I was brung up to gaze the crystal ball and read the tea leafs, but it didn't work. I gave it up and went out there to learn the hard way.
There is a way to understand how the SEC thinks about ICOs, but it requires hard knocks - you've got to have been exposed to the dirty underbelly of USA financial markets. Don't read any coinschmuckdesk blockchain article, the authors are all virgins and the words are rubbish. Don't listen to the Twitter lawyers, they're all engaged in the same criminal conspiracy to convince you to pay them yuge sums of BTC to tell you what you are doing is illegal. And more yuge sums so they can give you a few tips, ya know?
For the real story, read on: The science and practice of the SEC is governed by simple principles. First and foremost of all - the USA is sodden, soaked, ridden, infected, rotten with frauds known as Ponzis.
For the scope and scale of them, check out PonziTracker and Securities Analytics for some detailed information. Or glance at this map:
That's just 2016 ! Look at the numbers, or go play with the models on Securities Analytics. Here's what they say:
Key Take-Aways:
- 59 new alleged Ponzi schemes were revealed in 2016. This is down from 61 schemes uncovered in 2015 and 70 schemes in 2014. However, the $2.3 billion potential loss revealed in 2016 is far greater than the $800 million total from 2015.
- 67 individuals were sentenced in 2016 for Ponzi-related violations.
- The median sentence for schemes valued less than $5,000,000 was 33 months (2.75 years). These individuals on average will spend 39 months in prison for each $1 million dollars stolen.
- Individuals sentenced in schemes valued over $100,000,000 received a median 168 months (14 years) ...
- New York was home of the largest dollar value of alleged Ponzi schemes with six schemes valued at over $1.07 Billion although most of that sum was accounted for by one large alleged scheme.
- California was home to the highest count of alleged Ponzi schemes with nine schemes originating from the Golden State.
My Short Takeaway - these are million dollar plus scams. The total for 2016 of alleged Ponzis is $2.3 billion. The numbers are bigger than the current ICO bubble, and 67 people went to prison.
This is what the SEC thinks about, yesterday, every day, tomorrow. This is what they worry about when the phone rings and some daft congresscritter asks "what's with these ICOs then?"
What am I trying to say there? It's unfair of me to say, "go study Ponzis, my little ducklings, figure out how to quack before you launch your ICO?" Not to mention, the Ponzi scum is the tip of the iceberg, it's the stuff we get to measure. Inside the underbelly, it gets worse. No, what I'm trying to say is this:
The second principle is that, until proven otherwise, you're going be treated like a Ponzi. Here's the message in a nutshell.
- Don't expect the SEC to misunderstand. They do know the business. They'll take like a month and know inside out you're either the real deal or the real scam. Don't play word games with blockchain, DACs, new world order, unicorns and fucking lambos. They have like 84 years of experience in the duck test - if it quacks like a duck and it walks like a duck it is a duck. Meanwhile, frankly, how many years you been doing this, little duckling? They got it all over you. Lie down like the duckling you are. You may quack when asked to quack.
- Meanwhile - The SEC cannot control or fight every thing out there. They are underfunded, over worked, and therefore concentrate on the real crimes. Did you see the number above? $2.3 billion and that's only the Ponzis. You don't wanna hear the rest, it will shake your faith. Therefore:
- Have a real idea. Let's not fuck around, ducklings. Either your idea makes some form of sense or it doesn't. Make sure your idea is worth the quack, because if you get it wrong, the risk of you being a green splash on the map above is not zero. In plainer language, duckling, if your plan is bad, you could go to jail. Then,
- EXECUTE. If there is one thing that will save you it is that you executed a sensible plan.
The SEC will not burn you in 7 levels of hell for a good idea that is well executed. They will slap your wrist. It will hurt, take it like an er entrepreneur. In the big picture, there is one final thing that will save you.
- The SEC likes the good guys. If you've actually shown a better way to do finance to the world, they will no more destroy than they will eat their own babies. If you've actually done a good job, you might even get a little love, a little shielding, a little help against the real enemy. Don't rely on it, but hey, it can help.
- None of the above applies to other agencies. They all have their agendas. You plan might be fantastic for the SEC but if it treads on the toes of Fincen you're gonna find out how Peking Duck is made.
In closing. Don't fuck up. Telling yourself you're a good guy doesn't cut it, because all the real ponzi artists run around telling people they're the good guys.
And don't listen to lawyers who are in the business. Instead go out there and find a lawyer who is not in the business, but is prepared to do hard work of learning fast. And help you. While you all understand, this person is not taking the rap.
Stand up like an entrepreneur and do it. Do it honestly, and do it with pride. Own the consequences. And remember what the SEC lady said:
"Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors," said Valerie Szczepanik, the head of the SEC's distributed ledger group. "If you want this industry to flourish, protection of investors should be at the forefront."
In the regulatory game this is known as signalling. It's a coded message for those who are like on the inside. In short - look after your coin holders, or, we're gonna make duck soup of you.
Does it get any clearer?