I think you missed the best gem, under the Stay Tuned section
> "Once in, we will provide expert timing advice to make sure tier 1 and limited offer tier 2 participants maximize immediate gains with a pre-planned pump to occur shortly after the pre-ico phase ends. Our past two pumps have doubled value for the period immediately after the pump for returns of over 225%."
> At launch, we will have two of the world’s largest airline alliances and a possible third signed on as HoweyCoins partners. The top three airline alliances accounted for over 60% revenue passenger miles in 2015.
Do note that the wording leaves open (and even implies) that the airline alliances they'd partner with _don't_ account for 60% of revenue passenger miles in 2015.
The PDF is a wonderful document, it also has an entirely incorrect description of how inflation works.
In its hubris the SEC forgot one thing, the most important thing, the only thing...yes the SEC knows the law well, but this is smart contracts, Case Law/precedent/stare decisis don’t apply to ICOs...the code is the law
It’s sarcasm, I forgot the doesn’t exist on HN. My post history shows from day one I called DAO snake oil, and code is Law bullshit, and shows how much crap I took for that here on HN. But if the SEc can have a sense of humor about it why can’t I? They really did miss an opportunity to use the smart contract marketing though...
> Under the Howey Test, a transaction is an investment contract if:
> 1. It is an investment of money
> 2. There is an expectation of profits from the investment
> 3. The investment of money is in a common enterprise
> 4. Any profit comes from the efforts of a promoter or third party
I don't know if the crypto-currency community have a widely accepted view of how this applies to specific currencies, but I feel that "store of value" / HODL coins are dangerously close to failing the Howey Test and thus not being accurately classed as currencies.
Most people in the crypto community know that the majority of ICOs are illegal securities offerings. And by ‘in the community’ I mean people who run funds and regularly go to industry events with other fund managers, not people subscribed to random crypto subreddits.
People in the industry generally know who is dirty and likely to get indicted.
I read this and thought of the line about the universe creating bigger and better idiots. It seems to me that these scams are literally transmuting the seemingly limitless font of human greed into an evolutionary pressure that produces more gullible rubes.
I find it ironic that in a world where we've never ever had more information at our fingertips, that "investors" should be so ignorant of (recent!) history.
Whether or not it's an illegal security offering, I'm not entirely sure because I don't fully understand the law. However, a hypothetical example of one purported not to be illegal would be something like crowdfunding a game. You sell tokens that will be redeemed for a copy of the game when it is finished. This would allow people who change their mind half way through to freely sell their game token to someone else who wants to buy the game (presumably at a loss since otherwise the other person would just buy the game token from the developers). There are probably lots of places where you might get in trouble though. For example, if you increased the price of the token over time, then people might buy the initial token with the expectation that they will be able to sell it for a profit later, when the developer-bought token becomes more expensive. Especially if you state that the price will increase over time, I think you're going to be in trouble (but, like I said, I don't really understand that law).
I think such a scheme, if done carefully, might actually be useful. One of the problems with things like kickstarter is that you see the plan of what's going to be done, fund the project and then half way through you see that the plan has changed, or the delivery schedule has changed and you want out. There is no way to derisk your pre-purchase.
Having said that, I have seen no actual examples of ICOs that I think are legal.
Late reply and IANAL but I don't believe you can actually do a token model where the people buying tokens early on pay less for them than they will be priced at later. Pretty sure that doesn't pass the Howey Test because there is an expectation of profit. And if there isn't an expectation of profit there is little to no incentive to have a token, kickstarter would work.
While I don't know of any that have done this, an ICO could register their offering with the SEC, i.e. go public with all that entails, or operate within the exemptions from registration. I think their whole goal includes circumventing that stuff so as to lie better, which speaks to the attitudes and shadiness involved. The rules are indeed too onerous, but not only is the historical reason they came into existence still applicable, it's applicable to exactly this kind of scam.
As far as I can tell, the SEC statements have changed almost nothing. Most people understood the situation even before the SEC said anything, some people still refuse to acknowledge reality even afterwards.
I have yet to meet anyone who has changed their opinion on the legality of ICOs as a result of the SEC statements. In this respect professional fund managers are basically no different than redditors, where you show them an SEC statement and they see whatever they want to see in it.
I made a genuine small profit mining Dogecoin back in the day. Between that and Litecoin I was able to make my two 400$ HD7970s pay for themselves, even after accounting for electricity.
Edit: Wanted to add that the success (Well, maybe not 'success', but popularity) of Dogecoin should highlight the value of making things accessible. Not everything needs to be a silly meme, but making things fun and building a community can make a huge difference.
The real question is, who are those people? They are really smirking hard. I bet they're SEC employees, the images have real first names on them (that don't match their fictitious names) which would seem to indicate they're not just stock photos.
I can imagine the email to the office now. That would be the coolest thing ever... "we need volunteers, must be reasonably photogenic and capable of producing a foreboding smirk...."
Couldn't find those stock images anywhere else. Some names are unique enough to be mistaken for someone legit.
The site was announced today. The whitepaper was created on 2018-04-11 and the site was registered on 2018-03-08. So they probably spend a few months and 10k's $ on this scam project.
This project only works "PR"-wise, because it is posted on social media. No unsuspecting investor is going to happen upon on this site and change his/her behavior and be "educated". That's a deluded pipe dream by out-of-touch no-coin government employees.
I just saw and clicked an ad for this ICO and it looks just like Howey Coin's site - https://icerockmining.io/en.html (I don't know whether this is a scam or not, i don't recommend investing or avoiding it, I just wanted to point out how similar the website looks to the howeycoins website! DYOR) (Being overly neutral for its own sake here, but it seems very questionable)
Looks like pure bullshit or utter incompetence. Yeah, your mountain is actually at 12°C, but with 50kW or more of processing power, you're actually creating an oven if you haven't got ventilation or cooling. Stupid
My hot take is there's no way that's even remotely legitimate. Justification for projected ROI in FAQ includes "The question - do you believe in Bitcoin or not? In our case, we strongly believe in BTC BTC" and "ROI of 439% per year is easy to explain thanks to 20% monthly reinvestment"
Savvy investors want proof that the ICO organizer is running a scam, and that it has legs. The SEC has merely created a playbook, not a fraud deterrent.
The ICO scam is a genre of investor literature. As such certain obligatory signs and conventions will be present:
- the countdown (made its first big appearance with the Ethereum crowdsale)
- use of the term "blockchain technology" in the opening paragraph
- combining "blockchain technology" with a secondary domain (e.g. Travel)
- the more non-obvious the match between "blockchain technology" and the secondary domain, the better
- focus on benefits, not features
- describe a problem everyone recognizes (travel is expensive)
- state the size of the market for solutions ($1.5 trillion)
- management team headshots
- appeal to authority/celebrity
- ROI forecast
- a whitepaper that carefully avoids revealing how the token fulfills the promises made in the marketing material
Ticking all the boxes lets the ICO operator reassure the prospective investor that all steps have been taken to ensure future buyers of the token.
Think of it as proof-of-future-bagholder (PoFB). A rinky-dink ICO that can't bring itself to lay the fertilizer sufficiently high will be in no position to keep investors coming in after the crowdsale ends.
>Savvy investors want proof that the ICO organizer is running a scam, and that it has legs.
Savvy investors are likely not what this is targeting; they're generally savvy enough to skip terrible offerings. Those that were thinking of mortgaging their house to buy BTC when it was up late last year are.
FYI: At Bits & Blocks Press I've also put together educational booklets to alert invstors. See Best of Bitcoin Maximalist - Scammers, Morons, Clowns, Shills & BagHODLers - Inside The New New Crypto Ponzi Economics  or Crypto Facts - Decentralize Payments - Efficient, Low Cost, Fair, Clean - True or False?  or Get Rich Quick "Business Blockchain" Bible - The Secrets of Free Easy Money 
Disagree, the "Red Flags" sections are very simplified and prominent, and there are additional resources that follow for more sophisticated consumers. Unless you're taking a strongly sardonic swipe at ICO investors...
> Investors should understand that most licensed and registered investment firms do not allow their customers to use credit cards to buy investments or to fund an investment account. We urge investors to work only with a licensed or registered investment professional or firm and not attempt to use a credit card to fund investments.
Having worked in government in the past, I wouldn't be surprised at all if Heroku and Hover aren't approved vendors. Somebody is probably just paying for it out of pocket. Not worth the bureaucratic headache to get them to pay for $20 worth of stuff.
To be fair to many ICOs they don't make most of these claims. They are cherry picking the worst of the worst and presenting a straw man. I agree the crypto currency space is messed up but I think this could be done better.
The SEC holds ICO tokens to be securities; every ICO selling (wittingly or unwittingly, directly or indirectly) to un-accredited American investors is thus acting unlawfully. That describes every ICO I’ve heard of save like two (Filecoin and Telegram).
These people have the power to sue beyond their jurisdiction in many cases because they have guns. This PR scheme is a tell that they are doing the bidding of the big bankers extensive war against crypto.