The SEC has a set of tests from the Howey test to the Hawaii Market Center test to judge whether something falls under the jurisdiction of the security exchange act of 1933 via the investment contract section. Generally speaking, vocabulary doesn't matter nor marketing material rather the substance of the transaction from which parties financially benefited, expectation of return, the medium upon which funds were solicited and the nature of the enterprise. It's a complex topic and generally is resolved by either a formal legal opinion (a more likely than not letter) or a no action letter directly from the SEC.
The SEC cannot arrest people, nor can it pursue criminal conduct. This is done typically either at the state level or via the DOJ. Usually actions are multi-agency with the IRS and SEC examining one plank and state law enforcement examining another. Also they tend to bundle enforcement together with emerging industries. A great example would be the crackdown on online gambling back in the early 2000s. There is also the ability to pursue international enforcement via treaty. The SEC can reach into over 80 countries if there was provable American participation in the event in question. How enforcement could be done would be for the SEC to issue a ruling on ICOs and apply it retroactively giving them the mandate to pursue anyone within some window (up to ten years, usually five or so). Most will be given the option to settle for a fine and some restrictions. Others will become the poster child of the enforcement action.
The SEC can do all of this but it would seem like an utterly stupid waste of money, damaging to both their reputation and to the US economy. Why would the SEC want to crush innovation, hurt the people who have good intentions in the crypto-space?
They can do it but a lot of different agencies have similar powers which they decide not to use. Why would the SEC go all out?
In terms of personal liability for running a delegate, if the person was connected to invictus during or before the AGS event, then it could invite additional scrutiny from the relevant bodies. The bigger issue is if a bitasset is considered a derivative under US law and subject to CFTC regulation. Bitshares cannot work without delegates under the current design therefore the CFTC can argue that its under their jurisdiction and pursue enforcement against the delegates for operating the network.
Wouldn't this also work for Bitcoin and all of it's Counterparty/Mastercoin type functionality? I don't see how a delegate is any different from a miner so if they did attack delegates then delegates would go anonymous. Why would they want to push the delegates underground? It's not going to kill the Bitshares protocol and all it would do is remove a level of transparency.
I understand in your case because you were involved from the very beginning. I don't understand why they would go after delegates who were not involved with Invictus from the beginning.
The same could be said about mining perhaps; however, bitcoin does not permit complex financial derivatives or arbitrary code to be run. Also miners are not elected nor are paid a salary for providing a host of network services beyond block validation.
Bitcoin has scripting as well and permits all sorts of functions which aren't used. I would say we'll find out by how they treat Bitcoin but from what we know so far I don't see how being a delegate is a significantly higher risk for most people than being a miner in Bitcoin.
I'll admit I haven't rushed to become a delegate myself so I understand your concerns.
I think the community should strongly consider a delegate indemnity fund to cover legal costs associated with operating a delegate. It's an added layer of security and support for the role.
I agree with this.
I actually call these events DCCMs to avoid this very issue: https://docs.google.com/document/d/1xG1hkPbk0uuavjPc_gt_eWxEUbWM1SlsxNmhGdRIUtg/edit
Good call. I'm preferring at least at this time to promote the concept of a gift economy. It should be free speech to give a gift to another with no strings attached.
People are practical and have to communicate complex concepts to others. It doesn't help much to add a layer of legal obfuscation as a CYA. I suppose it is necessary, however.
I guess this is how lawyerts make money. They can basically make the law so confusing and have so many laws that no one can do anything without breaking some obscure archaic law from the 1930s. It's a situation where it's death by legal complexity unless we repeal and reform a lot of these outdated laws.
But I realize it's very easy to create many pages of laws which never get read and very difficult to repeal them. Obamacare is a good example. No one I know to this day has read all the pages of Obamacare and this means think tanks/politicians can exploit a bug in the system (attention scarcity) to put esoteric complex laws in place which we have to follow. They do this to create barriers to economic opportunity for people who cannot afford to consult with a lawyer for their every decision.
Topic: Charles Hoskinson - Business Development Delegate (Read 10221 times)
