> [The SEC] obtained an emergency asset freeze to halt a fast-moving Initial Coin Offering (ICO) fraud that raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month.
To me, the PlexCoin homepage [1] is indistinguishable from all the other ICO homepages I've seen.
- bootstrap homepage: check
- beautiful graphics with actors and coins: check
- unclear statement what the company is or will do: check
I tend to agree. Every ICO page mainly struggles with number 3. I never get what they are selling, probably because they're not selling anything other than the idea of buying in to their ICO.
Let's take a (somewhat snarky and definitely superficial) look at a few of the "top gainers" & market cap from https://coinmarketcap.com/gainers-losers/ (as of Dec 2nd)
Gainers:
1. Petrodollar.. Website isn't even an owned domain.
2. BTCMoon - Well their website works, but it speaks just heavily of the token offering not what it does. Personally I like the first question in the FAQ: "Q: Why BTCMoon are there? " Which is as close to the pseudo-philosophical question of "why is the moon" as we can get.
3.iQuant - Nearest I can tell, a blockchain trading platform. They're the closest to actually telling me something, but their ICO ended so maybe thats why.
Market cap.
1. EOS - Just talks about the ICO offering over and over. No idea
2. OmiseGo - "OmiseGO is a public Ethereum-based financial technology for use in mainstream digital wallets, that enables real-time, peer-to-peer ...." I'm sorry we've reached our buzzword quota for the day.
3. Tether.. Well we'll leave that one where it lands.
Ok so its super snarky and highly superficial, but in all cases, the basic question of "What are you selling" isn't answered clearly and concisely. I just don't get it but if the requirement is either;
A. Drink the ICO cool-aid and you'll get it
B. "You have to think beyond how they'll sell to consumers, these are like platforms with boundless potential"
Then I don't want to get it, because ambiguity is definitely something investors should avoid.
> PlexCoin is the next decentralized worldwide cryptocurrency, based on the Ethereum structure. Its mission is to broaden the possibilities of uses and to increase the number of users by simplifying the process of managing cryptocurrency to the maximum.
But they're going to simplify the process of managing cryptocurrency to the maximum!
This is a typical SEC action against a get-rich-quick Ponzi-type scheme. Read the SEC's note on Ponzi schemes.[1] The original Charles Ponzi only promised a 50% return in 90 days. Bernie Madoff promised about 10-15% a year. This "ICO" promised 1300% in 30 days.
If you can get in early and you recognize it for what it is, a Ponzi scheme can be just another rational investment.
Madoff's clients made good returns for a long time. From the perspective of each long term individual investor, the problem was that they did not fold and walk away from the table with their winnings after a few years. The scheme would have survived a few of those, and maybe some investors did.
None of which is to imply that I think Ponzi schemes should be legal. I'm not a libertarian.
The AMF had already found him guilty of the same and barred him from soliciting, directly or indirectly, investors for PlexCoin [0]. It's not the first time he gets in trouble, he had a lending "company" that was investigated and was barred from participating anymore [1]. All links in French sorry.
People might not be so eager to dump money into these scam investments if the government hadn't strangled legal and regulated equity crowdfunding. The SEC needs to look at ways to allow people to invest in legitimate opportunities, not just shut down scams. The JOBS act has been a bust in this regard as far as I can see.
There's pretty sound reasons why non-accredited investors can only invest in public tradable assets. Accredited investors can get into non-public companies if they earn a high enough income such that they can take that kind of volatility. For students fresh out of college that should focus on saving, it is not a great idea to throw those savings into non-public startups. It sure sounds tempting, but many times over has been shown to be the most risky asset class.
Right now regular people only have a few different options to invest in:
1. Stocks
2. Bonds
3. Cash
4. Your own bootstrapped business
5. Cryptocurrencies
6. Lottery
The first 2 are obviously limited growth opportunities... Corporations are already massive, people will never get the 100x or 1000x returns that they need to actually notice any lifestyle difference... And even if they did, by that point the world would be a horrible place not worth living in and you'd be near the bottom of the pile because you got in too late.
Interest rates are too low so holding cash is pointless.
In this VC-dominated and corporation-dominated landscape, the odds of successfully bootstrapping your own business are near zero and everyone knows it.
Lottery usually appeals to the working class due to the large potential payoffs. But everyone knows that the odds are terrible and that there are middlemen taking a cut.
Cryptocurrencies on the other hand are like a giant international startup which aims to disrupt the entire financial system and which is in a very good position to do so because everyone is in on it. The returns are great and the odds are much better than lottery.
We need to do some serious advocacy around this issue. Hacker news is surprisingly pro-investment restriction, which I could expect from hardcore VC's, not regular folks that look at startup news every day.
>"Security is very important to us. That's why we invented a new type of encryption system based on your private virtual currency address, so it is unencyptable."
".... based on your private virtual currency address, so it is undecryptable."
But that makes me think it cannot be decrypted, which is pretty bad for an encryption system. If you cannot decrypt the data, it might as well be random noise ...
Basic rundown: 19 year old "serial entrepreneur" buys a Carosell [0] (similar to craigslist) clone script for a couple of grand (apparently he claimed to have made it himself), claims to have millions of users after a couple of months, and then tries to launch an ICO. It was a blatant scam, he was called out for it, and ended up cancelling the ICO, and promising to return all the money.
> PlexCorps marketed and sold securities called PlexCoin on the internet to investors in the U.S. and elsewhere, claiming that investments in PlexCoin would yield a 1,354 percent profit in less than 29 days.
Is this claim the crux of the securities violation?
"Is it safe?
The cryptocurrency is currently the safest currency. Unlike cash, you cannot lose it or have it robbed. No bank will be able to validate your transactions or to take fees on your transactions. It's your money and no one will be able to scrutinize your operations."
if the company's in quebec, how were they able to freeze their assets? did the company have exchange accounts in US? does the SEC have some sort of agreement with the canadians?
I don't know for sure. All I know is that the AMF (Autorité des Marchés Financiers, Quebec "equivalent" of the SEC) froze Dominic Lacroix assets on Jun 13 2017[0]. Yet, his employees were still getting paid and he launched Plexcoin even if a court order was forbidding him to do so.
Maybe the AMF had information about accounts in USA and tipped the SEC?
More information:
The court order preventing him to launch Plexcoin was issued on July 20[1]. He did not comply and was charged for court contempt in September. The court found him guilty on oct 17 2017[2].
Because they are US ;).
How were they able to bring down btc-e, owned by foreign citizens, employing foreign citizens, registered in a foreign country?
US are playing by their own rules, and so far they have made the world to just eat it.
My understanding is Canada doesn't have a federal equivalent of the SEC, but there are provincial bodies for the same purpose. I assume SEC reached out to the quebec securities group and quebec was convinced enough to take action?
The SEC has global reach, and most regulatory authorities follow their lead. If you touch Americans in any way, shape, or form, they will find a way to get you.
If it's priced in USD then the SEC can act. To my knowledge, clearing any type of security with dollars as a denomination requires SEC approval. Due to the status of the dollar as the global standard currency this gives the SEC considerable power.
If you trade GBP/USD and then USD/EUR then you have to abide by SEC regulations.
If you sell PLEX/USD then you have to abide.
So anyone offering PLEX/USD has to comply with the freeze.
And if they have any accounts in dollars that will be frozen.
So what actions did the SEC actually take? It's an Ethereum token, right? So even if the SEC froze the creator's assets, they can't prevent others from still trading the token. They haven't completely closed the on-ramps for the token, then, since new "investors" can still purchase them in exchange for some other token. I guess they've just halted the creation of new tokens and the advertisement of the token by its creator?
So what happens to all the existing investors? Does the SEC (or another entity) buy back their tokens with the seized funds? Clearly, I haven't dealt with ICOs before, nor do I understand much of how the SEC operates.
All ICOs should be banned! When you see all these scams around, you start appreciating regulation, law, and order more! I am not sure why so many engineers today are into anarchy when it's entirely against the basis of computer science and engineering in general! I get the idea about the distributed systems for higher resilience, but going against the merits of states and governments is just childish!
Ah yes, how dare we poke and prod at the validity of current governmental systems and regulations. That feudal era was such great times, if we had only not gone against the merits of the government of the day./s
There is little doubt that many ICO's are 'scams', and some people will get hurt financially because of it.
The challenge with regulations is, it's easy to quantify the harm they try to stop, but it's harder understand the impact they have on limiting future creation / innovation etc.
Tokens / ICO's have created a whole new, far more accessible way to fund and invest in new technology. Making it far more equal, fast, open and liquid than the traditional process.
Regulation is coming, as it should. I just hope it's done with an eye for encouraging the right type action, rather than just trying to stop the wrong.
I agree with your statement of appreciating law and order, but I think there is also a general malaise surrounding who gets to benefit from all of the currently "legal" financial arrangements. There's a feeling that the little guy is left out--or at most, given the dregs after private equity deals, large mergers, and IPOs go down. ICOs--while risky and uncertain--also offer a way of taking action without waiting for governments to "approve."
>I am not sure why so many engineers today are into anarchy when it's entirely against the basis of computer science and engineering in general!
Huh? The history of computer science and engineering is rich with anarchy, individual projects, and unstructured contributions to the field. It might be one of its best examples.
[+] [-] donquichotte|8 years ago|reply
To me, the PlexCoin homepage [1] is indistinguishable from all the other ICO homepages I've seen.
- bootstrap homepage: check
- beautiful graphics with actors and coins: check
- unclear statement what the company is or will do: check
[1] https://www.plexcoin.com/
[+] [-] resonanttoe|8 years ago|reply
Let's take a (somewhat snarky and definitely superficial) look at a few of the "top gainers" & market cap from https://coinmarketcap.com/gainers-losers/ (as of Dec 2nd)
Gainers:
1. Petrodollar.. Website isn't even an owned domain.
2. BTCMoon - Well their website works, but it speaks just heavily of the token offering not what it does. Personally I like the first question in the FAQ: "Q: Why BTCMoon are there? " Which is as close to the pseudo-philosophical question of "why is the moon" as we can get.
3.iQuant - Nearest I can tell, a blockchain trading platform. They're the closest to actually telling me something, but their ICO ended so maybe thats why.
Market cap.
1. EOS - Just talks about the ICO offering over and over. No idea
2. OmiseGo - "OmiseGO is a public Ethereum-based financial technology for use in mainstream digital wallets, that enables real-time, peer-to-peer ...." I'm sorry we've reached our buzzword quota for the day.
3. Tether.. Well we'll leave that one where it lands.
Ok so its super snarky and highly superficial, but in all cases, the basic question of "What are you selling" isn't answered clearly and concisely. I just don't get it but if the requirement is either;
A. Drink the ICO cool-aid and you'll get it
B. "You have to think beyond how they'll sell to consumers, these are like platforms with boundless potential"
Then I don't want to get it, because ambiguity is definitely something investors should avoid.
[+] [-] wlesieutre|8 years ago|reply
But they're going to simplify the process of managing cryptocurrency to the maximum!
[+] [-] Flott|8 years ago|reply
A redditor eventually warned Visa about this and they required Plexcorp / DL Innov / Dominic Lacroix to remove all mention of Visa.
[+] [-] Animats|8 years ago|reply
[1] https://www.sec.gov/fast-answers/answersponzihtm.html
[+] [-] brudgers|8 years ago|reply
Madoff's clients made good returns for a long time. From the perspective of each long term individual investor, the problem was that they did not fold and walk away from the table with their winnings after a few years. The scheme would have survived a few of those, and maybe some investors did.
None of which is to imply that I think Ponzi schemes should be legal. I'm not a libertarian.
[+] [-] hectorr1|8 years ago|reply
[+] [-] libertymcateer|8 years ago|reply
[+] [-] hamstercat|8 years ago|reply
[0]: https://lautorite.qc.ca/grand-public/salle-de-presse/actuali... [1]: https://lautorite.qc.ca/grand-public/salle-de-presse/actuali...
[+] [-] ShroudedNight|8 years ago|reply
[+] [-] modeless|8 years ago|reply
[+] [-] cwperkins|8 years ago|reply
[+] [-] jondubois|8 years ago|reply
Right now regular people only have a few different options to invest in:
1. Stocks
2. Bonds
3. Cash
4. Your own bootstrapped business
5. Cryptocurrencies
6. Lottery
The first 2 are obviously limited growth opportunities... Corporations are already massive, people will never get the 100x or 1000x returns that they need to actually notice any lifestyle difference... And even if they did, by that point the world would be a horrible place not worth living in and you'd be near the bottom of the pile because you got in too late.
Interest rates are too low so holding cash is pointless.
In this VC-dominated and corporation-dominated landscape, the odds of successfully bootstrapping your own business are near zero and everyone knows it.
Lottery usually appeals to the working class due to the large potential payoffs. But everyone knows that the odds are terrible and that there are middlemen taking a cut.
Cryptocurrencies on the other hand are like a giant international startup which aims to disrupt the entire financial system and which is in a very good position to do so because everyone is in on it. The returns are great and the odds are much better than lottery.
[+] [-] notfromhere|8 years ago|reply
[+] [-] conanbatt|8 years ago|reply
[+] [-] FooHentai|8 years ago|reply
[+] [-] gregdoesit|8 years ago|reply
>"Security is very important to us. That's why we invented a new type of encryption system based on your private virtual currency address, so it is unencyptable."
Come up with a new encryption system and tell the world it's unencryptable... I'll just leave this one hanging. Source: Plexcoin blog (https://www.plexcoin.com/blog/important-statement)
[+] [-] gitgud|8 years ago|reply
".... based on your private virtual currency address, so it is undecryptable."
But that makes me think it cannot be decrypted, which is pretty bad for an encryption system. If you cannot decrypt the data, it might as well be random noise ...
[+] [-] toomanybeersies|8 years ago|reply
The ICO was later withdrawn: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&o...
Basic rundown: 19 year old "serial entrepreneur" buys a Carosell [0] (similar to craigslist) clone script for a couple of grand (apparently he claimed to have made it himself), claims to have millions of users after a couple of months, and then tries to launch an ICO. It was a blatant scam, he was called out for it, and ended up cancelling the ICO, and promising to return all the money.
[0] https://en.wikipedia.org/wiki/Carousell_(company)
[+] [-] NelsonMinar|8 years ago|reply
[+] [-] KasianFranks|8 years ago|reply
[+] [-] finkin1|8 years ago|reply
Is this claim the crux of the securities violation?
[+] [-] quirkot|8 years ago|reply
[+] [-] willsr|8 years ago|reply
"Is it safe? The cryptocurrency is currently the safest currency. Unlike cash, you cannot lose it or have it robbed. No bank will be able to validate your transactions or to take fees on your transactions. It's your money and no one will be able to scrutinize your operations."
People bought this?
[+] [-] hectorr1|8 years ago|reply
https://coincenter.org/entry/framework-for-securities-regula...
https://coincenter.org/entry/a-securities-law-framework-for-...
[+] [-] gruez|8 years ago|reply
[+] [-] Flott|8 years ago|reply
Maybe the AMF had information about accounts in USA and tipped the SEC?
[0] https://lautorite.qc.ca/en/general-public/media-centre/news/...
EDIT:
More information: The court order preventing him to launch Plexcoin was issued on July 20[1]. He did not comply and was charged for court contempt in September. The court found him guilty on oct 17 2017[2].
[1] https://lautorite.qc.ca/en/general-public/media-centre/news/...
[2] French only - https://lautorite.qc.ca/grand-public/salle-de-presse/actuali...
[+] [-] chroem-|8 years ago|reply
[+] [-] Erlich_Bachman|8 years ago|reply
[+] [-] fudged71|8 years ago|reply
[+] [-] hectorr1|8 years ago|reply
[+] [-] philipwhiuk|8 years ago|reply
If you trade GBP/USD and then USD/EUR then you have to abide by SEC regulations.
If you sell PLEX/USD then you have to abide.
So anyone offering PLEX/USD has to comply with the freeze.
And if they have any accounts in dollars that will be frozen.
[+] [-] spondyl|8 years ago|reply
[+] [-] shepardrtc|8 years ago|reply
[+] [-] wallacoloo|8 years ago|reply
So what happens to all the existing investors? Does the SEC (or another entity) buy back their tokens with the seized funds? Clearly, I haven't dealt with ICOs before, nor do I understand much of how the SEC operates.
[+] [-] Klathmon|8 years ago|reply
"SEC Emergency Action Halts an ICO Scam"
Just clarifying that the emergency action is halting a single scam ICO and not halting all ICOs.
For clarity, the original title (and the title of the linked article) was "SEC Emergency Action Halts ICO Scam"
[+] [-] jeffdo|8 years ago|reply
Sketchy to say the least.
[+] [-] crooked-v|8 years ago|reply
[+] [-] stale2002|8 years ago|reply
It is only similar/same industries where that applies.
The rule of thumb is consumer confusion. Is an average person going to mix up the 2?
In this case, the answer is likely No.
[+] [-] Negitivefrags|8 years ago|reply
[+] [-] nikolay|8 years ago|reply
[+] [-] jsloss|8 years ago|reply
There is little doubt that many ICO's are 'scams', and some people will get hurt financially because of it.
The challenge with regulations is, it's easy to quantify the harm they try to stop, but it's harder understand the impact they have on limiting future creation / innovation etc.
Tokens / ICO's have created a whole new, far more accessible way to fund and invest in new technology. Making it far more equal, fast, open and liquid than the traditional process.
Regulation is coming, as it should. I just hope it's done with an eye for encouraging the right type action, rather than just trying to stop the wrong.
[+] [-] canadaduane|8 years ago|reply
[+] [-] icelancer|8 years ago|reply
Huh? The history of computer science and engineering is rich with anarchy, individual projects, and unstructured contributions to the field. It might be one of its best examples.
[+] [-] Erlich_Bachman|8 years ago|reply
[+] [-] tuxxy|8 years ago|reply
[+] [-] juicyfroot|8 years ago|reply
[deleted]
[+] [-] Frogolocalypse|8 years ago|reply