SafeCoin may not be a 'security', but MAID (and most other cryptos) might qualify

#1

Some excerpts from Tuur’s Demeester’s twitter feed.

and

I’d feel happier if SafeCoin was already being implemented. Fingers crossed they don’t apply this kind of logic across the board any time soon. :unamused:

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Any good reason for Bittrex delisting?
#2

I see nothing to worry about there.

Ethereum is a whole different case, they are blue sky enough to be risking confusion. I still take them to be a wild experiment useful only as example to others.

Still, MAID is not remotely a stock or a security or an option - look at the definition of those. There nothing vague about SAFE plan for 1:1 exchange of tokens == currency. :sunglasses:

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#3

Maidsafe are based in Scotland. Why should they fear the SEC? Forgive me if I am being naive.

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#4

I’m not entirely sure they would, although a lot of the crowdsale money probably did come from US citizens. I know you can’t sell securities to US citizens even from outside of the US, but god knows how they would apply such regulation retroactively to overseas companies? Or how the FCA here would respond to the SEC taking a lead there?

I know the definition of a security. I’ve been banging on about this risk for the last 2 years in crypto and very few take it as seriously as they should imo. When/if regulators decide to flex their muscles this is the avenue they’ll likely take to define the responsibility for regulation. While one can certainly make a good case for MAID not being a security, if ETH presale wallets can be defined as such then MAID is certainly not safe. There is very little goal-post moving required for them to use security’s law as the fly-swatter for disruptions they don’t like.

I’m not really worried in the short-term btw, I’d be more concerned 12-18 months from now if TestSafeCoin still hasn’t launched.

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#5

Exactly and the UK have taken a different approach in articles that I have read. And MAID would be OK, and since it is before any rumblings it is further distanced.

This too. Its not a security as such but just place holder. Rather like a ticket to a sporting event. The ticket is no more a security than anything else, but you could otc say it a security for your seat at that event.

Its still not a certainty that ETH would be defined as such. It was the DAO that the SEC maybe defined as such. Until its tested in court the SEC can only issue guidelines and put the fear of Gov into people.

Also as in most cases any action will not be retrospective but only encompass situations after the initial guidelines issued. Its not like the SEC have a clear and cut case against most except perhaps a small number that fitted previous guidelines. So sure there were some that violated previous guidelines/law and those might be pursed, but most were in undefined territory and until the “preliminary guidelines” were determined by the SEC were doing nothing “wrong”.

MAID is well before those “preliminary guidelines” and doesn’t violate them, so I cannot see how the USA can do anything other than make new laws that affect MAID or US citizens who hold MAID. They would have shut down poloniex and bittrex long before now if MAID was in their sights. Most if not all the coins on those exchanges would be *illegal* if MAID was.

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#6

When Maid goes beta and global cryptocurrency headquarters are in Japan, no authority in the world will be able to stop anything.

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#7

because Japan is known for its financial acumen - or is it wild indulgence of the worst of Western economics?.. Perhaps instead Estonia… or Switzerland - those at least have motivation to get it right.

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#8

I highly recommend this episode of Epicenter for anyone concerned about cryptocurrencies and the SEC. Nick Morgan literally knows the SEC inside out:

Nick Morgan: The DAO, the SEC and the ICO Boom

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#9

If Substratum consider their coins are not within the SEC net as tgey are used and burnt to access their system, then Safecoin will/should/maybe okay as well

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#10

Very interesting talk by the ex-SEC guy.

The fact MAID is not issued for profit, is for decentralised purpose. And ETH is considered reasonably safe then I cannot see how MAID would come into their sights (that is if MAID was in the USA)

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#11

Good news for Safecoin.

With all this uncertainty around ICO and other blockchain coins, where are investors going to put their money?

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#12

ETH pre-sale wallets would be the consideration, not ETH. Likewise MAID ‘could’ be defined as a security where SafeCoin is very clearly a utility and store of value/currency backed by data. SafeCoin would also increase in value due to participation of users (monetising their spare capacity), so at that point the expectation of profit does not come from the work of the team, but rather from the user-base. MAID is solely reliant on MaidSafe.

MaidSafe raised money for an enterprise and we were/are reliant on the work of the core team IF the reason we bought MAID was with the expectation of profit prior to launch. I agree that it doesn’t sound like the SEC has any big plans that would affect MAID right now, but they are just dipping their toes in. The question will really come down to what expectations did investors have? It is quite possible to argue that the majority of investors had the expectation of selling their MAID prior to launch for a profit that was reliant on the work of the core team. This is the reason Filecoin went the SAFT route and investors can’t access their coins until after the network has launched. So there can not have been any expectation of profit prior to becoming a utility.

I’m not saying this is a big concern right now for MAID, but it is a concern if ‘they’ start looking for ways to hurt the project before it launches. I am more worried about several other crypto projects tbh, some are in much murkier water and the SEC will probably pick off the easiest targets first. Let’s just hope they stick to fraudulent ones and don’t start trying to hurt things they don’t like the sound of.

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#13

Did you listen to the talk. That is one specific that does not represent a security. A store of value is NOT a security and bitcoin was given as an example of that.

Its the promise of dividends or similar that gives profit that is of importance. Buying a token which is exchanged for storage is not a security. Financial Security is not that, but one like shares that offers the buyer profits from that purchase. (not profits on a exchange but profits from the coin)

MAID does not fulfill any of SECs trigger points.

Oh did I mention MAID is not a USA problem. And the issue of some USA people bought it is of a much much lesser issue than a USA ICO.

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#14

Re-read what I wrote :wink:

I am saying SafeCoin could not be a security. MAID could because it is not a store of value, it is a token that is only backed by the core team’s work to create value for it.

Anything that sold to US investors is potentially vulnerable to a suit from the SEC.

#15

It is the expectation of profit (not necessarily dividends) prior to launch that is important. If that profit is solely reliant on the work of a core team and expected from investors then that ‘team’ has responsibility to declare themselves ‘security exempt’ or go through the security regulatory circus. Failure to do that can lead to issues.

#16

@Jabba and @neo thanks for discussing this. My only knowledge of the SEC is the FCPA which isn’t really much use here.

I take @Jabba’s point re them offering it to US citizens as it seems to fall under their somewhat ad hoc definition for foreign jurisdictional reach.

Any thought from either of you re: how ‘grandfathering’ may/may not be applied here? It seems a wormhole for all involved whichever avenue is hypothetically taken :confused:

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#17

At the end of the day regulators and regulations are usually prompted by one of two things, complaints from the public or political pressure from above. I should imagine that in many cases they will grandfather projects rather than retroactively enforce new rules or applications of them on projects which have succeeded and investors are happy with. I guess it will very much depend on each situation. I can certainly imagine that where there are complaints there will be regulators. A lot of companies spend a fortune on compliance simply because their industry naturally generates a lot of complaints and angry customers (like my old industry, online poker).

I would be surprised if ETH pre sale wallets weren’t grandfathered if the SEC decided to apply the same criteria to take out different projects. You can never take grandfathering things for granted though. The US has retroactively enforced some crazy taxes and policies in the past.

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#18

MAID does not fulfill the criteria for profit and the coin is purely for the purchase of an item (a safecoin). Thus not a security. The item it purchases (safecoin) is not an item for making profit too.

So MAID is not a security. The same as buying a ticket for anything is not a financial security for the thing the ticket is for. MAID is our ticket for SAFEcoin. The concert ticket is for a place at the performance.

So yes I understood what you said and MAID is not a financial security period.

Only the USA citizen can be sued and what for (buying a coin?) and since MAID is not a financial security then USA citizens have nix to worry about.

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#19

Could you explain why MAID does not fulfil the criteria for profit? How can you claim the coin is purely for purchase of an item (SafeCoin) when MAID is tradable on exchanges and the majority of SafeCoins in circulation have indeed been traded (for considerable and expected profit) since the crowdsale?

Tickets are not traded in a secondary, liquid market and most people do not buy tickets to trade/profit from them, nor do most tickets end up getting traded multiple times before the show.

Really you just need to look at the implied logic of what the SEC tries to do.

If you are raising capital from people who have an expectation of future profit from the work that you are saying you are going to do, and they are dependent on you and your work for that return, then you could be hoodwinking people and the SEC wants to make sure that in those situations they have authority to protect the public and the markets from that risk exposure. They do this by putting the onus on you to declare and apply for regulation or risk finding yourself on the receiving end of the proverbial shitty stick.

This is not true I’m afraid. If you sell to US investors than you can indeed be held accountable in a US court as a foreign citizen, even if they fail to extradite you from wherever you are (you can never go anywhere with US-friendly extradition rules ever again). When the US changed the law for online gaming the (100% UK-based /owned) company I worked for had to shut down all US customers immediately. If we had not then any employee who set foot in the US could be arrested on the spot. PartyPoker failed to do so and the boss there was ‘caught’ and paid up $400M in fines. Kimdotcom awaits his possible extradition to the US too - he only broke civil laws (copyright) it was not even a criminal case and the feds have been all over him for years and stole most of his money and closed down his billion dollar business.

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#20

@neo I think there’s a risk that MAID fits the criteria for SEC rules. I won’t argue the point, but refer you to Preston Byrne’s blogging on the recent SEC reports (e.g. on the DAO) and its memo on ICOs. Links available if you want but search for his blog will get them. He takes a hard negative line, but I think is useful to get the reasoning those who want ICOs to be hit would use. I think our protection is that a) far bigger/worse fish are out there, b) MAID was very early, rather than that the structure used was SEC compliant. But I don’t know either way.

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