Quote from: burnside on July 26, 2013, 01:07:43 AM

Quote from: DeathAndTaxes on July 25, 2013, 10:37:08 PM

Quote from: MPOE-PR on July 25, 2013, 10:18:57 PM

Which is precisely why the game currency Bitcoin is going to stay a game currency: that's what it damned well is. Can shake that "formalism" quote all the way to Sunday, this isn't a formal matter in the least. Reasons barring Bitcoin from being a currency in the legal sense are purely functional, quite numerous and absolutely irreconcilable through formalism.

"Game currency" is no defense. First Circuit court has already ruled that virtual shares issues by virtual companies existing only in virtual stock exchange solely for the purported reason of being a game for entertainment to still be investments. Might want to read up on SEC v. SG, Ltd. The first circuit saw right through the sham of "it is only a game". What matters is the intent of the participants. I think one would find it pretty trivial to convince a jury that the public at large viewed any "asset buying games" as what they are investments. Hell this very sub forum would provide sufficient proof. It is impossible for an objective person to read the securities forum and believe the intent isn't for profit and instead is solely as entertainment in a game.

From SEC vs SG Ltd.
http://studentorgs.law.smu.edu/Science-and-Technology-Law-Review/Articles/Summer-2005/Tippett.aspx

Quote

SG argued that the virtual shares were part of a fantasy investment game created for the personal entertainment of Internet users, and therefore, those shares do not implicate the federal securities laws. 23 The SEC countered by stating that substance ought to prevail over form, and that merely labeling a website a game should not negate the applicability of the securities laws. 24The district court agreed with the defendant and granted the motion to dismiss, stating, the virtual shares were a clearly marked and defined game, lacking a business context.25 The SEC appealed immediately.26 This appeal hinged on whether the district court erred in ruling that transactions in the privileged companys shares did not constitute transactions in securities as a matter of law. 27 The First Circuit looked to the definition of an investment contract as a security, as defined under the three pronged test set forth by the Supreme Court in Howey. 28After applying the elements of the Howeytest and rejecting the rationale behind the district courts decision, the First Circuit reversed the dismissal order and remanded the case for trial. 29 The district court had created a distinction between commercial dealings and games, finding that the former were covered by federal securities law and the latter were not. The First Circuit rejected such a distinction, noting that as long as the three-pronged Howeytest is satisfied, the instrument must be classified as an investment contract. 30 It is immaterial whether an instrument is labeled as a serious commercial venture or a game, as the securities acts were enacted to encompass virtually any instrument that might be sold as an investment. There is no categorical exception for games.31

As a personal note I disagree with the court's decision in SG for a number of reasons but to pretend that "it's isn't a security because .... game" is just naive and dishonest. It isn't an open and shut case but intent matters. When asset holders are listing real assets, generating real world profits, and passing those as dividends to shareholders, and you have this entire forum dedicated to analyzing various securities, their risks, potential profits, etc it would be pretty hard to convince a jury that this is all a game solely for entertainment. By all accounts SG's operation was more like a casino then a true free market of assets and the courts still ruled against them. If SG Ltd failed in that defense then you honestly think other asset exchanges which have listings more bound to the real world then SG's "companies" which were totally fictional entities not having assets, cashflow, or profits will be more successful. Maybe they will but they will need a defense a lot stronger than "it is a game currency. period.".

I read through the entire article. There are many parallels to where we are today.

Ultimately however, they were in court because they committed fraud using USD, making promises that they could not keep. Read the "Operation" section on the page here: http://en.wikipedia.org/wiki/Stock_Generation ... They basically outright stole people's USD.

- BTC-TC does not steal USD or BTC in ANY way, shape, or form.
- BTC-TC does not commit fraud. (though the issuers might!)
- BTC-TC makes NO promises of guaranteed returns.
- With the exception of the LTC-GLOBAL shares, which are BTC Trading Corp's liability, the Howey test does not apply to the exchange directly, it applies to the issuers using the exchange.

The first prong of the Howey test may or may not apply to bitcoin. (is bitcoin "money"? in Australia and many parts of the world it explicitly IS NOT. In the US it has not been decided in court, but FinCEN is saying they consider it money and it will thus end up in court sooner rather than later.)

Subsequent prongs of the Howey test almost certainly apply.

It's been a day or so since I've posted in here and some may be wondering where BTC-TC stands with things.

- BTC-TC will not be closing it's doors to US citizens. US citizens using the site are not doing anything wrong and the issues around investing in assets from the various issuers is better addressed on a per-issuer basis. For instance, a fully registered and compliant issuer should be able to have unfettered access to the entire US population, whereas an issuer that has not properly registered their company puts themselves at risk and thus we would hope would close off access to the riskier markets. (note that this registration takes many forms depending on where you are located.)
- BTC-TC will be adapting it's ToS and wording on the site to be clearer and to avoid words that imply regulation where there is not. For example, calling something a stock implies a share of a regulated, registered company, when in fact that may not truly be the case. These changes will be made over time as we work things out with the help of legal representation.
- BTC-TC will be building a set of tools to assist issuers in maintaining compliance with securities law internationally. Initially this means that we will be giving issuers the ability to solicit (or not solicit) investment on a per-country basis. Eventually we could also facilitate validation and filtering of accredited investors versus non-accredited investors.

Cheers.

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