
Opening Remarks at the Securities Regulation Institute - thisisit
https://www.sec.gov/news/speech/speech-clayton-012218
======
Animats
The SEC is being clear enough. "Take the money and run" is not an acceptable
business plan. Doesn't matter if it's "crypto". Doesn't matter if it's
"blockchain". Doesn't matter if it's "binary options".

This isn't a new thing. Previous generations of scams included "street
railways", "real estate investment trusts", and "multi-level marketing". Read
"Extraordinary Popular Delusions and the Madness of Crowds", which is over a
century old yet will sound very familiar to anyone who's followed ICOs.

The history of scams should be taught in school. At least read the Wikipedia
entry.[1] High school students should learn about small cons like the pigeon
drop up through big ones like Madoff.

The SEC is mostly reactive. After the thing tanks and people complain, they go
after people who acted like crooks.

[1]
[https://en.wikipedia.org/wiki/List_of_confidence_tricks](https://en.wikipedia.org/wiki/List_of_confidence_tricks)

~~~
perl4ever
Real estate investment trusts (REITs) are a perfectly mainstream category of
publicly traded investment products today.[1]

And multi-level marketing companies, while they tend to be controversial[2],
also include quite a few large publicly traded stocks.

[1] [https://www.investor.gov/introduction-
investing/basics/inves...](https://www.investor.gov/introduction-
investing/basics/investment-products/real-estate-investment-trusts-reits)

[2] See the feud between Carl Icahn and Bill Ackman over Herbalife and whether
it is a scam.

------
yohann305
i was a bit too young to observe but has anyone here seen something similar
when the internet craze came out?

1) Were public companies changing their names to reflect the "e"/"i"? If so
which ones?

2) Isn't the "i" from iPhone/iMac taken from the word "internet"? Okay it's a
product and not a company name, but where does the distinction starts/ends?

Could we expect an incoming "bPhone" (blockchain) or cPhone(crypto),
dPhone(decentralized) .. it actually sounds cool, right?

~~~
erikpukinskis
I doubt we’ll see a mass market blockchain phone for two reasons:

1) blockchain adds overhead. Mobile is about efficiency

2) blockchains are only necessary for adversarial collaboration. Your phone is
wholly owned and controlled by you, so there’s no need to host adversarial
realities on it.

~~~
TomK32
ad 1) with a lot of people having more than one device, why not a block-chain
app between just your devices to make sure information is shared between them
correctly? It's all about finding a valid use-case, barely anyone does though.

~~~
mkirklions
> why not a block-chain app between just your devices to make sure information
> is shared between them correctly

Blockchain is ONLY a public verified ledger.

A peer to peer blockchain is not public verified. This is running a server on
your phone.

------
deckarep
Isn’t the whole point of crypto-based currencies is to develop a system that
has no need to be regulated by a government agency or any single entity at
all? If this is about protecting the consumer, perhaps the consumer shouldn’t
be meddling in a space that is still being developed where there are big risk
factors at this point in time. Or maybe I just dont get it.

~~~
chx
This is the end of an excellent tweetstorm by Sarah Jeong (so you can feed it
into Spooler and read it as a single blog post)
[https://twitter.com/sarahjeong/status/953713433530089472](https://twitter.com/sarahjeong/status/953713433530089472)
but I would like to quote one:

> All of this has gone too far!!!!! It was fine when you paranoid dorks were
> out there scamming each other, please leave the normies alone!!!!!!!!!!!

I also copied this all into
[https://pastebin.com/e8vXE5Vi](https://pastebin.com/e8vXE5Vi)

This is what the SEC is saying too with different words.

~~~
DoreenMichele
I would be vastly more interested in hearing her explain what blockchain
really is so I can decide for myself if her outrage is appropriate than
hearing about how she has to hide her internet activity from her boyfriend and
how she is "in trouble" for not coming to bed like she said she would. Her
personal comments on those things make her sound like a lunatic with a lot of
personal problems, including both zero self control and a dysfunctional
private life. This does not inspire confidence in me that I should just listen
to her wisdom and do as she tells me to do.

~~~
jgh
Meh, my wife does the same thing if I'm doing something on the computer late
at night. I get the "I thought you said you were coming to bed in 5 minutes?"
treatment. Hell I might even joke about getting in trouble for it. In any case
this is clearly not a tweetstorm where she's laying out her argument to change
minds, it's just a rant. It would be interesting to read her views in an
article.

~~~
DoreenMichele
I realize it is a rant. It is a rant in which she says she has never bothered
to explain it because [excuses] and asserts that she doesn't want to hear your
opinion _if you didn 't read the white paper 5 years ago._

So it is a lazy, elitist snob rant that asserts that she has no plans to
explain it to us unwashed morons and we should just take her word for it. My
general opinion of such attitudes is _Fuck you_ , which is part of why I
walked away from a National Merit Scholarship and dropped out of college in my
youth.

I already said I would be interested in her explanation. But I am not holding
my breath. Her rant suggests she can't be bothered to explain fuck all. She is
too busy stroking her ego on twitter.

------
maxxxxx
What does it mean when a company pivots to blockchain? Does their business
change fundamentally? Maybe I don't understand blockchain well enough but it
seems more like an implementation detail to, not a fundamental change.

~~~
paulie_a
It means they talked to their marketing department to make their advertising
more "blockchainy"

------
bob_theslob646
There definitely is a difference between talk and action.

Will be interesting to see if they actually do anything because in the end it
will end up with a ton of litigation that they may or may not want to do.

------
trhway
old slogan for new times - we're the block in the blockchain.

------
benwilber0
> Before I move on to the next topic I want to raise one more narrow,
> distributed ledger or "blockchain"-related legal issue by means of a
> hypothetical. I doubt anyone in this audience thinks it would be acceptable
> for a public company with no meaningful track record in pursuing the
> commercialization of distributed ledger or blockchain technology to (1)
> start to dabble in blockchain activities, (2) change its name to something
> like "Blockchain-R-Us," and (3) immediately offer securities, without
> providing adequate disclosure to Main Street investors about those changes
> and the risks involved. The SEC is looking closely at the disclosures of
> public companies that shift their business models to capitalize on the
> perceived promise of distributed ledger technology and whether the
> disclosures comply with the securities laws, particularly in the case of an
> offering.

~~~
xur17
And there is at least one company that has done exactly this [0].

[0] [https://www.vanityfair.com/news/2017/12/iced-tea-company-
cha...](https://www.vanityfair.com/news/2017/12/iced-tea-company-changes-name-
to-long-blockchain-stock-immediately-skyrockets)

~~~
ceejayoz
At least two (and this one's probably more egregious, in the SEC's eyes):
[https://www.theverge.com/2018/1/9/16869998/kodak-
kodakcoin-b...](https://www.theverge.com/2018/1/9/16869998/kodak-kodakcoin-
blockchain-platform-ethereum-ledger-stock-price)

~~~
mywittyname
Kodak has a plausible argument for pursuing BC; the iced tea company is just
flagrant.

~~~
ceejayoz
The iced tea was first, though.

Kodak went into _their_ announcement knowing what happened to the iced tea
company's stock.

~~~
TomK32
Not first, everyone's forgotten the dot-com-mania?

~~~
ceejayoz
The iced tea company was the first to stumble upon the fact that adding
"blockchain" to your company's name and making no other significant changes
could boost your shares by 50% instantly. They have some plausible deniability
that they truly intended to pivot the company and didn't know it'd have those
effects.

------
kgwgk
I don’t remember what the original title of the submission was, but it was
orders of magnitude better than the current one.

~~~
chaostheory
"SEC Chief says looking closely at public companies pivoting to Blockchain"

------
ohazi
Poor Kodak can't seem to get a break...

~~~
kevin_thibedeau
This just isn't their moment.

------
hal9000xp
SEC completely fails to acknowledge that their regulatory burden is way too
heavy for small blockchain startups.

If you want to be fully complaint with SEC to issue your tokens as a security
you have to spend shitload of money on laywers and wait for approval for
months if not years. In fast-paced world of blockchain, it's equal to suicide.

Another thing is deeply discriminatory concept of accredited investor. They
said that it's to protect investors. In reality it means that most lucrative
deals will be out of reach for not wealthy individuals. And I hate whole
concept that the big brother prevents me for taking risks because they think
I'm too stupid for thinking for myself.

And constantly referring to ICO scams is not excuse at all. They don't want to
shutdown scammy ICO, then want to shutdown all ICOs including ones with
exceptionally brilliant ideas.

SEC is not friendly at all and they don't want to adapt. If they were friendly
and willing to provide lightweight regulatory framework for ICO and
cryptocurrencies, they would be very welcomed by many in blockchain world.

~~~
paulie_a
Yes they want to shutdown scams, ie ICOs

