Quote from: smooth on September 04, 2017, 01:48:25 AM

Quote from: Traxo on September 03, 2017, 11:26:14 AM

The Steem scheme is an illegal investment security and the implications are potentially dire.

Can't say I disagree.

The famous blog post states intent to circumvent securities laws while achieving the same economic reality of raising funds by selling stake to investors seeking a return from success of the project. That's basically a roadmap for SEC prosecution. Whether the SEC chooses to prioritize this over hundreds of other such candidate token/ICO cases is unknown to me. I always felt that blog post was a strategic blunder (i.e. harmful admission) driven by ego ("Look how clever I am, I figured out how to skirt the law while achieving the same thing").

Just my uninformed and ignorant view, not legal advice.

Did you see he proposed an alternative to proof-of-work distribution which he claims would avoid the problem? See the section, Pre-mine Without Securitization and the comment that discusses Dans latest strategic blunder with EOS.

Quote from: chryspano on September 04, 2017, 08:45:15 AM

Then we can say the same about all the bitcoin miners too, imo. Every miner is selling stake to investors seeking a return from the success of the project(bitcoin)

Mining is competitive, thus its not free to mint tokens. Thus its not a transfer of value from the investor to the issuer who is responsible for the managerial or development efforts which the expectation-of-profit depends on. And the issuers are independent from each other, not a centralized issuer. The miners are orthogonal to the developers who the investors expectation-of-profit depends on. The value is significantly burned and ends up dispersed into heat, utility companies, and hardware manufacturers, etc.; thus its not economically equivalent to an issuer (who are the developers) pre-mining some tokens for (nearly) free then selling them to investors. Read the linked blog again more carefully. You need to understand the 3 points of the Howey Test. Without a transfer of value to an issuer who the investor depends on for managerial efforts, then there is no investment security. Btw, thanks for the upvote.

Whereas, for an instamine or stealth proof-of-work mining launch where a significant portion of the money supply is mined over a very short period of time mostly by the developers group (and their insider friends), theres no significant competition and thus the developers (and friends) mine the tokens at nearly zero cost (relatively speaking to the price they sell them for), and thus a very significant portion of the money supply has been effectively pre-mined at nearly zero cost by the developers who the investors expectation-of-profit depends on. Thus this is economically equivalent to an ICO and thus those tokens are effectively ICO-issued tokens under the Howey Tests criteria. This is what transpired for Dash, Steem, and Bytecoin. In Bytecoins case, the stealth mine may have been over a long period of time, because afaik it was not publicly announced for up to year from the date of the genesis block.

Thus in addition to ICOs, Dash, Steem, and Bytecoin are also investment securities under the Howey Test (and possibly in other countries as well that may follow the sane principles about investors expectation-of-profit and value transferred to an issuer which). They are also likely illegal investment securities, because they werent registered with the SEC. Illegal investment securities are illegal for US persons to trade ever. US persons who are trading unregistered investment securities are culpable under the law. Apparently other countries are also going to harmonize their securities regulation with the SEC, so eventually all persons of the world will be similarly affected.

As for ICOs such as Ethereum which also then employed proof-of-work to distribute more of the money supply, those tokens which were in the ICO are not fungible with the competitively proof-of-work mined tokens, in terms of compliance with securities regulations. For those ICOs-issued tokens of ETH (and others), if they were registered with the SEC, then US persons may trade them, but only on exchanges which are registered with the SEC and they may not spend them (i.e. trade them) decentralized. Thus such tokens are not legal to use as a cryptocurrency. If for any persons jurisdiction, the unregistered ICOs-issued tokens are illegal to trade (and spend!), then they cant be traded ever without being culpable under the law. It is a giant mess because these ICO-issued tokens of ETH (and others) have been mixed together with the proof-of-work tokens, so the SEC and others countries will likely be forced to seize all ETH tokens on all exchanges. Note however, probably regulators will prioritize purely ICO tokens which were clearly scams first. I think the demise of ETH is some year or years from now, but I believe eventually all the ICO-issued token systems are doomed to illegality. What can happen is that past trading in ETH can be generally ignored, but when the authorities want to for example force you to testify in court against some other ICO prosecution, they can employ your past ETH trading as a threat against you. It is also possible that ETH in the future might become delisted on regulated exchanges where the tokens were sold in countries where they were required to be registered but were not (and of course illegal to trade on unregulated exchanges). Note how regulators have seized trading records from Coinbase and BTC-e, and surely they will attain all trading records from all exchanges eventually. The G5 (Five Eyes) national security apparatus are recording everything and tracing can be done even across VPNs and Tor (and Tor is a honeypot any way). Russia, China, and Germanys national securities apparatus is also surely very active in recording and tracing all Internet activity.

The linked blog explains this in more detail.

Quote from: RenegadeMind on September 05, 2017, 05:09:46 AM

Excuse my ignorance, but I'm not clearly seeing what the "clear legal way" is. Reading here (where you linked):

https://steemit.com/cryptocurrency/@anonymint/re-h0bby1-re-anonymint-are-most-cryptocurrencies-doomed-to-collapse-because-they-re-ico-issued-20170904t001326092z

I'm not seeing the "clever way".

I'm not a lawyer, so this is beyond my expertise.

I see how PoW gets around the Howey Test. But for crowdfunding a project, I'm not really seeing "the clever way". (Maybe it's just late and I'm being stupid.)

Click the link to the blog so you can read the section:

Quote from: Hyperme.sh on September 04, 2017, 09:56:12 PM

Did you see he proposed an alternative to proof-of-work distribution which he claims would avoid the problem? See the section, Pre-mine Without Securitization