
SEC Commissioner's “safe harbor” proposal for ICOs will only enable scammers - davidgerard
https://davidgerard.co.uk/blockchain/2020/02/08/sec-commissioner-hester-peirces-safe-harbor-proposal-for-icos-will-only-enable-scammers/
======
woah
Not many ICOs led to efficient product development, but most of them were also
not scams. Most teams that ICOed had a profile similar to early stage tech
startups. The outcome was usually what you’d expect if you gave a bunch of
inexperienced seed stage companies series B-sized piles of cash. They didn’t
have the urgency developed by running on a shoestring in an earlier stage of
the company and they didn’t have the direction of having actual users, so they
generally have been puttering along and taking their sweet time on the tech.

That being said, most ICOs were not put together by scammers, and many of them
have made an honest effort to produced technically advance systems that are
often not useful in the real world.

The fact that this author needs to insist that every single ICO was totally
fake and has stock photography portraits of fake developers shows that he has
an axe to grind and casts doubt on the article.

~~~
empath75
Name one single ico that produced a useful product.

~~~
thehazard
MakerDAO.

~~~
arcticbull
A _useful_ product. It’s a stablecoin. Your wallet is full of them already.

~~~
thehazard
...a stablecoin not tied to any major fiat currency with over $600MM of value
locked in the contract. That's an extremely successful product by any
definition.

~~~
arcticbull
value locked inside is not a metric of success. By that metric Bank of America
is thousands of times more successful, with 1.081 trillion dollars locked in.

~~~
thehazard
Does Bank of America have a stablecoin not tied to any major fiat currency
with over $600MM of value locked in the contract? (Hint: no, no they do not.)

------
geraldbauer
FYI: I've put together some classic ICO myths in the "Awesome Initial Coin
Offerings (ICO) Truths" page [1] with the subtitle "The Art of the Steal - The
Scammers' Big Lies". [1]: [https://github.com/openblockchains/awesome-ico-
truths](https://github.com/openblockchains/awesome-ico-truths)

~~~
nullc
Thanks for the link. That's a resource I'll find useful to share in the
future.

~~~
DyslexicAtheist
:D I also got so annoyed that I started curating blogs and videos (as myth-
busters) to help me bring the point across in discussions. My experience with
this is sadly that changing anyone's mind who has already made it up is
_really_ hard.

Here is my list:

Blockchains Are a Bad Idea (James Mickens)
[https://www.youtube.com/watch?v=15RTC22Z2xI](https://www.youtube.com/watch?v=15RTC22Z2xI)

Hacking Blockchain (Konstantinos Karagiannis, Chief Technology Officer,
Security Consulting, BT)
[https://www.youtube.com/watch?v=0gL6DsR6vGg](https://www.youtube.com/watch?v=0gL6DsR6vGg)

Myth Busting: Can a blockchain save healthcare?
[https://blog.andreacoravos.com/myth-busting-can-a-
blockchain...](https://blog.andreacoravos.com/myth-busting-can-a-blockchain-
save-healthcare-d398cdebf0c1)

Blockchain Graveyard [https://magoo.github.io/Blockchain-
Graveyard/](https://magoo.github.io/Blockchain-Graveyard/)

Response to Blockchain & Blockcerts Critiques from Privacy Researcher
[https://community.blockcerts.org/t/response-to-blockchain-
bl...](https://community.blockcerts.org/t/response-to-blockchain-blockcerts-
critiques-from-privacy-researcher/308)

Blockcerts: Using blokchain for identity management is (mostly) ridiculous
[https://blog.xot.nl/2017/09/06/blockcerts-using-blokchain-
fo...](https://blog.xot.nl/2017/09/06/blockcerts-using-blokchain-for-identity-
management-is-mostly-ridiculous/)

Blockchains from a Distributed Computing Perspective
[https://cs.brown.edu/courses/csci2952-a/papers/perspective.p...](https://cs.brown.edu/courses/csci2952-a/papers/perspective.pdf)

Do you need a Blockchain?
[https://eprint.iacr.org/2017/375.pdf](https://eprint.iacr.org/2017/375.pdf)

IOTA Tweets from cybergibbons:
[https://twitter.com/search?q=iota%20cybergibbons](https://twitter.com/search?q=iota%20cybergibbons)

------
lawn
I'm a big cryptocurrency supporter, and I even wrote a chapter about some
possible benefits of tokens in my book[0], but I agree that ICOs are almost
always pump-and-dump schemes or straight up scams. This is also acknowledged
by many cryptocurrency supporters, and I can't really understand why the SEC
would do this.

[0]:
[https://whycryptocurrencies.com/tokens.html](https://whycryptocurrencies.com/tokens.html)

------
RichardHeart
People are caught in a local maxima of thinking securities laws alone stop
scams. Theranos, Madoff, Enron were all securities. There are 3 ways to stop
scams. 1\. Better enforcement of the laws we have (doesn't work in harsher
parts of the world.) It's usually post-facto and rarely recovers funds from
those harmed. 2\. Yell at people to be smarter. Your speech isn't funded as
well as the scammers, and your pitch isn't as compelling, you often bring
awareness to the scam and thus victims for free. 3\. Out-compete the scams for
money by marketing to their would-be victims things that aren't scams. Maybe
that's an index fund, maybe it's a business opportunity, that can scale, and
work everywhere. The only scalable solution to the scamming problem is similar
marketing tactics for honest projects. Starve the scams of resources.

~~~
empath75
> The only scalable solution to the scamming problem is similar marketing
> tactics for honest projects.

The only way for honest projects to use similar marketing tactics is for them
to lie. It’s worthwhile to invest in a vanguard fund but it’s not a get rich
_quick_ scheme and never can be.

------
seibelj
Wow, this guy is biased! Brief selection of non-scammy ICOs:

MakerDAO [https://makerdao.com/](https://makerdao.com/)

Ethereum [https://ethereum.org/](https://ethereum.org/)

Cosmos [https://cosmos.network/](https://cosmos.network/)

Augur [http://www.augur.net/](http://www.augur.net/)

Binance Coin [https://www.binance.com/](https://www.binance.com/)

Basic Attention Token
[https://basicattentiontoken.org/](https://basicattentiontoken.org/)

By non-scammy, I mean projects that 1) Raised money via ICO, 2) Delivered what
they promised, and 3) [a huge bar!] are succeeding! Even if 99% are scams, the
successes make up for the failures, which appears to be similar odds to normal
startups.

I would absolutely say that ICOs are way too founder-friendly, but to say
every single one of them is a pump-and-dump scam is ridiculous.

I would also say that VC funding is far too investor-friendly, and it makes me
happy that the pendulum swung in the opposite direction for once. I think the
market will find a better medium, which is what the SEC is proposing with
their safe harbor.

This author seems extremely unhappy that Bitcoin is about to hit $10,000. The
"never-crypto" people are losing their minds...

~~~
davidgerard
> Even if 99% are scams, the successes make up for the failures

If you think regulators will put up with any field that's 99% scams, you are
deeply incorrect in your understanding of anything about the world of actual
money.

I mean, seriously - you're going to go to the SEC and say "you should enable
our fabulous investment field, it's only 99% crooks"? Not even Hester Peirce
would give that one a pass.

Everything you listed there is to squeeze yet more of the increasingly rare
actualdollars from the most degenerate of crypto day traders. It's a "use
case" insofar as it addresses problems created by using crypto in the first
place.

~~~
seibelj
The impression I get from you is someone who has made a niche career out of
bashing this technology, but it will continue on regardless. Blockchain is
unstoppable by the SEC or any other government regulator because it is
decentralized. The blockchain / cryptocurrency industry is building a parallel
financial system - one that requires no government intervention for capital
allocation, money transfer, ownership, debt, and so on. Every year it gets
more powerful and easier to use. You don't have to use this parallel financial
system, but as the use-cases expand some people choose to use it.

I'm very happy that neither regulators nor your whiny posts are capable of
shutting down Bitcoin. It is an exciting experiment!

------
thehazard
Horribly written article -- doesn't go into any detail about the proposal,
uses anecdotal data, and author is extremely biased. Seems like the author has
an axe to grind. The proposal from Peirce is novel and much superior to the
current SAFT framework; The SEC proposal is definitely worth a read.

~~~
arcticbull
Anything in particular you disagree with or think is an unfair
characterization? It all seemed right to me.

~~~
thehazard
You don't think it's a bit biased...?

> "The field was literally composed of BS."

> "I think I’ve literally never seen an ICO white paper idea that wasn’t
> palpable nonsense."

~~~
arcticbull
That’s all fair because crypto is a solution in search of a problem space.
When all you’ve got is a bicycle you’re going to try and ride that bad boy
everywhere even if it’s not at all appropriate. Blockchain folks are enamored
by the technology and have no concept of the problems they’re trying to solve
with it so naturally fail.

------
aakilfernandes
This article doesn't even bother to explain the proposal

~~~
davidgerard
Summarised in the second paragraph. That's all it has for substance.

~~~
aakilfernandes
You wrote that tokens in the safe harbor will need less registration and
disclosure, but no comment on what that registration or disclosure will
entail, or why it is less than sufficient.

