• According to Nicolas Morgan, a former lawyer for the U.S. government agency tasked with regulating the securities industry, the SEC is likely to roll out a sort of “assembly line” of enforcement actions against the nascent industry in the coming years.
  • While the SEC has issued guidance to the ICO industry, recently laying out why it classified tokens issued by The DAO (a now-defunct ethereum smart contract that sold its token to investors) as securities, the agency has yet to announce formal rules.
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  • Words that don’t appear in Satoshi’s white paper: decentralized, revolutionary, advanced, innovative, ground-breaking, state-of-the-art.
  • Words that appear in every half-baked ICO white paper: all of the foregoing.
  • Investors might be greedy but they’re not dumb, and the prospects of raising millions off the back of a Fiverr white paper seem fanciful.
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  • Stakeholders in the burgeoning market for initial coin offerings (ICOs) have reached consensus: the practice of presales needs to be reformed.
  • So, for example, a discounted presale would fund a product’s development phase, with an ICO closer to its market debut.
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  • The Japanese Financial Services Agency has recently published a document clarifying its financial administrative policies, including its policy on cryptocurrencies and initial coin offerings (ICOs).
  • Citing that cryptocurrencies utilize blockchain technology “which was not seen before,” the agency stated that to protect users, daily business management and system management are required.
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  • The government’s most detailed crypto guidance to date – an analysis by the SEC of whether tokens offered by “The DAO” comprised securities – is encouraging, at least insofar as it appears to acknowledge that utility tokens may qualify as something other than securities.
  • The SEC is about to determine– after looking at DAO token holders’ limited control over project dynamics – that such tokens were securities because value derived so substantially from people other than token holders.
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  • In a recent interview, Ripple chief executive officer, Brad Garlinghouse, and Ethereum co-founder, Joseph Lubin, have criticized the current state of the ICO industry.
  • The pair expressed concerns that although many “high-quality projects” are using ICOs as a fundraising vehicle, numerous “copycat projects” have raised money without “intend[ing] to deliver any value to the people buying the tokens.”
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  • Many of these burgeoning organizations are introducing new tokens into the cryptocurrency market with little more to show for them than whitepapers.
  • Constantine Goltsev, CEO of SolidOpinion expounded on the current state of ICOs, and offered these four points on how organizations can overcome these challenges.
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  • Etherscan CEO and founder Matthew Tan went so far as to call ICOs ethereum’s “killer app,” a statement that aligns with the more than 10,000 token projects launched to date – 13 of which have eclipsed $100 million in total market value, according to Etherscan data.
  • In many cases, these are poorly thought out tokens predicated on centralized products,” Jack du Rose, co-founder of ethereum startup Colony, said.
  • Ethereum developers largely believe that, at the very least, the individuals or company behind an ICO should have a prototype to prove their idea could theoretically work in practice.
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  • Berlin start-up raises nearly $12 million to create first equity token

    By Gertrude Chavez-Dreyfuss NEW YORK (Reuters) – Berlin-based Neufund said it has raised 10 million euros ($11.6 million) from private investors for its fund-raising platform, the first ever that will allow companies to issue a token or digital currency that will represent equity.

  • Neufund’s platform will allow investors to finance projects, while acquiring equity in the form of tradable crypto-currencies.
  • The intention of Neufund is that both the company’s and NEU tokens will be tradable on digital asset exchanges.
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  • As Tezos faces a public lawsuit from its ICO investors, Alex Tapscott’s NextBlock Global has opted to return funds to investors.
  • NextBlock had stated Civic CEO Vinny Lingham and federal prosecutor Kathryn Haun – now on Coinbase’s executive board – were advising the project.
  • This was not true, but Tapscott responded to Lingham denying the claims even as Lingham himself “was looking at the deck with his face and bio” on NextBlock’s website.
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  • A class-action lawsuit has been filed in a California state court against the organizers of the technology project Tezos, which in July raised $232 million in one of the largest “initial coin offerings” (ICOs) ever.
  • The lawsuit quotes extensively from a Reuters investigation published Oct. 18 that reported on a battle between the Breitmans and Gevers over control of the Tezos project.
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  • ICO teams have very little understanding of SEC requirements, and that their token sales are not compliant.
  • Most ICOs to date have operated under the presumption that the instrument being offered is a “utility token,” not a security, to which SEC rules would not be applicable.
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  • The SEC’s new cyber unit appears to be stepping up its rhetoric on ICOs.
  • Avakian said that the cyber unit was created to consolidate the regulatory body’s expertise on cybercrime, and include a focus on blockchain technology, particularly initial coin offerings.
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  • Concerns are growing that the recent boom in “initial coin offerings” (ICOs) could leave many investors burned by scammers looking to make easy money.
  • Michael Jackson, a venture capitalist at Mangrove Capital, told Business Insider: “The danger with ICOs is that the boiler room is resurrected.”
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  • To help investors sort the rare gems from the abundance of junk, I’ve made a simple tool called Spacesuit X for analyzing the investment merits of coins, tokens, ICOs and similar projects.
  • Spacesuit X is a rating scale of 0–100 which is based on an acronym for 10 categories that investors and analysts might consider regarding tokens, coins and ICO offerings.
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  • Are token trading platforms required to register with the SEC as securities exchanges or alternative trading systems?
  • How will other countries apply their securities laws to tokens?
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  • Since newly minted tokens purchased during an ICO can be immediately traded on various exchanges, there is an obvious way to make money quickly.
  • There is even a web app called CoinCreator that can do that for you.It seems that, nowadays, all it takes to do an ICO is a token, a white paper and some good marketing.
  • If the funding goal is not met or the product not built, people usually get their money back. With an ICO, you get money in exchange for tokens.
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  • Genesis Vision is creating a platform for a private trust management market based on blockchain and smart contracts which will serve as an ecosystem for traders, investors and brokers.
  • Trust management in this reference is a system where investors transfer their funds to wealth management companies/fiduciaries/experts who manage and invest these funds in assets which match the investor’s risk profile.
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How to run a token sale

ICO September 22, 2017
  • Token sales are, quite simply, the new way of getting VC money for your project or startup.
  • Raising tens of millions of dollars in just a few hours is real.
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How to secure in ICO

ICO September 8, 2017
  • Over the last few months in the crypto space we’ve seen a lot of attempts and actually successful phishing attacks through companies’ Slacks, Twitter accounts, and other paths of attack.
  • The root cause can sometimes be something as trivial as a simple stolen password or a stolen social media account, leading to a huge mess.
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