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Comment by vkou | Hacker News Reader

> complete transparency

What are the reporting requirements for a company undergoing ICO?

Do holders of ICO tokens have any say in the governance of an ICO company? Can they fire the founders if they are mismanaging the company?

What can they do to stop the founders from taking the money, and going to the Bahamas (Or spending it on their Uncle Tim's consulting business)? What recourse do you, as an owner of an ICO token have against that?

I've never had a serious answer to the last two points. The kind of transparency you tout is not the kind of transparency that securities markets currently lack.

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Pretty much every ICO is a securities offerings. (Don't let the talk about "utility tokens" fool you.) If you offer a security, there are applicable SEC rules. If you want to raise money from unaccredited investors, you have to follow "Reg CF" [1], which involves regulatory filings. Most startups raise money according to Reg D of the 1933 act [2]. Depending on how you advertise your offering, there are more or less strict rules and regulations. For example, if you ever publicly mention the offering, you'll have to verify your investor's accreditation (rule 506(b) vs. 506(c)).

All of this applies to any securities offering, including ICOs.

[1]: https://www.sec.gov/info/smallbus/secg/rccomplianceguide-051... [2]: https://www.sec.gov/fast-answers/answers-regdhtm.html

IANAL… this is not legal advice, etc. etc.

It varies from coin to coin. For example, I prefer to steer clear of coins like XRP which are governed and managed by a central authority (in this case Ripple, Inc.). Something like Decred, on the other hand, has a very interesting governance model[1] which will be proved out by the market.

Many of these projects are open source, so you can audit, compile, and run the source yourself. There's nothing to stop an owner of cryptocurrencies from going to the Bahamas anymore than there is to stop the CEO of Google.

Here's[2] a good introduction to decentralized currencies for you to learn about them.

[1]: https://docs.decred.org/getting-started/constitution/

[2]: https://www.youtube.com/watch?v=fOMVZXLjKYo

When Larry Page goes to the Bahamas, they don't take the company's treasury with them.

Who exactly are the developers going to do with the ICO money? From the looks of it, the answer is 'pay themselves'.

Which is 'fine', if the value they created is the crypto-currency itself - wham, bam, they are done - at the time of the sale. This is not the case for the vast majority of ICOs - there are just a bunch of promises about how eventually the coin will be super-useful, with no oversight for how to get from now to then.

Larry Page (who isn't the CEO of Google btw) still owns all his stock, regardless of whether he's in the USA or the Bahamas.

Larry Page also uses his stock to pay himself.

These cryptocurrencies only have value as long as the market considers them valuable. If Alphabet's stock price dropped, Larry's net worth would decline proportionally.

And yes, they certainly took in money during the initial funding, but Larry and friends did the exact same thing when they pitched Google to early investors.

Larry Page not being the CEO of Google is somewhat pedantic… he's the CEO of Alphabet, formerly known as Google. Sundar Pichai is the CEO of formerly Google's Google division, now known as the only Google, reporting to Larry Page.

In most (all?) recent ICOS you exchange some ETH with an internal token (aka "coins") that is tracked in the ethereum blockchain.

After the ICO the developers have all the ETH and almost no oversight, they can sell the ETH and go to Bahamas. They can claim that the project is dead, and so the internal tokens are effectively worthless, but they already sold the ETH and are already in Bahamas and you can try to extradite them for fraud if lucky. Or they add some more and more features before launching, an decide to work remotely from Bahamas for a few years ...

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