
Dear Floyd Mayweather, you’re why the SEC exists - janober
https://techcrunch.com/2017/07/28/dear-floyd-mayweather-youre-why-the-sec-exists
======
whack
How is this any different from Ashton Kutcher being publicly bullish about
Bitcoin, or Mark Cuban endorsing unikrn? Or more generally, any celebrity
flaunting high-priced luxury goods like BMWs and Rolexes?

Yeah, it feels great to be all self-righteous and lecture Mayweather, but that
energy would be far better spent imparting financial literacy on the hundreds
of millions who don't know any better.

[http://www.cnbc.com/id/100696230](http://www.cnbc.com/id/100696230)

[https://www.coindesk.com/celebrity-investor-mark-cuban-
parti...](https://www.coindesk.com/celebrity-investor-mark-cuban-participate-
first-ico/)

~~~
ringaroundthetx
This is a fluid development, but basically until Stox proves that it isn't a
security, then securities regulations apply. In this case it means lots of
disclosures for safe harbor from litigation when it goes bust. (PSLRA)

How is it different than bitcoin or unikrn? Loaded question, but the main
thing is that not all tokens are the same. As in, just because something is
tokenized doesn't mean the same things apply. Even the SEC understands that,
and proved so with their no action report from a few days ago, even though
nobody read it and just used the headline to confirm their worldview.

Regulations apply to securities. Bitcoin isn't considered a security. Unikrn
might be. Stox might be. This is a factor of how they are offered, issued, and
used.

~~~
Jabanga
>but basically until Stox proves that it isn't a security, then securities
regulations apply

That's not how it works.

~~~
kasey_junk
It's not exactly how it works but there is lots of precedent that allows the
SEC broad discretion in this regard & upholds their very broad view of what is
a security.

So while it's not true it's a fairly good starting point for a group to take
when they float securities looking item.

~~~
Jabanga
Right, but that doesn't mean digital token sales are securities offerings
until proven otherwise. The recent SEC communication did not assert that, and
only concluded that DAO tokens, which are among the most security-like tokens
to be created, were securities.

The investigative report they released [1] is quite informative, and suggests
to me that the vast majority of tokens being traded and sold do not meet the
SEC's definition of a security. Mind you, I'm not a lawyer, so take what I say
with a grain of salt.

[1]
[http://www.sec.gov/litigation/investreport/34-81207.pdf](http://www.sec.gov/litigation/investreport/34-81207.pdf)

~~~
ringaroundthetx
I agree with you, but you simply can't do any business with that logic because
all of your affiliates have to treat your tokens different if they are or are
not securities.

Exchanges have to have assurances that they are not securities, otherwise they
may retroactively be sanctioned as unregistered broker-dealers. For the
traders themselves, securities are subject to insider trading logic which
doesn't apply to non-securities. It is a tough landscape, and creating a legal
basis for not being a security is a prerequisite, for now.

When actual broker-dealers (like TD Ameritrade, ETrade etc) start trading
tokenized securities offerings, it will be extremely advantageous because they
have much more robust infrastructure and trillions of dollars of assets under
management already. So people that register their tokenized offerings as
securities now may have the first mover advantage in the future for attracting
liquidity, but a big disadvantage now.

~~~
Jabanga
>When actual broker-dealers (like TD Ameritrade, ETrade etc) start trading
tokenized securities offerings, it will be extremely advantageous because they
have much more robust infrastructure and trillions of dollars of assets under
management already.

Maybe. But maybe in the long run, the regulated industry, as encumbered by
regulatory friction as it is (e.g. $10 per trade), is a dinosaur, and will be
thoroughly eclipsed by this new unregistered blockchain token market with its
nearly frictionless transactions.

------
spunker540
I get that the SEC exists for very good reasons - but a part me wishes that
ICOs and cryptocurrencies as a whole could remain unregulated. Sort of like an
economic free-for-all zone: risky, experimental, not for the faint of heart.

At the same time, I guess the only way for these to become mainstream is for
them to be regulated. Hopefully regulations help them thrive rather than
dampen growth. Time will tell.

Regardless I'd like to see the SEC at least send a warning shot Floyd's way,
cause he seems out of his depth and he's trying to bring his fans with him.

~~~
wmf
You can create whatever crazy investment you want as long as you limit it to
qualified investors. But those people mostly won't fall for pump-and-dump
ICOs.

~~~
api
Could you write a smart contract requiring someone to prove that they control
enough currency to qualify ?

~~~
SilasX
There's long been talk of having web-portable, cryptographically secure
endorsements for things you want to prove about your identity: that you've
over 18, that you hold a valid driver's license, etc, but they've never gotten
off the ground. Basically, same as CAs, except for validating that "this
identity has that attribute".

This would be another use case.

Edit: if you meant proving you own enough ETH tokens, rather than USD, that's
a lot easier and (I assume) possible now.

------
OliverJones
It's true that buying shares in any new offering is risky. It's true that
celeb endorsements can convince some otherwise careful people to behave
riskily. It's true that selling shares in a decent index fund to buy shares in
an initial offering is risky. And people should be careful. (duh.) It's a good
reason to be skeptical of stuff like celeb endorsements and guarantees of
resturns.

But there's another side to the SEC regulation system. It has been captured by
the industry it's supposed to regulate. It serves the existing investment
industry very well, and main street investors not so much (witness the Madoff
mess). The tonnage of legal work required to meet the regulations raises a
barrier to entry to new players. Google, in their IPO, managed to innovate in
this area. But they already had a lot of political clout.

It would be helpful if there were ways to expand access.

------
chrsstrm
The concept of an ICO is still somewhat new to me and I'm trying to figure out
how Mayweather is so sure he is going to make money on this offering. Correct
me if I'm wrong, but in the simplest terms:

I'm assuming Mayweather is not an owner of STOX, just a 3rd party participant
in the offering. His plan would be to attempt to corner the market on STOX
tokens on release and then pray to Cthulhu that demand for the tokens outpaces
supply, triggering a rise in price. He then starts to sell his tokens, taking
advantage of good old fashioned price arbitrage (which he himself was trying
to influence). Does this sound about right?

------
Mikeb85
You're allowed to state you're invested in something, or promote it. Not
against any securities rules.

~~~
twinkletwinkle
No one is saying the SEC exists to prevent Floyd from saying what he wants to
say. The SEC exists to protect less informed investors from being influenced
by what Floyd says. That's why they have rules about disclosures and/or
accredited investors, which are lagging behind on ICOs

~~~
Jabanga
>No one is saying the SEC exists to prevent Floyd from saying what he wants to
say. The SEC exists to protect less informed investors from being influenced
by what Floyd says.

By preventing Floyd from saying what he wants to say.

~~~
uxp
Not really. Floyd can say whatever he wants to say, he just needs to warn
people that they might not be able to weather the loss. Just like if I was to
say that I think Apple's stock is going to soar now that they've discontinued
the iPod and can focus more embedded development into the Apple Watch and TV
and something something pulled out of my ass, I should also state that:

All statements and expressions are the sole opinion of the commenter and are
subject to change without notice. The Commenter is not liable for any
investment decisions by its readers or subscribers. It is strongly recommended
that any purchase or sale decision be discussed with a financial adviser, or a
broker-dealer, or a member of any financial regulatory bodies. The information
contained herein has been provided as an information service only. The
accuracy or completeness of the information is not warranted and is only as
reliable as the sources from which it was obtained. Investors are cautioned
that they may lose all or a portion of their investment in this or any other
company.

~~~
Jabanga
>Floyd can say whatever he wants to say, he just needs to warn people that
they might not be able to weather the loss.

While I am least opposed to generic disclosure requirements (as opposed to a
requirement of getting the approval of and registering with some specific
regulatory authority, as is the case with getting an exemption to the
prohibition on offering securities to the public) like you describe, it is
still a prohibition on what Mayweather can say.

The law essentially says, "you cannot say X, unless you say Y and Z". It is a
prohibition on what he can say under particular conditions. That being said, I
haven't fully considered the implications of disclosure requirements, and
would hold it as a possibility that it can be justified, on the grounds that
"saying X, without saying Y and Z" is indisputably fraud, under all
circumstances (those this is a very high bar to clear, and I'm not sure that
the prohibition clears it).

------
balls187
> It’s impossible to know if Stox paid you to promote their ICO. It’d be
> fairly sleazy if they did, but either way, you have a responsibility to be
> forthcoming about what you stand to gain and what your passionate followers
> stand to lose.

FTC ruled that paid sponsors must disclose that fact on Social Media posts.

~~~
xxr
True, but it doesn't appear to be readily enforced. One of the lawsuits
involving the Fyre Festival revolves around sponsored social media posts that
failed to disclose that sponsorship.[1] Certainly, someone could come and sue
Mayweather, but not before he dumps the pump.

[1][http://www.hollywoodreporter.com/thr-esq/fyre-festival-
spark...](http://www.hollywoodreporter.com/thr-esq/fyre-festival-sparks-class-
action-lawsuit-999793)

------
crazydoggers
Why aren't we talking about the fact that Stox is basically a bucket shop?
Isn't that the bigger issue than the celeb who is promoting the bucket shop??

Oh wait... it's a "prediction market"... lol.

[https://en.m.wikipedia.org/wiki/Bucket_shop_(stock_market)](https://en.m.wikipedia.org/wiki/Bucket_shop_\(stock_market\))

~~~
noddy1
exactly - more info here:

[https://www.reddit.com/r/Bancor/comments/6o34fz/heads_up_for...](https://www.reddit.com/r/Bancor/comments/6o34fz/heads_up_for_those_who_intend_to_invest_in_the/)

"Tali Yaron-Eldar, Israel’s income tax commissioner from 2002 to 2004, in 2007
founded eTrader, a binary options firm that targets Israelis, along with Shay
Ben-Asulin, who also co-founded AnyOption, one of Israel’s largest binary
options companies with revenues in the tens of millions of dollars. In 2011,
Ben-Asulin was indicted by the United States for securities fraud, and last
month he was convicted of fraud by an Israeli court for helping an Israeli
credit card company, ICC-CAL, illegally clear billions of shekels of charges
from porn, binary options and gambling websites, as well as conceal the number
of canceled transactions."

AnyOption was bought by invest.com and the customer numbers bragged about in
the STOX ico are those of anyoption.

For more information on the anyoption.com scam:
[https://www.sitejabber.com/reviews/www.anyoption.com](https://www.sitejabber.com/reviews/www.anyoption.com)
They seem to have destroyed their reputation by refusing to pay out investor
funds. For more information on this style of israeli bucketshop binary options
scam: [http://www.timesofisrael.com/the-wolves-of-tel-aviv-
israels-...](http://www.timesofisrael.com/the-wolves-of-tel-aviv-israels-vast-
amoral-binary-options-scam-exposed/)

------
tabeth
From my limited understanding, ICOs are more or less a tax on being stupid, as
(relatively) intelligent individuals ride the cryptocurrency wave, profiting
off the naive greed of the dumb. In other words, money made off
cryptocurrencies are zero sum. Similar to how money made from stocks are zero
sum (for every buyer their must be a seller and if one made money the other
must have lost for the buyer to have gained, yadda yadda) if you ignore
dividends.

Any truth to this statement? I've tried to gather some more information but I
still fail to see the advantage of any cryptocurrency for the average person
conducting an average, typical transaction. I don't see how _everyone_
investing in crytocurrencies can make money.

EDIT: It seems this comment has riled a few people up. Basically, all I was
trying to say is that the simplistic stock market (one without dividends) and
bitcoins are very similar as they seem to be built on irrationality.

People taking advantage of this irrationality in my view is how "dumb" people
end up broke and the ICO sponsors or what have you run away with the dumb
people's money.

~~~
quickthrower2
Stocks are certainly not zero sum.

If they were then the implication is that they have no intrinsic value.

~~~
tabeth
Ignoring dividends, what intrinsic value do stocks have? I'd be curious to
know how the stock market, ignoring dividends, is _not_ a zero sum game. Maybe
my understanding of "zero sum" is incorrect.

~~~
umanwizard
> Ignoring dividends

This is like saying "ignoring calories, what intrinsic value does food have?"

The whole point of stocks is that they pay dividends, or in the case of some
high-growth tech companies, they have some probability of paying dividends in
the future.

~~~
tabeth
Hmm. I only invest passively so I can't say I'm super knowledgeable about
this. My understanding is that stocks do not inherently give you dividends.
Food inherently has caloric value, so I'd say that's the difference. Also, I
thought the whole point is that stocks are tied to the (expected) performance
of the company itself, and the value is that when you sell if you basically
made a return on betting on the company before it appreciated.

Finally, even if there are dividends wouldn't that affect the stock price and
therefore be irrelevant (as the stock itself already accounts for it)? Are you
suggesting that without dividends the stock market would not function?

~~~
mafuyu
Stocks are set up to have some sort of inherent value tied to the company, or
nobody would buy them. The typical ways are dividends paid out of profits,
company buyouts, and the on hand assets of the company that can be sold. The
market is just a pricing mechanism around all that.

~~~
tabeth
I disagree with the premise. I guess the point I'm trying to make is that
stocks would be purchased even if there were no dividends. Case and point,
(and to remain on-topic): cryptocurrencies.

~~~
tanderson92
False. It is not a matter of a disagreement, it is one of fact. Companies like
Amazon have nonzero stock price while paying no dividends only because there
is a market expectation that eventually a company in the future will pay
dividends to shareholders.

Also, you are begging the question compared to your remark about how ICOs and
stocks are similar in your top level post.

~~~
tabeth
I'm not sure what you're stating to be "False." That stocks would be purchased
without dividends? That's obviously true. Stocks need not have dividends to be
valuable, only just have someone else willing to pay more than what you did.

Which brings me to the next point: this expectation you speak of is part of
the irrationality. Suppose there was a company that publicly stated that it
would never give out dividends, but it was making bank. People like yourself
would assume at some point in the future dividends would be paid out and
therefore what you stated would apply, even if no dividends were never paid
out (assuming the company's trajectory and what not stayed the same).

You also seem to imply the "expectation" of the market is always correct or
rational. We both know that's not true, either.

~~~
zodiac
> Suppose there was a company that publicly stated that it would never give
> out dividends, but it was making bank. People like yourself would assume at
> some point in the future dividends would be paid out

Why would we do that?

~~~
tabeth
Because there's uncertainty in the world. People lie, the world changes, etc.
Company A says no dividends ever, while maintaining soaring stock prices.
Company A fires its CEO and Company A gets a new CEO. The new CEO doesn't say
there will be dividends, but you assume they'll turn around so you buy, etc.

~~~
zodiac
Well then the value of that stock reflects the future dividends of that stock
in that scenario, weighted by how likely that scenario is to happen. Not sure
what your point is then.

------
nnfy
Based on what I've seen in the off-media, I don't know that Mr. Mayweather
understands much outside of boxing; I fear this article would fall on blind
eyes if he would even read it.

Then again, thats partly the purpose of the SEC, right? To protect people from
ignorance?

~~~
sremani
Floyd Mayweather understands "money" and understands how to acquire or
increase it by "social proofing".

His stunt is so successful that, even on HN ,people will be like what is stox
ico and look for it.

~~~
econnors
Does he? He still hasn't paid his 2015 taxes:

[https://www.reuters.com/article/us-boxing-mayweather-
idUSKBN...](https://www.reuters.com/article/us-boxing-mayweather-
idUSKBN19V2NQ)

------
Jabanga
The attitude expressed in the article, of assuming one group of adults has a
right to create laws restricting what is offered in the marketplace to other
groups of adults, to protect the latter from their own naivety and bad
judgement, is incredibly paternalistic. It exudes a superiority complex and
disdain for the personal autonomy of presumed lesser men and women.

>ICOs, like any other securities offering, come with risks.

There has been no statement from the SEC that all token sales qualify as
securities offerings.

------
needlessly
i'm not sure why this guy thinks Floyd would care what he thinks.

~~~
soared
Obviously the article is to inform readers, not aimed at Floyd. The title is
just to get clicks.

------
discombobulate
Can buy some cigarettes, can't buy investments. The little people need
protection from dat ROCE.

~~~
kasey_junk
Cigarettes are probably not the best product for your argument as they are
highly regulated.

~~~
quickthrower2
Fine art would be a good example?

