. (Also, the history of investor protection is because snake-oil salesmen really did take advantage of investors, selling them the clear blue sky: http://en.wikipedia.org/wiki/Blue_sky_law http://en.wikipedia.org/wiki/Blue_sky_law So it's not like this is some theoretical thing. The problem happened first, and the solution simply solved it. There are a lot of areas where the legal system can improve, but the existence itself of the SEC and the fact that it shut this exchange down is not one of them. This is absolutely warranted and called-for. Yes, you need to register if you want to do this type of thing, and you need to play by the rules.)