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Comment by jasonmcalacanis | Hacker News Reader

1. ICO founders are getting a quick education in the fact that "anyone can sue anyone at any time" -- no matter what paperwork you have folks sign.

2. What are the damages if they just give the money/coins back? That's the easiest solution for these ICOs: a 100 days buy back/escrow period?

3. Another easy solution is to have these ICOs hold the proceeds in escrow and release of funds quarterly for five years to the startups/projects and giving the investors the ability to refund half or 75% of their remaining commitment (i.e. a 25-50% penalty for leaving the project early).

had the founder on recently https://youtu.be/rdRSUJkvmxM -- seems like people who invested knew what they were doing going in.

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>3. Another easy solution is to have these ICOs hold the proceeds in escrow and release of funds quarterly for five years to the startups/projects and giving the investors the ability to refund half or 75% of their remaining commitment (i.e. a 25-50% penalty for leaving the project early).

I've seen something similar to this in another ICO. They set up an ethereum smart contract that would distribute 90% of funds raised to the project over 4 years. If an investor wanted out, they could send their tokens to the contract and (iirc) it would burn them and refund the investor with ETH at a 10% haircut to the original buy price. Alas can't quite remember the ICO or the exact details (it was in a random whitepaper I read).

Not fun for them, but nevertheless a very interesting lawsuit. What I am interested in is the fact they used a Swiss foundation that they don't actually control.

What happens when a US judge allocates damages for certain actions? They declare personal bankruptcy? US judgements are also not always enforceable abroad, so is it imaginable the foundation gets to keep the money regardless of the outcome of any lawsuit? I would guess so.

Ethereum was the first cryptocurrency to form a foundation in Zug, and its a popular structure. Generally the code and system are open sourced, and a nonprofit foundation controls the money raised in the ICO.

https://www.swissinfo.ch/eng/500-million-business_crypto-pig...

All those Zug-incorporated ICOs exploiting loopholes in civil law:

1. Tokenizing non-profit foundations (stiftungs), while traditional "stiftung foundation has no shares or members" [1]

2. Pretending that token allocations are unrelated to donations/contributions.

3. Using nonprofit foundations for clearly for-profit speculative activity.

[1] https://en.wikipedia.org/wiki/Stiftung

As a Swiss, I'm saddened that my country seems to have found yet another way to get involved in shady financial dealings.

The problem is not that setting up such a structure is possible, the problem is the lack of suitable alternative legal structures that are better suited for the job. For that, regulation needs to be relaxed.

It's not so clear. For Ethereum, it worked well. The foundation is non-profit, financing the creation of an open-source system. And those who donated get to use one instance that system. The rights to use the system come in the firm of transferrable coins, and can turn out to be valuable.

It is not an ideal construction, but can make sense. The foundation is used as a funding vehicle for a common prpject, but it is still non-profit.

Are they 'exploiting loopholes' or are they simply looking for a hole from which to escape exploitation?

> ICO founders are getting a quick education...

It's not fun for them, but after raising a couple of hundred million dollars, I don't feel too sorry for them either.

Video is a great background on Tezos, why they chose a Swiss foundation in Zug, how the money is budgeted, how they chose the trustees for the foundation, the token presale, etc

my podcast is a complete front for me figuring out if i should invest in startups. :-)

just had coinlist on the show as well.... they did filecoin's $200m+ ICO http://thisweekinstartups.com/andy-bromberg-coinlist/

Wow! I think you need a dedicated podcast called "This week in ICOs" or "This week in crypto" ;)

They say if you want to master something, teach it.

Looking forward to more crypto-focused podcasts. It's always preferable to hear from more technical guests who aren't just trying to sell something.

Unchained is probably the best crypto podcast currently, but would love other recommendations.

There's Epicenter on iTunes.

CoinMastery is quite good, although more focused on market analysis. I think Unchained gets great guests but I cannot stand the interviewer's style.

So honest it sometimes hurts, lol. Great show btw.

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