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

I’ve already put forth a proposal that I believe better addresses the
concern and has been approved by 5 and soon to be 6 members of the working
group and has approvals from the chair. If that does not adequately address
the concerns to resolve this issue please state so within the PR[1].

[1]: https://github.com/w3c/did-spec-registries/pull/519

-Kyle

On Thu, 22 Jun 2023 at 7:56 PM Melvin Carvalho <melvincarvalho@gmail.com>
wrote:

>
>
> st 21. 6. 2023 v 18:59 odesílatel Chaals Nevile <
> charles.nevile@consensys.net> napsal:
>
>> > Chaals, I'd appreciate a clear response to this straightforward
>> question:
>>
>> I'm unconvinced that the question is as straightforward as you make out,
>> and note that once again you seem to aim to make a rhetorical point.
>> Nevertheless, I have tried to provide a clear answer to the question, below.
>>
>> > Do you agree that our groups should adhere to US securities laws?
>>
>> I don't believe I have *ever* expressed the opinion that anyone should
>> not do so.
>>
>> W3C groups should obey US securities laws.
>>
>> I remind you that some of my work explicitly aims to make it clearer, for
>> people involved in "DeFi", what that actually means, to help people do so.
>>
>> I note that at least for the most part W3C groups have no business doing
>> things that are even governed by US securities laws - investing or trading
>> in, promoting or denigrating, securities, seem like generally inappropriate
>> activities for W3C groups. (Scenarios exist in which it seems a reasonable
>> proposal for a group to create and offer in the US something that seems to
>> be a security. In any such case it would self-evidently be very important
>> to follow the relevant laws. In concrete situations I am aware of, the
>> complexity of doing so has been one reason that the proposals haven't been
>> implemented.)
>>
>> I believe W3C groups should not be promoting *any* specific products
>> except the products of W3C itself - various technical documents, lists,
>> specifications, registries, tests and testing frameworks and the like - as
>> that would be a failure to respect the obligation W3C places on itself to
>> be vendor-neutral not just with respect to our members but overall.
>>
>> > If yes, we can move forward. However, if your answer is otherwise,
>> kindly state it explicitly as it seems, to my knowledge, you're the only
>> member expressing such a viewpoint.
>>
>> What viewpoint am I expressing, alone among members of this group to your
>> knowledge?
>>
>> - That an allegation is not a legal determination?
>> - That some questions about whether something is legal are unanswerable
>> today?
>> - That we work as a global organisation?
>> - That US securities law does not have "universal jurisdiction"?
>> - That people in China should follow Chinese securities law?
>> - That believing "we should obey the law" doesn't mean that we should
>> simply accept any argument that invokes a supposed legal principle?
>> - That noting the existence of something is different from promoting it?
>>
>
> Thank you Chaals for the clarification
>
> From your statement here:  "W3C groups should obey US securities laws."
>
> If we have consensus on this item, then it can be applied to the W3C DID
> registry, in a two-step approach.
>
>
>>
>> cheers
>>
>>
>> On Tuesday, June 20, 2023 10:05:20 (+02:00), Melvin Carvalho wrote:
>>
>>
>>
>> ne 18. 6. 2023 v 23:33 odesílatel Chaals Nevile <
>> charles.nevile@consensys.net> napsal:
>>
>>>
>>>
>>> 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.
>>>
>>
>> Chaals, I'd appreciate a clear response to this straightforward question:
>>
>> Do you agree that our groups should adhere to US securities laws?
>>
>> If yes, we can move forward. However, if your answer is otherwise, kindly
>> state it explicitly as it seems, to my knowledge, you're the only member
>> expressing such a viewpoint.
>>
>>
>>>
>>> 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
>>
>>