They horrify me too.<p>Some are plain fraud. Investors will lose, scammers will profit and/or go to jail.<p>Some are promising startups, that will raise far more money than is healthy for their stage, and will die from too much money. If you don't have enough money (true for nearly everyone) it might be hard to imagine, but I've seen it when VCs give a startup too much. It makes them grow before they've found product-market fit, and when they realize their fit isn't quite right they're too large to change course quickly.<p>The second is more sad, because not only will investors lose their money but the world will lose an otherwise promising startup.
The idea of accredited investors horrifies me. The only way to get rich by investing is to get in early when the valuation is very low. These type of rules guarantee that only people already rich will be able to get in early.<p>The reason cryptocurrencies & ICOs are popular is they let anyone speculate and day trade.
The funny thing about ICOs is that anyone in the world can invest anonymously AND GET PAID BACK anonymously even if they have no money, don't have a bank account, are a fugitive, in Iran or North Korea, are in prison, have unpaid child support obligations, have large unpaid IRS tax liabilities, or government fines and penalties or are using stolen funds. All the little knobs and levers that governments use to financially control people are rendered useless. The guys taking the money don't know who their investors are, so they can't discriminate. This is probably why they are so popular even though the risks are ludicrous.
Founder of the first ICO platform here (April '14, SWARM) and early contributor to the Ethereum project.<p>I half-left the industry for a few reasons:<p>(1) Current crypto-markets highly favor "smoke and mirror" hype-driven approach to product as opposed to a user and product centric approach.<p>(2) Most "businesses" in the space are basically about skimming money off the top of a frothy market and effectively encouraging the scammy parts of the system. I suppose I could be making a lot of money this way right now but would highly violate my personal ethics to do so.<p>(3) It is exceedingly difficult to tie any sort of standard value to a blockchain-issued token, partially because of the complex regulatory framework around such offerings<p>(4) The libertarian bias of the industry effectively forces a massive head on collision between the incumbents (e.g. the SEC) and folks trying to circumvent their control, also effectively guaranteeing some version of "blood on the streets."<p>That said, as someone who founded the first platform dedicated to these topics I obviously think there are a lot of positive elements that are possible. Including:<p>(1) Streamlining and adding efficiency to capital markets by removing middlemen<p>(2) Funding novel highly sophisticated technological projects that would be difficult to get funding for in the VC world (Ethereum, DASH)<p>(3) Creating broader incentivization than exists in traditional funding models such that users of a product are directly incentivized by its success<p>(4) Allowing for novel forms of governance and organizations that are not bound by the legal system of any specific legal jurisdiction (e.g. DAOs)<p>All of these ultimately have high value. However, I think what we are likely to see is a major phase of consolidation after the current hype cycle wears off (much as what happened with "the DAO").<p>The reality is that ICOs are mostly scammy and useless projects at the moment with a few shining examples.<p>DISCLOSURE: I don't mean to critique any particular political philosophy in this post. If I have criticism it is more directed to tactics and strategy.
No shit, right? SEC Regulator is intrinsically a position that exists in human controlled, centralized trust networks, so of course it violates their archaic human contracts. Precisely what blockchains aim at reforming.
Yet Kickstarter, with all of the same risks of never getting what you paid for, and none of the potential benefits of becoming a stakeholder, is still perfectly fine.
I don't get why regulation is needed. The whole thing is by definition very high risk investment, and I think it'd be silly for any "scam-victim" to claim he didn't know he's entering a high risk, and also high chance of scam, deal.<p>In the end of the day, why is it the government's job to protect idiot people's money? And that's coming from the country where gambling is legal? The whole thing is based upon get-out-of-our-way-government exactly because of these ridiculous regulations.<p>If someone got money to waste, and decided to bet on some ICO horse, I wish him luck. If he doesn't have money to waste, it doesn't stop him from gambling on a real horse (which is still legal, and yet has 0 meaning whatsoever), so why are we so bothered about him gambling on this new virtual horse?<p>Sure, arrest those ICOs that are actually 100% clear scam because they left misleading expectations which they never had an intent of fulfilling.
>I.C.O.s represent the most pervasive, open and notorious violation of federal securities laws since the Code of Hammurabi<p>Can someone explain this statement to me? Is he saying I.C.O.s are the most flagrant violations occurring since the Code of Hammurabi was written, or is the Code of Hammurabi itself a violation?
What's old is new again - this is why the SEC was created if I'm not mistaken.<p>People were losing their shirts investing in shady companies so the government stepped in to protect people from themselves.<p>For this reason it won't be surprising at all when we start seeing some attempts to enact regulation.
There will be enough marketplaces in the world that will provide a solid legal structure for ICOs. The US certainly wont be a part if them.
Switzerland, Singapore and Japan already moved ahead with the legal structure.<p>The world is global, money is global.
The interesting unasked question here is why he seems to like FileCoin (the reference to decentralised storage markets) - what does he think that FileCoin gets right that others are getting wrong?
If you don't trust ICOs to provide the desired effect, don't participate in them. An ICOs has the same trust dynamic as a Kickstarter, and as long as somebody is okay with that, then I don't see why they should be protected from themselves preemptively.
No shit - by the time a company hits a public market, accredited investors are the ones who cash out. ICOs, invested in with some research and diligence can finally spread the wealth to the rest of us.
Every ICO page looks the same. Every ICO promises the same stuff. Support staff even promise future gains in their intercom driven chats.<p>This will not end well.
> But Mr. Grundfest said it was clear that almost everyone buying tokens at this point was buying them with the hope that their value would go up, not because the buyer wanted to use them on some future computer network.<p>So beanie babies were securities too?<p>This is just silly. Surely there's some better definition of what a securities are.<p>In some countries security is either equity or fixed income instrument. As I understand ICO-s are neither.
Posted earlier: <a href="https://news.ycombinator.com/item?id=15784520" rel="nofollow">https://news.ycombinator.com/item?id=15784520</a><p>But I'm very glad this article is getting more attention.
Let the people decide if they want to get ripped off or not, you cant regulate this, and you cant do nothing about people asking for crypto currencies in the internet.
This is the old wild west and you cant do nothing about it. If the people buying tokens are not smart enough to see that ICOs are a scam 99% of the time, that is their own problem. This is wallstreet trying to stick their nose where they cant rip off people under their "law".