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I'm old, and I don't get Bitcoin [Cryptocurrency and society].

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Posts

  • BlazeFireBlazeFire Registered User regular
    Ok so this is sort of crypto currency related, but exactly so.

    A company that I'm invested in outlined in their end of year video that they're looking to do some sort of equity token - current shares are going to be linked on a 1 to 1 basis to a token, which can then apparently be bought and sold like any other share.

    My questions are:
    1) While this seems legal, from the brief amount of reading that I've done on it, it's not common. Therefore - are there any actual places that things like this can be bought and sold?
    2) Is there any real advantage to doing this, as opposed to a traditional IPO? I'm not sure.

    Wisdom of the forums, lay it on me!

    What reasoning did the company give for the token idea?

  • OrcaOrca Registered User regular
    I just did a quick search for "ICO scam" and came up with the following:

    "New Study Says 80 Percent of ICOs Conducted in 2017 Were Scams":
    https://cointelegraph.com/news/new-study-says-80-percent-of-icos-conducted-in-2017-were-scams
    (no idea who the fuck Coin Telegraph is; for all I know they're a hamster)

    "How to Identify Cryptocurrency and ICO Scams"
    https://www.investopedia.com/tech/how-identify-cryptocurrency-and-ico-scams/

    "Gorgeous models, Vladimir Putin, and fluffy buzzwords: 6 clues the blockchain project you're thinking about investing in is a scam"
    https://www.businessinsider.com/how-to-tell-ico-scam-blockchain-2018-7

    Color me skeptical that the company in question is doing everything on the up-and-up.

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  • OrcaOrca Registered User regular
    Now since there are already public shares it's hopefully not as bad...but. They're pretty clearly chasing a bandwagon that has seen its value collapse from its all-time highs.

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  • TL DRTL DR Not at all confident in his reflexive opinions of thingsRegistered User regular
    Yeahhh, there are some potential uses for crypto tokens and smart contracts, but it's not something that's at all hit the mainstream.

  • Sanguinius666264Sanguinius666264 Registered User regular
    It's not an ICO though, it's an Equity Token. That might seem like a semantic difference, but it's not entirely.

    @BlazeFire the reasoning they gave was that once the tokens have been issued, they can be more readily sold than private shares can be.

    Ordinarily, they appear to be on the up and up - they've received genuine valuations, I've seen the contracts and other deals that they've done that are generating revenue for them.

    I also found it to also be an interesting approach and more information is going to follow in weeks to come.

  • Sanguinius666264Sanguinius666264 Registered User regular
    Having said that, I definitely agree that from the outside in, it looks pretty dodgy.

  • Rhesus PositiveRhesus Positive GNU Terry Pratchett Registered User regular
    Are shares hard to sell? Harder than something that you will first have to explain, no, it's basically like a share but easier to sell?

    Mugsley
  • HevachHevach Registered User regular
    the reasoning they gave was that once the tokens have been issued, they can be more readily sold than private shares can be.

    How? By what mechanism and on what exchange?

    It's REALLY easy to trade shares. A bit too easy, so you have all kinds of goons losing their shirts doing it in a second browser window while they're at work. As a society we have set up so many systems around trading shares that there's almost literally nothing easier to buy or sell.

    Sounds a lot like they're trying to get all the benefit of selling shares without affording the shareholders the protections they're due. And if that's the case, I doubt it's legal.

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  • Sanguinius666264Sanguinius666264 Registered User regular
    Public shares, sure. Public shares you can trade super easily. It takes a lot of time and effort (and money) to get to that point - however private shares in a privately held company? No, not at all. Private shares have no secondary market, usually. It can be quite difficult to sell them.

  • HevachHevach Registered User regular
    There is, however. Many penny stocks are exactly that, and Nasdaq has settings for trading these that carry fewer or even none of the requirements of proper listing, and the US has no fewer than four other venues for trading unlisted or over the counter shares.

    BlackDragon480
  • VeeveeVeevee WisconsinRegistered User regular
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

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  • FencingsaxFencingsax It is difficult to get a man to understand, when his salary depends upon his not understanding GNU Terry PratchettRegistered User regular
    Veevee wrote: »
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

    Yeah, it seems they want the benefit of money, without having to give up controls or adhering to regulation or the like.

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  • Ninja Snarl PNinja Snarl P My helmet is my burden. Ninja Snarl: Gone, but not forgotten.Registered User regular
    Veevee wrote: »
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

    Yeah, that was my primary concern. Even if they "value" one token at one share, they can sell more tokens than they have shares while not relinquishing any control of the company. As long as everybody doesn't try to cash in the shares at once, who would ever know there are more tokens than shares?

    And on top of that, they could just refuse to issue the shares for the corresponding tokens if issuing those shares would cause a problem for the company. The company has the shares and you don't, even if the legality of the situation is questionable.

  • daveNYCdaveNYC Why universe hate Waspinator? Registered User regular
    Fencingsax wrote: »
    Veevee wrote: »
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

    Yeah, it seems they want the benefit of money, without having to give up controls or adhering to regulation or the like.

    Or having to report that founders are cashing out in any way.

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  • tsmvengytsmvengy Registered User regular
    Veevee wrote: »
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

    Yeah, given that ICOs have become a new way for companies to raise funds, expect the SEC to start regulating them sometime soon.

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  • Commander ZoomCommander Zoom Registered User regular
    tsmvengy wrote: »
    Veevee wrote: »
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

    Yeah, given that ICOs have become a new way for companies to raise funds, expect the SEC to start regulating them sometime soon.

    Good.

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  • CptHamiltonCptHamilton Registered User regular
    The company I work for is private and issues stock options and RSU (reserved stock units? something like that). Normally you can't cash in on either of those as an employee without the company having an IPO. My company recently spent a shit ton of money paying some sort of tax/fees such that we, the employees, legally own our RSUs despite the company still being private. We get taxed on them when they vest as though they were income at some calculated value based on our valuation as a company. They still can't be traded normally because we aren't a publicly-traded company, but periodically when we get a capital infusion we have the opportunity to sell a limited number of our RSUs to the investing company or back to our own company as a way to not have to issue new shares and dilute their individual value.

    The token thing sounds like a way to do approximately that without the legal process and fees. Which probably means that if you, for example, leave the company, your tokens become worthless since you don't actually own anything. The stock the token represents is presumably still held by the company and they're offering to let you trade the promise of stock for money but it's just a "promise", not a legal ownership instrument.

    I don't think it's necessarily a scam but whether it's them being generous or them being greedy is entirely a matter of perspective and how long you plan to stay with the company. When my company did the thing to give us RSU ownership we became, apparently, one of an extremely small group of companies to ever actually do it despite the SEC saying it's possible. Because why would a private company spend (what I'm given to understand what a very significant amount of) money to give their employees something that doesn't directly benefit the owners and investors?

    Is the 'token' actually blockchain mediated or something? Or is it just an entry in a database somewhere that says you have $X in EmployerFunbucks good for stock or cash at a future point of their choosing?

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  • shrykeshryke Member of the Beast Registered User regular
    Fencingsax wrote: »
    Veevee wrote: »
    The only thing I'm getting out of these "tokens" is that the company wants to get the cash infusion going public provides while maintaining complete control as if they were a private company. The "tokens" might be legally legit, but that just makes them a legal scam.

    Yeah, it seems they want the benefit of money, without having to give up controls or adhering to regulation or the like.

    Every time someone is like "Let's do it this way to avoid the regulations" one should seriously consider why said regulations exist and what the point of them is.

    In the case of any kind of financial transaction the answer is almost universally "to protect you, the consumer, from getting fucked over".

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  • Sanguinius666264Sanguinius666264 Registered User regular
    @CptHamilton I'm not an employee of the company, I'm an investor - to give more background than I did, I invested in the company in 2016. It's going well, they've been earning revenue and expanding pretty fast. Things are going pretty peachy, especially as they're now starting to communicate a lot better than they were previously.

    I own shares in the company - I have the share certificates in my hot little hands. I also know about a dozen or so other investors through meet ups, both ones arranged by the company and personally because some of them are pretty cool folks.

    So as far as can be expected, that's all above board. I've seen the contracts that have been signed, the company has been independently valued by an investment bank which has confirmed increases of value stated in things like their quarterly updates.

    We were expecting an IPO listing but that appears to have been delayed until this year. In the interim, they've outlined that they want to release an equity token that is a one to one link with the shares that have already been issued to us. Admittedly, the amount of further information is limited and nothing has or will happen until they release further information about this (no final date given, but in the next month was the sort of vague timeline given).

    The reason that was stated was to allow for liquidity of the private shares we hold. It appears to be both generous AND greedy - generous, in that they're using at least some of the cash that they've raised to release a special dividend and greedy in that it means they're able to also capitalise on this by selling some of their own shares/tokens ahead of the IPO.

    The tokens will be backed by a blockchain ledger, so we should be able to see who is selling to who. I doubt we'll have sufficient visibility to understand if the founders are selling their stock, so that is a concern. I am also just not sure of the underpinning reasoning behind it all. If an IPO is likely to occur later this year, if there's revenue already coming in to the company, if valuations are continuing to climb - why bother with the token issuing at all? Seems like a bit of a needless thing to do.

    Anyway, I'll get more information in the not too distant future, I hope. Once I do, either I'll be super concerned (and probably talking to the other investors about getting legal representation of some kind) or it'll be a non-event. Either way, I'm old and I don't really understand crypto currency and related type stuff. More often than not it seems like a solution in search of a problem.

  • Jebus314Jebus314 Registered User regular
    As far as I understand it (which is limited), the board of directors has to approve every sale of stock/shares for a private company. So setting up a middle man scheme to get around this is of questionable legality, though I suppose if the board of directors is setting up they are just defacto giving permission to every sale, and this is just an easier way for them than signing off on a bunch of individual sell/buy requests.

    "The world is a mess, and I just need to rule it" - Dr Horrible
  • HefflingHeffling No Pic EverRegistered User regular
    Rather than random people on the internet I would ask your lawyer and/or the SEC if this is legal and not a scam.

    If a movement doesn't have someone that can sit down opposite those in a position of power and strike a deal, how can that movement achieve success?
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  • FencingsaxFencingsax It is difficult to get a man to understand, when his salary depends upon his not understanding GNU Terry PratchettRegistered User regular
    Heffling wrote: »
    Rather than random people on the internet I would ask your lawyer and/or the SEC if this is legal and not a scam.

    Yeah, that's too involved for internet randos. Talk to a lawyer, or financial advisor.

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  • CoinageCoinage dance all crazy, whip my hair around all crazy Registered User regular
    Projected Bitcoin usage, should it follow the rate of adoption of other broadly adopted technologies
    lol no that's not happening

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  • kimekime Queen of Blades Registered User regular
    Coinage wrote: »
    Projected Bitcoin usage, should it follow the rate of adoption of other broadly adopted technologies
    lol no that's not happening

    Yeah OK that's kind of a huge caveat.

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  • Knight_Knight_ Dead Dead Dead Registered User regular
    it's not happening but it does show how clearly ludicrous the technology is.

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  • tsmvengytsmvengy Registered User regular
    Jragghen wrote: »


    Okay, time to stop faffing around and ban crypto.

    Carbon tax nowwwwwwwwwww

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  • discriderdiscrider Registered User regular
    tsmvengy wrote: »
    Jragghen wrote: »


    Okay, time to stop faffing around and ban crypto.

    Carbon tax nowwwwwwwwwww

    I mean, yes, but the electricity is probably cheapest where it's less regulated so...
    We can hope?

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  • GoumindongGoumindong Registered User regular
    Electricity is cheapest where there is less carbon but that doesnt matter much

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  • Sanguinius666264Sanguinius666264 Registered User regular
    https://www.afr.com/news/world/tesla-stock-on-a-blockchain-offers-hint-of-where-cryptocurrencies-are-headed-20190104-h19phh

    Ok, so this is exactly the same thing that I was on about - looks like there seems to be some sort of movement towards it. That seems to have some benefits, but I dunno. Not a whole lot, really.

  • JepheryJephery Registered User regular
    https://www.afr.com/news/world/tesla-stock-on-a-blockchain-offers-hint-of-where-cryptocurrencies-are-headed-20190104-h19phh

    Ok, so this is exactly the same thing that I was on about - looks like there seems to be some sort of movement towards it. That seems to have some benefits, but I dunno. Not a whole lot, really.

    Its basically the same scam as tether, except its a pyramid scheme pretending to be pegged to stocks instead of pegged to the dollar.

    }
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  • MugsleyMugsley Registered User regular
    @Sanguinius666264 it sounds like you're reasonably skeptical. Your description sounds to me like the CFO was either sold on this product or has experience otherwise that s/he convinced the board this was a "Good Idea."

    I agree with you that if a IPO was imminent already, making this move would be moot. Does that imply that the planned IPO is getting moved back substantially?

    Sanguinius666264
  • Sanguinius666264Sanguinius666264 Registered User regular
    Thanks, I am. We will have a phone conference soon and I will ask for the reasons. Yes, the IPO has been delayed. There was no fixed date given, but Q4 in 2018 was indicated. Now it is later in 2019, still unspecified.

  • daveNYCdaveNYC Why universe hate Waspinator? Registered User regular
    Thanks, I am. We will have a phone conference soon and I will ask for the reasons. Yes, the IPO has been delayed. There was no fixed date given, but Q4 in 2018 was indicated. Now it is later in 2019, still unspecified.

    Shifting the IPO looks sketchy when combined with this cryptotoken garbage, but given the state of the market it could also be a completely legitimate move.

    ElvenshaeFencingsax
  • PhyphorPhyphor Building Planet Busters Tasting FruitRegistered User regular
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  • NEO|PhyteNEO|Phyte They follow the stars, bound together. Strands in a braid till the end.Registered User regular
    Ethereum is the one that fucked GPU prices, right?

    It was that somehow, from within the derelict-horror, they had learned a way to see inside an ugly, broken thing... And take away its pain.
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  • HefflingHeffling No Pic EverRegistered User regular
    NEO|Phyte wrote: »
    Ethereum is the one that fucked GPU prices, right?
    NEO|Phyte wrote: »
    Ethereum is the one that fucked GPU prices, right?

    No that's all of them.

    If a movement doesn't have someone that can sit down opposite those in a position of power and strike a deal, how can that movement achieve success?
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  • discriderdiscrider Registered User regular
    So now we get to see whether Ethereum collapses, due to a lack of trust in its coin, or whether the exchanges step in to become trusted intermediaries.

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  • bowenbowen How you doin'? Registered User regular
    Phyphor wrote: »

    Is this when I get to feel smug because blockchain idiots told me I was making a problem out of nothing?

    Ladies.
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  • VeeveeVeevee WisconsinRegistered User regular
    edited January 10
    bowen wrote: »
    Phyphor wrote: »

    Is this when I get to feel smug because blockchain idiots told me I was making a problem out of nothing?

    Yes, but this is also when they move the goal posts and say "sure, it happened to ethereum, but there is no way it could happen to stupid coin name goes here"

    Veevee on
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