Basically the entire crypto space got high on selling tokens to “investors” with the implication (explicit or implicit) that you should absolutely get in on the ground floor of this one because it’s gonna moon so hard buddy, you’ll be rich, just wait and see.
That’s a security my friend. And there are some pretty strict laws about selling those. The decision was basically a surprise to LBRY and absolutely no one else.
The problem is that if people are being told “put your life savings into this, it will definitely make you rich” there really have to be some kind of rules about who can and cannot do that.
It’s not a perfect system by any stretch. There are far too many entirely legal ways to still get away with conning people out of their life savings, and there are probably some edge cases where people guilty of breaking these laws weren’t actually doing anything all that bad. It’s certainly not as though the legal finance world is flush with upstanding decency and morals. We all lived through 2008.
But the laws do exist for a reason. An entirely unregulated securities market is going to result in a lot more fraud and a lot more destroyed lives than one that has at least some regulation.
Ultimately, the crypto world conned themselves into thinking that what they were doing was fine because their unregulated securities were printed on special magic digital paper. The SEC has been very pointedly reminding people that the Howie Test still applies the same no matter what kind of magic paper you print the contract on. I honestly don’t know if LBRY were trying to pull some shit, or if they really did believe that they were somehow exempt from the rules. Like most people in the crypto space they really should have spent some of that money on some better layers right up front.
It’s to do with selling unregistered securities.
Basically the entire crypto space got high on selling tokens to “investors” with the implication (explicit or implicit) that you should absolutely get in on the ground floor of this one because it’s gonna moon so hard buddy, you’ll be rich, just wait and see.
That’s a security my friend. And there are some pretty strict laws about selling those. The decision was basically a surprise to LBRY and absolutely no one else.
Thanks for the reply. Ultimately those sorts of things protect the “customer/investor” I’d presume.
That’s the long and short of it, yes.
The problem is that if people are being told “put your life savings into this, it will definitely make you rich” there really have to be some kind of rules about who can and cannot do that.
It’s not a perfect system by any stretch. There are far too many entirely legal ways to still get away with conning people out of their life savings, and there are probably some edge cases where people guilty of breaking these laws weren’t actually doing anything all that bad. It’s certainly not as though the legal finance world is flush with upstanding decency and morals. We all lived through 2008.
But the laws do exist for a reason. An entirely unregulated securities market is going to result in a lot more fraud and a lot more destroyed lives than one that has at least some regulation.
Ultimately, the crypto world conned themselves into thinking that what they were doing was fine because their unregulated securities were printed on special magic digital paper. The SEC has been very pointedly reminding people that the Howie Test still applies the same no matter what kind of magic paper you print the contract on. I honestly don’t know if LBRY were trying to pull some shit, or if they really did believe that they were somehow exempt from the rules. Like most people in the crypto space they really should have spent some of that money on some better layers right up front.