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Comment by joosters | Hacker News Reader

I'm sure Bancor couldn't care less about their token price collapsing. They've already got all of the "investors'" money.

In fact, they could just walk away right now instead of carrying on developing the system. The brave new world of ICOs offers no protection against companies failing to follow through on their ICO roadmap. Maybe Bancor could use the token collapse as an excuse to quit now?

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The SEC might say otherwise. There are plenty of civil and criminal options for recourse if they simply "walk away".

They're based in Israel, though. What does the Israeli SEC say about that?

Israel recently banned offering binary options to foreigners because a lot of such companies were based in Israel and I guess a lot of people complained to Israeli authorities about being scammed, and impacted the country reputation.

https://www.timesofisrael.com/the-wolves-of-tel-aviv-israels...

What's the SEC got to do with this? Bancor isn't a US company

If a company has American investors, you can expect the SEC can get involved.

What would they do?

Bring US charges. How hard they pursue extradition is the real question.

Is there a precedent of the SEC causing extradition?

Given Bancor is in Israel, this case is interesting:

http://www.reuters.com/article/us-israel-fraud/israel-approv...

SEC oversees securities trading, which Bancor does not deal in.

The SEC ruled earlier this year that some coins are indeed securities and has brought charges against multiple ICOs.

From https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_co...:

Depending on the facts and circumstances of each individual ICO, the virtual coins or tokens that are offered or sold may be securities. If they are securities, the offer and sale of these virtual coins or tokens in an ICO are subject to the federal securities laws.

No it didn't it made a pronouncement which is different from a ruling.

The ICOs that it has charged so far didn't have an actual token associated with them so they were scams with a popular (edit: fashionable) name.

I really hate that people on HN will down vote comments based on misunderstanding of information freely available.

Ironically, it is the SEC and it's regulation that made Bancor structure their ICO the way they did. To escape being classified as a security, you have two options: either give the tokens away for free, or promise nothing. Most crypto startups do the latter.

Not quite. In the USA, classification as a security is usually determined using a four-pronged legal standard called the Howey Test.

A security is:

1. An investment of money,

2. In a common enterprise,

3. With an expectation of profits,

4. Predominantly from the efforts of others.

Selling something without making any promises doesn't necessarily preclude expectation of profits.

Bancor's ICO is not covered by SEC.

SEC covers securities which are defined in the US as meeting all four properties of the Howey test. Bancor has a stable coin framework which means they create currencies and have an automated market making algorithm.

Currencies are classed as commodities in the US.

The people downvoting my comments without volunteering a counterargument could probably use some time doing a bit of reading on the topic.

That's just an opinion masked as an argument.

The brave new world of crowdfunding is not that new, but the allergic reactions to it seem odd.

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