[driverdan]

There is a lot of fraud going on in the cryptocoin "IPO" space. It's strange that the SEC went after one of the cases that wasn't fraud. Maybe it was because they knew who he was. Either way they really need to crack down on these unregistered securities. People are being fleeced left and right.

[gojomo]

I suspect more people are losing money on state lotteries than cryptocoin IPOs. Shouldn't enforcers go after those, first?

[cwkoss]

I disagree with your point. IPO implies a hope for future return, whereas lotteries are gambling for entertainment.

[gojomo]

But a "cryptocoin IPO" is more like a seed round; most such investments are losses. A few have (and likely will) succeed, and quite likely at a better rate than lotteries/casinos. Why can't people choose the "entertainment with small chance of net rewards" in cryptocoin investing?

[cb18]

Notice driverdan uses the term, fraud. Which I think means he is implying that there are instances where the business plan doesn't go much if any beyond selling shares in their fledgling startup and then calling it a day. That is a different thing entirely from buying shares in a legitimate business that subsequently fails.

[gojomo]

And of course frauds should be prosecuted. But does all the up-front compliance and registration burden provide any actual protection against (a) dedicated fraudsters, and (b) credulous fools?

It looks to me that it just changes the expression slightly, and not for net social benefit. People gamble or day-trade-on-margin or over-leverage-in-real-estate or wire-their-money-toNigerian-419-scams, when some longshots (including occasional frauds) as cryptocoin/venture investments would be no worse. And, they'd be plausibly better, because the process of aiming for business success, but still failing through misestimation, misexecution, or even malfeasance serves as valuable training for future success.

If you lose at your lottery scratcher 10 times in a row, the 11th is still an awful bet for you and society. But if you lose your investment principal 10 times, even if most of those times were total or borderline fraud, you will make usefully better choices, for yourself and society, in the 11th try.

(Or you'll just stick to other areas where you're more competent, which is fine, too.)

[cb18]

Good god, typical coiner logic... An attempt at a fallacy of relative privation('whataboutery') that doesn't even make sense. Do you think state lotteries are being misrepresented for what they are? Putting aside people's innumeracy, do you think state lotteries fraudulently misrepresent the expected return of purchasing a ticket?

I too think lotteries are a little seedy, and it's a little weird how the state uses its vice regulating powers to create something of a vice monopoly to further its own ends, but surely you see how this comparison you're making is lacking in equivalence.

http://en.wikipedia.org/wiki/Fallacy_of_relative_privation

[gojomo]

Yes, the marketing of state lotteries misrepresents their value and preys on the poor and misinformed. (Private casinos are just as bad.)

Because law and social-norm enforcement faces budgetary constraints in time/resources/attention, the (informal-not-really) "fallacy" of relative privation doesn't apply. We can only choose some activities to both demonize and punish; we should allocate that effort well.

State lotteries and state-sanctioned gambling monopolies are a lot more destructive than even dishonestly-marketed "cryptocoin IPOs" (where people know that caveat emptor applies and traditional legal recourse is difficult).

And, the enforcement action described here was against a fairly honest, successful cryptocoin venture, SatoshiDice, a far more moral operation than the California Lottery.

The SEC doesn't need to "do more", it needs to "do less". The government's limited attention, resources, and competence should be focused on crimes and fraud with real, actual victims. Not trivial violations-of-form.

[driverdan]

I'm talking about outright fraud, not gambling. Quite a few cryptocurrencies have had larger premines than the devs claimed or other outright fraud issues that allow the devs to profit and costs everyone else money.