Re: Potential list of securities in the US [was: Unlawful Unregistered Securities, DID and VC]

On Saturday, June 17, 2023 12:13:25 (+02:00), Melvin Carvalho wrote:






čt 15. 6. 2023 v 17:06 odesílatel Kyle Den Hartog <kyle@pryvit.tech> napsal:

...Won’t this just lead to a select few number of did methods being allowed based upon a non-unanimous definition of legality? Within the US this is still being interpreted by the judicial system about whether these even are securities.  Globally, there’s a patchwork of legal interpretations. I’ve pointed to China’s laws as one example...


While it's true that regulations vary widely across different jurisdictions, this discussion is fundamentally about aligning our work with legal frameworks, particularly those which carry significant penalties for non-compliance, such as US securities law.


While as far as I can tell the US is pretty happy about killing people as a legal sanction, I believe they only have it for certain classes of crime that do not include financial crimes. Whereas China does seem to apply the death penalty in such cases. I don't know about you, but that strikes me as a significant penalty and indeed significantly more so than a fine and lengthy term in prison.


Notably, it's not about proposing that W3C adheres to every regulation in every jurisdiction. That may indeed lead to an impractical "slippery slope" situation, as you've outlined.


Promoting potentially illegal activities under the W3C banner is concerning for a couple of reasons.

Yes. But promoting adherence to one country's law that doesn't cover somewhere in the order of 80-90% of Web users, while explicitly ignoring that of other countries seems to me a terrible idea, and I plead with the working group not to follow such a path.



Firstly, it could be seen as an endorsement or promotion of these activities,

This seems a stretch. Apart from the fact that you can add something to a registry, where is the endorsement? 


Can you please explain a particular case where it seems like the group is (or may, by following its current approach) endorsing something that has been *formally alleged* to be illegal by a body such as the SEC? I mean, not an assertion by some smart person, but something that is clearly at least *very* likely to end up in court - because this gives us some sense that it's worth following up to see how reality turns out. By the same token, I am not asking you to demonstrate that something *is* illegal (although by assuming the right jurisdiction this probably becomes trivial for anything involving trading in a cryptocurrency), just that there's a serious allegation that's likely to be tested.


I don't see any endorsement of tokens that might be securities, let alone any endorsement of people who are selling them in a way that is illegal. Remember, there are legal ways to sell securities in the US. Being a security is not an inherent problem, that's why there is "securities law".


It's hard (and I believe irresponsible) to endorse a decision whose goal is to avoid something that one doesn't believe is a risk.

which could lead to an increase in network effects and, subsequently, an increase in token prices.This could be problematic as it can be interpreted as a violation of securities laws if these tokens are deemed unregistered securities.

Perhaps that could happen. There are a lot of conditions being stacked up in this hypothetical. I am afraid that as I look at them, they seem to add up to "in a particular set of circumstances, it is possible to imagine an idiosyncratic interpretation of our actions that suggests we are responsible for promoting a security".


This approach also seems to me to very obviously fail the "reasonable person" test that would be applied at law in a number of countries, such as the US. Likewise, it seems to ignore reality. (Those are pretty similar claims in practice).


This is why I think it is important to demonstrate the practical issue, as requested above.


Secondly, doing so could risk damaging the reputation of the W3C and undermining the transparency and trust that are critical to its operations.

Sure. However, as explained above with regard to the necessary chain of what seem to be incredibly unlikely interpretations and events, I think the risk is risibly small. This is particularly so when I compare it to things that damage our reputation like not being a suitable place to do the work we aim to take on. 


It seems to me that accepting the argument of reputational risk you have repeated as a reason not to accept blockchain-based methods for DIDs would damage our reputation as an organisation capable of holding complicated technical discussions and making systems that are suitable for use around the world more than rejecting the argument and running the risk you are describing.

cheers


Chaals




[1]: 

https://asia.nikkei.com/Spotlight/Cryptocurrencies/Chinese-crypto-activity-slows-but-not-dead-despite-ban


On Fri, 16 Jun 2023 at 2:17 AM Melvin Carvalho <melvincarvalho@gmail.com> wrote:

I was looking for a potential list of securities, that may be used improve the did method registry, and closest I came to was this article, there may be better:


https://beincrypto.com/full-list-cryptos-securities-sec-lawsuit-binance-coinbase/


criteria: an investment of money, in a common enterprise, with an expectation of profit derived predominantly from the efforts of others


List:


Cosmos (ATOM)
Binance Coin (BNB)
Binance USD (BUSD)
COTI (COTI)
Chiliz (CHZ)
Near (NEAR)
Flow (FLOW)
Internet Computer (ICP)
Voyager Token (VGX)
Dash (DASH)
Nexo (NEXO)
Solana (SOL)
Cardano (ADA)
Polygon (MATIC)
Filecoin (FIL)
The Sandbox (SAND)
Decentraland (MANA)
Algorand (ALGO)
Axie Infinity (AXS)


Prominent cryptocurrencies previously declared securities by the SEC include:

Ripple (XRP)
Telegram’s Gram (TON)
LBRY Credits (LBC)
OmiseGo (OMG)
DASH (DASH)
Algorand (ALGO)
Naga (NGC)
Monolith (TKN)
IHT Real Estate (IHT)
Power Ledger (POWR)
Kromatica (KROM)
DFX Finance (DFX)
Amp (AMP)
Rally (RLY)
Rari Governance Token (RGT)
DerivaDAO (DDX)
XYO Network (XYO)
Liechtenstein Cryptoasset Exchange (LCX)
Kin (KIN)
Salt Lending (SALT)
Beaxy Token (BXY)
DragonChain (DRGN)
Tron (TRX)
BitTorrent (BTT)
Terra USD (UST)
Luna (LUNA)
Mirror Protocol (MIR)
Mango (MNGO)
Ducat (DUCAT)
Locke (LOCKE)
EthereumMax (EMAX)
Hydro (HYDRO)
BitConnect (BCC)
Meta 1 Coin (META1)
Filecoin (FIL)
Binance Coin (BNB)
Binance USD (BUSD)
Solana (SOL)
Cardano (ADA)
Polygon (MATIC)
Cosmos (ATOM)
The Sandbox (SAND)
Decentraland (MANA)
Axie Infinity (AXS)
COTI (COTI)
Paragon (PRG)
AirToken (AIR)
Chiliz (CHZ)
Flow (FLOW)
Internet Computer (ICP)
Near (NEAR)
Voyager Token (VGX)
Nexo (NEXO)
Mirrored Apple Inc. (mAAPL)
Mirrored Amazon.com, Inc. (mAMZN)
Mirrored Alibaba Group Holding Limited (mBABA)
Mirrored Alphabet Inc. (mGOOGL)
Mirrored Microsoft Corporation (mMSFT)
Mirrored Netflix, Inc. (mNFLX)
Mirrored Tesla, Inc. (mTSLA)
Mirrored Twitter Inc. (mTWTR)
Mirrored iShares Gold Trust (mIAU)
Mirrored Invesco QQQ Trust (mQQQ)
Mirrored iShares Silver Trust (mSLV)
Mirrored United States Oil Fund, LP (mUSO),
Mirrored ProShares VIX Short-Term Futures ETF (mVIXY)


These instruments should not be promoted under the w3c banner, imho


-- 
Charles 'Chaals' Nevile
Lead Standards Architect, ConsenSys Inc