ICOs and Pyramid schemes

[Nicodeamus]

I've been trying to spend the last 2 weeks trying to understand these coins, it looks to me very similar to a way to bypass security laws and regulations. I would to open a discussion around it, over here.

In the US (where most of these coins are issue) there is what is called the Howay test to determine what a security is:

1. It is an investment of money
2. There is an expectation of profits from the investment
3. The investment of money is in a common enterprise
4. Any profit comes from the efforts of a promoter or third party

Now I am not going to pretend to be knowledgeable on financial markets or securities, but these coins are looking very dodgy at the time.

More and more companies are going to start launching these things and I am worried that a lot of people are going to lose money when the whole thing collapses.

My logic tells me that if the coin is exchangeable for something (a reward) then it has to comply with legal regulations, if it is useful in the software then perhaps it can be used for crowdfunding. (Which is essentially give away money).

I would appreciate if someone in the area can clear it up for us.

 

[Thor]

This is not a pyramid https://www.civic.com/

 

[Raees123]

What do you think about Digix?

 

[Purply]

It's my understanding that no US person can partake in any ICO's as it's against their laws, whether that is actually preventing them from doing so is however another question.

But back to your points, I fully agree that most of these ICOs will go under within a few months, with most of them not even needing close to the millions they are getting to produce said "product"

 

[Nicodeamus]

This is not a pyramid https://www.civic.com/

So let's take this example. The idea yes, sounds good, but what exactly does the ICO buy me at the end? Do I get a share in the software, do I get a share in the company, is it a donation?

After reading the white paper, it doesn't seem very clear what the actual value of a coin is and I believe that many people are being misled over here, i.e. people are "investing" when it only looks like a donation to me.

 

[Nicodeamus]

What do you think about Digix?

from the website alone it sounds "sound" to me. Meaning that one coin is tied to a bar of gold. However I do know that there used to be a coin like that in the states that was shut down by the financial services board. Perhaps we should list coins here that we believe are sound or decent and maybe say why we think so. Or at least what we are buying into. Selling an "idea" sound a lot like a ponzi scheme to me.

 

[pecano]

It's my understanding that no US person can partake in any ICO's as it's against their laws, whether that is actually preventing them from doing so is however another question.

But back to your points, I fully agree that most of these ICOs will go under within a few months, with most of them not even needing close to the millions they are getting to produce said "product"

Oh thar be a storm a-comin'