[thesausageking]

The SEC is just the wrong organization to be enforcing laws in crypto. This was a scam that was done out in the open and launched 4 years ago. People conned into buying this have already lost their money and they're not getting it back. The founder will use some of the $1B+ he's made of it to defend himself in a long, drawn out court case that the SEC will eventually settle.

The SEC's purpose is supposed to be to protect investors and no one is being protected by this.

[WorldMaker]

If not the SEC then who?

It took decades before Bernie Madoff's crimes came to light under SEC investigation (and then eventual criminal prosecution). Most of his victims had already lost their money and were never getting it back, even with the criminal suits they eventually joined that was mostly to show justice to Madoff not to recover lost funds.

From that perspective, 4 years is possibly a record in speediness for scams of this scale. (Cryptocurrencies sure have sped up the scams, but also seem to have greatly sped up the investigations into the spams, perhaps in a way that some will find ironic.)

The SEC can't protect all investors a priori (ahead of time). There's always going to be a long tail of investigations into past misdeeds and airing the dirty laundry. In theory the more dirty laundry the SEC can air from previous misdeeds the more it educates the public on things to look for and the more it assures would-be scammers that eventually they will be caught and will have to face the American justice system. (Whether or not you think the American justice system capable of doling out enough criminal charges that stick to these sorts of injustices, it is always still worth trying.)

[x-complexity]

> If not the SEC then who?

For US entities other than the SEC in particular, the CFTC that can also handle this problem if the token's not a security.

However, I'm extremely weary of this immediate ceding of control, as it gives back power to the State. The ideal would be that such products would be marked as high-risk by default, and that it should be made explicitly clear that there's a high chance (> 90%) of failure in such a product's early stages, with ample warnings, cautions, & checks detailing so.

Past a certain point, it should be acknowledged that the individual made the decision to invest in such a product. The aforementioned warnings & checks on all new products & services by default will make that boundary clear, with the lack of said checks making it visible .

> It took decades before Bernie Madoff's crimes came to light under SEC investigation (and then eventual criminal prosecution). Most of his victims had already lost their money and were never getting it back, even with the criminal suits they eventually joined that was mostly to show justice to Madoff not to recover lost funds.

Bernie Madoff's scheme was prolonged due to the reputation of the man himself, and from A trusting that B said that he was trustworthy, based on C's vouch of his trustworthiness, based on D's vouch, ad infinitum. After establishing the minimal amount of people to vouch for him, the effects from said connected network compounded as more people trusted him based on that network.

Again, this circles back to the main issue regarding trust. It's way too easy to earn trust just because you look/act some way, were a part of something, and/or made connections to the right people. Trust should be isolated to a particular venture/effort & no further, and if someone wanted to try something else that was at least 2 steps removed from their previous ventures, that trust should be rebuilt from scratch & not based on existing efforts made.

[martin8412]

You can't pay for your legal defense with illegal funds. Well, you can, but the lawyers if not careful might be subject to clawback and therefore not likely to defend you.

[paulpauper]

the sec also does not bring criminal investigation, only refer. it's not even that effective as a deterrent. only jail stops criminals, not lawsuits.