The most important fact is that an "Initial Coin Offering" could potentially be treated as selling a security by SEC or other securities regulators. See the new report Is Bitcoin A Security? by the excellent Coin Center crew to understand what that means and when it might apply:
https://coincenter.org/2016/01/is-bitcoin-a-security/So this is the number one fact that determined my decision: doing an ICO would risk legal consequences that could prevent the technology from ever being built.
(The Coin Center report actually cites us as an example of how to avoid this legal issue.)
I had studied that Coin Center report in the past and their conceptualization of the Howey test (pg. 41 of the report) is incorrect! The test is not some explicit set of 4 attributes as the Coin Center claims but rather
the Supreme Court explicitly stated it will overlook all obfuscations and distill to the economic reality of who is creating the expectations of investors (implied by any means, not just those 4 attributes so enumerated)! For example, the points on pg. 30 (32 of the PDF) and pp. 38 - 40 are linking profit by developers to the Howey test, but rather I argue the Howey test looks not primarily at profits by developers (although that is also a necessary ingredient) but rather whether the developers promoted expectations for gains amongst the investors. The term 'security' means another entity is securing (i.e. responsible for in the eye of the investor for) the outcome. Note IANAL though.
Pleeeeaaaaaassssseeee don't insinuate to us that your company is basing its decision on a report from the Coin Center and has not consulted its own legal counsel. You need your own legal counsel to indemnify you from this risk.
That Coin Center report has technical errors as well, such as they claim on pg. 15 (17 of the PDF) that a 51% attack can't create coins out of the thin air nor otherwise alter the consensus protocol, but what they fail to realize is that the minority mining can't fork away from the 51% attack because the 51% attack can always create the longest chain on any new fork as well. So the minority mining is powerless and thus the users of the coin have no choice but to the use the 51% attacked protocol, so their cois are not locked up (jammed). Also that Coin Center report claims it is very expensive to sustain a 51% attack, but this fails to mention the case where the cost is charged to the collective by the corrupt State, such as may be the case in China (which controls 65% of Bitcoin's hashrate) where perhaps a wink and a handshake gets you free electricity from the Three Gorges Dam.
The Coin Center repeats that technical error on pg. 19 (21 of the PDF) wherein they formulate a thus erroneous distinction between proof-of-work (PoW) and permissioned block chains. On pg. 20 (22 of the PDF), the report makes an erroneous claim about proof-of-stake (PoS) coins being more expensive to acquire as the coin's price rises, because
as we explained, PoS has lack of Nash equilibrium failure modes of which includes the fact that externalities can be employed to pay for attacking the coin, most especially because the attack cost is paid only once and not ongoing as for PoW. On pg. 53 (55 of the PDF), the statement that investors in ETH (Ethereum's tokens) do so primarily for use-value is entirely disproven by the recent domination of the Altcoin Discussion thread at Bitcointalk.org with numerous of Ethereum threads shrilling[1] for the recent price rise from $2 to $15 despite
my numerous attempts to explain that Ethereum has no use-case because they never solved the centralization of verification issue.
On pg. 23 (25 of the PDF) the point is made that proof-of-burn is probably the most unarguably fair.
> There's actually a good reason for securities regulators to look critically at such deals
> because they are an opportunity for the seller to take advantage of the buyers, and to find
> buyers who are naive or vulnerable. An ICO is an acute opportunity for a "pump-and-dump"
> scam. I didn't want even the appearance of the possibility of such a thing to be associated
> with Zcash. I also didn't feel comfortable taking money from people who may be ill-informed
> and who may be unable to afford the loss if the project were to fail.
>
> It's ironic: there is a certain segment of the cryptocurrency world who considers an open ICO
> to be good because it exposes a bunch of self-selected people to the upside, but this is the exact
> same reason that securities regulators such as SEC regard such things as potentially bad: because
> they expose a bunch of self-selected people to the downside! (And insidiously, the cost to the
> buyers is potentially to the benefit of the seller.)
But you have steadfastly ignored the numerous times I (shelby3 on the Zcash forum and Zooko's AMA) have asked you to comment on the
FinCEN regulations which seem to require that all Zcash miners will have to apply as Money Service Businesses (and note even the Coin Center report mentions FinCEN at the top of page 3), if you require miners to transfer 11% of the coinbase block rewards to your corporation. Even if you build in the protocol the requirement that 11% of the coinbase is to be transfered to your foundation, the miner still is the one who creates the block and decides on his own free will whether to honor the protocol or fork the protocol. This is very dubious and I don't think miners will risk it! You may think that FinCEN regulations do not apply globally, but the G20 has announced plans to cooperate against money laundering (and the recent false flag operation in France is being used as another excuse just as that false flag 9/11 got the BigT Lie rolling with the resultant "Patriot" Act). You think you are clever, but you are digging your grave by monkeying around trying to skirt USA regulations, which you've now admitted in public above. Not good. You are starting to demonstrate that you are not competent to run this operation. Please stop being obstinate and wake up to the realities.
That will kill your coin because it means that FinCEN controls your coin.