(3727,1,'2019-09-01 17:05:08','2019-09-01 17:05:08','<!-- wp:paragraph -->\n<p>Once you’re ready to choose an equity crowdfunding portal you’re pretty far along the equity crowdfunding path. By now you’ve already <a href=\"https://www.thecrowdfundinglawyers.com/is-equity-crowdfunding-right-for-your-company/\">decided that equity crowdfunding is right for your company</a>. You’ve reviewed <a href=\"https://www.thecrowdfundinglawyers.com/four-keys-to-a-successful-equity-crowdfunding-raise-reg-cf/\">four keys to a successful equity crowdfund</a>. And now you (and your lawyer) are ready to go portal shopping. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Indeed, the company must consider many factors in choosing an equity crowdfunding portal. And because portals sell <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/06/SEC-regulation-crowdfunding-2019_0.pdf\">90% </a>of equity crowdfunded securities the right “fit” is crucial. For instance, the biggest portal may not be best if your company will likely to mostly attract local investors. And a specialty portal may look great but if the investor list is skimpy, you’ll need to move on.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Thus, here are some considerations when choosing an equity\ncrowdfunding portal </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Federal and state equity crowdfunding portals; different strokes for different companies &nbsp;</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>To start, most companies look to the federal portals. To the extent equity crowdfunding has entered the public conscious its likely through <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> the federal exemption with the $1.07M limit. There are currently <a href=\"https://www.finra.org/about/funding-portals-we-regulate\">45 Reg CF portals</a> located throughout the country. But really only a few actually warrant consideration if you don’t have a massive ready-made crowd or marketing budget. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":136,\"align\":\"center\",\"width\":605,\"height\":373} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2017/08/CFcanvas.png\" alt=\"Equity Crowdfunding Portals\" class=\"wp-image-136\" width=\"605\" height=\"373\"/><figcaption><strong>Source: Crowdfund Capital Advisors</strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>But really the market looks more like this. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3724,\"align\":\"center\",\"width\":586,\"height\":425} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Wefunder-Chart-1.png\" alt=\"Equity Crowdfunding Portal Investment\" class=\"wp-image-3724\" width=\"586\" height=\"425\"/><figcaption><strong>Source: </strong><a href=\"https://medium.com/@jonnyprice/regulation-crowdfunding-three-years-in-29766d0b80a2\"><strong>Jonny Price, WeFunder</strong></a></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:image {\"id\":3726,\"align\":\"center\",\"width\":588,\"height\":426} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Wefunder-Chart-2.png\" alt=\"Equity Crowdfunding Portal Investment\" class=\"wp-image-3726\" width=\"588\" height=\"426\"/><figcaption><strong>Source: </strong><a href=\"https://medium.com/@jonnyprice/regulation-crowdfunding-three-years-in-29766d0b80a2\"><strong>Jonny Price, WeFunder</strong></a></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Thus <a href=\"https://wefunder.com/\">WeFunder</a>, <a href=\"https://www.seedinvest.com/\">Seed Invest</a>, and <a href=\"https://www.startengine.com/\">Start Engine</a> are industry leaders with <a href=\"https://republic.co/\">Republic</a>, and <a href=\"https://microventures.com/\">MicroVentures</a> also having market share. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Companies should know that all but one of these is in\nCalifornia. So if you’re not West Coast think about what you can offer them as\nmuch as what they can offer you. Do you have cool technology? An interesting\nidea? A new approach to solving old problems? Be aware there is a supply and\ndemand issue with the big West Coast portals because they have large investor\nlists you gain access to with acceptance on their platform. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Being in the South, Midwest, or East Coast is not necessarily\na deterrent to acceptance. In fact, some portals <a href=\"https://republic.co/about\">stress</a> they scout companies throughout the\ncountry. But be prepared to pitch!</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>If you choose a federal equity crowdfunding portal, be aware of the differences.</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p><strong>WeFunder</strong>: A great all-purpose portal with a massive\ninvestor list that has funded all sorts of startups with the <a href=\"https://medium.com/@jonnyprice/regulation-crowdfunding-three-years-in-29766d0b80a2\">top\nbeing</a> Food &amp; Beverage, Software, and Entertainment. And a <a href=\"https://www.crowdfundinsider.com/2019/04/146023-chattanooga-football-club-scores-some-serious-funding-on-wefunder/\">soccer\nteam</a>! </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><strong>Start Engine</strong>: A leader in the token/crypto space that\n<a href=\"https://www.crowdfundinsider.com/2018/07/136687-startengine-will-now-accept-bitcoin-from-investors-for-the-reg-cf-offerings/\">accepts\nBitcoin</a>, has run its <a href=\"https://www.crowdfundinsider.com/2018/12/142856-startengine-to-close-reg-d-sto-round-after-securing-10-million-target/\">own\ntoken offering</a> and is leading secondary-market development with their <a href=\"https://www.crowdfundinsider.com/2019/08/150578-startengine-receives-ats-license-so-when-will-secondary-trading-in-crowdfunded-securities-start/\">recent\napproval</a> as an Alternative Trading System. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><strong>Republic</strong>: Part of a family of startup platforms\ntogether with <a href=\"https://angel.co/\" target=\"_blank\" rel=\"noreferrer noopener\">AngelList</a> and <a href=\"https://www.producthunt.com/\" target=\"_blank\" rel=\"noreferrer noopener\">Product Hunt</a>. “<a href=\"https://www.crowdfundinsider.com/2019/07/149425-republic-update-over-80-campaigns-funded-more-than-3-million-note-tokens-distributed/\">Mission\ndriven</a>” portal that also is a crypto leader. It was the first to do an <a href=\"https://www.crowdfundinsider.com/2019/08/150147-republic-first-althea-airdrops-tokens-under-reg-cf-exemption-no-payment-necessary/\">air\ndrop</a> and has a unique Note Token digital asset. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.seedinvest.com/\">Seed Invest</a> which\nwas bought by Circle last year and <a href=\"https://microventures.com/\">MicroVentures</a>\nwhich split from Indiegogo are going through transitions but are still industry\nleaders. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Still other Reg CF portals remain as viable options. For example,  <a href=\"https://us.trucrowd.com/\">TruCrowd</a> a Chicago-based portal has also developed three specialty portals <a href=\"https://musicfy.us/\">https://musicfy.us/</a> (Music), <a href=\"https://cryptolaunch.us/\">https://cryptolaunch.us/</a> (Tokens), and <a href=\"https://fundanna.com/\">https://fundanna.com/</a> (Cannabis). But current offerings are slim. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>State-based portals can be a viable alternative to federal Reg CF equity crowdfunding portals</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>But not all companies are good fits for the big West Coast portals. For example, businesses that aren’t likely to scale, whose investors will mostly be local, or those with strong state appeal may be <a href=\"https://www.crowdfundinsider.com/2016/05/86096-intrastate-crowdfunding-the-often-overlooked-option/\">better staying in-state</a>. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Although all investors must be state residents, these portals can offer advantages. 1. There is likely to be less compliance costs with a smaller regulatory burden and supportive state government. 2. Higher limits (although not always). This means one big investor can really jumpstart a raise. 3. Opportunity for localized wealth creation, and. 4. Less marketing costs. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>As of 2017 according to lawyer <a href=\"https://crowdfundinglegalhub.com/2017/08/28/2017-state-of-the-states-list-of-current-active-and-proposed-intrastate-crowdfunding-exemptions-updated/\">Anthony\nJ. Zeoli</a> most states had already approved state portals or were in the\nprocess. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3736,\"align\":\"center\",\"width\":636,\"height\":507} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/State-Crowdfunding.jpg\" alt=\"State Equity Crowdfunding Portals\" class=\"wp-image-3736\" width=\"636\" height=\"507\"/><figcaption><strong>Source: </strong><a href=\"https://crowdfundinglegalhub.com/2017/08/28/2017-state-of-the-states-list-of-current-active-and-proposed-intrastate-crowdfunding-exemptions-updated/\"><strong>Anthony J. Zeoli, Crowdfundinglegalhub.com</strong></a></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>For a list of state-crowdfunding rules <a href=\"https://media2.mofo.com/documents/171101-state-crowdfunding-regulations.pdf\">see\nhere</a>. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>And at least one innovative platform has combined the two. <a href=\"https://sppx.io/\">Silicon Prairie</a> offers a <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> portal along\nwith <a href=\"https://www.crowdfundinsider.com/2019/06/148442-crowdfunding-platform-silicon-prairie-is-approved-as-a-state-regulated-broker-dealer-no-finra-oversight/\">state-based\nportals</a> in Michigan, Iowa, Minnesota, and Wisconsin where state limits are\nas high as $5 million. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Your equity crowdfunding portal choice will factor into your raise’s success</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Sherwood Neiss, principal of the analytics firm <a href=\"http://crowdfundcapitaladvisors.com/\">Crowdfund Capital Advisors</a>, <a href=\"https://www.crowdfundinsider.com/2019/08/150297-report-states-that-reg-cf-has-topped-250-million-in-commitments-but-falls-short-of-potential/\">estimates</a> the next two years will bring 3,400 companies, half a billion dollars, and over half a million investors into the <a href=\"https://www.thecrowdfundinglawyers.com/is-equity-crowdfunding-right-for-your-company/\">equity crowdfunding world</a>. And help from Congress or needed <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">changes by the SEC</a> would bring much more. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3658,\"align\":\"center\",\"width\":440,\"height\":324} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Sponge-Bob-Amazing-GIF.gif\" alt=\"\" class=\"wp-image-3658\" width=\"440\" height=\"324\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>And as more companies take advantage of the opportunity, they will have to choose the right equity crowdfunding portal. Indeed, your choice of an equity crowdfunding portal will go far in determining the success of the campaign. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a>\nvia <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.thecrowdfundinglawyers.com/cfl-scheduler/\">Schedule a call or video conference</a> </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Disclaimer </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This post is for informational purposes only. It does not\nrepresent a contract, offer, or any legal obligation on the part of Jossey\nPLLC. Many factors go into a successful raise including appeal of the product,\ncompetition for the product, the quality of the marketing, operating history of\nthe company, experience of management, and ability to self-generate crowd\ninvestors. Legal and regulatory compliance is only one part. Investing in small\ncompanies and startups carries lots of risk, there is no guarantee your company\nwill have a successful raise.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph /-->','How to Choose an Equity Crowdfunding Portal','','publish','open','open','','how-to-choose-an-equity-crowdfunding-portal','','https://crowdfundinglegalhub.com/2017/08/28/2017-state-of-the-states-list-of-current-active-and-proposed-intrastate-crowdfunding-exemptions-updated/\nhttps://www.thecrowdfundinglawyers.com/four-keys-to-a-successful-equity-crowdfunding-raise-reg-cf/','2019-09-01 17:29:47','2019-09-01 17:29:47','',0,'https://www.thecrowdfundinglawyers.com/?p=3727',0,'post','',0),(3736,1,'2019-09-01 17:24:55','2019-09-01 17:24:55','','State Crowdfunding','','inherit','open','closed','','state-crowdfunding','','','2019-09-01 17:25:30','2019-09-01 17:25:30','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/State-Crowdfunding.jpg',0,'attachment','image/jpeg',0),(3740,1,'2019-09-08 19:02:03','2019-09-08 19:02:03','','Blockchain','','inherit','open','closed','','blockchain','','','2019-09-08 19:29:09','2019-09-08 19:29:09','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Blockchain.jpg',0,'attachment','image/jpeg',0),(3741,1,'2019-09-08 19:02:14','2019-09-08 19:02:14','','VC Graph 1','','inherit','open','closed','','vc-graph-1','','','2019-09-08 19:22:10','2019-09-08 19:22:10','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/VC-Graph-1.png',0,'attachment','image/png',0),(3742,1,'2019-09-08 19:02:23','2019-09-08 19:02:23','','VC Graph 2','','inherit','open','closed','','vc-graph-2','','','2019-09-08 19:21:39','2019-09-08 19:21:39','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/VC-Graph-2.png',0,'attachment','image/png',0),(3743,1,'2019-09-08 19:27:08','2019-09-08 19:27:08','<!-- wp:paragraph -->\n<p>Blockchain startups should <a href=\"https://www.thecrowdfundinglawyers.com/is-equity-crowdfunding-right-for-your-company/\">equity\ncrowdfund</a> their projects. Today most don’t. Instead, they rely on Silicon Valley\nventure capital dinosaurs. VCs create massive exits for themselves whilst hindering\nflexibility and draining vitality from dynamic companies. It is the old way,\nand it should end. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Over <a href=\"https://www.crowdfundinsider.com/2019/09/151257-stripe-announces-new-lending-services-for-internet-companies/\">70%</a>\nof startups have capital needs. And raises always involve tradeoffs. But for\nthose boldly creating Web 3.0, using a 1987 funding model defies logic. Since\nthe JOBS Act of 2012, blockchain startups can now <a href=\"https://www.thecrowdfundinglawyers.com/is-equity-crowdfunding-right-for-your-company/\">equity\ncrowdfund</a> via <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg\nA+</a> and <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a>.\nVisionaries can bypass VC middlemen and merge their funders and users into one\ncrowd. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":981,\"align\":\"center\",\"width\":540,\"height\":232} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Jen-An2.gif\" alt=\"\" class=\"wp-image-981\" width=\"540\" height=\"232\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Venture Capitalists are running away from blockchain startups </strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Anything new and exciting brings scammers. The 2017 <a href=\"https://www.thecrowdfundinglawyers.com/sec-unleashes-hurricane-ico/\">ICO\ncraze</a> flooded <a href=\"https://www.thecrowdfundinglawyers.com/five-ico-donts/\">swindlers</a> and\nunprepared honest brokers with gobs of cash but little corporate or government oversight.\nVCs were not immune. Fraudsters hosed them with other FOMO investors. Now they have\nretreated, creating a supposed cash crunch. As one analyst <a href=\"https://www.crowdfundinsider.com/2019/09/151229-report-private-crypto-and-blockchain-investing-slumped-in-2019/\">noted</a>,\n“VCs still like blockchain they just like it less.” &nbsp;&nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The numbers agree. Crunchbase <a href=\"https://news.crunchbase.com/news/blockchain-and-crypto-deals-are-down-sharply-in-2019/\">reports</a>\nVCs have given $3.38 billion to blockchain ventures this year representing a major\ndrop from 2018’s $12.86 billion. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3741,\"align\":\"center\",\"width\":588,\"height\":376} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/VC-Graph-1-1024x656.png\" alt=\"\" class=\"wp-image-3741\" width=\"588\" height=\"376\"/><figcaption><strong>Source: </strong><a href=\"https://news.crunchbase.com/news/blockchain-and-crypto-deals-are-down-sharply-in-2019/\"><strong>Crunchbase</strong></a></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>This remains so even when removing tainted ICOs. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3742,\"align\":\"center\",\"width\":585,\"height\":376} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/VC-Graph-2-1024x657.png\" alt=\"\" class=\"wp-image-3742\" width=\"585\" height=\"376\"/><figcaption><strong>Source: </strong><a href=\"https://news.crunchbase.com/news/blockchain-and-crypto-deals-are-down-sharply-in-2019/\"><strong>Crunchbase</strong></a></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According to <a href=\"https://bitcoinexchangeguide.com/2018s-sharp-rise-in-blockchain-venture-capital-declines-60-in-2019-bitcoin-is-the-smarter-bet/\">Bloomberg</a>,\nthis year blockchain startups will see 60% less cash. Famed VC firm Andreesen\nHorowitz typifies this trend. It has <a href=\"https://www.crowdfundinsider.com/2019/09/151229-report-private-crypto-and-blockchain-investing-slumped-in-2019/\">dropped\nfunding</a> from $850 million last year to $75 million. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>But despite the dip, VC’s <em>love</em> blockchain. Since 2014,\nthey have <a href=\"https://bitcoinexchangeguide.com/2018s-sharp-rise-in-blockchain-venture-capital-declines-60-in-2019-bitcoin-is-the-smarter-bet/\">favored\nthese startups</a> over everything else. According to <a href=\"https://www.forbes.com/sites/yoavvilner/2018/11/23/evolution-of-venture-capital-structure-in-the-age-of-blockchain/#249c212929a1\">Crunchbase</a>\nJuly 2018, “set a record for the number of nine-figure rounds raise worldwide…\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p> $15 billion in venture capital deal flow, July was a good time to raise\n$100 million or more.” &nbsp;Just ten years\nago <a href=\"https://news.crunchbase.com/news/an-outsized-series-a-a-call-for-change-and-whales/\">Series\nA yielded</a> a few million dollars, today that’s a seed round. \n\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Blockchain startups can break replace venture capitalists with equity crowdfunding </strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>No doubt, many blockchain startups see the dip as worrisome.\nAfter all, some conflate success raising cash with market success. But blockchain\nstartups should view it as an opportunity. Grabbing big quick money may garner\npress and speaker invites but has real drawbacks. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>According to one <a href=\"https://www.riversaascapital.com/the-venture-capital-success-rate-for-startups/\">Harvard\nprofessor</a> VCs lose 75% of their bets with over a third completely busting. And\nVCs force out founders of startups that win. They also get <a href=\"https://www.thecrowdfundinglawyers.com/venture-capital-versus-equity-crowdfunding/\">management\npower</a> and exert pressure for quick returns. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3463,\"align\":\"center\",\"width\":484,\"height\":395} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/07/Michael-Scott-GIF-No.gif\" alt=\"\" class=\"wp-image-3463\" width=\"484\" height=\"395\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Blockchain represents the future web, venture capitalists funded the old one </strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Beyond control and pressure are doctrinal concerns. Instead\nof the <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">decentralized</a>,\nindividualized future <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">blockchain\nrepresents</a>, a small group of elite investors get richer. Familiar names\nlike Union Square Ventures and Sequoia Capital buy more yachts whilst the public\noften pays with intrusive access to their lives and data. Interestingly those funding\nblockchain startups seem oblivious to their role in this cycle, as per a recent\nAndreessen Horowitz <a href=\"https://a16z.com/crypto/#vertical-landing-investment-thesis\">post</a>: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>In an era in which the internet is increasingly <a rel=\"noreferrer noopener\" href=\"https://medium.com/@cdixon/crypto-tokens-a-breakthrough-in-open-network-design-e600975be2ef\" target=\"_blank\">controlled</a> by a handful of large tech incumbents, it’s more important than ever to create the right economic conditions for developers, creators, and entrepreneurs. Trust also enables new kinds of governance where communities collectively make important decisions about how networks evolve, what behaviors are permitted, and how economic benefits are distributed.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>Of course, through its model AH thwarts the “right economic\nconditions for developers, creators, and entrepreneurs . . . and a fairer way\nfor how “economic benefits are distributed.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Blockchain promises to fix Web 2.0 maladies, particularly control\nof personal data and embedded, censorious middlemen. <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">The\nnext web</a> will fell gatekeepers, protect user data, and aid peer-to-peer business\nmodels. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This what George Gilder in ‘<a href=\"https://www.thecrowdfundinglawyers.com/what-will-life-be-like-after-google/\">Life\nafter Google</a>’ called the “great unbundling.” Yet if VCs control the purse\nhow <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">decentralized</a>\ncan the new web be? Just as blockchain can reorient the individual’s\nrelationship with the web, so should blockchain startups discard old funding\nmodels for the crowd. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":398,\"align\":\"center\",\"width\":542,\"height\":305} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-2.gif\" alt=\"\" class=\"wp-image-398\" width=\"542\" height=\"305\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Equity crowdfunding is more democratic and inclusive but harder </strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Equity crowdfunding allows blockchain startups to bypass VCs.\nIt merges users and investors. Capital raising becomes democratic, inclusive,\nand mission oriented. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This path is harder. It means additional risk and effort. But\nthose with the courage and moxie to create a new internet should welcome the\nchallenge. <a href=\"https://www.thecrowdfundinglawyers.com/is-equity-crowdfunding-right-for-your-company/\">Equity\ncrowdfunding</a> via <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg\nA+</a> and Reg CF get results and allow someone beside <a href=\"https://twitter.com/fredwilson\">Fred Wilson</a> to profit. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>After years delay, the SEC finally approved <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">Blockstack’s\nReg A+ token sale</a>. Now other blockchain startups can follow. <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg A+</a> has a $50 million\nlimit, tokens can be instantly liquid, and the raise is open to all. For the\nless ambitious, <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a>\nhas a $1.07 million limit and provides restricted securities. Yet it is viable.\n<a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> portal\nRepublic recently secured the first token air drop. Like <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg A+</a>, <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> is open to all.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Blockchain startups are rightly proud of creating a better\nweb. One that is better, safer, more individualized, and democratic. An internet\nfree of suffocating data silos and chokepoints. Thus, it makes no sense they\nshould approach funders who created the current mess. Blockchain’s promise\nshould include capitalization. It should be open to everyone. Blockchain startups\ncan make this happen.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a>\nvia <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>\n</p>\n<!-- /wp:paragraph -->','Why Blockchain Startups Should Equity Crowdfund','','publish','open','open','','why-blockchain-startups-should-equity-crowdfund','','\nhttps://www.riversaascapital.com/the-venture-capital-success-rate-for-startups/','2019-09-08 19:49:03','2019-09-08 19:49:03','',0,'https://www.thecrowdfundinglawyers.com/?p=3743',0,'post','',0),(3803,1,'2019-09-17 13:57:42','2019-09-17 13:57:42','<!-- wp:paragraph -->\n<p>Congress sought to thwart startups by limiting early-stage capital in a remarkable, but little-noticed <a href=\"https://www.crowdfundinsider.com/2019/09/151488-us-house-financial-services-subcommittee-debates-the-merits-of-securities-exemptions-accredited-investor-definition/\">move</a> last week. A House Financial Services Subcommittee <a href=\"https://www.youtube.com/watch?time_continue=1748&amp;v=f2l5Ix_l6JY\">hearing</a> began with Chairwoman <a href=\"https://maloney.house.gov/\">Carolyn Maloney</a> (D-NY) lamenting the “troubling” success of private capital. And it sunk from there. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Indeed, the academic-and-regulator-laden panel argued Congress should: (i.) restrict private capital, (ii.) impose burdensome costs, and (iii) strip retail (crowdfund) investors from risky but high-return startup opportunities. &nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Congress should not thwart investment opportunities for startups despite academic advice</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The panelists frowned upon landscape shifts most would think praiseworthy. For example, <a href=\"https://www.bc.edu/bc-web/schools/law/academics-faculty/faculty-directory/renee-jones.html\">Renee Jones</a>, Professor of Law at Boston College worried startup founders now <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/09/hhrg-116-ba16-wstate-jonesr-20190911.pdf\">negotiate more favorable terms</a> for received capital. The power shift meant founders could more ably parry pressure to immediately “prove their concept and profitability, so they could proceed along the pipeline toward an eventual IPO.” Previous pressures included board seats, vetoes, and most often founder ouster.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.sifma.org/people/michael-s-pieciak/\">Mike Pieciak</a>, Vermont Commissioner of Financial Regulation, argued state agencies should granularly monitor Reg D investors. This despite its spectacular success and the extra burden inherent with double jurisdiction. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>But most alarming was <a href=\"https://law.duke.edu/fac/defontenay/\">Elisabeth de Fontenay</a>, Professor of Law, Duke University. In both her live and <a href=\"https://financialservices.house.gov/uploadedfiles/hhrg-116-ba16-wstate-defontenaye-20190911.pdf\">written testimony</a>, Ms. <a>de Fontenay</a> resembled a Chinese functionary describing Hong Kong protesters. She viewed startups as state vassals and retail investors as submissive subjects. Stemming the decline of public companies may require “mandating” firms go public. The government must impose “paternalistic interventions,” lest small investors get “thrown to the wolves.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>According\nto Ms. de Fontenay, startups that seek capital from these would-be babes in the\nwoods are likely failures-in-waiting or scheming ne’er-do-wells. They are “the\nworst of the lot,” those with the “<a href=\"https://financialservices.house.gov/uploadedfiles/hhrg-116-ba16-wstate-defontenaye-20190911.pdf\">worst\nprospects</a>,” because legitimate capital seekers “don’t want them.” </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3463,\"align\":\"center\",\"width\":451,\"height\":368} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/07/Michael-Scott-GIF-No.gif\" alt=\"\" class=\"wp-image-3463\" width=\"451\" height=\"368\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Companies seeking retail investment are not the dregs of the startup world</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>To see if this is true one might peruse <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> <a href=\"https://www.thecrowdfundinglawyers.com/how-to-choose-an-equity-crowdfunding-portal/\">portals</a> <a href=\"https://wefunder.com/\">WeFunder</a>, <a href=\"https://www.startengine.com/\">Start Engine</a>, or <a href=\"https://republic.co/\">Republic</a>. Each boast a slew of promising companies in myriad industries. Or listen to Jonathan Cohen, President &amp; Chief Executive Officer, 20/20 GeneSystems, Inc. On a <a href=\"https://www.thecrowdfundinglawyers.com/talking-reg-cf-equity-crowdfunding-at-the-heritage-foundation/\">Heritage Foundation panel</a> last year. Mr. Cohen stated his promising biotech company had already raised Reg D money but chose a Reg CF round anyway. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Or Ms. de Fontenay may have trotted to <a href=\"https://dcstartupweek.org/\">DC Startup Week</a>. Many events took place while the professor was in town. Throughout DC dozens of innovative and exciting startups brandished wares, practiced pitches, and sought investment. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>It is unsurprising the panelists were mostly pedigreed in America’s elite universities. While these institutions attract much intellectual capital, they don’t produce comparative impact. More likely they’ll graduate career bureaucrats and lecturers seeking to rule tomorrow’s “doers.” </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In <a href=\"http://www.thecrowdfundinglawyers.com/2019/02/21/what-will-life-be-like-after-google/\">Life After Google</a>, George\nGilder wrote about America’s decaying institutions:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Feeding on the air of entitlement of fading upper-class institutions that accomplish “little with a lot” of other people’s funds, the Harvard initiative reflected the increasing inebriation of elite American education. Focusing on stopping progress, barring new power plants, dismantling chemical facilities, mobilizing against Israel, and other reactionary pursuits, Ivy institutions are pursuing fancies of a declining intellectual and business elite, full of chemophobic nags and luddite lame-ducks quacking away on their miasmic pools of old money as the world whirls past them.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Congress and the SEC have already thwarted startup capital through regulatory burdens &nbsp;</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.egsllp.com/attorneys/douglas-ellenoff\">Douglas Ellenoff</a>, Partner, Ellenoff Grossman &amp; Schole LLP <a href=\"https://www.youtube.com/watch?time_continue=1748&amp;v=f2l5Ix_l6JY\">paddled alone</a> as a voice of sanity in a sea of credentialed madness. “We should ensure in my judgment these markets are operating optimally and regulate only to the extent absolutely necessary.” The sole panelist that advises clients on securities-law vagaries, Mr. Ellenoff also noted the costs in both expense and opportunity inherent in the current regime. Specifically<a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\"> Reg CF</a>: “The burdens of any kind of preparation of disclosure that needs to be filed with the SEC is an undertaking it takes time energy and resources and for up to 1.07M financing the costs of doing that is a meaningful percentage of the proceeds raised in those deals and it’s out of pocket before you even know if you’ve raised the money.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":398,\"align\":\"center\",\"width\":535,\"height\":301} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-2.gif\" alt=\"\" class=\"wp-image-398\" width=\"535\" height=\"301\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:image {\"id\":1579,\"align\":\"center\",\"width\":595,\"height\":316} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Reg-CF-Costs.jpg\" alt=\"SEC Reg CF Report Costs\" class=\"wp-image-1579\" width=\"595\" height=\"316\"/><figcaption><strong>Source: Securities and Exchange Commission </strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Scammers have not overtaken unsophisticated investors</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>While the JOBS Act that enabled retail investment in startups via <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> and <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg A+</a> was not the day’s focus, it formed background. Indeed, a central theme was how much government should trust its citizens with their money. &nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>To her credit Ms. de Fontenay didn’t <a href=\"https://financialservices.house.gov/uploadedfiles/hhrg-116-ba16-wstate-defontenaye-20190911.pdf\">blanch</a>. “Based on the evidence at hand, the easiest and most defensible means of simplifying the registration exemption regime would be to eliminate the current exemptions for retail investors that have had immaterial uptake thus far.” Mr. Pieciak more subtly <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/09/hhrg-116-ba16-wstate-pieciakm-20190911.pdf\">demurred</a> crowdfunding is “niche” and presumably not worth the bother. &nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":415,\"align\":\"center\",\"width\":642,\"height\":507} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/CFgraph.png\" alt=\"\" class=\"wp-image-415\" width=\"642\" height=\"507\"/><figcaption><strong>Reg CF Commitments: Source Crowdfund Capital Advisors </strong></figcaption></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>But “immaterial uptake” may be in the eyes of the beholder.” According to <a href=\"http://crowdfundcapitaladvisors.com/cclear_public/\">Crowdfund Capital Advisors</a> 1,900 Reg CF issuers have supported over 10,000 jobs. And panelist Dr. Andrew Lo, Professor, Massachusetts Institute of Technology Sloan School of Management <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/09/hhrg-116-ba16-wstate-loa-20190911.pdf\">written testimony</a> stated, “the firms using crowdfunding have exceeded their targeted offering amount by 300%, implying significant excess demand.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Congress thwarted Reg CF and Reg A+ from the start but they are still growing</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>But these\nnumbers would carry further materiality had the SEC not straddled Reg CF with <a href=\"https://www.thecrowdfundinglawyers.com/sec-reg-cf-report-details-data-criticisms/\">suffocating\nrules</a>. Both government and industry recognize the problems and have\nproposed fixes, but heretofore none have materialized.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Unfortunately, <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg A+</a> has not yet taken flight but again government obstruction deserves the blame. But the SEC’s recent <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">Blockstack</a> token-sale qualification will hopefully juice the exemption. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>A final concern is scammers. They supposedly will flood private investors with unseemly offers that existing protections cannot counter. As Ms. de Fontenay <a href=\"https://financialservices.house.gov/uploadedfiles/hhrg-116-ba16-wstate-defontenaye-20190911.pdf\">stated</a>, “[W]e already have some evidence of this adverse selection, given the poor performance, noncompliance, and even outright fraud with the new Regulation A and crowdfunding exemptions.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>But <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> disagrees. As Mr. Ellenoff <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/09/hhrg-116-ba16-wstate-ellenoffd-20190911-1.pdf\">stated</a>, “Notwithstanding a remarkable amount of outspoken investor protection advocacy to the build-up of the passage of the JOBS Act, Title III Regulation Crowdfunding in particular, it is now acknowledged by regulators that none of the doom-and gloom prognostications of fraud or litigation has presented itself.\" Thus, those worrying retail investors getting hosed have precious few actual examples.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Congress should nurture not thwart startup capital formation</strong> </h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Congress should applaud itself for opening private markets to retail investors. The fact is the rocket VC-IPO model <a href=\"https://www.thecrowdfundinglawyers.com/venture-capital-versus-equity-crowdfunding/\">doesn’t suit many startups</a>. And most people risking their money do so cautiously as the message boards under <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a> raises attest. Thus, the JOBS Act gives more companies a chance. Particularly those from nontraditional locales or with unconventional founders. Congress should see the enormous potential and embrace alternative and private means of capital formation. It is good for the economy, investors, and entrepreneurs. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:core-embed/youtube {\"url\":\"https://www.youtube.com/watch?time_continue=1748\\u0026v=f2l5Ix_l6JY\",\"type\":\"video\",\"providerNameSlug\":\"youtube\",\"align\":\"center\",\"className\":\"wp-embed-aspect-16-9 wp-has-aspect-ratio\"} -->\n<figure class=\"wp-block-embed-youtube aligncenter wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\nhttps://www.youtube.com/watch?time_continue=1748&amp;v=f2l5Ix_l6JY\n</div></figure>\n<!-- /wp:core-embed/youtube -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>\n<!-- /wp:paragraph -->','Congress Looks to Thwart Startups','','publish','open','open','','congress-looks-to-thwart-startups','','','2019-09-17 14:14:18','2019-09-17 14:14:18','',0,'https://www.thecrowdfundinglawyers.com/?p=3803',0,'post','',0),(3804,1,'2019-09-17 12:44:19','2019-09-17 12:44:19','<iframe title=\"09/11/2019 - Examining Private Market Exemptions as a Barrier to IPOs and Retail... (EventID=109907)\" width=\"1080\" height=\"608\" src=\"https://www.youtube.com/embed/f2l5Ix_l6JY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen></iframe>','','','publish','closed','closed','','490bce202ea1afc7d3e47b18e10e683b','','','2019-09-17 12:44:19','2019-09-17 12:44:19','',0,'https://www.thecrowdfundinglawyers.com/490bce202ea1afc7d3e47b18e10e683b/',0,'oembed_cache','',0),(3814,1,'2019-09-17 13:30:33','2019-09-17 13:30:33','','House Committee','','inherit','open','closed','','house-committee','','','2019-09-17 13:30:59','2019-09-17 13:30:59','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/House-Committee.png',0,'attachment','image/png',0),(3850,1,'2019-09-22 18:36:10','2019-09-22 18:36:10','','Amy Winehouse Its true','','inherit','open','closed','','amy-winehouse-its-true','','','2020-11-10 16:44:23','2020-11-10 16:44:23','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Amy-Winehouse-Its-true.gif',0,'attachment','image/gif',0),(3851,1,'2019-09-22 18:36:50','2019-09-22 18:36:50','','ICO Box','','inherit','open','closed','','ico-box','','','2019-09-22 18:38:00','2019-09-22 18:38:00','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/ICO-Box.jpg',0,'attachment','image/jpeg',0),(3852,1,'2019-09-22 18:37:27','2019-09-22 18:37:27','','Ole Miss its true','','inherit','open','closed','','ole-miss-its-true','','','2020-11-10 16:46:35','2020-11-10 16:46:35','',7366,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Ole-Miss-its-true.gif',0,'attachment','image/gif',0),(3853,1,'2019-09-22 18:58:59','2019-09-22 18:58:59','<!-- wp:paragraph -->\n<p>The Securities and Exchange Commission (SEC) <a href=\"https://www.sec.gov/litigation/litreleases/2019/lr24601.htm\">iced</a> erstwhile token issuer ICOBox last week. Indeed, the <a href=\"https://www.sec.gov/litigation/complaints/2019/comp24601.pdf\">complaint</a> filed in a California court alleges ICOBox didn\'t register its $14.6M token sale and thus should disgorge the money. The case will likely settle quickly as the alleged facts are damning and related <a href=\"https://www.crowdfundinsider.com/2019/08/150997-paragon-coin-starts-processing-sec-mandated-refunds-for-funds-raised-via-ico/\">Paragon Coin already surrendered</a>. Unlike <em><a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">SEC vs. Kik</a></em>, this case won’t color token law. Questions like <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">“sufficient” decentralization</a> and <em><a href=\"https://www.thecrowdfundinglawyers.com/sec-goes-for-kik-will-it-get-knifed/\">Howey test utility</a></em> will resolve elsewhere. But the case offers lessons in timing, compliance, best approaches to contesting SEC rules. And none of the parties here garner much sympathy. ICOBox, investors, and the SEC all acted faulty.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>ICOBox officers invited SEC scrutiny by promoting potential gains and downplaying risks &nbsp;</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Over 2,00 investors bought ICOBox tokens in 2017. Company\nofficers raised lots of <a href=\"https://www.sec.gov/litigation/complaints/2019/comp24601.pdf\">red flags</a>\nwith performance promises, discarded risks, and downplayed SEC moves that endangered\nthe sale. Afterward ICOBox’s marketing and compliance shop supplied ICO issuers\nmyriad services. But also allegedly performed broker-dealer services, taking “success\nfees,” and “transaction-based compensation.” </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>ICOBox didn\'t register the sale or fully explain why it didn’t\nneed to. When would-be investors asked about risk, officers blew off concerns.\nThey described the sale as for “product tokens” and “discount cards.” They dismissed\nthe <a href=\"https://www.sec.gov/news/press-release/2017-131\">just-out SEC DAO report</a>\nand claimed without apparent legal backing the tokens’ <a href=\"https://www.sec.gov/litigation/complaints/2019/comp24601.pdf\">“purpose”\nand “functions”</a> dodged registration. Afterward their alleged broker-dealer moves\npractically begged for SEC enforcement.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3852,\"align\":\"center\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Ole-Miss-its-true.gif\" alt=\"\" class=\"wp-image-3852\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Investors with ICO FOMO should think more clearly &nbsp;</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Investors who purchased the tokens and others through ICOBox\nfare no better in hindsight. Many knew of the DAO report, and those who invested\napparently didn\'t seek a clearing legal opinion. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>ICOBox’s <a href=\"https://icobox.io/\">website</a> lists no\nphysical address, no phone number, not even an email address. (It does have a\ncontact form). There are no real pictures or team bios. No location listing. It\npurports to offer legal opinions that assure potential clients of offering\nlegality but name no lawyers or firms. The site invites the impression of lucky\namateurs who caught a wave and ended up dazed with a $14.6M stash.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The site’s press releases also scream Stay Away! Officers constantly churn. The CEO for example lasted <a href=\"https://icobox.io/pressreleases/121418_6\">five months</a>. Others notify readers of <a href=\"https://icobox.io/pressreleases/011419_1\">changing business models</a> and shifting priorities. And some are <a href=\"https://icobox.io/pressreleases/010219_1\">contradictory</a> like “It is clear that in 2019 investors will mostly be focused on the security token market, because this approach meets the regulatory requirements . . .” Okay but what of ICOBox’s listed previous and current clients that didn\'t follow the rules, not to mention its own token sale.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>In short, investors not heeding these warnings may need a\nhard lesson in due diligence and the dangers of FOMO.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":417,\"align\":\"center\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-3.gif\" alt=\"\" class=\"wp-image-417\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>The SEC’s token approach and guidance is a case study in bureaucratic malpractice</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Finally, the SEC shouldn’t take any victory laps. It will likely get a quick win, but its posture deserves no praise. The complaint emphasizes ICOBox’s timing, selling tokens after the infamous DAO report. Just so. The SEC released the report on July 25. ICOBox announced its token sale on July 27 and started selling on August 7.&nbsp; At the time confusion reigned about what the report meant and how vigorously the SEC would pursue errant issuers. The <a href=\"https://www.thecrowdfundinglawyers.com/sec-unleashes-hurricane-ico/\">SEC did not even bring charges against DAO</a> but instead left it as a warning. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Media now calls the DAO report a “line in the sand.” “The SEC has consistently taken legal action against any ICO issuer post-DAO report if they have been deemed as issuing unregistered securities or other acts of fraud.” But no one knew that then. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>But what if ICOBox had sold its tokens six-month earlier? The ICO advent clearly flummoxed the commission. And its response: appointing career bureaucrat “<a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie</a>” Szczepanik Crypto Czar and <a href=\"https://www.thecrowdfundinglawyers.com/the-sec-mobilizes-for-war/\">flooding issuers with subpoenas</a> in early 2018 seems reactive and benighted. And for all the amateurishness, ICOBox doesn’t look like an outright fraud where the SEC should focus. Since August 2017, it reportedly helped 30 token issuers raise over $650 million. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Unfortunately, the SEC’s policy-by-enforcement harmed the economy and prompted grousing about uneven prosecution and sparse direction. And latent corrective attempts only mucked it up more. For instance, the commission’s long-awaited <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">token “guidance”</a> released in April and signed by ‘<a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie</a>’ and ‘Bill the Butcher’ Hinman was lamentable. Indeed, it took six months, likely cost the American taxpayer upwards of a quarter-million dollars and clarified nothing. And everyone from <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Commissioners</a> to securities lawyers to media lampooned it.&nbsp; </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3850,\"align\":\"center\",\"width\":468,\"height\":259} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Amy-Winehouse-Its-true.gif\" alt=\"\" class=\"wp-image-3850\" width=\"468\" height=\"259\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>ICOBox’s SEC trouble should guide future issuers, activists, and investors</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Token issuers should learn from ICOBox’s missteps to avoid\nrescissions, lawsuits, and even criminal charges:</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li>The law is fluid, play by      the rules. This means hiring experienced counsel willing to sign opinions.      Views from issuers that no legal obligations exist mean nothing. </li><li>Better rules come through advocacy.      As inept as the government is, it’s the only arbiter. Both Congress and      the SEC have input paths. The SEC <a href=\"https://www.sec.gov/news/press-release/2019-97\">sought public comment</a> in its current reconciliation      of private exemptions. The president appoints commissioners and good ones      like Hester Peirce aka <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Crypto      Mom</a> move the needle. Finally, some lawmakers see the problems. Reps<strong>. </strong>Warren      Davidson (R-OH) and Darren Soto (D-FL) have sponsored the <a href=\"https://www.thecrowdfundinglawyers.com/congress-tries-to-bring-clarity-to-crypto-markets/\">Token      Taxonomy Act</a> and the JOBS Act 3.0 passed last Congress although it’s now      stalled. Packed rooms in hearings like one this week pressure Congress.  </li></ul>\n<!-- /wp:list -->\n\n<!-- wp:paragraph -->\n<p>Still, the <a href=\"https://www.thecrowdfundinglawyers.com/how-token-rewards-will-kill-social-media/\">token future is bright</a>. Distracted lawmakers, inept regulators, sleazy issuers, and stulted FOMO investors won’t stop it. But technology won’t halt buck-seeking con men or turf-protecting governments guarding control over the populace and economy. Buyer should beware and those interested in the <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">token economy</a> should get involved.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":980,\"align\":\"center\",\"width\":329,\"height\":326} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/do-it.gif\" alt=\"\" class=\"wp-image-980\" width=\"329\" height=\"326\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a>\nvia <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>\n</p>\n<!-- /wp:paragraph -->','SEC Ices ICOBox','','publish','open','open','','sec-ices-icobox','','','2019-09-22 19:03:01','2019-09-22 19:03:01','',0,'https://www.thecrowdfundinglawyers.com/?p=3853',0,'post','',0),(3870,1,'2019-09-28 17:41:40','2019-09-28 17:41:40','<!-- wp:paragraph -->\n<p>The Securities and Exchange Commission’s (SEC) commissioners\ntestified last week to the House Financial Services Committee. The otherwise\nnondescript <a href=\"https://www.youtube.com/watch?v=iEu6wxOoCNg\">3.5-hour\nconfab</a> briefly surveyed the crowdfunding and crypto landscape. But Congress\nmissed a huge chance to examine the commission’s scattershot guidance and\narbitrary enforcement. Its desultory policymaking hinders the economy and harms\nthose it seeks to help. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>This hearing followed one on the <a href=\"https://www.thecrowdfundinglawyers.com/congress-looks-to-thwart-startups/\">supposed\nmenace of private capital markets</a>. But unlike there, Commissioners provided\nbalanced testimony. And only <a href=\"https://www.sec.gov/biography/commissioner-robert-j-jackson\">Robert J.\nJackson Jr</a>.—who (*eye roll*) holds five Ivy League degrees—promoted extreme\nanti-capitalist views.  </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3872,\"align\":\"center\",\"width\":409,\"height\":292} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/eye-roll.gif\" alt=\"\" class=\"wp-image-3872\" width=\"409\" height=\"292\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>SEC progress on Reg CF crowdfunding could rescue drowning exemption</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The hearing began well with Patrick McHenry (R-NC) chastising\n<a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a>’s shackling.\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>McHenry: One exemption that warrants modernization is the crowdfunding exemption. My original crowdfunding bill which was included in the JOBS Act was only a few pages long, 11 pages in fact. I appreciate the SEC and their hardworking staff creating 685 pages worth of regulations around those 11 pages. The absurdity of this I have pointed out a number of times since then. So, you’ve given me at least the rhetorical value of talking about the burden of SEC regulation of making an exemption and a public law completely meaningless because of the impact of the costs.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>As the bill’s sponsor, however, his concern proved sadly\nunique as the hearing wandered about. Everyone knows <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">Reg\nCF’s shortcomings</a>. And the commission seems finally to be acting. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Chairman <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">Shallow-End Jay Clayton</a>:&nbsp; You can get up to a million-dollar company going with Reg Crowdfunding and some of our other exemptions. It’s really hard to grow a business from say a $1M business to a $50M business . . . if there are things that we can do to facilitate capital formation in that gap so our small businesses can become larger I think that’s an area we should focus on.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>The SEC recently sought <a href=\"https://www.crowdfundinsider.com/2019/09/152022-an-issuers-point-of-view-comments-on-reg-cf-the-secs-concept-release/\">public\ncomment</a> on reconciling and improving the private exemptions. Commenters sent\nmany good ideas. Long awaited action is hopefully afoot. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3700,\"align\":\"center\",\"width\":386,\"height\":263} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Steve-Harvey-Dancing.gif\" alt=\"\" class=\"wp-image-3700\" width=\"386\" height=\"263\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>SEC token and crypto guidance remains woeful</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Less promising is token-sale progress. The SEC seems no\ncloser to solving the crypto riddle than during the <a href=\"https://www.thecrowdfundinglawyers.com/sec-unleashes-hurricane-ico/\">ICO\ncraze</a>, with one exception. &nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Congressman McHenry mentioned the <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">Blockstack\nReg A+ token sale</a> and several are irked by <a href=\"https://www.thecrowdfundinglawyers.com/mark-zuckerberg-thinks-were-all-stupid-and-he-may-be-right/\">Mark\nZuckerberg’s corporate crypto scheme</a>. But commissioners couldn’t remove\ncrypto uncertainty. Commissioner Hester Peirce, aka <a href=\"https://www.thecrowdfundinglawyers.com/cryptomom-versus-the-machine/\">Crypto\nMom</a> stated such when discussing utility tokens and policy-by-enforcement that\nonly seems to bother her.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Crypto Mom: I would like to see us be a little more forward thinking in ways that we might accommodate unique aspects of digital assets. For example, digital assets that are utility tokens I don’t know that the securities laws framework that we have right now is the appropriate framework for them and so I’d like for us to think about creating some kind of safe harbor.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Crypto Mom: But enforcement is a poor way to announce policy. We need to be clear in writing our rules and we need to make sure we provide the guidance that firms and individual need as necessary. We understand that our rule book is complicated, and we work with well-intentioned firms and individuals to help them comply with our rules.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>The SEC’s April Digital Asset “guidance\": dazed and confused</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>This wantonness colored the hearing’s best exchange when Ted\nBudd (R-NC) mocked the SEC’s now-infamous <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">token\n‘guidance,’</a> which has become a <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">poster\nchild for bureaucratic drivel</a>. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Budd: In April Fin Hub published a framework for investment contract analysis of digital assets which included 60 plus factors for determining whether or not the SEC would consider a digital asset a security. In a statement released alongside your framework your colleagues Bill Hinman and Valerie Szczepanik indicated that the framework is not intended to be an exhaustive overview of the law. But rather an analytical tool to help market participants . . . [H]as the guidance helped resolve their most important questions? </p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Crypto Mom: [No] </p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Budd: So last question, when <em>can </em>market participants expect and exhaustive overview of the law so that they can get the regulatory certainty required to continue to innovate and create American jobs.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>The SEC plagues entrepreneurs with ambiguous and arbitrary enforcement</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The Commission’s name brand, massive budget, and economic power\nincentives <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">risk-averse,\nsnails-pace progress</a> on issues that won’t wait. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Indeed, the SEC abstains from the only recent securities\nsuccess: <a href=\"https://www.thecrowdfundinglawyers.com/reg-d/\">Reg D</a>. Onerous\nrules knifed <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Reg CF</a>\nand <a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg A+</a>. And rules\nencourage companies to stay private rather than face the many IPO burdens. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>All the while, former <a href=\"https://bitcoinmagazine.com/articles/former-sec-cyber-unit-head-joins-coinbases-attorneys#!\">SEC\nstaff</a> and <a href=\"https://www.law.com/therecorder/2018/06/04/ripple-labs-brings-on-former-top-sec-officials-to-help-defend-private-securities-lawsuit/?slreturn=20190828111056\">commissioners</a>\nget massive paydays to interpret and cajole because no one can discern motives\nbehind mountains of disclaimers and subpoenas. Staffers justify this as needed\n“flexibility.” <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">As\nNPC Valerie Szczepanik noted</a>, “The lack of bright-line rules allows\nregulators to be more flexible.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Just so, as <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">these\npages have stated</a>: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>This is true but has other effects. It leaves regulators with massive discretion. And it gives them enormous power over the economy with no responsibility for the results. It mandates entrepreneurs approach them hat-in-hand for permission. And it makes them sought after speakers on the conference circuit.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>But it’s a zero-sum game. Every unit of power Ms. Szczepanik reserves for herself and her colleagues removes it from job producers. Indeed, every ambiguous pronouncement shunts billable hours to lawyers and compliance professionals instead of research or marketing. Those building tomorrow’s economy need the flexibility not bureaucrats. They will power our future long after Ms. Szczepanik takes her professorship or retires to a nonprofit.&nbsp; </p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Congress missed a chance to examine the SEC’s misguided de facto policymaking</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Entrepreneurs facing intense market pressures need flexibility.\nWarren Davidson’s (R-OH) soliloquy struck the matter and is worth fully quoting:\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Davidson: Recently director of corporation and finance Bill Hinman stated in a fireside chat that the SEC prefers an approach to digital assets through facts and circumstances rather than a bright line test. This company by company approach prevents regulatory clarity and it suffers from some of the charm and inefficiency of third world power structures. For this reason, although innovators are in America and innovation is still occurring in America capital is fleeing. Not to avoid our regulations to find efficient regulatory clarity. And they’re finding it elsewhere. We need a simple set of rules that apply equally and clearly to all. That is the premise of a bill I know you won’t talk about. But the framework that the market needs. Where is the capital going? Places like Singapore, the UK, Switzerland, have laid out clear frameworks for digital assets. </p><p>Meanwhile the US hundreds of companies await No Action Letters, with only two having been issued thus far by the SEC. Now I agree with you that the ICO situation represents bad outcomes, but the root issue remains. America does not have a clear regulatory framework. Consumer and investors are harmed by that status quo in fact Commissioner Peirce nailed the explanation, the SEC should not only be concerned about fraud but also about opportunity. Our failure to provide regulatory clarity fails Americans on both counts. We have become the world’s land of opportunity the best destination for goods, services, capital, intellectual property and more by anarchy or by inaction. With respect for digital assets it’s time for deeds not words.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>Yet instead of forcing <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">Shallow-End\nJay</a>’s hand, Davidson sought <a href=\"https://www.thecrowdfundinglawyers.com/cryptomom-versus-the-machine/\">Crypto\nMom</a> who, of course, agreed.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>The problem is the SEC’s results not intentions</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The SEC undoubtedly tries. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":1588,\"align\":\"center\",\"width\":358,\"height\":269} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Simpson-GIF.gif\" alt=\"\" class=\"wp-image-1588\" width=\"358\" height=\"269\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>But too often we get years-long dithering before <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">eye-rolling\nguidance</a> or subpoena floods. And people never subject to market forces live\ncomfortable lives in prestige whilst hindering tomorrow’s economy. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:core-embed/youtube {\"url\":\"https://www.youtube.com/watch?v=iEu6wxOoCNg\",\"type\":\"video\",\"providerNameSlug\":\"youtube\",\"className\":\"wp-embed-aspect-16-9 wp-has-aspect-ratio\"} -->\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\nhttps://www.youtube.com/watch?v=iEu6wxOoCNg\n</div></figure>\n<!-- /wp:core-embed/youtube -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a>\nvia <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph /-->','SEC Commissioners talk Crowdfunding, Crypto before Congress','','publish','open','open','','sec-commissioners-talk-crowdfunding-crypto-before-congress','','\nhttps://www.thecrowdfundinglawyers.com/congress-looks-to-thwart-startups/','2019-09-28 17:42:43','2019-09-28 17:42:43','',0,'https://www.thecrowdfundinglawyers.com/?p=3870',0,'post','',0),(3872,1,'2019-09-28 17:19:29','2019-09-28 17:19:29','','eye roll','','inherit','open','closed','','eye-roll','','','2019-09-28 17:19:29','2019-09-28 17:19:29','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/eye-roll.gif',0,'attachment','image/gif',0),(3874,1,'2019-09-28 17:30:39','2019-09-28 17:30:39','<iframe title=\"09/24/2019 - &quot;Oversight of the Securities and Exchange Commission: Wall Street’s...&quot;(EventID=110011)\" width=\"1080\" height=\"608\" src=\"https://www.youtube.com/embed/iEu6wxOoCNg?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen></iframe>','','','publish','closed','closed','','2fe1584bcbd4f8b8d15905c5c8f6d269','','','2019-09-28 17:30:39','2019-09-28 17:30:39','',0,'https://www.thecrowdfundinglawyers.com/2fe1584bcbd4f8b8d15905c5c8f6d269/',0,'oembed_cache','',0),(3930,1,'2019-10-15 18:20:17','2019-10-15 18:20:17','','block-one','','inherit','open','closed','','block-one','','','2019-10-15 18:32:16','2019-10-15 18:32:16','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/10/block-one.jpg',0,'attachment','image/jpeg',0),(3931,1,'2019-10-15 18:20:45','2019-10-15 18:20:45','','Michael Scott eww','','inherit','open','closed','','michael-scott-eww','','','2020-11-10 16:48:41','2020-11-10 16:48:41','',7366,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/10/Michael-Scott-eww.gif',0,'attachment','image/gif',0),(3932,1,'2019-10-15 18:37:53','2019-10-15 18:37:53','<!-- wp:paragraph -->\n<p>SEC bugles sounded retreat as Enforcement Division troops let Block.one escape an ICO fate that felled lesser transgressors like <a href=\"https://www.thecrowdfundinglawyers.com/sec-ices-icobox/\">ICOBox</a> and <a href=\"https://www.thecrowdfundinglawyers.com/from-meh-to-dont-tase-me-bro-ico-legal-advice/\">Munchee</a>. Perhaps it was gearing for heavyweight battles against <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik</a> and <a href=\"https://www.thecrowdfundinglawyers.com/telegram-sec-fight-could-signal-turning-point-for-crypto-law/\">Telegram</a>, perhaps Block.one’s lawyers had nude selfies of Chairman <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">‘Shallow-End Jay’ Clayton</a>. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3931,\"align\":\"center\",\"width\":327,\"height\":331} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/10/Michael-Scott-eww.gif\" alt=\"\" class=\"wp-image-3931\" width=\"327\" height=\"331\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Whatever the reason, Block.one walked away from a $4 billion\nunregistered securities offer with a “<a href=\"https://www.coindesk.com/the-silver-lining-in-block-ones-sec-slap-on-the-wrist\">stunning\nand historically significant</a>” $24 million wrist slap. No disgorgement, no rescission,\n<a href=\"https://www.theblockcrypto.com/post/41632/what-the-block-one-sec-settlement-in-the-eos-ico-sale-means-and-doesnt\">no\nnothing</a>. It can even keep selling securities (they promise to <a href=\"https://www.sec.gov/divisions/corpfin/cf-noaction/2019/block.one-093019-506.pdf\">follow\nthe rules</a> next time). Block.one and their China-heavy EOS blockchain, the <a href=\"https://www.coindesk.com/everyones-worst-fears-about-eos-are-proving-true\">seventh\nlargest</a> by market cap, celebrated. Others scratched their head. &nbsp;Whether justified or not the SEC’s sudden soft\ntouch raises questions about favoritism as yet another indecisive year for the <a href=\"https://www.thecrowdfundinglawyers.com/how-token-rewards-will-kill-social-media/\">token\nrevolution</a> starts to close. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Block.one’s settlement is either prudent or corrupt</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>We can view Block.one’s settlement two ways. The charitable\nview is the SEC kept its powder, fining an amount <a href=\"https://www.coindesk.com/the-silver-lining-in-block-ones-sec-slap-on-the-wrist\">roughly\nequal</a> to US investment in its raise. Block.one claims it tried to stymie US\ninvestors with IP blocking software and contractual disclaimers. Importantly\nthough, Block.one marketed the raise here and more importantly the tokens\nbecame instantly tradeable in the U.S. in <a href=\"https://www.sec.gov/litigation/admin/2019/33-10714.pdf\">July 2017</a>.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.coindesk.com/the-silver-lining-in-block-ones-sec-slap-on-the-wrist\">CoinDesk’s\nMichael J Casey</a> sums the less charitable view: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>One cynical conclusion to draw, then, is that the crypto startup community is now following the same norms as the Wall Street banks it seeks to dislodge. Here too, it seems, money buys protection, if not from the law per se but from the impediments to business that adverse rulings have on those of lesser means. It’s a melancholy thought for those who want this technology to lower barriers to entry and give scrappy garage-based startups a chance to change the world.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>By this view the SEC’s dreaded storm troopers trade in swords\nfor plowshares depending on the size of lawyer billables and zeros in the raise.\n(Think the crypto version of the government ignoring a presidential candidate’s\nofficial communications placed on a bathroom-based server). </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>At the least the SEC makes no secret it expects you to dance\nto its tune. As <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">Shallow-End\nJay</a> stated in recent <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">Congressional\ntestimony</a>: “Our doors are open to talk about these things and if somebody’s\ngoing to launch something without coming to see us first, I think that’s a bad\nidea.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Flatter the bureaucrats and the ‘facts and circumstances’\nfall your way. Fight it and plowshares sharpen and cannonades besiege your\ncompany. Unfortunately, without bright line rules the SEC leaves for its discretion\nwho gets artillery and who gets paroled. &nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3852,\"align\":\"center\",\"width\":471,\"height\":264} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Ole-Miss-its-true.gif\" alt=\"\" class=\"wp-image-3852\" width=\"471\" height=\"264\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>The SEC treated other ICO raises much harsher than Block.one</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Questions arise because of seemingly disparate treatment with <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik</a>, <a href=\"https://www.thecrowdfundinglawyers.com/from-meh-to-dont-tase-me-bro-ico-legal-advice/\">Munchee</a>, <a href=\"https://www.thecrowdfundinglawyers.com/sec-ices-icobox/\">ICOBox</a>, and the <a href=\"https://www.thecrowdfundinglawyers.com/telegram-sec-fight-could-signal-turning-point-for-crypto-law/\">looming Telegram</a>. The <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik-SEC battle</a> is the marquee showdown. Commentators describe <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik</a> as belligerent and “<a href=\"https://www.coindesk.com/the-silver-lining-in-block-ones-sec-slap-on-the-wrist\">angry</a>,” whilst Block.one was helpful and accommodating. But that confrontational stance may provide clarity on issues like <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">decentralization</a> that demurred cases like Block.one will never solve. As the <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">SEC’s infamous token guidance</a> indicates, clarity is not a commission priority.   </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Unlike Block.one, <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik</a>\nraised a comparatively paltry $100 million, half of which was an ostensibly\nlegal <a href=\"https://www.thecrowdfundinglawyers.com/reg-d/\">Reg D</a> and by\nits count only <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/08/SEC-v-Kik-Interactive-Anser-to-Complaint-8.6.19-Case-119-cv-05244-AKH.pdf\">$16\nmillion</a> from its allegedly illegal token sale. Yet <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik</a>\nhasn’t danced the SEC’s tune and is <a href=\"https://www.coindesk.com/kik-messaging-app-to-shut-down-following-sec-lawsuit-against-ico\">besieged</a>.\nThe stakes are high. An appellate court could weaken the SEC’s hand and force\nthem into clearer rules. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The SEC also iced <a href=\"https://www.thecrowdfundinglawyers.com/sec-ices-icobox/\">ICOBox</a>. And it\nstopped <a href=\"https://www.thecrowdfundinglawyers.com/from-meh-to-dont-tase-me-bro-ico-legal-advice/\">Munchee</a>\non Day Two of its raise. Just last week it filed an emergency injunction to <a href=\"https://www.coindesk.com/telegram-could-postpone-crypto-issuance-after-us-halts-token-sale\">stop\nTelegram</a> from flooding the U.S. market with what it deems unregistered\nsecurities. Block.one got none of this despite selling 900 million ERC-20\nTokens the commission deemed unregistered securities. These <a href=\"https://www.sec.gov/litigation/admin/2019/33-10714.pdf\">tokens were</a>\n“traded and widely available for purchase on numerous online trading platforms\nopen to U.S.-based purchasers throughout the duration of the ICO.”&nbsp; </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Ask LeBron James and Steve Kerr about kowtowing to China</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Whatever underlies the settlement, the commission could have\npicked a more sympathetic startup. Block.one’s EOS blockchain is weighted with\nChinese whales and <a href=\"https://www.coindesk.com/everyones-worst-fears-about-eos-are-proving-true\">fears\nof state intervention abound</a>. The biggest EOS feature is delegated Proof of\nStake allowing China-based nodes to control governance. There is also\nwide-spread vote buying. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Given ongoing controversies with Huawei, the NBA, and Hong\nKong, killing <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Canadian-based\nKik</a> whilst nerfing Chinese-heavy Block.one was not politic. Russian-created\nTelegram will now amass even more scrutiny.&nbsp;\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a>\nvia <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph /-->','Block.one Spared SEC Chopping Block, But Why?','','publish','open','open','','block-one-spared-sec-chopping-block-but-why','','\nhttps://www.thecrowdfundinglawyers.com/telegram-sec-fight-could-signal-turning-point-for-crypto-law/','2019-10-20 13:07:13','2019-10-20 13:07:13','',0,'https://www.thecrowdfundinglawyers.com/?p=3932',0,'post','',0),(3977,1,'2019-10-18 19:17:39','2019-10-18 19:17:39','','Telegram ICO','','inherit','open','closed','','telegram-ico','','','2019-10-18 19:18:02','2019-10-18 19:18:02','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/10/Telegram-ICO.jpg',0,'attachment','image/jpeg',0),(3978,1,'2019-10-18 19:38:56','2019-10-18 19:38:56','<!-- wp:paragraph -->\n<p>The Telegram SEC fight over its proposed “Gram” release could mark a sea change for U.S. crypto law. Both sides have dug in amid <a href=\"https://www.scribd.com/document/430781940/Telegram-Response-to-SEC\">rising tension</a>. And given the stakes—$425 million in U.S. investment—a truce seems doubtful. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The SEC got an emergency order to stop Gram purchasers “<a href=\"https://www.sec.gov/news/press-release/2019-212\">flooding</a>” the U.S. market by reselling Grams to retail investors. Because the <a href=\"https://www.sec.gov/litigation/complaints/2019/comp-pr2019-212.pdf\">commission argues</a> Grams are securities, resales violate U.S. law. But <a href=\"https://www.scribd.com/document/430781940/Telegram-Response-to-SEC\">Telegram says</a> Grams are would-be commodities once disbursed via its TON Blockchain. And the fight has turned nasty with Telegram accusing the SEC of “<a href=\"https://www.scribd.com/document/430781940/Telegram-Response-to-SEC\">steamrolling</a>” and the commission demanding swift discovery. Without a resolution this case will go to trial and then appellate review. Indeed, this could clarify crypto law rules heretofore dictated only by SEC fiat. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":980,\"align\":\"center\",\"width\":314,\"height\":311} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/do-it.gif\" alt=\"\" class=\"wp-image-980\" width=\"314\" height=\"311\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Telegram SEC fight evolved from app’s jump from messaging to blockchain</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Telegram’s Messenger is an encrypted app with 300 million\nmonthly users worldwide. Privacy focus made it a crypto favorite with <a href=\"https://www.sec.gov/litigation/complaints/2019/comp-pr2019-212.pdf\">84%</a>\nof blockchain projects having channels. But it has also become a government target.\nFounder Pavel Durov left his native Russia in 2014 after clashing with its\ngovernment. And Russia <a href=\"https://www.cnet.com/news/russia-bans-telegram-encrypted-messaging-app/\">banned</a>\nMessenger over concerns of use by state enemies.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Early last year Telegram raised capital for the Telegram Operation Network (TON), “designed to host a new generation of cryptocurrencies and decentralized applications, at a massive scale.” And Telegram sought to power TON through its huge user base and crypto popularity. Heavies scooped up Gram futures contracts deliverable after the blockchain buildout. As a result, Telegram raised $1.7 billion from investors discounted from projected market yields. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>Are Telegram SAFTs the same as Telegrams Grams? SEC says Yes  </strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The legal issues embody the crypto conflict. Telegram sold Simple\nAgreements for Future Tokens (SAFT) to accredited investors using <a href=\"https://www.thecrowdfundinglawyers.com/reg-d/\">Regulation D</a>. Both sides\nagree SAFTs are securities. But what of Grams themselves? The SEC claims the\nSAFT sale began an illegal offering. Under this theory, no separation exists between\nSAFTs and Grams. This is a regular capital raise because some money went to\nimprove Messenger, the TON Blockchain wasn’t finished, and Grams can’t buy\nanything yet because would-be products don’t exist.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Thus, the SEC <em>Howeys</em> Grams as “<a href=\"https://www.sec.gov/litigation/complaints/2019/comp-pr2019-212.pdf\">investment contracts</a>.” Thus, they are securities because of profit potential for resellers whose value depends on the skill of Telegram’s team. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Or in SEC speak: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>A reasonable purchaser of Grams would view their investment as sharing a common interest with other purchasers of Grams as well as sharing a common interest with Defendants in profiting from the success of Grams. The fortunes of each Gram purchaser were tied to one another and to the success of the overall venture, including the development of a TON “ecosystem,” integration with Messenger, and implementation of the new TON Blockchain.</p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.scribd.com/document/430781940/Telegram-Response-to-SEC\">Telegram\ninsists</a> it followed the rules by only selling SAFTs to accredited investors.\nGrams themselves are a commodity like “gold, sliver, or sugar.” “SEC’s actions hinge\non a fundamentally flawed theory that Grams constitute a ‘security’ subject to\nU.S. Securities laws—a theory that runs counter to longstanding Supreme Court\nprecedent, the SEC’s own views relating to other Cryptocurrencies, and common\nsense.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>The SEC Telegram Emergency Injunction forestalls Telegram’s best argument</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The preliminary injunction forestalled Telegram from arguing\nwhat it wanted. If initial purchasers resold Grams to “highly interested” retail\npurchasers, Telegram could say decentralized occurred via the ‘<a href=\"https://www.coindesk.com/secs-hinman-says-some-icos-may-be-eligible-for-no-action-relief\">Hinman\nDoctrine</a>.’ And like Ethereum is now beyond SEC reach. This doctrine is named\nafter SEC Corp Fin Director ‘Bill the Butcher’ Hinman but has <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">no\njudicial grounding</a>. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Thus, the SEC Catch 22. To claim decentralization, tokens must be widely distributed and used. But users can’t distribute them unless an open market exists. And an open market can’t exist under securities law. Indeed, issuers can’t even <a href=\"https://www.crowdfundinsider.com/2018/08/137933-ico-tokens-the-sec-you-cant-even-give-them-away-no-seriously/\">give them away</a> for the desired decentralization. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>The SEC knows this: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p>Defendants knew, however, that to actually implement the TON Blockchain in the real world, the project would require “numerosity”: a widespread distribution and use of Grams across the globe. Indeed, by definition, the TON Blockchain can only become truly decentralized (as contemplated and promoted in the Offering Documents) if Grams holders <em>other than </em>the original Grams purchasers actually stake Grams and, thereby, act as “validators” of transactions on the TON Blockchain.  </p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>SEC demands Issuers use Reg A+ . . . Or be Ethereum</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>The commission’s only apparent answer to this puzzle is to get\n<a href=\"https://www.thecrowdfundinglawyers.com/reg-a/\">Reg A+</a> qualified like\n<a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">Blockstack</a>\nand wait it out (or be Ethereum). &nbsp;But if\nthe SEC enjoins the token release that’s it because absent court findings it\nhas all the power. And as Crypto Czar <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC\nValerie</a> has stated, <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">they\nlike it that way</a>. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.scribd.com/document/430781940/Telegram-Response-to-SEC\">Telegram claims</a> it spent 18 months “voluntarily engaged with, and solicited feedback from, the SEC regarding development and planned launch of its decentralized blockchain platform . . .” And it produce thousands of documents and answered endless inquiries. But when the time came, it didn\'t even get a warning an <em>ex parte</em> emergency injunction was coming. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"id\":3658,\"align\":\"center\",\"width\":335,\"height\":247} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Sponge-Bob-Amazing-GIF.gif\" alt=\"\" class=\"wp-image-3658\" width=\"335\" height=\"247\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:tadv/classic-paragraph -->\n<h2 style=\"text-align: center;\"><strong>SEC needs judicial oversight or more Crypto Moms</strong></h2>\n<!-- /wp:tadv/classic-paragraph -->\n\n<!-- wp:paragraph -->\n<p>Without court findings this untenable situation will persist.\nCommissioner Hester Peirce aka <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Crypto\nMom</a> discussed a utility-token carve out in <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">recent\ncongressional testimony</a>. But current commission makeup makes this unlikely.\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Telegram has a <a href=\"https://www.crowdfundinsider.com/2019/10/152832-telegram-enforcement-action-a-reminder-that-the-sec-not-only-has-considerable-enforcement-tools-but-is-willing-to-use-them/\">better fact pattern</a> than <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Kik</a> having only sold to accredited investors. And it imbued its SAFT with a restrictive legend. Unlike Kik, however, it doesn’t seem to have the stomach for a long-term fight. But it may not have a choice short of rescinding a third of its raise and leaving the U.S. market.  Whatever happens here court clarity must happen. The SEC cannot always sit as judge, jury, and bankrupter.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a>\nvia <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>\n</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph /-->','Telegram SEC Fight Could Signal Turning Point for Crypto Law','','publish','open','open','','telegram-sec-fight-could-signal-turning-point-for-crypto-law','','','2019-10-18 19:38:58','2019-10-18 19:38:58','',0,'https://www.thecrowdfundinglawyers.com/?p=3978',0,'post','',0),(4126,1,'2019-11-17 17:59:25','2019-11-17 17:59:25','','2018 private','','inherit','open','closed','','2018-private','','','2019-11-17 18:02:51','2019-11-17 18:02:51','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/11/2018-private.jpg',0,'attachment','image/jpeg',0),(4127,1,'2019-11-17 18:00:54','2019-11-17 18:00:54','','PE Performance vs S&P','','inherit','open','closed','','pe-performance-vs-sp','','','2019-11-17 18:02:06','2019-11-17 18:02:06','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/11/PE-Performance-vs-SP.png',0,'attachment','image/png',0),(4128,1,'2019-11-17 18:33:06','2019-11-17 18:33:06','<!-- wp:paragraph -->\r\n<p>The speaker list screamed. The SEC Investor Advisory Committee <a href=\"https://www.sec.gov/video/webcast-archive-player.shtml?document_id=iac110719\">recently heard testimony</a> on the proposed <a href=\"https://www.sec.gov/rules/concept/2019/33-10649.pdf\">Concept Release on Harmonization of Securities Offering Exemptions</a>. And the invitees shrieked irreverence for America’s innovators.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>The majority talkers—academics, policy pushers, and regulators (Nannies)—played their part as innovation hurters, capital killers, and job jerkers. Startups, say the Nannies, must go through them for the privilege of driving the economy.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>The SEC <a href=\"https://www.sec.gov/spotlight/investor-advisory-committee.shtml\">Investor Advisory Committee</a> is typical Washington—formed through Dodd-Frank, a political overreaction to a downturn the government itself helped create. It holds hearings and recommends solutions to problems that may not exist to <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">commissioners</a> who may not read them. Its purpose is appearance and to provide some insiders a sinecure. The SEC Investor Advisory Committee is staffed with well-meaning academics and agitprops who never work where they play. But sincerity does not obviate uselessness.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:tadv/classic-paragraph -->\r\n<h2 style=\"text-align: center;\"><strong>Nannies and Doers presented different ideas about capital raising</strong></h2>\r\n<!-- /wp:tadv/classic-paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Everyone knows <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">capital-raising rules</a> are unforgiving and prolix. And they limit the best prospects to the already moneyed. Thus, two solutions: (i.) allow everyone to invest in riskier but higher reward early-stage companies; or (ii.) force everything into the public markets or die.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>The Nannies, Boston College professor Renne Jones (a <a href=\"https://www.thecrowdfundinglawyers.com/congress-looks-to-thwart-startups/\">veteran of such panels</a>), policy hack Tyler <a>Gellasch</a>, state bureaucrat Andrea Seidt, knew the answer. Each spoke of rules, rules, and oversight. None ever signed the front of a business check. None ever will.  </p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Worst was Mr. <a>Gellasch</a>, the neo-New Dealer. In a bygone era, his likeness walked confidently behind Rexford Tugwell or Henry Morgenthau. Full of bravado, confidence, and self-assured in his ignorance. The only thing missing were the wingtips and zoot suit.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Gellasch was the guy 90 years ago telling Americans he could fix things; he and his pals were the smart ones. So smart, it turned out, they <a href=\"https://dailycaller.com/2013/10/31/why-does-charles-krauthammer-love-the-new-deal/\">took an 18-month downturn and made a 10-year calamity</a>. And left us with a permanent bureaucratic ruling class as the tax we pay for being Americans.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":1588,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-1588\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Simpson-GIF.gif\" alt=\"\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:tadv/classic-paragraph -->\r\n<h2 style=\"text-align: center;\"><strong>The Doers gave the SEC Investor Advisory Committee needed insight</strong>  </h2>\r\n<!-- /wp:tadv/classic-paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Standing apart were angel investor Catherine Mott, and compliance CEO Sara Hanks (the Doers). The difference between the two groups is stark. The Nannies look at reports, attend conferences, and think of new ways to control those they study and regulate.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>The Doers think in ideas. How to solve problems. This is hard work. Entrepreneurs give their lives to work, knowing the odds aren’t good. Some spend years at or near bankruptcy before success. Gains bring the Nannies’ watchful eyes. The Nannies never know failure (or success) because they never try. Their realm is not ideas but rules and rulers, and obedience to both.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Ms. Mott’s testimony was compelling. She fights the geographic opportunity gap. What happens when a Western Pennsylvania factory shutters? Can a Mississippi startup get a chance with current rules? Right now, Ms. Mott says no. The morass of rules and the zeal to enforce them overpowers outsiders. The money, says Ms. Mott, is looking elsewhere and America loses as a result.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:quote -->\r\n<blockquote class=\"wp-block-quote\">\r\n<p><em>Entrepreneurs get tripped up by regulations and can lose the opportunity to create an impactful enterprise. Harmonization of rules in a balanced fashion can facilitate innovation in the United states. When all net new jobs in the United States are created by companies five years old or less it behooves us to pay attention to the issues for real economic development purposes. Furthermore, China has gained significant ground at a remarkable rate in advancing innovation and encouraging capital investment in startups. The United States is falling behind. </em></p>\r\n</blockquote>\r\n<!-- /wp:quote -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":3850,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-3850\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Amy-Winehouse-Its-true.gif\" alt=\"\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:tadv/classic-paragraph -->\r\n<h2 style=\"text-align: center;\"><strong>Investor Advisory Committee gives short shrift to the difficulty following SEC rules</strong></h2>\r\n<!-- /wp:tadv/classic-paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Ms. Hanks runs a company that helps startups with rules but even she gets flummoxed. Speaking of solicitation: “Nobody knows what it is, nobody can work out what the rules are. We waste so much time trying to comply with it when we should be trying to work out what information people need at the time of sale.”</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Later she defended the much-maligned Reg A+ after Gellasch (of course) insisted it wasn’t working:</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:quote -->\r\n<blockquote class=\"wp-block-quote\">\r\n<p><em>I just want to defend Reg A. So, the listing companies right now when I counted this morning there was nearly 600 filings that have taken place under Reg A. Some of them did not qualify because they were crappy. Some of them withdrew because no one was interested in investing because they were crappy and that’s the way the markets work. Of the 600 or so, roughly 6 went to the listing markets and they didn’t do well and a lot of this is because of let’s say optimistic pricing. A lot of it is the whole process and some of these companies may not have been ready to become fully listing companies. </em></p>\r\n<p>&nbsp;</p>\r\n<p><em>But to take that half dozen and say that’s your data point for disaster or not is to ignore an enormous number of companies who have really nice business plans, who have managed to raise some funds and employ people and are eventually going to come to the public markets we hope. . . . So, I think it’s a little unfair to take a whole category of companies and say they’re all disasters based on the performance of six companies.</em></p>\r\n</blockquote>\r\n<!-- /wp:quote -->\r\n<!-- wp:tadv/classic-paragraph -->\r\n<h2 style=\"text-align: center;\"><strong>Despite what SEC Investment Advisory Committee Nannies say, the private markets are working</strong></h2>\r\n<!-- /wp:tadv/classic-paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>America’s private markets are the envy of the world, accounting for $2.9 trillion dollars in investment last year.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4126,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-4126\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/11/2018-private-1024x402.jpg\" alt=\"Private Markets 2.9T\" />\r\n<figcaption><strong>Source: Securities and Exchange Commission </strong></figcaption>\r\n</figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:paragraph -->\r\n<p>The further fact is that private investment has <a href=\"https://www.crowdfundinsider.com/2019/11/154114-private-equity-has-better-returns-lower-volatility-than-public-markets-will-the-sec-make-it-easier-for-retail-investors-to-gain-access-to-this-asset-class/\">outperformed public markets over the past two decades and have lower volatility</a>.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4127,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-4127\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/11/PE-Performance-vs-SP-1024x673.png\" alt=\"Private vs Public Markets\" />\r\n<figcaption><strong>Source: Committee on Capital Markets and Regulation and Voya Investment Management (October 2017) via John Finley, Senior Managing Director &amp; Chief Legal Officer, Blackstone</strong></figcaption>\r\n</figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:paragraph -->\r\n<p>The Nannies hate this because private raises avoid the compliance cabal, quarterly reporting, activist shareholders etc. Being a public company is hard and costly, that is why there are fewer of them. But the U.S. economy is doing fine. If the Nannies succeeded there would be less startups, less jobs, less investment. But more lawyers, accountants, and regulators. Many companies, especially those not in California, New York, or Massachusetts lose out.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By adumbrating their position, the Nannies entrench those who can afford the public play and keep others with better mouse traps out. It is an academic version of regulatory capture.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>What the capital markets need is an open playing field in the private world and acceptance the 1950s economy is gone. Instead of forcing companies into markets where they cannot win, laws should help startups raise <a href=\"https://www.thecrowdfundinglawyers.com/sec-reg-cf-report-details-data-criticisms/\">small-dollar private money</a> to <a href=\"https://www.thecrowdfundinglawyers.com/is-equity-crowdfunding-right-for-your-company/\">prove viability</a>.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Whatever happens the economy will not move forward with the Nannies haranguing the Doers.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>\r\n<!-- /wp:paragraph -->','SEC Investor Advisory Committee Pits Nannies Against Doers','','publish','open','open','','sec-investor-advisory-committee-pits-nannies-against-doers','','','2020-10-17 18:49:49','2020-10-17 18:49:49','',0,'https://www.thecrowdfundinglawyers.com/?p=4128',0,'post','',0),(4164,1,'2019-11-24 14:05:53','2019-11-24 14:05:53','<!-- wp:paragraph -->\n<p>The Telegram SEC fight over whether “Gram” tokens are securities progressed when Telegram ‘answered’ in federal court. The move foretells a lengthy battle, something Telegram surely hoped to avoid. Telegram’s <a href=\"https://www.crowdfundinsider.com/wp-content/uploads/2019/11/SEC-v.-Telegram-NOV-19.pdf\">Answer</a> spotlights myriad government crypto failures. Among them, mixed signals by officials, selective enforcement, policymaking by staff, unclear rules, and bureaucrats protecting agency power. Regardless of the SEC Telegram outcome, without changes America’s tech advantage will shrink whilst sinecures rise.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":3850,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Amy-Winehouse-Its-true.gif\" alt=\"\" class=\"wp-image-3850\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Telegram’s two defenses against SEC enforcement    </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Telegram has two defenses but only uses one lest they admit\nclandestine attempts to skirt rules. Officially Telegram complains SEC rules\nare vague, scattershot, and violate due process. “Plaintiff has engaged in\nimproper ‘regulation by enforcement’ in this nascent area of the law, failed to\nprovide clear guidance and fair notice of its views as to what conduct\nconstitutes a violation of the federal securities laws, and has now adopted an <em>ad\nhoc </em>legal position that is contrary to judicial precedent and the publicly\nexpressed views of its own high-ranking officials.” </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Yes. Telegram’s <a href=\"https://www.crowdfundinsider.com/wp-content/uploads/2019/11/SEC-v.-Telegram-NOV-19.pdf\">Answer</a>\ncovers many <em>ad hoc</em> apparatchik games. The three horseman of reaction, <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">Shallow-End\nJay Clayton</a>, Bill the Butcher Hinman, and <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC\nValerie Szczepanik</a> play hot potato whilst <a href=\"https://www.thecrowdfundinglawyers.com/cryptomom-versus-the-machine/\">Crypto\nMom Hester Peirce</a> stares incensed. Risk-averseness, so common to our three\nmillion “public servants,” isn\'t bad with nuclear policy, global warming, or\nUkraine favors. But here, their actions matter. The future American economy and\nour place as world’s chief innovator is at stake. Whether a court accepts SEC\nbuck passing given <a href=\"https://www.thecrowdfundinglawyers.com/sec-unleashes-hurricane-ico/\">DAO</a>\nand <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC\nValerie’s Dreadful Guidance</a> is unclear. But the government has good odds. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Telegram SEC fight centers on decentralization</strong> </h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Telegram’s unspoken defense is “<a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">decentralization</a>.”\n<a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">Decentralization</a>\nisn’t in <a href=\"https://www.thecrowdfundinglawyers.com/competitive-enterprise-institute-criticizes-sec-shallow-end-jay-for-crypto-intransigence/\">any\ncourt case or statute</a>. Corp Fin Director Bill the Butcher created it. And\nwhile it makes sense, it lacks the <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">analytical\nrigor</a> crypto entrepreneurs need. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Bill the Butcher <a href=\"https://www.sec.gov/news/speech/speech-hinman-061418\">announced</a> this\npolicy last year: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em>The digital asset itself is simply code. But the way it is sold [determines whether it is a security.] But this also points the way to when a digital asset transaction may no longer represent a security offering. If the network on which the token or coin is to function is sufficiently decentralized—where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts—the assets may not represent an investment contract. Moreover, when the efforts of the third party are no longer a key factor for determining the enterprise’s success, material information asymmetries recede” and “the ability to identify an issuer or promoter to make the requisite disclosures becomes difficult, and less meaningful.”</em></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>Crypto entrepreneurs embraced this statement lacking much\nelse, save <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie’s Dreadful Guidance</a>.\nWhen Congress pressed, <a href=\"https://www.thecrowdfundinglawyers.com/shallow-end-jay-treads-water-while-reg-cf-sinks-but-is-help-on-the-way/\">Shallow-End\nJay</a> <a href=\"https://www.coindesk.com/crypto-convergence-from-decentralization-to-direct-listings\">backed</a>\nBill the Butcher without actually using the word. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":981,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Jen-An2.gif\" alt=\"\" class=\"wp-image-981\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Crypto startups see decentralization as the only way around SEC compliance </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Lawyers have earned millions working Bill the Butcher’s\nstatement into the current capital framework. Most use <a href=\"https://www.thecrowdfundinglawyers.com/telegram-sec-fight-could-signal-turning-point-for-crypto-law/\">Reg\nD for SAFTs</a> but whether this covers the actual tokens is unclear.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">Blockstack</a>\nis the only successful Reg A+ offer thus far. In its <a href=\"https://www.thecrowdfundinglawyers.com/its-happening-the-blockstack-reg-a-token-sale-and-a-new-internet/\">offering\ncircular</a> it stated it expects to be decentralized and leave securities\ncompliance within a year. <a href=\"https://www.thecrowdfundinglawyers.com/sec-goes-for-kik-will-it-get-knifed/\">Kik</a>\ntook a different route. It claimed its “Kin” tokens were <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">already\ndecentralized</a>. And thus, like Bitcoin or Ethereum could avoid SEC\noversight. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Telegram chose the Kik route, arguing the potentially\ndisbursed 220 billion Grams would be de facto decentralized, but the SEC\nstopped it. As one <a href=\"https://www.coindesk.com/crypto-convergence-from-decentralization-to-direct-listings\">CoinDesk\ncommentator</a> stated: “Last year, messaging platform Telegram funded the\nconstruction of its TON blockchain with a private placement which guaranteed\nfuture allocation of Gram tokens, which <em>of course</em> would be decentralized\nenough to not need to go through a securities registration. The SEC was not\nconvinced.” </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>SEC filed against Telegram before it could claim decentralization </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>And the SEC laid bare Telegram’s plan in its <a href=\"https://www.sec.gov/litigation/complaints/2019/comp-pr2019-212.pdf\">temporary restraining order</a>: “Indeed, by definition, the TON Blockchain can only become truly decentralized (as contemplated and promoted in the Offering Documents) if Grams holders other than the original Grams purchasers actually stake Grams… Stated differently, if the original Grams purchasers alone all immediately staked their holdings, the TON Blockchain would be <em>centralized</em> rather than decentralized and, therefore, subject to misuse and majority attacks.” [original emphasis].</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Thus, both sides skate <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">decentralization</a>.\nTelegram demurs because it would tacitly admit it tried to skirt SEC mandates.\nThe SEC avoids it because it’s somewhat unofficial.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":3701,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Homer-Simpson-GIF.gif\" alt=\"\" class=\"wp-image-3701\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Telegram SEC fight shows problems with government crypto policy  </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>But whatever happens, the government’s inability to explain its policy is a fiasco. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li><strong>Relying on outdated precedent</strong>: SEC Enforcement defines securities from the 1946 <em>Howey</em> case. That worked for orange groves, but the world has changed slightly since mid-20<sup>th</sup> Century. Judicial precedent restrains the SEC, but also empowers it. The SEC likes <em>Howey</em> because it yields broad discretion. </li><li><strong>Guidance that confuses more than clarifies</strong>: Crypto entrepreneurs have clamored for clear rules beyond outdated cases. The SEC responded with <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie’s Dreadful Guidance</a>. It took 6-months to complete. And likely cost taxpayers upwards of a quarter-million dollars. And it only worsened things adding more factors to the <em>Howey</em> Test, without any inkling of weight or even if that was all. Anyone outside “public service” would  have been fired for such waste. </li><li><strong>Insistence entrepreneurs get permission</strong>: Not only does the SEC not give clear rules but it insists entrepreneurs ask permission through lengthy negotiations or laborious no-action letters. These letters may take years or not come at all. And others can’t use them as precedent. It also favors insiders, those represented by major law firms or with staff relationships. </li><li><strong>Bureaucrats make policy without responsibility</strong>: Every document, speech, or murmur by an SEC functionary comes with disclaimers. No one takes responsibility or accountability. Bill the Butcher has a doctrine <a href=\"https://www.lawandblockchain.eu/hinman-test/\">named for him</a>—heady stuff—but ask if his statements represent the SEC. <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie</a> travels the country on taxpayer dimes, receives VIP treatment at conferences. Ask her to opine beyond <a href=\"https://www.youtube.com/watch?v=PukteFAYWPo\">NPC fashion</a> ‘<em>Howey</em>, <em>Howey</em>, <em>Howey</em>.’ </li><li><strong>Real guidance comes through enforcement</strong>: The SEC can bankrupt a startup. It has no shareholders, no timelines, no need for profit, subpoena power, and  essentially an unlimited budget. <a href=\"https://www.thecrowdfundinglawyers.com/cryptomom-versus-the-machine/\">Try and cross them. They dare you</a>. </li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>SEC functionaries have hijacked crypto regulation </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p><a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC\nValerie</a> summed the government’s crypto stance in a short yet revealing\ncomment. “The lack of bright-line rules allows regulators to be more flexible.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>Just so, as these <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">pages\nhave opined</a>: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em>This is true but has other effects. It leaves regulators with massive discretion. This gives them enormous power over the economy with no responsibility for the results. It mandates entrepreneurs approach them hat-in-hand for permission. And it makes them sought after speakers on the conference circuit.</em></p><p></p><p><em>But it’s a zero-sum game. Every unit of power Ms. Szczepanik reserves for herself and her colleagues removes it from job producers. Indeed, every ambiguous pronouncement shunts billable hours to lawyers and compliance professionals instead of research or marketing. Those building tomorrow’s economy need the flexibility not bureaucrats. They will power our future long after Ms. Szczepanik takes her professorship or retires to a nonprofit. </em></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Too few call out dreadful SEC crypto policy </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>A few, but only that, recognize the absurdity. Most\nprominently is Commissioner Hester Peirce, aka <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Crypto\nMom</a>. As a lone voice, she has repeatedly warned about this path:&nbsp; </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em>The SEC staff recently <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">issued a framework </a>to assist issuers with conducting a Howey analysis of potential token offerings. The document is a thorough 14 pages. It points to features of an offering and actions by an issuer that could signal that the offering is likely a securities offering. If this framework helps issuers understand what the different Howey Factors might look like in an ICO context, it may be valuable. I am concerned, however, that it could raise more questions and concerns than it answers.</em></p><p></p><p><em>While Howey has four factors to consider, the framework lists 38 separate considerations, many of which include several sub-points. A seasoned securities lawyer might be able to infer which of these considerations will likely be controlling and might therefore be able to provide the appropriate weight to each. Whether the framework gives anything new to the seasoned securities lawyer used to operating in the facts and circumstances world of Howey is an open question. I worry that non-lawyers and lawyers not steeped in securities law and its attendant lore will not know what to make of the guidance.</em></p><p></p><p><em>Pages worth of factors, many of which seemingly apply to all decentralized networks, might contribute to the feeling that navigating the securities laws in this area is perilous business . . .</em></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":3852,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Ole-Miss-its-true.gif\" alt=\"\" class=\"wp-image-3852\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Congress could act to reign in SEC intransigence </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Representative Warren Davidson (R-OH) stated: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em>Regulation by enforcement [has] all the charm and inefficiency of third-world power structures.</em></p><p><em>  . . . </em></p><p><em>The SEC is doing a complete patchwork of regulation. No one knows where they\'re going. They’re literally told if you want to launch a token, whatever you think you want to do with it, come check with the SEC first. . .. And you can grovel. If you grovel well enough, then we\'ll give you a no-action letter. You have hundreds of companies waiting on no-action letters. They’ve approved two.</em></p><p><em>You can’t raise capital while you\'re waiting for that.</em></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:paragraph -->\n<p>And in the best exchange in a recent <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">SEC\nCongressional hearing</a>, Ted Budd (R-NC) mocked <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC\nValerie’s Dreadful Guidance</a>,&nbsp;which is a&nbsp;<a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">poster\nchild for bureaucratic drivel</a>.</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:quote -->\n<blockquote class=\"wp-block-quote\"><p><em><strong>Budd</strong>: In April Fin Hub published a framework for investment contract analysis of digital assets which included 60 plus factors for determining whether or not the SEC would consider a digital asset a security. In a statement released alongside your framework your colleagues Bill Hinman and Valerie Szczepanik indicated that the framework is not intended to be an exhaustive overview of the law. But rather an analytical tool to help market participants . . . [H]as the guidance helped resolve their most important questions?</em></p><p></p><p><em><strong>Crypto Mom</strong>: [No]</em></p><p></p><p><em><strong>Budd</strong>: So last question, when <strong>can </strong>market participants expect and exhaustive overview of the law so that they can get the regulatory certainty required to continue to innovate and create American jobs.</em></p></blockquote>\n<!-- /wp:quote -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>The world keeps spinning while the SEC ensures America falls behind</strong> </h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>But sound bites won’t change Commission practice. The Telegram SEC fight is only a symptom. Indeed, the SEC embodies the administrative state run amok—<a href=\"https://www.thecrowdfundinglawyers.com/cryptomom-versus-the-machine/\">the Machine</a> whose highest priority is turf protection and DC cache. The political and judicial branches must cabin administrative agencies. Or future Americans will be tech colonized by those less concerned about Washington chatter or who retires to an Ivy League teaching post. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>\n<!-- /wp:paragraph -->','SEC Telegram Fight Shows Government At Its Worst','','publish','open','open','','sec-telegram-fight-shows-government-at-its-worst','','','2019-11-24 14:05:55','2019-11-24 14:05:55','',0,'https://www.thecrowdfundinglawyers.com/?p=4164',0,'post','',0),(4365,1,'2020-03-08 16:29:05','2020-03-08 16:29:05','','ECF Map','','inherit','open','closed','','ecf-map','','','2020-03-08 16:29:45','2020-03-08 16:29:45','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/03/ECF-Map.png',0,'attachment','image/png',0),(4366,1,'2020-03-08 17:10:30','2020-03-08 17:10:30','<!-- wp:paragraph -->\n<p>Last week the Securities and Exchange Commission (SEC) proposed sweeping changes to Regulation Crowdfunding (equity crowdfunding or Reg CF) as well as the other private capital-raising exemptions. The proposals come just months after the SEC closed comments on last summer’s <a href=\"https://www.sec.gov/news/press-release/2019-97\">Concept Release</a>. The commission sought to harmonize, simplify, and streamline the exemptions. As SEC Chairman Jay Clayton stated, “The complexity of the current framework is confusing for many involved in the process, particularly for those smaller companies whose limited resources spent on navigating our overly complex rules are diverted from direct investments in the companies’ growth.&nbsp; These proposals are intended to create a more rational framework that better allows entrepreneurs to access capital while preserving and enhancing important investor protections.”</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":3464,\"width\":385,\"height\":256,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/07/Ron-Paul-GIF.gif\" alt=\"\" class=\"wp-image-3464\" width=\"385\" height=\"256\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>The proposed changes to Reg CF are particularly significant. Congress enacted this exemption as part of the JOBS Act of 2012 to open the private markets to retail investors. The idea was everyone could invest in hotshot startups but also local businesses that supported communities. It would also allow entrepreneurs traditionally excluded from the angel investor/venture capital circuit a better chance to thrive by democratizing capital raising. Signs showed Reg CF had started to fulfill its potential. According to <a href=\"https://www.crowdfundinsider.com/2020/02/157163-sherwood-neiss-of-crowdfund-capital-advisors-updates-on-reg-cf-progress-successful-reg-cf-companies-have-pumped-almost-1-billion-into-local-economies/\">Crowdfund Capital Advisors</a>, which curates equity crowdfunding data, since 2016 successful Reg CF companies had pumped almost one billion dollars into local economies.&nbsp; &nbsp;</p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":4365,\"width\":704,\"height\":438,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large is-resized\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/03/ECF-Map.png\" alt=\"Equity Crowdfunding Map\" class=\"wp-image-4365\" width=\"704\" height=\"438\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>Still, complaints persisted. Many companies thought the $1.07 million raise limit too small. And rules restricted Accredited Investors to relatively tiny amounts despite no such constraints with Reg D. Moreover, regulations forbade issuers from discussing and gauging interest in their raise before spending money on legal and accounting services. Finally, retail investors meant messy cap tables that dismayed later investors. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>SEC addressed long-standing equity crowdfunding complaints in proposal</strong> </h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Yesterday’s <a href=\"https://www.sec.gov/news/press-release/2020-55?utm_source=CCA+Master+List&amp;utm_campaign=40105b558a-EMAIL_CAMPAIGN_2020_01_02_09_01_COPY_01&amp;utm_medium=email&amp;utm_term=0_b3d336fbcf-40105b558a-712237837\">proposal</a>\nsolves all these issues and sets the stage for a paradigm shift in U.S. capital\nraising. Among the potential rule changes: </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:list -->\n<ul><li><strong>Raise the overall to limit to $5 million</strong>: While not as big as some had hoped, this new ceiling allows for larger institutional players to invest alongside retail investors. </li><li><strong>Remove Accredited Investor limits</strong>: Successful equity crowdfunds usually have a mix accredited and nonaccredited investors. Accredited Investors send important signals to each other and the larger market. Removing Reg CF’s arbitrary limit increases the chance for successful raises. And it partially eliminates the need to “stack” Reg Ds on top of Reg CFs so Accredited Investors can fully participate. </li><li><strong>Allow ‘testing the waters’ communications prior to the raise</strong>: The ability to gauge interest in a raise before having to spend money on professional services is critical. Also, equity crowdfunding companies tend to be newer and less experienced with complex securities laws. This gives companies a better idea of their raise metrics, while still protecting investors. by preserving liability for misleading statements.  </li><li><strong>Allow Special Purpose Vehicles</strong>: Allowing issuers to “clean up” their cap table by placing Reg CF issuers into an SPV was perhaps the most consistent Reg CF failing. According to the SEC proposal: “In particular, public feedback has indicated that allowing the use of such vehicles could address concerns associated with managing the potentially large number of direct investors that could result from a crowdfunding offering, as those investments would be held through a single purpose entity.” This also alleviates concerns about Reg CF issuers having to prematurely register as public companies.</li></ul>\n<!-- /wp:list -->\n\n<!-- wp:heading {\"align\":\"center\"} -->\n<h2 class=\"has-text-align-center\"><strong>Equity Crowdfunding can explode under proposal </strong></h2>\n<!-- /wp:heading -->\n\n<!-- wp:paragraph -->\n<p>Indeed, these long-sought changes could have lasting effects on the private capital markets. It could truly democratize capital raising, allowing everyone an equal opportunity at potentially lucrative investments. It could encourage entrepreneurs normally off the angel investor/venture capital radar to bypass traditional-funding methods. And issuers can synergize crowd effects by melding their investors, supporters, and customers. And it could geographically disperse capital investing away from the few hubs where it currently happens. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:image {\"align\":\"center\",\"id\":398,\"sizeSlug\":\"large\"} -->\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-2.gif\" alt=\"\" class=\"wp-image-398\"/></figure></div>\n<!-- /wp:image -->\n\n<!-- wp:paragraph -->\n<p>According\nto the SEC <a href=\"https://www.sec.gov/news/press-release/2020-55?utm_source=CCA+Master+List&amp;utm_campaign=40105b558a-EMAIL_CAMPAIGN_2020_01_02_09_01_COPY_01&amp;utm_medium=email&amp;utm_term=0_b3d336fbcf-40105b558a-712237837\">press release</a>, the comment period will remain open\nfor 60 days following the publication of these proposals in the Federal\nRegister. </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:paragraph -->\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com</a> </p>\n<!-- /wp:paragraph -->\n\n<!-- wp:tadv/classic-paragraph /-->','Equity crowdfunding poised to explode under SEC proposal','','publish','open','open','','equity-crowdfunding-poised-to-explode-under-sec-proposal','','','2020-03-08 17:10:32','2020-03-08 17:10:32','',0,'https://www.thecrowdfundinglawyers.com/?p=4366',0,'post','',0),(4396,0,'2020-05-21 20:33:38','2020-05-21 20:33:38','<iframe title=\"Crowdfunding So Far and Necessary Reforms\" width=\"1080\" height=\"608\" src=\"https://www.youtube.com/embed/ahs6MGsskdg?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen></iframe>','','','publish','closed','closed','','1cc12c71625a3b944b42c068722c60b5','','','2020-05-21 20:33:38','2020-05-21 20:33:38','',0,'https://www.thecrowdfundinglawyers.com/1cc12c71625a3b944b42c068722c60b5/',0,'oembed_cache','',0),(4403,1,'2020-07-20 14:10:39','2020-07-20 14:10:39','<!-- wp:tadv/classic-paragraph -->\r\n<p><a href=\"https://neighborhoodsun.solar/\">Neighborhood Sun</a> is an innovative Maryland-based public-benefit company that allows people to use solar energy without panels or expensive equipment.  The Company is currently conducting an equity-crowdfunding raise on Wefunder, a major funding portal in California. Equity Crowdfunding allows anyone to invest in hot new companies across the country. To learn more about the opportunity to invest in Neighborhood Sun, visit their Wefunder page <a href=\"https://wefunder.com/neighborhoodsun\">here</a>.  </p>\r\n<!-- /wp:tadv/classic-paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":980,\"width\":442,\"height\":438,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-980\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/do-it.gif\" alt=\"\" width=\"442\" height=\"438\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:paragraph -->\r\n<p>Disclaimer: Jossey PLLC performed paid legal work for this raise.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By<a href=\"https://twitter.com/thecrowdfundlaw\"> Jossey PLLC</a></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:tadv/classic-paragraph /-->','Neighborhood Sun is live on Wefunder!!','','publish','open','open','','neighborhood-sun-is-live-on-wefunder','','','2020-09-29 19:49:11','2020-09-29 19:49:11','',0,'https://www.thecrowdfundinglawyers.com/?p=4403',0,'post','',0),(4428,1,'2020-08-07 20:49:32','2020-08-07 20:49:32','','ETH BTC','','inherit','open','closed','','eth-btc','','','2020-08-07 20:59:33','2020-08-07 20:59:33','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-BTC.png',0,'attachment','image/png',0),(4429,1,'2020-08-07 20:49:41','2020-08-07 20:49:41','','ETH drop','','inherit','open','closed','','eth-drop','','','2020-08-07 20:53:19','2020-08-07 20:53:19','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-drop.png',0,'attachment','image/png',0),(4430,1,'2020-08-07 20:49:57','2020-08-07 20:49:57','','ETH Short','','inherit','open','closed','','eth-short','','','2020-08-07 20:57:38','2020-08-07 20:57:38','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-Short.png',0,'attachment','image/png',0),(4431,1,'2020-08-07 21:11:51','2020-08-07 21:11:51','<!-- wp:paragraph -->\r\n<p>Whales may be <a href=\"https://www.crowdfundinsider.com/2020/04/160846-new-analysis-claims-that-ethereum-eth-price-might-be-manipulated-by-certain-large-crypto-exchanges-and-whales/\">manipulating ETH price</a>s according to financial analyst <a href=\"https://medium.com/@adamscochran\">Adam Cochran</a>. Cochran <a href=\"https://medium.com/@adamscochran/the-10k-audit-42c100dd32bb\">manually audited</a> the top 10,000 Ethereum addresses and got some interesting results including possible ETH price manipulation. ETH is quickly becoming the world’s dominant cryptocurrency.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Although ETH price has steadily risen since “<a href=\"https://medium.com/aave/crypto-black-thursday-the-good-the-bad-and-the-ugly-7f2acebf2b83\">Black Thursday</a>,” March 12, 2020, previous cyclical dips had occurred at the end of both 2018 and 2019 among other times where prices fell just above $100.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4429,\"width\":713,\"height\":460,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-4429\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-drop.png\" alt=\"ETH Price\" width=\"713\" height=\"460\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\">Twelve Whales short ETH before price drops</h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Cochran claims twelve whales work in conjunction with crypto exchanges BitFinex and possibly BitMex to manipulate ETH. First the whales begin shorting ETH. Their transactions are small enough not to trigger monitors like <a href=\"https://whale-alert.io/\">Whale Alert</a>. Next a wave of bot-driven negative ETH traffic appears on Twitter. Select Asian and European whales move money into other currencies like DAI and USDC before the negative tweet storms happen. According to Cochran the shorts predict the drop 87% of the time and spend the next month cleaning up their haul as the ETH market rebounds. More suspicious BitFinex cold wallets predict the movements roughly 40% of the time. This doesn’t work all the time perhaps as little as 7% of the time but it doesn’t need to work often to make it work well. Bots apparently run by these whales encourage ETH FUD and then profit leaving the market guessing.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4430,\"width\":763,\"height\":451,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-4430\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-Short.png\" alt=\"ETH Short\" width=\"763\" height=\"451\" />\r\n<figcaption><a href=\"https://medium.com/@adamscochran/the-10k-audit-42c100dd32bb\">Source</a></figcaption>\r\n</figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\">Growing popularity may prevent future ETH manipulation</h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>The booming advance of Decentralized Finance (<a href=\"https://www.coindesk.com/five-years-in-defi-now-defines-ethereum\">DeFi</a>) and the coming staking change with <a href=\"https://www.coindesk.com/everything-you-need-to-know-about-ethereum-2-0\">ETH 2.0</a> may grow ETH usage to a point these manipulations no longer happen. ETH’s long predicted overtaking of BTC as the world’s dominant cryptocurrency is well underway. Last spring whales purchased more ETH in six months than BTC in an entire year. But that didn\'t stop it from being transacted much more frequently. ETH is used 440x more than BTC for transacting. Unlike BTC Hodlers, ETH is actually used, it is money.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4428,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-4428\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-BTC.png\" alt=\"ETH BTC\" />\r\n<figcaption><a href=\"https://medium.com/@adamscochran/the-10k-audit-42c100dd32bb\">Source</a></figcaption>\r\n</figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:paragraph -->\r\n<p>As DeFi and other dApps gain adoption this trend will only continue. The influx of millions of new users interacting with ETH may prevent market manipulation while nurturing growth. Still, watch for another price drop in December.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a></p>\r\n<!-- /wp:paragraph -->','Are Whales Manipulating ETH prices?','','publish','open','open','','are-whales-manipulating-eth-prices','','','2020-10-17 20:31:19','2020-10-17 20:31:19','',0,'https://www.thecrowdfundinglawyers.com/?p=4431',0,'post','',0),(4603,1,'2020-08-22 20:11:09','2020-08-22 20:11:09','<!-- wp:paragraph -->\r\n<p>DeFi is rising and stumbling as early adopters capture decentralized finance’s potential and some lose their shirts in untested protocols. So, what is DeFi and how can it change the way global finance happens without a deluge of lawsuits from foolish risktakers?</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>DeFi dApps (decentralized applications) can perform limitless financial functions. They include lending and borrowing money, no-lose lotteries, and high stakes rigged “games” where rule-knowing insiders fleece FOMO come-latelys. The dApps run on smart contracts that in theory need little human oversight. They operate through preset coded triggers and on permissionless blockchains. As a concept Defi can remove middlemen from potentially every financial transaction, anywhere globally. It also creates the possibility for new financial protocols or “games” to arise as coders build different apps like Legos.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>On the bright side, bloated governments and centuries-old financial institutions need not play the role of trusted go-between. Contracting parties need not know each other and most of the time they will not. Removing middlemen means removing the middleman fees ensuring more profit for both parties—at least when working as designed.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>DeFi is rising through adoption.</strong></h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>DeFi started from a 2018 <a href=\"https://www.coindesk.com/ethereum-defi-platforms-eth-history\">Meetup</a>. It progressed in the fall of 2019 but really exploded this summer. According to <a href=\"https://defipulse.com/\">Defi Pulse</a>, since June the “TVL” in DeFi dApps has grown from $1 billion to almost $7 billion. TVL or Total Value Locked is the amount locked in DeFi apps.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":3658,\"width\":409,\"height\":301,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-3658\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Sponge-Bob-Amazing-GIF.gif\" alt=\"\" width=\"409\" height=\"301\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>DeFi rises because it is infinitely composable.</strong></h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>DeFi dApps’ programmability yields unlimited potential for common financial transactions. But also for unbridled fervor in younger enthusiasts hoping for instant riches. Because DeFi dApps run on unmanaged smart contracts, embedded triggers direct their actions. If the code is solid little need for human oversight arises. The code is transparent so anyone can audit or find bugs but also that transactions are public and traceable. DeFi dApps are global open to anyone with an internet hookup or smart phone. They are permissionless; anyone can join or leave a DeFi dApp at any time. Finally, and most revolutionary, they are interoperable. Programmers can build, rebuild, or “compose” them in infinite ways. Creativity depends only upon people’s willingness to place their money in new (often untested) configurations.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>DeFi is rising through useful applications that excise middlemen</strong></h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p><a href=\"https://blog.coinbase.com/a-beginners-guide-to-decentralized-finance-defi-574c68ff43c4\">Coinbase lists</a> several different uses that have caught on in nascent DeFi:</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p><strong>Stable coins</strong></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:tadv/classic-paragraph -->\r\n<p><a href=\"https://makerdao.com/en/\" target=\"_blank\" rel=\"noreferrer noopener\">Maker</a> is a stablecoin project where each stablecoin (called DAI) is pegged to the US Dollar. Stablecoins offer the programmability of crypto without the downside of volatility of “traditional” cryptocurrencies like Bitcoin or Ethereum.</p>\r\n<!-- /wp:tadv/classic-paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>You can try creating your own DAI stablecoin on the <a href=\"https://oasis.app/borrow\" target=\"_blank\" rel=\"noreferrer noopener\">Maker Oasis dapp</a>. Maker is more than just a stablecoin project, though–it aspires to be a decentralized reserve bank. People who hold a separate but related token, MKR, can vote on <a href=\"https://www.coindesk.com/dai-stablecoins-stability-fee-nears-20-after-latest-makerdao-vote\" target=\"_blank\" rel=\"noreferrer noopener\">important decisions like the Stability Fee</a> (similar to how the Federal Reserve’s Federal Open Market Committee votes on the Fed Funds rate).</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Another stablecoin with a different architecture is <a href=\"https://www.coinbase.com/usdc\" target=\"_blank\" rel=\"noreferrer noopener\">USD Coin (USDC)</a>, where every USDC token is backed by one US dollar held in an audited bank account. <a href=\"https://www.coindesk.com/ethereum-defi-platforms-eth-history\">LINK</a></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p><strong>Lending</strong></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p> <a href=\"https://compound.finance\" target=\"_blank\" rel=\"noreferrer noopener\">Compound</a> is a blockchain-based borrowing and lending dapp — you can lend your crypto out and earn interest on it. Or maybe you need some money to pay the rent or buy groceries, but your funds are in your crypto investments? The Compound contract automatically matches borrowers and lenders and adjusts interest rates dynamically based on supply and demand.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p><strong>Prediction</strong></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p><a href=\"https://www.augur.net/\" target=\"_blank\" rel=\"noreferrer noopener\">Augur</a> is a decentralized prediction market protocol. With Augur, you can vote on the outcome of events, except you put ‘skin in the game’ by attaching a value to your vote.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p><strong>Games</strong></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>The composability of DeFi lends itself to infinite new possibilities. <a href=\"https://www.pooltogether.com/\" target=\"_blank\" rel=\"noreferrer noopener\">PoolTogether</a> is a no-loss game where participants deposit the DAI stablecoin into a common pot. At the end of each month, one lucky participant wins all the interest earned, and everyone gets their initial deposits back. <a href=\"https://www.coindesk.com/ethereum-defi-platforms-eth-history\">LINK</a></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>Yield Farming can foment a DeFi revolution </strong> </h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>DeFi’s biggest attraction is the chance to gain additional dApp-provided tokens as an incentive for use. Users “farm” these additional tokens at no additional cost, risk, or effort. This is essentially free money subject to the limitations of placing enough money in the dApp to make it worthwhile and account for the transaction fees inherent in traversing dApps. </p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:core-embed/youtube {\"url\":\"https://www.youtube.com/watch?v=WDR4BqMzkVY\",\"type\":\"video\",\"providerNameSlug\":\"youtube\",\"className\":\"wp-embed-aspect-16-9 wp-has-aspect-ratio\"} -->\r\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\">\r\n<div class=\"wp-block-embed__wrapper\">https://www.youtube.com/watch?v=WDR4BqMzkVY</div>\r\n</figure>\r\n<!-- /wp:core-embed/youtube -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>DeFi stumbles (and the rise of degens)</strong></h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Like any tech breakthrough Defi is plagued with uncertainty, faulty mechanics, wild speculations, immature systems, and eye-popping gains and losses. <a href=\"https://www.coindesk.com/yams-market-cap-falls-from-60m-to-zero-in-35-minutes\">YAM</a> shows the risks of plunging into uncertain dApps some of which have not even been audited. YAM was a protocol that pegged its value to the dollar. At defined intervals, the protocol would ‘rebase’ into dollar value creating an opportunity for insiders to reap huge profits if they ‘played’ correctly. But the YAM code had not been audited and the creators discovered a bug too late. YAM total value <a href=\"https://www.coindesk.com/yams-market-cap-falls-from-60m-to-zero-in-35-minutes\">went from</a> $60 million to $0 in about 35 minutes.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>YAM boosters were part of a cohort known as the DeFi degenerates, or degens. Degens jump from one Defi protocol to the next without regard to due diligence or examining the risks. The point for the degens is to game the game by knowing the inside rules and get out before the project crashes.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>Hackers gonna hack</strong>   </h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Hacks are also a major concern. Hacks have been part of crypto from the beginning most notably the infamous <a href=\"https://medium.com/swlh/the-story-of-the-dao-its-history-and-consequences-71e6a8a551ee\">2016 DAO hack</a> that began the Securities and Exchange Commission on the <a href=\"https://www.thecrowdfundinglawyers.com/sec-unleashes-hurricane-ico/\">enforcement path</a>.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Finally, more sophisticated operators can send spam bots geared toward attaching and profiting off major ETH transactions. This scam known as ‘<a href=\"https://www.coindesk.com/defi-traders-are-gaming-ethereum-for-higher-profits-researchers-say\">backrunning</a>” can clog up the ETH transaction que and waste millions of dollars in gas fees.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Even without backrunning DeFi’s has meant massive ETH gas prices. While ETH 2.0 or a competitor like <a href=\"https://www.coindesk.com/omisego-price-defi-ethereum-fees\">OMG Network</a> can solve some of these problems real fixes are months away and can themselves open up avenues for new problems.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4608,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-4608\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-gas.png\" alt=\"ETH Gas Prices\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:heading {\"align\":\"center\",\"level\":1} -->\r\n<h1 class=\"has-text-align-center\"><strong>DeFi will rise but many will likely lose in the process</strong></h1>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>These issues expose an obviously immature but growing market for decentralized financial applications. Some that have little value unless one is prepared to risk large amounts. <a href=\"https://app.compound.finance/\">Compound</a> for instance yields only around .15% APY for ETH lenders. Other currencies pegged to the dollar like Dai have better returns but lending ETH without putting substantial upfront commitment will lose money given the transaction fees not to mention hack risks. Growing pains happen and will likely not distract from DeFi’s overall promise, but until maturation users should know the risks that go with the potential rewards.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> on <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>\r\n<!-- /wp:paragraph -->','DeFi is rising (and stumbling)','','publish','open','open','','defi-is-rising-and-stumbling','','','2020-10-17 20:31:06','2020-10-17 20:31:06','',0,'https://www.thecrowdfundinglawyers.com/?p=4603',0,'post','',0),(4605,1,'2020-08-22 19:38:45','2020-08-22 19:38:45','<iframe title=\"The ultimate guide to Yield Farming in DeFi\" width=\"1080\" height=\"608\" src=\"https://www.youtube.com/embed/WDR4BqMzkVY?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen></iframe>','','','publish','closed','closed','','a096545d73fe64b92027df8f2d5e9464','','','2020-08-22 19:38:45','2020-08-22 19:38:45','',0,'https://www.thecrowdfundinglawyers.com/a096545d73fe64b92027df8f2d5e9464/',0,'oembed_cache','',0),(4608,1,'2020-08-22 19:42:07','2020-08-22 19:42:07','','ETH gas','','inherit','open','closed','','eth-gas','','','2020-08-22 19:44:51','2020-08-22 19:44:51','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/ETH-gas.png',0,'attachment','image/png',0),(4634,1,'2020-08-23 16:08:09','2020-08-23 16:08:09','<!-- wp:paragraph -->\r\n<p>Equity crowdfunding keeps gaining on other forms of capital raising despite (or perhaps because of) capital-raising headwinds. The pandemic, economic uncertainty, and the tumult of an approaching election has gripped America with anxiety.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Not so with equity crowdfunding as it gains acolytes and breaks records seemingly monthly. <a href=\"https://wefunder.com/\">Wefunder</a>, the biggest equity crowdfunding portal volume, <a href=\"https://www.crowdfundinsider.com/2020/06/162696-wefunder-reports-significant-growth-in-spite-of-covid-march-april-and-may-have-been-biggest-months-ever/\">reported its three biggest months</a> ever as March, April, and May of this year. Now <a href=\"https://crowdfundcapitaladvisors.com/\">Crowdfund Capital Advisors</a>, which curates equity crowdfunding data reports:</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:list -->\r\n<ul>\r\n	<li>July was the highest month of investor commitments at $23.2 million. The next closest month was October 2019 with $18.5 million. (See chart below)</li>\r\n	<li>June and May of this year were the third and fourth highest months of commitments.</li>\r\n	<li>The first quarter of this fiscal year saw more commitments than the entire first year of Regulation Crowdfunding.</li>\r\n</ul>\r\n<!-- /wp:list -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4635,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-4635\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/CCA-Table.png\" alt=\"\" />\r\n<figcaption><strong>Source: Crowdfund Capital Advisors</strong></figcaption>\r\n</figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4636,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large\"><img class=\"wp-image-4636\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/CCA-Table-2-1024x386.png\" alt=\"\" />\r\n<figcaption><strong>Source: Crowdfund Capital Advisors</strong></figcaption>\r\n</figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\">Proposed SEC rule changes could help equity crowdfunding gain traction</h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Equity crowdfunding will likely keep gaining even under prolonged uncertainty. In March, the <a href=\"https://www.thecrowdfundinglawyers.com/sec-commissioners-talk-crowdfunding-crypto-before-congress/\">Securities and Exchange Commission</a> <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-poised-to-explode-under-sec-proposal/\">proposed several changes</a> to <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf/\">Regulation Crowdfunding</a> that will increase use. As I explain in an upcoming law review article, the proposed measures fall short of the best possible Commission fixes. But, if enacted as is, it would improve the equity crowdfunding landscape for entrepreneurs and small businesses.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>For now, as many people spend lots of time home-ridden, some are looking for investment opportunities. In equity crowdfunding, everything is transacted over the internet and potential investors can view financial and legal documents and query founders before investing. The equity crowdfunding ride is only just beginning.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:tadv/classic-paragraph /-->','Equity crowdfunding keeps gaining despite national uncertainty','','publish','open','open','','equity-crowdfunding-keeps-gaining-despite-national-uncertainty','','','2020-10-17 20:26:37','2020-10-17 20:26:37','',0,'https://www.thecrowdfundinglawyers.com/?p=4634',0,'post','',0),(4635,1,'2020-08-23 15:52:09','2020-08-23 15:52:09','','CCA-Table','','inherit','open','closed','','cca-table','','','2020-08-23 15:52:09','2020-08-23 15:52:09','',4634,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/CCA-Table.png',0,'attachment','image/png',0),(4636,1,'2020-08-23 15:53:15','2020-08-23 15:53:15','','CCA-Table-2','','inherit','open','closed','','cca-table-2','','','2020-08-23 15:53:15','2020-08-23 15:53:15','',4634,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/CCA-Table-2.png',0,'attachment','image/png',0),(4676,1,'2020-08-26 14:46:11','2020-08-26 14:46:11','<!-- wp:paragraph -->\r\n<p>Neighborhood Sun, the innovative Maryland company revolutionizing the solar industry has now crossed $300k in investments from 336 investors in its equity-crowdfunding campaign. If you\'re interested in investing or learning more about this fast-growing company, checkout their Wefunder investment page:<a href=\" https://wefunder.com/neighborhood.sun\"> https://wefunder.com/neighborhood.sun</a></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":980,\"width\":332,\"height\":329,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-980\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/do-it.gif\" alt=\"\" width=\"332\" height=\"329\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:paragraph -->\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com</a></p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Disclaimer: Jossey PLLC performed paid legal work for this raise.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:tadv/classic-paragraph /-->','Neighborhood Sun Crosses $300K mark on Wefunder!!','','publish','open','open','','neighborhood-sun-crosses-300k-mark-on-wefunder','','','2020-10-17 20:30:47','2020-10-17 20:30:47','',0,'https://www.thecrowdfundinglawyers.com/?p=4676',0,'post','',0),(4747,1,'2020-08-28 17:09:57','2020-08-28 17:09:57','','CEI-Logo','','inherit','open','closed','','cei-logo','','','2020-08-28 17:09:57','2020-08-28 17:09:57','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/08/CEI-Logo.jpg',0,'attachment','image/jpeg',0),(4797,1,'2020-09-06 13:43:23','2020-09-06 13:43:23','','Proceeds-of-Reg-CF-by-Year-CCA-1024x692','','inherit','open','closed','','proceeds-of-reg-cf-by-year-cca-1024x692','','','2020-09-28 18:19:59','2020-09-28 18:19:59','',5445,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Proceeds-of-Reg-CF-by-Year-CCA-1024x692-1.png',0,'attachment','image/png',0),(4798,1,'2020-09-06 13:44:19','2020-09-06 13:44:19','','Exempt Offerings 2009-2018','','inherit','open','closed','','exempt-offerings-2009-2018','','','2020-09-06 13:45:58','2020-09-06 13:45:58','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Exempt-Offerings-2009-2018.png',0,'attachment','image/png',0),(4799,1,'2020-09-06 14:07:54','2020-09-06 14:07:54','<!-- wp:paragraph -->\r\n<p>To much fanfare, the Securities and Exchange Commission (SEC) <a href=\"https://www.sec.gov/news/press-release/2020-191\">recently expanded</a> the Accredited Investor (AI) definition. Individuals can now qualify as AIs via sophistication criteria and not just hard monetary limits. This change will increase the AI pool for startups and small businesses seeking investment. But it mainly affects Reg D offerings—by far the largest private exemption—which offers a binary: AIs can invest, non-AIs can’t.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Reg D’s dominance of the private markets is clear. In 2019 Reg D 506(b) issuers raised almost $1.5 billion. It dwarfs other exemptions like Reg A+, Reg CF, and Reg D 506(c) (similar to Reg D 506(b) except it allows general solicitation).  </p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4798,\"width\":535,\"height\":389,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-4798\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Exempt-Offerings-2009-2018-1024x745.png\" alt=\"Exempt Offerings 2009-2018\" width=\"535\" height=\"389\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:paragraph -->\r\n<p>But how the new definition affects equity crowdfunding (Reg CF) is more complex. The short answer for now, is, it doesn’t. Because Reg CF already allows anyone to invest, more AIs are irrelevant. But it could matter soon, if the Commissioners approve the <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-poised-to-explode-under-sec-proposal/\">March 2020 proposals</a> from last year’s Concept Release. For now, however, the hash Congress and the SEC made of Reg CF’s individual investor limits prevents the AI expansion from having impact.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\"><strong>Congress’s Reg CF individual investor limit exemplified bad drafting.</strong></h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>As enacted in <a href=\"https://www.congress.gov/112/plaws/publ106/PLAW-112publ106.pdf\">Title III of the JOBS Act</a>, Reg CF individual investor limits reads:  </p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:quote -->\r\n<blockquote class=\"wp-block-quote\">\r\n<p>[T]he aggregate amount sold to any investor by an issuer, including any amount sold in reliance on the exemption provided under this paragraph during the 12- month period preceding the date of such transaction, does not exceed— ‘‘(i) the greater of $2,000 or 5 percent of the annual income or net worth of such investor, as applicable, if either the annual income or the net worth of the investor is less than $100,000; and ‘‘(ii) 10 percent of the annual income or net worth of such investor, as applicable, not to exceed a maximum aggregate amount sold of $100,000, if either the annual income or net worth of the investor is equal to or more than $100,000</p>\r\n</blockquote>\r\n<!-- /wp:quote -->\r\n<!-- wp:paragraph -->\r\n<p>Like most statutes this passage shows how lawmakers should not write laws. Congress could have defined a hard limit adjusted for inflation for non-AIs and no limit for AIs. Instead, Congress divided the Reg CF limit into four categories: (i) 5% of annual income; (ii) 5% of net worth; (iii) 10% of annual income; and (iv) 10% of net worth. Then it added a floor, $2,000 and a ceiling, $100,000.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>It gets “better.” Congress failed to specify when each limit applies. Part one states, “if <em>either</em> annual income or net worth is less than $100,000 and part two states “if <em>either</em> the annual income or net worth . . . is equal to or more than $100,000.” So which is it? If someone’s income was $150,000 and net worth was zero, he would qualify for both brackets. And once in the bracket which limit applies, annual income or net worth? In the previous example if placed in the 5% bracket the limit would either be $2000 or $7,500.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\"><strong>The SEC interpreted Congressional ambiguity in the worst possible way</strong></h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Congress tasked the SEC with writing the Reg CF rules and cleaning up its textual mess. In its typically chary way, the SEC chose the worst possible interpretation. First it declared investors must meet the $100,000 threshold for <em>both</em> income and net worth for the 10% bracket. Second it chose the <em>lesser of</em> income or net worth once placed in either bracket. Thus, is the previous example the rules limited the $150,000 salaried person with no net worth to $2,000.  </p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>The Commission <a href=\"https://www.sec.gov/rules/final/2015/33-9974.pdf\">originally proposed</a> the <em>greater of </em>standard but changed course because of the supposed greater equity crowdfunding risks:</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>We recognize that this change from the proposed rules could place constraints on capital formation. Nevertheless, we believe that the investment limits in the final rules appropriately take into consideration the need to give issuers access to capital while minimizing an investor’s exposure to risk in a crowdfunding transaction.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>Importantly, the Commission also declined to exempt AIs from the formula. This distinguished Reg CF from Reg D and Reg A+ where accredited investors face no caps.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\"><strong>Equity crowdfunding continues to flourish despite bad drafting and regulatory hurdles</strong></h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Despite government obstacles <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/\">equity crowdfunding continues to grow</a>. In arguing against expanding the AI definition a <a href=\"https://www.sec.gov/comments/s7-25-19/s72519-6960384-212775.pdf\">group of state attorneys general</a> cited Reg CF underuse as evidence for restricting AIs.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:quote -->\r\n<blockquote class=\"wp-block-quote\">\r\n<p>[T]he equity crowdfunding market . . . has largely been underwhelming expectations despite significant deregulation to allow individual investors all along the financial spectrum to participate. Instead of a booming marketplace, equity crowdfunding has remained a niche market with fundraising falling well below the statutory caps and issuer-generated maximum targets for their offerings.</p>\r\n</blockquote>\r\n<!-- /wp:quote -->\r\n<!-- wp:paragraph -->\r\n<p>The AGs don’t mention the Commission-led barriers placed in Reg CF’s path, including confusing investment limits. Nonetheless after a slow start <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/\">Reg CF has gained substantial ground</a> in the past two years. According to Crowdfund Capital Advisors Reg CF investment jumped 37% between 2018 and 2019.</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:image {\"align\":\"center\",\"id\":4797,\"width\":537,\"height\":363,\"sizeSlug\":\"large\"} -->\r\n<div class=\"wp-block-image\">\r\n<figure class=\"aligncenter size-large is-resized\"><img class=\"wp-image-4797\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Proceeds-of-Reg-CF-by-Year-CCA-1024x692-1.png\" alt=\"Proceeds into Reg CF Offerings\" width=\"537\" height=\"363\" /></figure>\r\n</div>\r\n<!-- /wp:image -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\"><strong>Equity Crowdfunding portals are having a record year</strong>  </h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Further massive Reg CF portals <a href=\"https://www.seedinvest.com/blog/seedinvest/seedinvest-performance-during-covid19\">SeedInvest</a> and <a href=\"https://www.crowdfundinsider.com/2020/06/162696-wefunder-reports-significant-growth-in-spite-of-covid-march-april-and-may-have-been-biggest-months-ever/\">Wefunder</a> have reported their best months ever in 2020. And despite endless handwringing from regulators, academics, and nonprofits, Reg CF has not experienced predicted fraud and high-risk speculative investments. The Commission admits as much in its <a href=\"https://www.thecrowdfundinglawyers.com/sec-reg-cf-report-details-data-criticisms/\">2019 review</a> of the exemption’s <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/06/SEC-regulation-crowdfunding-2019_0.pdf\">performance</a>:</p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:quote {\"className\":\"is-style-default\"} -->\r\n<blockquote class=\"wp-block-quote is-style-default\">\r\n<p>During the considered period, there were few instances of legal proceedings (involving FINRA or the Commission) referencing Regulation Crowdfunding, so we cannot infer a systematic relation between any particular characteristics of the offerings and the incidence of such legal actions. In particular, a search of publicly available information in the Commission’s litigation releases has not identified civil complaints or administrative proceedings filed against Regulation Crowdfunding issuers or intermediaries. We have, however, identified four actions initiated by FINRA against a funding portal member that involved alleged violations of Regulation Crowdfunding or FINRA rules.</p>\r\n</blockquote>\r\n<!-- /wp:quote -->\r\n<!-- wp:heading {\"align\":\"center\"} -->\r\n<h2 class=\"has-text-align-center\"><strong>The Proposed Rules along with the expanded AI definition will improve equity crowdfunding  </strong></h2>\r\n<!-- /wp:heading -->\r\n<!-- wp:paragraph -->\r\n<p>Equity crowdfunding seems poised to become a “booming marketplace” with the expanse of time and more favorable rules. Four years after a <a href=\"https://www.thecrowdfundinglawyers.com/mr-clayton-tear-down-this-law-or-at-least-the-parts-that-suck/\">decidedly jaundiced</a> Commission wrote Reg CF’s rules it has finally <a href=\"https://www.sec.gov/news/press-release/2020-55\">proposed improvements</a>. One proposal seeks to correct its individual investment-limit mistakes. First it has proposed switching to the originally proposed “greater of” standard. Also, it has finally proposed lifting the caps for AIs. Assuming the Commission adopts the proposals as is, more equity crowdfunding investors will be free to invest without limits. This will further enhance Reg CF’s attractiveness to issuers and investors alike inching it toward the “booming marketplace” of state AG dreams.  </p>\r\n<!-- /wp:paragraph -->\r\n<!-- wp:paragraph -->\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a>  </p>\r\n<!-- /wp:paragraph -->','How the expanded accredited investor definition affects equity crowdfunding','','publish','open','open','','how-the-expanded-accredited-investor-definition-affects-equity-crowdfunding','','\nhttps://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/','2020-10-17 20:30:31','2020-10-17 20:30:31','',0,'https://www.thecrowdfundinglawyers.com/?p=4799',0,'post','',0),(4919,1,'2020-09-14 01:37:06','2020-09-14 01:37:06','','marketing-bg6','','inherit','open','closed','','marketing-bg6','','','2020-09-14 01:37:06','2020-09-14 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type=\"4_4\" _builder_version=\"4.0.3\"][et_pb_post_nav prev_text=\"Prev: %title\" next_text=\"Next: %title\" _builder_version=\"4.6.1\" title_font=\"Roboto|700|||||||\" title_text_color=\"#0c71c3\"][/et_pb_post_nav][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" _builder_version=\"4.0.3\"][et_pb_row _builder_version=\"4.0.3\"][et_pb_column type=\"4_4\" _builder_version=\"4.0.3\"][et_pb_text _builder_version=\"4.0.3\" header_2_font=\"Roboto||||||||\" header_2_font_size=\"48px\" header_2_font_size_tablet=\"38px\" header_2_font_size_phone=\"28px\" header_2_font_size_last_edited=\"on|phone\"]<h2>You May Also Like...</h2>[/et_pb_text][et_pb_blog fullwidth=\"off\" posts_number=\"3\" include_categories=\"current\" use_manual_excerpt=\"off\" excerpt_length=\"120\" show_author=\"off\" show_categories=\"off\" show_pagination=\"off\" _builder_version=\"4.0.3\" header_font=\"Roboto|600|||||||\" header_font_size=\"14px\" header_line_height=\"1.3em\" 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_module_preset=\"default\"][et_pb_text _builder_version=\"4.6.3\" _module_preset=\"default\"]<p>Below are just a few recent successful crowdfunding campaigns.</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_2\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_image src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/raise-5.gif\" title_text=\"raise 5\" align=\"center\" force_fullwidth=\"on\" _builder_version=\"4.6.5\" _module_preset=\"default\"][/et_pb_image][/et_pb_column][/et_pb_row][et_pb_row column_structure=\"1_2,1_2\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_column type=\"1_2\" _builder_version=\"4.6.3\" _module_preset=\"default\" background_enable_color=\"off\"][et_pb_blurb title=\"Streaming TV\" image=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/streaming-tv.png\" alt=\"ETH Whale\" admin_label=\"Streaming TV\" _builder_version=\"4.6.5\" _module_preset=\"default\" custom_padding=\"15px|15px|15px|15px|true|false\" box_shadow_style=\"preset2\"]<p>Amount Raised: $23K<br />Portal: Trucrowd</p>[/et_pb_blurb][/et_pb_column][et_pb_column type=\"1_2\" _builder_version=\"4.6.3\" _module_preset=\"default\" background_enable_color=\"off\"][et_pb_blurb title=\"Trustwire\" image=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/trustwise-logo.jpg\" alt=\"ETH Whale\" _builder_version=\"4.6.4\" _module_preset=\"default\" custom_padding=\"15px|15px|15px|15px|true|false\" box_shadow_style=\"preset2\"]<p>Amount Raised: $116K<br />Portal: Wefunder</p>[/et_pb_blurb][/et_pb_column][/et_pb_row][et_pb_row column_structure=\"1_2,1_2\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_column type=\"1_2\" _builder_version=\"4.6.3\" _module_preset=\"default\" background_enable_color=\"off\"][et_pb_blurb title=\"Neighborhood Sun\" image=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/neighborhoodsun2.jpg\" alt=\"ETH Whale\" 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custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crypto\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds screenname=\"SEC_News\"]</p>[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row disabled_on=\"off|off|on\" _builder_version=\"4.6.5\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.5\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.6.5\" _module_preset=\"default\" text_orientation=\"center\"]<p>[custom-twitter-feeds]</p>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]','Successful 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_module_preset=\"default\" text_text_color=\"#ffffff\" header_text_color=\"#ffffff\" header_2_text_color=\"#ffffff\" header_3_text_color=\"#ffffff\" header_text_shadow_style=\"preset1\" header_text_shadow_color=\"rgba(0,0,0,0.9)\" header_2_text_shadow_style=\"preset1\" header_2_text_shadow_color=\"rgba(0,0,0,0.75)\"]<h1>Crowdfunding &amp; Crypto</h1>\n<h2> </h2>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_row _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.6.3\" _module_preset=\"default\"]<h1 style=\"text-align: center;\">COMING SOON!</h1>\n<p>&nbsp;</p>\n<p> <img src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2016/07/cfglobe-300x300.jpg\" width=\"300\" height=\"300\" alt=\"\" class=\"wp-image-63 alignnone size-medium\" style=\"display: block; margin-left: auto; margin-right: auto;\" /></p>\n<p>&nbsp;</p>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" disabled_on=\"off|off|off\" _builder_version=\"4.6.5\" background_color=\"#003563\" width=\"100%\" global_module=\"5041\" saved_tabs=\"all\"][et_pb_row column_structure=\"1_4,1_4,1_4,1_4\" use_custom_gutter=\"on\" make_equal=\"on\" disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width=\"100%\" max_width=\"98%\" custom_margin=\"|||\" custom_padding=\"|41px||\"][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|phone\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" module_alignment=\"left\" min_height_tablet=\"\" min_height_phone=\"\" min_height_last_edited=\"on|phone\" custom_margin_tablet=\"\" custom_margin_phone=\"\" custom_margin_last_edited=\"on|desktop\" custom_padding_tablet=\"\" custom_padding_phone=\"\" custom_padding_last_edited=\"on|desktop\" module_alignment_tablet=\"center\" module_alignment_phone=\"center\" module_alignment_last_edited=\"on|desktop\"]<p>[custom-twitter-feeds]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crowdfunding\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crypto\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds screenname=\"SEC_News\"]</p>[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row disabled_on=\"off|off|on\" _builder_version=\"4.6.5\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.5\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.6.5\" _module_preset=\"default\" text_orientation=\"center\"]<p>[custom-twitter-feeds]</p>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]','Crowds & Crypto','','publish','closed','closed','','crowds-crypto','','','2020-10-01 17:05:55','2020-10-01 17:05:55','',0,'https://www.thecrowdfundinglawyers.com/?page_id=5206',0,'page','',0),(5209,1,'2020-09-24 19:44:54','2020-09-24 19:44:54','','crowd-crypto','','inherit','open','closed','','crowd-crypto','','','2020-09-24 19:44:54','2020-09-24 19:44:54','',5206,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/crowd-crypto.jpg',0,'attachment','image/jpeg',0),(5213,1,'2020-09-24 19:47:17','2020-09-24 19:47:17',' ','','','publish','closed','closed','','5213','','','2020-09-24 20:00:12','2020-09-24 20:00:12','',0,'https://www.thecrowdfundinglawyers.com/?p=5213',1,'nav_menu_item','',0),(5217,1,'2020-09-24 19:52:55','2020-09-24 19:52:55','[et_pb_section fb_built=\"1\" _builder_version=\"4.6.3\" _module_preset=\"default\" background_image=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/biz-startup-crowdfund-firm2.jpg\" custom_padding=\"100px||100px||false|false\"][et_pb_row _builder_version=\"4.6.1\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.1\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.9.4\" _module_preset=\"default\" text_text_color=\"#ffffff\" header_text_color=\"#ffffff\" header_2_text_color=\"#ffffff\" header_3_text_color=\"#ffffff\" hover_enabled=\"0\" header_text_shadow_style=\"preset1\" header_text_shadow_color=\"rgba(0,0,0,0.9)\" header_2_text_shadow_style=\"preset1\" header_2_text_shadow_color=\"rgba(0,0,0,0.75)\" sticky_enabled=\"0\"]<h1>Jossey PLLC</h1>\n<h2> </h2>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_row _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.3\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.9.4\" _module_preset=\"default\" hover_enabled=\"0\" sticky_enabled=\"0\"]<p><strong>Jossey PLLC</strong> helps startups, small businesses, and entrepreneurs nationwide with capital raising and other business-compliance needs. Jossey PLLC primarily focuses on alternative capital raising methods created through the JOBS Act of 2012, including Regulation A+, Regulation Crowdfunding, and Regulation D.  Jossey PLLC is based in the Washington, DC metro area. Principal attorney Paul H. Jossey is an Adjunct Fellow at the Competitive Enterprise Institute for cryptocurrencies and crowdfunding.</p>\n<p>thecrowdfundinglawyers.com is a project of Jossey PLLC. The site provides information on the legal aspects of alternative-capital raising as well as commentary on newsworthy events in crowdfunding, crypto, and at the Securities and Exchange Commission.</p>\n<p><a href=\"https://www.thecrowdfundinglawyers.com/contact-us/\">Contact Us</a></p>\n<p>Read Paul H. Jossey’s Law Review Article, <a href=\"https://cablj.org/wp-content/uploads/2021/02/Jossey_READY.pdf\">\'</a><em><a href=\"https://cablj.org/wp-content/uploads/2021/02/Jossey_READY.pdf\">Fixing the JOBS Act and Inviting the Tokenized Future, the Need for Congressional Action.\'</a> </em></p>\n<p><img class=\"wp-image-7496 size-full aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Screenshot-37.png\" alt=\"law review screen shot\" width=\"836\" height=\"920\" /></p>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" disabled_on=\"off|off|off\" _builder_version=\"4.6.5\" background_color=\"#003563\" width=\"100%\" global_module=\"5041\" saved_tabs=\"all\"][et_pb_row column_structure=\"1_4,1_4,1_4,1_4\" use_custom_gutter=\"on\" make_equal=\"on\" disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width=\"100%\" max_width=\"98%\" custom_margin=\"|||\" custom_padding=\"|41px||\"][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|phone\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" module_alignment=\"left\" min_height_tablet=\"\" min_height_phone=\"\" min_height_last_edited=\"on|phone\" custom_margin_tablet=\"\" custom_margin_phone=\"\" custom_margin_last_edited=\"on|desktop\" custom_padding_tablet=\"\" custom_padding_phone=\"\" custom_padding_last_edited=\"on|desktop\" module_alignment_tablet=\"center\" module_alignment_phone=\"center\" module_alignment_last_edited=\"on|desktop\"]<p>[custom-twitter-feeds]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crowdfunding\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crypto\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text 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17:05:23','2020-09-28 17:05:23','','streaming tv','','inherit','open','closed','','streaming-tv','','','2020-09-28 17:05:23','2020-09-28 17:05:23','',5183,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/streaming-tv.png',0,'attachment','image/png',0),(5414,1,'2020-09-28 17:07:03','2020-09-28 17:07:03','','Trustwire1','','inherit','open','closed','','trustwire1-2','','','2020-09-28 17:07:03','2020-09-28 17:07:03','',5183,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Trustwire1.png',0,'attachment','image/png',0),(5423,1,'2020-09-28 17:26:37','2020-09-28 17:26:37','','neighborhoodsun','','inherit','open','closed','','neighborhoodsun','','','2020-09-28 17:26:37','2020-09-28 17:26:37','',5183,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/neighborhoodsun.jpg',0,'attachment','image/jpeg',0),(5427,1,'2020-09-28 17:29:36','2020-09-28 17:29:36','','neighborhoodsun2','','inherit','open','closed','','neighborhoodsun2','','','2020-09-28 17:29:36','2020-09-28 17:29:36','',5183,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/neighborhoodsun2.jpg',0,'attachment','image/jpeg',0),(5430,1,'2020-09-28 17:32:08','2020-09-28 17:32:08','','trustwise-logo','','inherit','open','closed','','trustwise-logo','','','2020-09-28 17:32:08','2020-09-28 17:32:08','',5183,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/trustwise-logo.jpg',0,'attachment','image/jpeg',0),(5434,1,'2020-09-28 17:36:40','2020-09-28 17:36:40','','comingsoon','','inherit','open','closed','','comingsoon','','','2020-09-28 17:36:40','2020-09-28 17:36:40','',5183,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/comingsoon.jpg',0,'attachment','image/jpeg',0),(5439,1,'2020-09-28 17:52:09','2020-09-28 17:52:09','','SEC Report Offering Type','','inherit','open','closed','','sec-report-offering-type','','','2020-09-28 18:21:09','2020-09-28 18:21:09','',5445,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/SEC-Report-Offering-Type.png',0,'attachment','image/png',0),(5440,1,'2020-09-28 18:17:02','2020-09-28 18:17:02','<p>By greenlighting a banking rule, the feds again <a href=\"https://www.crowdfundinsider.com/2020/09/167045-occ-issues-interprestive-letter-on-banks-and-stablecoins-sec-comments-on-its-position-regarding-digital-assets/\">inched toward</a> accepting the crypto revolution. The Office of the Comptroller of the Currency (OCC) <a href=\"https://www.coindesk.com/wp-content/uploads/2020/09/2020-125a.pdf\">declared</a> big banks may hold stablecoin reserves for clients in hosted wallets. The statement follows this summer’s OCC proffer big banks could custody crypto. Always ahead of the curve, the most recent statement okayed a years-long practice but limited it unnecessary ways.</p>\r\n<p>Stablecoins are tied to a fiat currency, or some other <a href=\"https://www.coindesk.com/wp-content/uploads/2020/09/2020-125a.pdf\">“stable” reserve</a> like commodities or other cryptocurrencies. The tether can be a direct 1:1 peg or algorithm managed. Entrepreneurs created stablecoins to smooth crypto volatility.</p>\r\n<p>Without government permission, the stablecoin market had swiftly grown. Coindesk <a href=\"https://www.coindesk.com/questions-occ-first-guidance-stablecoins\">reports</a> from September 2019 to September 2020 the market jumped from $5 billion to $19 billion—much of it already backed by large financial institutions. But OCC unnecessarily limited stablecoin acceptance to 1:1-backed stablecoins and those in “hosted wallets,” presumably excluding business and individual wallets. This is bound to confuse and catalyze the need for further government clarification.</p>\r\n<p><img class=\" wp-image-1588 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Simpson-GIF.gif\" alt=\"\" width=\"399\" height=\"299\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>The SEC, always around, never there</strong></h2>\r\n<p>And then there is the always-lurking <a href=\"https://www.thecrowdfundinglawyers.com/competitive-enterprise-institute-criticizes-sec-shallow-end-jay-for-crypto-intransigence/\">Securities and Exchange Commission</a>. The SEC is the exemplar of foot-dragging slow-reacting bureaucratic power. Anyone familiar with Commission documents could have written its statement beforehand plus or minus a few words. It states the OCC interpretation is limited, any securities analysis will be based on “facts and circumstances,” the aspiring stablecoin creator should visit, and “if appropriate” the Commission may issue a No Action Letter.</p>\r\n<p>Perhaps no federal agency has ever used a phrase more than the SEC does “fact and circumstances.” What this phrase means is it will not provide clear public guidance on the fear that someone will subvert it and Commission would get blamed. It puts the burden on entrepreneurs to dance the SEC tune beforehand or risk a years-long investigation.</p>\r\n<p>The Commission couches this invitation in nondescript language. “The Staff stands ready to engage with market participants to assist them and to consider providing, if appropriate, a \"no-action\" position regarding whether activities with respect to a specific digital asset may invoke the application of the federal securities laws.”</p>\r\n<h2 style=\"text-align: center;\"><strong>The Commission greenlights stablecoin disclaimers</strong></h2>\r\n<p>But anyone who has talked with said Staff knows this isn’t quite true. Engagement is a regulatory two-step. You can talk to them, but don’t expect answers. They disclaim responsibility for their words. Here is last week’s example:</p>\r\n<blockquote>\r\n<p><em>This statement represents Staff views and is not a rule, regulation, or statement of the Commission. The SEC has neither approved nor disapproved its content. SEC Staff statements, like all SEC Staff guidance, have no legal force or effect: they do not alter or amend applicable law, and they create no new or additional obligations for any person.</em></p>\r\n</blockquote>\r\n<p>Got that? Come talk to us but don’t take our words seriously. The only surefire way to avoid a “facts and circumstances” probe is a No Action Letter. But that could take months, even years, and has limited precedential value.</p>\r\n<h2 style=\"text-align: center;\"><strong>NPC Valerie, SEC stablecoin czar</strong></h2>\r\n<p>In the crypto world, the SEC’s top talker is <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie</a>—a career bureaucrat.  Before the virus NPC Valerie traveled the country attending conferences and grinding ad nauseum the Commission’s “facts and circumstances” and “<em>Howey</em>” tread.  Here is <a href=\"https://www.coindesk.com/secs-valerie-szczepanik-at-sxsw-crypto-spring-is-going-to-come\">her answer</a> on whether algorithmic stablecoins constitute securities: “You might be getting into the land of security.” What does that mean? Nobody knows. It depends of course on the “facts and circumstances.”</p>\r\n<p>The Commission kicker was a citation to the infamous <a href=\"https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets\">April 2019 “guidance.”</a> Insiders and media mocked the document as a confusing morass of nothingness. It stands thus far as <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">NPC Valerie’s</a> most comprehensive work product. (She didn\'t sign it of course, why take responsibility for such a mess?) At the time Coindesk’s lead story was titled ‘<em>SEC\'s Crypto Token Framework Falls Short of Clear and Actionable Guidance</em>.’ The <a href=\"https://harvardlawreview.org/2019/06/sec-framework-for-investment-contract-analysis-of-digital-assets-2019/\">Harvard Law Review</a> called it “an inadequate substitute for clear legislation and judicial rulings.”</p>\r\n<h2 style=\"text-align: center;\"><strong>Crypto Mom breaks the mold</strong></h2>\r\n<p>And Hester Peirce, aka <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Crypto Mom</a>, at times the Commission’s lone voice of reason didn\'t <a href=\"https://www.sec.gov/news/speech/peirce-how-we-howey-050919\">hold back</a>:</p>\r\n<blockquote>\r\n<p><em>While Howey has four factors to consider, the framework lists 38 separate considerations, many of which include several sub-points. A seasoned securities lawyer might be able to infer which of these considerations will likely be controlling. And might therefore be able to provide the appropriate weight to each. Whether the framework gives anything new to the seasoned securities lawyer used to operating in the facts and circumstances world of </em>Howey<em> is an open question. I worry that non-lawyers and lawyers not steeped in securities law and its attendant lore will not know what to make of the guidance.</em></p>\r\n<p><em> Pages worth of factors, many of which seemingly apply to all decentralized networks, might contribute to the feeling that navigating the securities laws in this area is perilous business. Rather than sorting through the factors or hiring an expensive lawyer to do so, a wary company may reasonably decide to forgo certain opportunities or to pursue them in a more crypto-friendly jurisdiction overseas</em>.</p>\r\n</blockquote>\r\n\r\n[caption id=\"attachment_2049\" align=\"aligncenter\" width=\"600\"]<img class=\"wp-image-2049\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/07/cryptomom-1.png\" alt=\"Crypto Mom\" width=\"600\" height=\"375\" /> <strong>Commissioner Hester Peirce, AKA Crypto Mom</strong>[/caption]\r\n\r\n<p>It is a testament to the Commission’s failed leadership that it still cites guidance people both inside and outside government have branded useless.</p>\r\n<p>The feds have once again inched toward opening our decentralized, privatized future through stablecoin acceptance. They could help even more by providing clear rules and getting out of the way.</p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>','Government greenlights stablecoins (kind of)','','publish','open','open','','government-greenlights-stablecoins-kind-of','','','2020-10-17 20:30:13','2020-10-17 20:30:13','',0,'https://www.thecrowdfundinglawyers.com/?p=5440',0,'post','',0),(5445,1,'2020-09-28 18:33:55','2020-09-28 18:33:55','<p><a href=\"https://crowdfundcapitaladvisors.com/\">Crowdfund Capital Advisors</a> has always led the equity crowdfunding (Reg CF) charge. It provides the public free and <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/\">invaluable data</a> about Reg CF’s promise and growth. It deserves accolades for its leadership.</p>\r\n<p>But last week it released a <a href=\"https://www.crowdfundinsider.com/wp-content/uploads/2020/09/Regulation-Crowdfunding-by-Congressional-District.pdf\">report</a> and with The Small Business &amp; Entrepreneurship Council that tries to steer Reg CF down a wanton path. The groups argue the federal government, i.e. taxpayers, should co-invest alongside private investors in Reg CF issues. The scheme would involve a $20 billion fund dispersed in tranches of up to $250k. Terms would be “standard,” and issuers would repay the loans, first to private investors, then the government.</p>\r\n<p>As evidence for this program’s need Crowdfund Capital Advisors and SBE Council promote a few factors. First, they expose challenges traditionally underserved entrepreneurs such as minority groups face. (They drive home the point home by analyzing Reg CF issuers by Congressional district). Second, they point to a <a href=\"https://www.gov.uk/guidance/future-fund\">UK program</a> that could serve as a model. Finally, they declare the pandemic’s hardship makes this program necessary and urgent.</p>\r\n<h2 style=\"text-align: center;\"><strong>Crowdfund Capital Advisors evidence for more government involvement is unavailing</strong></h2>\r\n<p>Several problems arise with programs of this sort from an economic and social utility standpoint. First, it would apparently require participating companies take on multi-source debt. While debt is the right financial route for some Reg CF issuers, they are not the majority. As the <a href=\"https://www.sec.gov/files/regulation-crowdfunding-2019_0.pdf\">2019 Reg CF report</a> noted, only 27% of issuers chose debt for their financial instrument.</p>\r\n\r\n[caption id=\"attachment_5439\" align=\"aligncenter\" width=\"832\"]<img class=\"wp-image-5439 size-full\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/SEC-Report-Offering-Type.png\" alt=\"Reg CF security type\" width=\"832\" height=\"407\" /> <strong>Source: Securities and Exchange Commission </strong>[/caption]\r\n\r\n<p>This limits company freedom to choose their own financial instruments and forces it into an ill-suited instrument to enjoy taxpayer largess. The report nudges local investors to the front of the line, if issuer fails, as many of them will, taxpayers get stuck with empty IOUs.</p>\r\n<p>If the issuers need the extra money after a successful Reg CF raise they can use their new capital as collateral. If the market won’t support an extra injection, taxpayers shouldn’t be a backstop.</p>\r\n<h2 style=\"text-align: center;\"><strong>The government creates zombies</strong></h2>\r\n<p>Second this program would prolong the agony of “<a href=\"https://www.economist.com/leaders/2020/09/26/what-to-do-about-zombie-firms\">zombie firms</a>.” Taxpayers will prolong the agony of firms destined to die. In free markets not every idea succeeds, and many entrepreneurs fail once or twice before hitting their stride. The experience of learning what went wrong is invaluable. And doing more with less on short budgets makes a firm scrappy and smart in a way that getting a six-figure wire from Uncle Sam never will. Capitalism cannot succeed if it cannot destroy bad ideas. This axiom is why SEC Chair <a href=\"https://www.sec.gov/news/speech/speech-clayton-2019-09-09\">Jay Clayton calls</a> the US private capital markets “unrivaled and coveted around the globe.”</p>\r\n<p>Third most big portals are already committed to serving underserved communities and nontraditional entrepreneurs. Some write it into their mission. Wefunder’s <a href=\"https://wefunder.com/charter\">charter</a> for instance states “Wefunder will help those who are willing to work hard to achieve the American Dream. Everyone deserves access to funding, including immigrants, minorities, and the poor.” <a href=\"https://republic.co/about\">Republic</a> adds “Traditionally, female, black, and latinx founders have seen far less venture capital than their white male counterparts. Furthermore, the majority of funded startups come from Silicon Valley and New York with little representation from other cities across the US.”</p>\r\n<p>Reg CF is already a great tool bring capital access to these entrepreneurs. This success will hopefully spark an entrepreneurial cascade of strong companies emerging from these communities and demographics. But the market will (and should) be the ultimate judge of their success.</p>\r\n<p>Fourth, Reg CF is already succeeding. CCA <a href=\"https://www.crowdfundinsider.com/2020/02/157163-sherwood-neiss-of-crowdfund-capital-advisors-updates-on-reg-cf-progress-successful-reg-cf-companies-have-pumped-almost-1-billion-into-local-economies/\">reports</a> 2018-2019 saw a 37% increase in Reg CF investment. And 2020 will top it all. As the <a href=\"https://www.crowdfundinsider.com/wp-content/uploads/2020/09/Regulation-Crowdfunding-by-Congressional-District.pdf\">report</a> states, “During the last 2 months (July and August 2020) equity and debt crowdfunding delivered the same amount of capital ($48 million) as the first full year (2016-2017) of online fundraising.”</p>\r\n<p><img class=\"wp-image-4797 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Proceeds-of-Reg-CF-by-Year-CCA-1024x692-1.png\" alt=\"Proceeds into Reg CF Offerings\" width=\"749\" height=\"506\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>The SEC should step back and let Reg CF flourish</strong></h2>\r\n<p>More government involvement is not what Reg CF needs. The SEC has finally become comfortable enough after four years to <a href=\"https://www.sec.gov/news/press-release/2020-55\">propose</a> increasing the offer limit from $1.07 to $5M, allow ‘testing the waters,’ and remove accredited-investor caps. This is the right direction, but the regulators should remove more restraints to equity crowdfunding. As I argue in an upcoming law review article, <em>Fixing the JOBS Act and Inviting our Tokenized World, the Need for Congressional Action</em>, Congress should copy the private-ordered New Zealand model researched by <a href=\"https://lawweb.colorado.edu/profiles/profile.jsp?id=315\">Professor Andrew Schwartz</a>.</p>\r\n<p>Schwartz showed in an <a href=\"https://www.sec.gov/comments/s7-08-19/s70819-6193349-192506.pdf\">SEC Comment letter</a> how New Zealand copied our own Reg CF but removed many of the restraints currently facing US entrepreneurs. Through gatekeepers and syndication, New Zealand keeps costs low whilst protecting against fraud. Larger lead investors and portals perform due diligence. Big investors put their money on the line and retail investors then join. Reputational awareness keeps portals from accepting subpar issuers. Entrepreneurs face no advertising restrictions or lengthy disclosure documents and investors face no limits.</p>\r\n<p>This model has worked well providing exponentially more opportunities for investors when scaled for economy.</p>\r\n<p>Schwartz <a href=\"https://www.sec.gov/comments/s7-08-19/s70819-6193349-192506.pdf\">concludes</a>:</p>\r\n<blockquote>\r\n<p><em>The central focus of regulatory enforcement by the SEC and FINRA should be the oversight of intermediaries, not issuers or offerings, as per the New Zealand model. The intermediaries should exercise direct oversight of the issuers, and the regulators should ensure that the intermediaries have proper practices and procedures in place for doing so.</em></p>\r\n</blockquote>\r\n<h2 style=\"text-align: center;\"><strong>Crowdfund Capital Advisors is a great resource with a bad idea</strong></h2>\r\n<p>Crowdfund Capital Advisors is an invaluable resource for equity crowdfunding. And their intentions are certainly noble. But their bias toward more government involvement is not the way. The government already interferes in the economy in enough terrible ways. It should not straddle the nation’s entrepreneurs with its overbearing presence.</p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>','Crowdfund Capital Advisors’ Bad Idea','','publish','open','open','','crowdfund-capital-advisors-bad-idea','','','2020-10-17 20:29:56','2020-10-17 20:29:56','',0,'https://www.thecrowdfundinglawyers.com/?p=5445',0,'post','',0),(5531,1,'2020-09-28 20:37:14','2020-09-28 20:37:14','#main-header, #et-top-navigation {\r\n    border-bottom: 1px solid #efefef;\r\n}','Divi-child','','publish','closed','closed','','divi-child','','','2020-10-17 17:28:39','2020-10-17 17:28:39','',0,'https://www.thecrowdfundinglawyers.com/divi-child/',0,'custom_css','',0),(5533,1,'2020-09-28 20:43:31','2020-09-28 20:43:31','https://www.thecrowdfundinglawyers.com/wp-content/uploads/2016/07/cropped-cfglobe.jpg','cropped-cfglobe.jpg','','inherit','open','closed','','cropped-cfglobe-jpg','','','2020-09-28 20:43:31','2020-09-28 20:43:31','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2016/07/cropped-cfglobe.jpg',0,'attachment','image/jpeg',0),(5534,1,'2020-09-28 20:43:32','2020-09-28 20:43:32','{{unknown}}','','','publish','closed','closed','','6a2ee7864012036300612b955ecda148','','','2020-09-28 20:43:32','2020-09-28 20:43:32','',0,'https://www.thecrowdfundinglawyers.com/6a2ee7864012036300612b955ecda148/',0,'oembed_cache','',0),(5544,1,'2020-09-28 21:06:18','2020-09-28 21:06:18','','freeequityfundingchecklist','','inherit','open','closed','','freeequityfundingchecklist','','','2020-09-28 21:06:18','2020-09-28 21:06:18','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/freeequityfundingchecklist.jpg',0,'attachment','image/jpeg',0),(5546,1,'2020-09-28 21:09:21','2020-09-28 21:09:21','','Fixing the JOBS Act and Inviting Our Tokenized Future, the Need for Congressional Action','','inherit','open','closed','','fixing-the-jobs-act','','','2020-09-29 19:15:01','2020-09-29 19:15:01','',5217,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Fixing-the-JOBS-Act.pdf',0,'attachment','application/pdf',0),(6656,1,'2020-09-30 15:44:20','2020-09-30 15:44:20','','thecrowdfundinglawyers.com','','inherit','open','closed','','btc','','','2020-09-30 15:54:55','2020-09-30 15:54:55','',429,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/BTC.jpg',0,'attachment','image/jpeg',0),(6664,1,'2020-09-30 15:57:47','2020-09-30 15:57:47','[et_pb_section fb_built=\"1\" _builder_version=\"4.6.1\" _module_preset=\"default\" background_image=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/crowdfundingheader.png\" background_position=\"top_center\" custom_padding=\"100px||100px||false|false\"][et_pb_row _builder_version=\"4.6.1\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.1\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.6.5\" _module_preset=\"default\" text_text_color=\"#ffffff\" header_text_color=\"#ffffff\" header_2_text_color=\"#ffffff\" header_3_text_color=\"#ffffff\" header_text_shadow_style=\"preset1\" header_text_shadow_color=\"rgba(0,0,0,0.9)\" header_2_text_shadow_style=\"preset1\" header_2_text_shadow_color=\"rgba(0,0,0,0.75)\"]<h2>Privacy Policy</h2>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" _builder_version=\"4.6.5\" custom_padding=\"||1px|||\" hover_enabled=\"0\" module_alignment=\"right\" sticky_enabled=\"0\"][et_pb_row _builder_version=\"4.6.5\" hover_enabled=\"0\" sticky_enabled=\"0\"][et_pb_column type=\"4_4\" _builder_version=\"3.25\" custom_padding=\"|||\" custom_padding__hover=\"|||\"][et_pb_text _builder_version=\"4.6.5\" custom_padding=\"||0px|||\" hover_enabled=\"0\" sticky_enabled=\"0\"]<h2><strong>Privacy Policy</strong></h2>\n<p><strong>Your privacy is critically important to us. At the thecrowdfundinglawyers.com we have a few fundamental principles:</strong></p>\n<ul>\n<li>We don’t ask you for personal information unless we truly need it. (We don’t like ask you for things like your gender or income level for no apparent reason.)</li>\n<li>We don’t share your personal information with anyone except to comply with the law, develop our products, provide you a service or protect our rights.</li>\n<li>We don’t store personal information on our servers unless required for the on-going operation of one of our services.</li>\n<li>Regarding Cookies, approved third party ad networks may utilize them and Google Analytics does use Cookies in an attempt to track user traffic, but that’s it.</li>\n</ul>\n<p>Below is our privacy policy which incorporates these goals: If you have questions about deleting or correcting your personal data please contact us at info@thecrowdfundinglawyers.com.</p>\n<p>Jossey PLLC operates thecrowdfundinglawyers.com, It is our policy to respect your privacy regarding any information we may collect while operating our websites.</p>\n<p><strong>Website Visitors</strong></p>\n<p>Like most website operators, THECROWDFUNDINGLAWYERS.COM collects non-personally- identifying information of the sort that web browsers and servers typically make available, such as the browser type, language preference, referring site, and the date and time of each visitor request. THECROWDFUNDINGLAWYERS.COM’s purpose in collecting non-personally identifying information is to better understand how THECROWDFUNDINGLAWYERS.COM’s visitors use its website. From time to time, THECROWDFUNDINGLAWYERS.COM may release non- personally-identifying information in the aggregate, e.g., by publishing a report on trends in the usage of its website.</p>\n<p>THECROWDFUNDINGLAWYERS.COM also collects potentially personally-identifying information like Internet Protocol (IP) addresses for logged in users and for users leaving comments on our sites. THECROWDFUNDINGLAWYERS.COM only discloses logged in user and commenter IP addresses under the same circumstances that it uses and discloses personally-identifying information as described below, except that blog commenter IP addresses are visible and disclosed to the administrators of the blog where the comment was left.</p>\n<p><strong>Gathering of Personally-Identifying Information</strong></p>\n<p>Certain visitors to THECROWDFUNDINGLAWYERS.COM website choose to interact with THECROWDFUNDINGLAWYERS.COM in ways that require THECROWDFUNDINGLAWYERS.COM to gather personally-identifying information. The amount and type of information that THECROWDFUNDINGLAWYERS.COM gathers depends on the nature of the interaction. For example, we ask visitors who sign up for a newsletter at THECROWDFUNDINGLAWYERS.COM to provide a name and email address. Those who engage in transactions with THECROWDFUNDINGLAWYERS.COM are asked to provide additional information, including as necessary the personal and financial information required to process those transactions. In each case, THECROWDFUNDINGLAWYERS.COM may collect such information only insofar as is necessary or appropriate to fulfill the purpose of the visitor’s interaction with THECROWDFUNDINGLAWYERS.COM sites. THECROWDFUNDINGLAWYERS.COM does not disclose personally-identifying information other than as described below. And visitors can always refuse to supply personally-identifying information, with the caveat that it may prevent them from engaging in certain website-related activities.</p>\n<p><strong>Aggregated Statistics</strong></p>\n<p>THECROWDFUNDINGLAWYERS.COM may collect statistics about the behavior of visitors to its websites. For instance, THECROWDFUNDINGLAWYERS.COM may monitor the most popular content. THECROWDFUNDINGLAWYERS.COM may display this information publicly or provide it to others. However, THECROWDFUNDINGLAWYERS.COM does not disclose personally-identifying information other than as described below.</p>\n<p><strong>Protection of Certain Personally-Identifying Information</strong></p>\n<p>THECROWDFUNDINGLAWYERS.COM discloses potentially personally-identifying and personally-identifying information only to those of its employees, contractors and affiliated organizations that (i) need to know that information in order to process it on THECROWDFUNDINGLAWYERS.COM ’s behalf or to provide services available at THECROWDFUNDINGLAWYERS.COM ’s websites, and (ii) that have agreed not to disclose it to others. Some of those employees, contractors and affiliated organizations may be located outside of your home country; by using THECROWDFUNDINGLAWYERS.COM ’s websites, you consent to the transfer of such information to them. THECROWDFUNDINGLAWYERS.COM will not rent or sell potentially personally-identifying and personally-identifying information to anyone. Other than to its employees, contractors and affiliated organizations, as described above, THECROWDFUNDINGLAWYERS.COM discloses potentially personally-identifying and personally-identifying information only in response to a subpoena, court order or other governmental request, or when THECROWDFUNDINGLAWYERS.COM believes in good faith that disclosure is reasonably necessary to protect the property or rights of THECROWDFUNDINGLAWYERS.COM, third parties or the public at large. If you are a registered user of an THECROWDFUNDINGLAWYERS.COM website and have supplied your email address, THECROWDFUNDINGLAWYERS.COM may occasionally send you an email to tell you about new features, solicit your feedback, or just keep you up to date with what’s going on with THECROWDFUNDINGLAWYERS.COM and our products. We primarily use our various product blogs to communicate this type of information, so we expect to keep this type of email to a minimum. If you send us a request (for example via a support email or via one of our feedback mechanisms), we reserve the right to publish it in order to help us clarify or respond to your request or to help us support other users. THECROWDFUNDINGLAWYERS.COM takes all measures reasonably necessary to protect against the unauthorized access, use, alteration or destruction of potentially personally-identifying and personally-identifying information.</p>\n<p><strong>Cookies</strong></p>\n<p>A cookie is a string of information that a website stores on a visitor’s computer, and that the visitor’s browser provides to the website each time the visitor returns.</p>\n<p>THECROWDFUNDINGLAWYERS.COM uses cookies to help identify and track visitors, their usage of THECROWDFUNDINGLAWYERS.COM sites, and their website access preferences. THECROWDFUNDINGLAWYERS.COM visitors who do not wish to have cookies placed on their computers should set their browsers to refuse cookies before using THECROWDFUNDINGLAWYERS.COM’s websites, with the drawback that certain features of THECROWDFUNDINGLAWYERS.COM’s websites may not function properly without the aid of cookies.</p>\n<p><strong>Business Transfers</strong></p>\n<p>If THECROWDFUNDINGLAWYERS.COM, or substantially all of its assets, were acquired, or in the unlikely event that THECROWDFUNDINGLAWYERS.COM goes out of business or enters bankruptcy, user information would be one of the assets that is transferred or acquired by a third party. You acknowledge that such transfers may occur, and that any acquirer of THECROWDFUNDINGLAWYERS.COM may continue to use your personal information as set forth in this policy.</p>\n<p><strong>Ads</strong></p>\n<p>Ads appearing on any of our websites may be delivered to users by advertising partners, who may set cookies. These cookies allow the ad server to recognize your computer each time they send you an online advertisement to compile information about you or others who use your computer. This information allows ad networks to, among other things, deliver targeted advertisements that they believe will be of most interest to you. This Privacy Policy covers the use of cookies by THECROWDFUNDINGLAWYERS.COM and does not cover the use of cookies by any advertisers.</p>\n<p><strong>Privacy Policy Changes</strong></p>\n<p>Although most changes are likely to be minor, THECROWDFUNDINGLAWYERS.COM may change its Privacy Policy from time to time, and in THECROWDFUNDINGLAWYERS.COM’s sole discretion. THECROWDFUNDINGLAWYERS.COM encourages visitors to frequently check this page for any changes to its Privacy Policy. If you have an account, you should also check this section for alerts to these changes. Your continued use of this site after any change in this Privacy Policy will constitute your acceptance of such change. If you would like to provide feedback or comments regarding our policies please email us at info@thecrowdfundinglawyers.com</p>\n<p>&nbsp;</p>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=\"1\" disabled_on=\"off|off|off\" _builder_version=\"4.6.5\" background_color=\"#003563\" width=\"100%\" global_module=\"5041\" saved_tabs=\"all\"][et_pb_row column_structure=\"1_4,1_4,1_4,1_4\" use_custom_gutter=\"on\" make_equal=\"on\" disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width=\"100%\" max_width=\"98%\" custom_margin=\"|||\" custom_padding=\"|41px||\"][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|phone\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" module_alignment=\"left\" min_height_tablet=\"\" min_height_phone=\"\" min_height_last_edited=\"on|phone\" custom_margin_tablet=\"\" custom_margin_phone=\"\" custom_margin_last_edited=\"on|desktop\" custom_padding_tablet=\"\" custom_padding_phone=\"\" custom_padding_last_edited=\"on|desktop\" module_alignment_tablet=\"center\" module_alignment_phone=\"center\" module_alignment_last_edited=\"on|desktop\"]<p>[custom-twitter-feeds]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crowdfunding\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds hashtag=\"#crypto\"]</p>[/et_pb_text][/et_pb_column][et_pb_column type=\"1_4\" _builder_version=\"4.6.3\" background_enable_color=\"off\" custom_padding=\"40px|20px|40px|20px|false|false\" border_color_all=\"rgba(255,255,255,0.5)\"][et_pb_text disabled_on=\"on|on|off\" _builder_version=\"4.6.5\" width_tablet=\"\" width_phone=\"\" width_last_edited=\"on|desktop\" max_width_tablet=\"\" max_width_phone=\"\" max_width_last_edited=\"on|desktop\" custom_margin=\"|12px||\"]<p>[custom-twitter-feeds screenname=\"SEC_News\"]</p>[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row disabled_on=\"off|off|on\" _builder_version=\"4.6.5\" _module_preset=\"default\"][et_pb_column type=\"4_4\" _builder_version=\"4.6.5\" _module_preset=\"default\"][et_pb_text _builder_version=\"4.6.5\" _module_preset=\"default\" text_orientation=\"center\"]<p>[custom-twitter-feeds]</p>[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]','Privacy Policy','','publish','closed','closed','','privacy-policy','','','2020-09-30 16:06:43','2020-09-30 16:06:43','',0,'https://www.thecrowdfundinglawyers.com/?page_id=6664',0,'page','',0),(6724,1,'2020-09-30 20:23:24','2020-09-30 20:23:24','','Equity Crowdfunding Checklist','','inherit','open','closed','','equity-crowdfunding-checklist','','','2020-09-30 20:23:24','2020-09-30 20:23:24','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Equity-Crowdfunding-Checklist.pdf',0,'attachment','application/pdf',0),(7202,1,'2020-10-12 14:55:34','2020-10-12 14:55:34','<p>Coinbase CEO Brian Armstrong <a href=\"https://www.coindesk.com/coinbase-has-drawn-a-line-in-the-sand-for-its-activist-employees\">recently announced</a> the crypto exchange will run an apolitical shop. The <a href=\"https://blog.coinbase.com/coinbase-is-a-mission-focused-company-af882df8804\">decree</a> seeks to avoid drama-filled, virtue-signaling walkouts that have plagued other tech-focused companies. The move defies not only Coinbase’s Silicon Valley pedigree, but the corporate-culture zeitgeist. Armstrong offered objectors generous severance packages to go, about <a href=\"https://news.yahoo.com/coinbase-ceo-says-5-employees-175335944.html\">60 employees</a> or 5% went.</p>\r\n<p>Normally Coinbase’s stance would evoke shrugs. Indeed, businesses usually avoid emotionally charged work-unrelated topics on company time. And those who complain of political bias in corporate messaging or policies are often met with the snide retort, ‘Go start your own [insert industry] company.’</p>\r\n<p>But these aren’t normal times. Activist bullies dictate terms. They target dissenters socially, economically, and politically. Most cave, genuflecting to grievance is easy, taking unpopular stands is hard. But Armstrong took one; he should be applauded.</p>\r\n<h2 style=\"text-align: center;\"><strong>Coinbase’s stance isn’t embraced by cultural conformists</strong></h2>\r\n<p>But claps won’t come from the enforcers of cultural conformity and submission. Twitter CEO Jack Dorsey <a href=\"https://twitter.com/jack/status/1311423420274372608?s=20\">panned</a> Armstrong’s decision tweeting Coinbase was “leaving people behind.” Former Twitter CEO Dick Costello was more ardent. He offered to provide <a href=\"https://www.breitbart.com/tech/2020/10/01/former-twitter-ceo-dick-costolo-capitalists-will-be-first-people-lined-up-against-the-wall-and-shot-in-the-revolution/?utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed%3A+breitbart+%28Breitbart+News%29\">video commentary</a> of Armstrong’s assassination by mob revolutionaries for practicing “me-first capitalism.”</p>\r\n<p>Costello, whose net worth is reportedly $300 million, would presumably opine from a fortified abode manned with armed private security. Wouldn’t want those revolutionaries getting any ideas about his allegiance to ‘we-first’ capitalism.</p>\r\n<p>The violent imagery evinces Big Tech’s breezy authoritarianism, which has <a href=\"https://www.coindesk.com/money-reimagined-cryptos-diversity-problem\">seeped into crypto</a>. Not only do adherents constrict the Overton Window, often without explanation. But they deem any disparity proof of discriminatory intent, no matter how ‘woke’ the industry or company.</p>\r\n<p><img class=\"size-full wp-image-417 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-3.gif\" alt=\"\" width=\"488\" height=\"275\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>Twitter works overtime to enforce cultural hegemony</strong></h2>\r\n<p>It’s not clear how Twitter’s corporate mission keeps people from “falling behind.” It’s clearer how it controls the national conversation and censors what an Oceania bureaucrat might call ‘wrongspeak.’</p>\r\n<p>The latest tool is a pop up for tweets Twitter has deemed provides insufficient context. The company will now “suggest” reading the full context before retweeting. One can imagine <a href=\"https://thefederalist.com/2020/10/07/twitter-warns-users-trying-to-retweet-federalist-article-on-declassified-russiagate-documents/\">whose messages</a> will get such treatment—Big Brother on the Information Superhighway.</p>\r\n<p><img class=\"size-full wp-image-7203 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/10/Twitter-JPEG.jpg\" alt=\"Twitter Headlines don\'t tell the full story\" width=\"474\" height=\"284\" /></p>\r\n<p>All of this of course tracks with a larger push for cultural hegemony: <a href=\"https://www.nationalreview.com/corner/science-journals-have-become-intensely-political/\">science</a>, sports, journalism, academia have all been infected. Free thinking, say the cultural oligarchs, won’t be tolerated. And silence, if activists get their way, won’t either. Pushback happens, just <a href=\"https://www.breitbart.com/sports/2020/08/21/ratings-continue-crater-protest-filled-nba/\">ask the NBA</a>. But it’s slow and churning. Those demanding submission usually have little to lose. Colin Kaepernick’s career was over. Lebron James’s is in twilight.  </p>\r\n<h2 style=\"text-align: center;\"><strong>Blockchain represents the best chance to break the chains of cultural submission</strong></h2>\r\n<p>As I have <a href=\"https://t.co/qWru2bz8jy?amp=1\">previously written</a>, the shame is that blockchain can solve this, because code is apolitical. A dApp doesn’t care if you support Trump or Biden. Blockchain can rid us from cultural gatekeepers and data chokepoints. <a href=\"https://www.thecrowdfundinglawyers.com/how-token-rewards-will-kill-social-media/\">Open platforms</a> where users control the rules and people take their followers with them when they go potentially ends <a href=\"https://www.thecrowdfundinglawyers.com/how-token-rewards-will-kill-social-media/\">cultural conformity</a> and groupthink. It represents the only real way to not leave anyone behind. Coinbase is the first, if Armstrong succeeds he won’t be the last.</p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>','Coinbase takes a stand','','publish','open','open','','coinbase-takes-a-stand','','','2020-10-17 20:29:43','2020-10-17 20:29:43','',0,'https://www.thecrowdfundinglawyers.com/?p=7202',0,'post','',0),(7203,1,'2020-10-12 14:42:31','2020-10-12 14:42:31','','Twitter JPEG','','inherit','open','closed','','twitter-jpeg','','','2020-10-12 14:43:18','2020-10-12 14:43:18','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/10/Twitter-JPEG.jpg',0,'attachment','image/jpeg',0),(7299,1,'2020-10-17 19:11:49','2020-10-17 19:11:49','<p>Patent Portfolio Builders has named thecrowdfundinglawyers.com a trusted partner for startup capital raising. </p>\r\n<p><img class=\"size-full wp-image-417 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-3.gif\" alt=\"\" width=\"488\" height=\"275\" /></p>\r\n<div id=\"comp-kcf0gl712\" class=\"txtNew\" data-packed=\"true\" data-vertical-text=\"false\">\r\n<p class=\"font_8\"><a href=\"https://www.ppblaw.com/\"><span class=\"color_19\">Patent Portfolio Builders PLLC</span></a>, was founded in 2002 by patent attorneys with extensive experience in the areas of electrical and computer technologies.</p>\r\n<p class=\"font_8\">They are committed to providing the highest quality legal services to our corporate clients in all areas of domestic and international intellectual property (IP), focusing on patent application preparation and prosecution, opinions, and licensing matters. We provide personalized service at a fair cost by controlling our overhead expenses and making the most of our experience.</p>\r\n<p class=\"font_8\">The firm specializes in helping clients with limited in-house IP expertise to quickly generate patent portfolios while minimizing time commitments from key employee inventors. This capability has proven valuable to both start-ups and larger companies who experience a competitive need for patents and don’t have the time to build up the needed in-house infrastructure to accomplish short term patent portfolio objectives.</p>\r\n<p>By<a href=\"https://twitter.com/thecrowdfundlaw\"> Jossey PLLC</a> via<a href=\"http://www.thecrowdfundinglawyers.com\"> www.thecrowdfundinglawyers.com </a></p>\r\n</div>','Patent Portfolio Builders names thecrowdfundinglawyers.com Trusted Partner!','','publish','open','open','','patent-portfolio-builders-names-thecrowdfundinglawyers-com-trusted-partner','','','2020-10-17 20:41:51','2020-10-17 20:41:51','',0,'https://www.thecrowdfundinglawyers.com/?p=7299',0,'post','',0),(7313,1,'2020-10-17 20:13:28','2020-10-17 20:13:28','','OCC','','inherit','open','closed','','occ','','','2020-10-17 20:13:28','2020-10-17 20:13:28','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/OCC.png',0,'attachment','image/png',0),(7314,1,'2020-10-17 20:14:07','2020-10-17 20:14:07','','CFpng','','inherit','open','closed','','cfpng','','','2020-10-17 20:14:07','2020-10-17 20:14:07','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CFpng.png',0,'attachment','image/png',0),(7315,1,'2020-10-17 20:15:12','2020-10-17 20:15:12','','ETH Defi','','inherit','open','closed','','eth-defi','','','2020-10-17 20:15:12','2020-10-17 20:15:12','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/ETH-Defi.jpg',0,'attachment','image/jpeg',0),(7316,1,'2020-10-17 20:15:43','2020-10-17 20:15:43','','coinbase logo','','inherit','open','closed','','coinbase-logo','','','2020-10-17 20:15:43','2020-10-17 20:15:43','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/coinbase-logo.jpg',0,'attachment','image/jpeg',0),(7317,1,'2020-10-17 20:16:12','2020-10-17 20:16:12','','NS PNG','','inherit','open','closed','','ns-png','','','2020-10-17 20:16:12','2020-10-17 20:16:12','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/NS-PNG.png',0,'attachment','image/png',0),(7318,1,'2020-10-17 20:16:45','2020-10-17 20:16:45','','PPB Logo','','inherit','open','closed','','ppb-logo','','','2020-10-17 20:16:45','2020-10-17 20:16:45','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/PPB-Logo.png',0,'attachment','image/png',0),(7319,1,'2020-10-17 20:17:19','2020-10-17 20:17:19','','sec-us-securities-exchange-commission','','inherit','open','closed','','sec-us-securities-exchange-commission','','','2020-10-17 20:17:19','2020-10-17 20:17:19','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/sec-us-securities-exchange-commission.jpg',0,'attachment','image/jpeg',0),(7320,1,'2020-10-17 20:17:51','2020-10-17 20:17:51','','Whale','','inherit','open','closed','','whale','','','2020-10-17 20:17:51','2020-10-17 20:17:51','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Whale.png',0,'attachment','image/png',0),(7321,1,'2020-10-17 20:18:25','2020-10-17 20:18:25','','ccalogo','','inherit','open','closed','','ccalogo','','','2020-10-17 20:18:25','2020-10-17 20:18:25','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/ccalogo.gif',0,'attachment','image/gif',0),(7354,1,'2020-11-06 18:56:36','2020-11-06 18:56:36','<p>Crowdfunded startups received a major boost when the Securities and Exchange Commission (SEC) <a href=\"https://www.sec.gov/news/press-release/2020-273\">voted on proposals</a> earlier this week to tweak Regulation Crowdfunding (Reg CF or equity crowdfunding). Reg CF allows entrepreneurs and small businesses to seek investment from the ‘crowd,’ greatly expanding their potential-investor pool.</p>\r\n<p>The changes join a larger Commission effort to simplify the private-exemption rules and expand capital access for growing ventures. As SEC Chair Jay Clayton <a href=\"https://www.sec.gov/news/press-release/2020-273\">stated</a>, “For many small and medium-sized business, our exempt offering framework is the only viable channel for raising capital. . . . The staff has identified various costly and unnecessary frictions and uncertainties and crafted amendments that address . . . inefficiencies in the context of a more rational framework that will facilitate capital formation for small and medium-sized businesses and benefit investors for years to come.”</p>\r\n<p>The Commission was particularly attentive to impediments crowdfunded startups faced. Through <a href=\"https://www.sec.gov/comments/s7-08-19/s70819.htm\">Commission-requested comments</a>, industry participants detailed myriad regulatory hurdles startups and small businesses face when using this exemption. These included low aggregate offering limits, discordant and confusing individual investor limits, restrictive solicitation rules, and capitalization table issues.</p>\r\n<h2 style=\"text-align: center;\"><strong>SEC modifies rules to help crowdfunded startups</strong></h2>\r\n<p>The SEC listened and changed rules that were impeding Reg CF growth. Among the beneficial changes:</p>\r\n<ul>\r\n	<li>Raising the aggregate offer limit from $1.07M to $5M.\r\n\r\n<ul>\r\n	<li>As <a href=\"https://www.thecrowdfundinglawyers.com/crowdfund-capital-advisors-bad-idea/\">Crowdfund Capital Advisors</a>, which curates equity crowdfunding data <a href=\"https://mailchi.mp/b6c28df0d0e7/crowdfunding-update-2019-state-of-regulation-crowdfunding-2638972\">stated</a> about this change: “At $5 million, a tech startup can raise a seed round or a traditional small or mid-sized company can raise expansion capital.  This will open significant new opportunities for businesses to use this capital to recover from the current economic crisis or launch innovative new products and services.”</li>\r\n</ul>\r\n</li>\r\n	<li>Removing individual investor limits for accredited investors.\r\n\r\n<ul>\r\n	<li>This rule had perplexed many industry participants. Its removal now aligns Reg CF with the more established Reg D and Reg A+ exemptions, where accredited investors faced no such limits.</li>\r\n</ul>\r\n</li>\r\n	<li>Allowing potential issuers to gauge interest in a raise (“test the water”) before filing.\r\n\r\n<ul>\r\n	<li>This change is especially helpful for less experienced entrepreneurs unaccustomed to securities law’s confusing array of rules on what they can say and when (and the policy reasons behind them).</li>\r\n</ul>\r\n</li>\r\n	<li>Allowing Special Purpose Vehicles (SPVs) to cabin all Reg CF investors into one legal “bucket.”\r\n\r\n<ul>\r\n	<li>The call for SPVs has been perhaps the most persistent complaint from industry participants about Reg CF. Although <a href=\"https://www.crowdfundinsider.com/2020/04/160187-crowdfunding-industry-insider-criticizes-sec-proposal-on-special-purpose-vehicles-for-reg-cf/\">questions remain</a> about how this rule will function in practice, ideally it will solve the “messy cap table” issue frowned on by later investors.</li>\r\n</ul>\r\n</li>\r\n	<li>Extend relief from financial-statement requirements for issuers seeking under $250k.\r\n\r\n<ul>\r\n	<li>Although separate from the Commission’s summer 2019 initiative, the commissioners voted to extend for 18 months a temporary exemption from Reg CF’s financial statement-review requirements for issuers offering less than $250k in securities.</li>\r\n</ul>\r\n</li>\r\n</ul>\r\n<h2 style=\"text-align: center;\"><strong>In surprise move, SEC allows crowdfunded startups to keep using SAFEs</strong></h2>\r\n<p>A final surprising and welcome development is the Commission voted not to restrict security type as it had proposed. The Commission had previously <a href=\"https://www.sec.gov/oiea/investor-alerts-and-bulletins/ib_safes\">expressed concern</a> about certain financial instruments such as Simple Agreements for Future Equity (SAFE). Also scheduled for elimination were other nontraditional but helpful instruments like revenue shares and token-based structures. The Commission deserves credit for resisting its regulatory urge. These innovative structures that lacked any evidence investors were unhappy or confused by them. </p>\r\n<h2 style=\"text-align: center;\"><strong>Reg CF was already growing, new rules could see explosive growth</strong></h2>\r\n<p>Despite the now-cured impediments and after a slow start, <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/\">Reg CF had already found its footing</a>. Aided in part by the ease of investing online during the pandemic, Reg CF has set <a href=\"https://next.law/equity-crowdfunding-continues-to-boom-through-pandemic/\">multiple records this year.</a> This includes its best month ever in October ($32 million committed investments). According to Crowdfund Capital Advisors, the past six months have seen a 300% increase in investor commitments.</p>\r\n<p><img class=\"size-large wp-image-7356 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Graph1-1200x681.png\" alt=\"Crowdfunded Startup commitments \" width=\"1080\" height=\"613\" /></p>\r\n<p>Moreover, the number of offerings year-to-year has continued growing as more businesses incorporate equity crowdfunding into their capital-raising plans.</p>\r\n<p><img class=\"size-full wp-image-7357 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Table3.png\" alt=\"Crowdfunded startups number of offerings\" width=\"917\" height=\"655\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>Crowdfunded startups could soon become the norm</strong></h2>\r\n<p>Equity crowdfunding is set for <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-poised-to-explode-under-sec-proposal/\">explosive growth</a> in the years ahead. The new rules will boost Reg CF’s already impressive momentum as more businesses and investors learn about and use this innovative tool.</p>\r\n<p>The new rules will be effective 60 days after publication in the Federal Register. This doesn\'t include the extension of the temporary Regulation Crowdfunding provisions. These will be effective upon publication in the Federal Register.</p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>\r\n<p>&nbsp;</p>\r\n<p>&nbsp;</p>\r\n<p>&nbsp;</p>','Crowdfunded Startups Get Boost with New SEC Rules','','publish','open','open','','crowdfunded-startups-get-boost-with-new-sec-rules','','','2020-11-06 18:56:36','2020-11-06 18:56:36','',0,'https://www.thecrowdfundinglawyers.com/?p=7354',0,'post','',0),(7356,1,'2020-11-06 18:41:46','2020-11-06 18:41:46','','CCA Graph1','','inherit','open','closed','','cca-graph1','','','2020-11-06 18:43:57','2020-11-06 18:43:57','',7354,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Graph1.png',0,'attachment','image/png',0),(7357,1,'2020-11-06 18:42:27','2020-11-06 18:42:27','','CCA Table3','','inherit','open','closed','','cca-table3','','','2020-11-06 18:45:00','2020-11-06 18:45:00','',7354,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Table3.png',0,'attachment','image/png',0),(7366,1,'2020-11-10 16:58:53','2020-11-10 16:58:53','<p>Tokenized apps are the <a href=\"https://www.thecrowdfundinglawyers.com/how-token-rewards-will-kill-social-media/\">Web 3.0 elixir</a> to the poison brew supplied by our social-media oligarchs. But imbibing enough people to slay the giants won’t be easy. They have silos of cash, mass adoption, and political clout. And they enjoy their perch as America’s Overton-Window setters and cultural enforcers.</p>\r\n<p>For those yearning for a world without these censorious distillers, options exist but they require energy and patience.  </p>\r\n<p>Recently I switched to two tokenized crypto-based apps: Brave browser and Minds social media. While I’ve generally had a good experience, both platforms, especially Minds, needs work before slaying the giants.</p>\r\n<p><img class=\" wp-image-3852 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/09/Ole-Miss-its-true.gif\" alt=\"\" width=\"451\" height=\"253\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>The Brave browser is good, it needs to get better</strong></h2>\r\n<p>Brave is the brainchild of <a href=\"https://outthinker.com/2020/01/30/brendan-eich-employee-created-javascript/\">JavaScript creator</a> Brendan Eich. In 2014, cultural enforcers “cancelled” him as Mozilla CEO for donating to a successful ballot initiative years earlier. <a href=\"https://brave.com/\">Brave</a> is Eich’s revenge (although he likely wouldn’t describe it that way). The browser seeks to wrest web control from Mountain View snoopers and hand it to the user.</p>\r\n<p>In 2016 Eich <a href=\"https://www.youtube.com/watch?v=zlcnOr81lPc\">described</a> his Web 3.0 vision: “Try to imagine a world where you own your dossier, it’s your online life, it should be your data, if you own it then you can give terms of service to the big network superpowers, the walled gardens, the giant companies that own too much of your data right now . . . that would be a good day.” </p>\r\n<p>Brave’s contribution to this new world is a browser that trades user attention for advertiser-supplied tokens in a straightforward exchange free of bots, bits, <a href=\"https://www.thecrowdfundinglawyers.com/mark-zuckerberg-thinks-were-all-stupid-and-he-may-be-right/\">spiders, and snitches</a>. Users can then tip earned BATs (Basic Attention Tokens) to their favorite content creators. As Brave <a href=\"https://brave.com/brave-rewards/\">explains</a>: “When you join Brave Rewards, your browser will automatically start tallying (only on your device’s local storage) the attention you spend on sites you visit. Once a month, Brave Rewards will send the corresponding amount of <a href=\"https://basicattentiontoken.org/\">BAT</a>, divided up based on your attention, from your local browser-based wallet to the sites you’ve visited.”</p>\r\n<h2 style=\"text-align: center;\"><strong>Tokenized BAT is hard to find</strong></h2>\r\n<p>I never saw an advert in my first two Brave-filled months and thus did not receive any BAT. Only after further inquiry I realized my Windows 10 operating system blocked pop ups, stopping the adverts. The problem is now resolved but it took effort and research.</p>\r\n<p>I also found the default resolution size on my laptop to be too small and had to keep manually adjusting. I switched the Appearances setting Page Zoom to 150%, which solved the issue.</p>\r\n<p>Finally, the “Top Sites” setting on the landing page doesn’t work properly and lacks functionality. Brave designed this feature to resemble Google Chrome, but ‘Pinned’ sites don’t stay pinned, the user cannot move the icons around, nor can he add additional sites.</p>\r\n<p>Overall Brave meets expectations for from Mozilla or <a href=\"https://www.thecrowdfundinglawyers.com/what-will-life-be-like-after-google/\">Google</a> jumpers. Small glitches still exist and programmers could better explain why people wouldn’t see ads. But users who want a satisfying browsing experience whilst protecting their privacy, standing against cancel culture, and earning tokens on the side should switch to Brave.  </p>\r\n<h2 style=\"text-align: center;\"><strong>Minds: a tokenized app that needs work</strong></h2>\r\n<p>My <a href=\"https://www.minds.com/\">Minds</a> experience has been more frustrating. The “leading alternative social network” is brimming with great ideas yet lacking in execution.  Minds bills itself as the way to “take back control of your social media.” It focuses on free speech and censorship resistance. Like Brave (and unlike <a href=\"https://www.thecrowdfundinglawyers.com/mark-zuckerberg-thinks-were-all-stupid-and-he-may-be-right/\">Facebook</a>, <a href=\"https://www.thecrowdfundinglawyers.com/what-will-life-be-like-after-google/\">Google</a>/YouTube, and Twitter), Minds cares about user privacy. Founder Bill Ottman recently stated he aims to <a href=\"https://thebitcoinnews.com/crypto-social-network-minds-sees-users-flock-from-twitter-and-facebook-over-privacy-concerns/\">provide</a> a “spy free alternative to mainstream social media platforms.”</p>\r\n<p>Also like Brave, use earns tokens. Users receive some fraction of Minds tokens for interactions they generate. Users can then reward content providers, boost their own content, or (eventually) cash them out. As the site states, Minds allows you to “Earn tokens for your daily contributions and use them to upgrade your channel, boost your content for more reach and support other creators.” Minds earned media by <a href=\"https://www.thecrowdfundinglawyers.com/\">crowdfunding</a> their venture and <a href=\"https://wefunder.com/updates/90337-thank-you-minds-broke-the-regulation-crowdfunding-record-for-fastest-to-raise-1-million\">breaking records</a> in the process.  </p>\r\n<h2 style=\"text-align: center;\"><strong>Minds was built by programmers for programmers</strong></h2>\r\n<p>Unfortunately, the user experience lacks pizzaz and glitches abound. Minds programmers built it for laptops first. Mobile users get a lesser experience. The interface and ease of finding different pages is harder on mobile. Some features like promoting pages on a side column are absent. But even the desktop user experience has a pulled-right-off-template feel. The aesthetics feel programmer, not design driven.</p>\r\n<p><img class=\"size-full wp-image-1588 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Simpson-GIF.gif\" alt=\"\" width=\"256\" height=\"192\" /></p>\r\n<p>Worse is the lack of mobile functionality. I failed several times to buy Minds tokens through mobile. Users apparently can only complete this task via laptop although the site doesn’t say that. Buying tokens requires a Meta Mask wallet (from a Mozilla or Google browser extension, Brave and Minds don’t seem compatible yet). For those whose crypto buying ends with <a href=\"https://www.thecrowdfundinglawyers.com/coinbase-takes-a-stand/\">Coinbase</a> this process can be mind-numbing. Although Meta Mask <a href=\"https://www.bloomberg.com/news/articles/2020-09-02/metamask-s-blockchain-mobile-app-opens-doors-for-next-level-web\">mobile functionality</a> is also improving. I was only able to figure out the Meta Mask process and link it to my Minds account after an entire day.</p>\r\n<h2 style=\"text-align: center;\"><strong>Minds tokens went missing and never came back</strong></h2>\r\n<p>But that was just the start. The token purchase appeared in my Minds transaction page, but the tokens didn’t FOR TWO WEEKS. The delay was blamed on Ethereum congestion. There is no universe where a simple token purchase should take two weeks, ever, period. During this time, I wasn’t sure if I’d been hacked, one day ETH just disappeared from my Meta Mask wallet. Eventually I got the tokens and start boosting content. I must add Bill Ottman, Minds founder, personally helped me get the issue resolved. I doubt @Jack would be so concerned.</p>\r\n<p>But that wasn’t my last issue. A few weeks later a platform backlog cancelled my boosted content. This did not stop Minds from taking the tokens, nor the ETH fee. (Each “On Chain” Minds transaction requires a separate miner ETH fee in addition to the actual tokens for the transaction). When I emailed about this situation, they told me they would manually return the tokens. They never did despite several follow ups.</p>\r\n<p>Finally, the newsfeed is horrid. A scroll often produces content from the same user for a dozen straight posts. Apparently, some people do nothing all day but continually post. Although straight timelines are preferable to algorithms, the newsfeed is often boring or tedious.</p>\r\n<p><img class=\" wp-image-3931 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/10/Michael-Scott-eww.gif\" alt=\"\" width=\"207\" height=\"209\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>Tokenized apps are the future, embrace the suck</strong></h2>\r\n<p><a href=\"https://www.thecrowdfundinglawyers.com/how-token-rewards-will-kill-social-media/\">Tokenized apps are the future</a>, they are gaining ground on and notice from the giants. Google has reportedly <a href=\"http://vergereport.com/2020/11/google-bans-youtube-competitor-bitchute-app-from-play-store/\">banned</a> access to YouTube competitor Bitchute. Apple has <a href=\"https://www.crowdfundinsider.com/2019/12/155781-coinbase-ceo-apple-prohibiting-decentralized-applications-at-app-store/\">banned dApps</a> altogether. It won’t end there.</p>\r\n<p>But those wary of the oligarchs and excited for Web 3.0’s promise should support these tokenized apps. We should do so despite inconveniences, steep learning curves, or missing rewards. The oligarchs poison is our ignorance and laziness.</p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>','Tokenized apps hold promise but not ready for prime time','','publish','open','open','','tokenized-apps-hold-promise-but-not-ready-for-prime-time','','\nhttp://vergereport.com/2020/11/google-bans-youtube-competitor-bitchute-app-from-play-store/','2020-11-10 16:58:53','2020-11-10 16:58:53','',0,'https://www.thecrowdfundinglawyers.com/?p=7366',0,'post','',0),(7368,1,'2020-11-10 16:52:11','2020-11-10 16:52:11','','MInds logo','','inherit','open','closed','','minds-logo','','','2020-11-10 16:53:26','2020-11-10 16:53:26','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/MInds-logo.jpg',0,'attachment','image/jpeg',0),(7377,1,'2020-11-17 18:36:31','2020-11-17 18:36:31','','Screenshot (28)','','inherit','open','closed','','screenshot-28','','','2020-11-17 18:38:58','2020-11-17 18:38:58','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Screenshot-28.png',0,'attachment','image/png',0),(7379,1,'2020-11-17 19:07:55','2020-11-17 19:07:55','<p>Paul H Jossey, founder of <a href=\"https://www.thecrowdfundinglawyers.com/\">thecrowdfundinglawyers.com</a> participated in a panel at <a href=\"https://www.dcstartupweek.org/\">DC Startup Week</a> titled Crowdfunding and the Different Models (alternative models for raising capital). The other panelists included Larry Bard, Partner at <a href=\"https://next.law/\">Shulman Rogers</a>, Katherine Mereand, Program Manager for Innovation &amp; Equitable Development at the DC Department of Small and Local Business Development, and Sara Gibson, CEO at<a href=\"https://20degs.com/\"> 20 Degrees</a>. Prayas Neupane, Manager at Business Retention and Expansion at the Washington, DC Economic Partnership.</p>\r\n<p>The panel covered various types of crowdfunding models, things to know when starting a crowdfunding campaign, how to best execute a crowdfunding campaign, and how to wrap it up. Jossey, specfically covered equity crowdfunding, including the various legal and practical requirements.  </p>\r\n<p>Watch the full panel below: </p>\r\n<p><iframe src=\"//www.youtube.com/embed/_gThD-MY4C8\" width=\"560\" height=\"314\" allowfullscreen=\"allowfullscreen\"></iframe></p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com</a> </p>','Paul H Jossey, founder of thecrowdfundinglawyers.com participates in DC Startup Week crowdfunding panel','','publish','open','open','','paul-h-jossey-founder-of-thecrowdfundinglawyers-com-participates-in-dc-startup-week-crowdfunding-panel','','','2020-11-17 19:11:06','2020-11-17 19:11:06','',0,'https://www.thecrowdfundinglawyers.com/?p=7379',0,'post','',0),(7389,1,'2020-12-04 14:38:26','2020-12-04 14:38:26','','Amy-Winehouse','','inherit','open','closed','','amy-winehouse','','','2020-12-04 14:39:35','2020-12-04 14:39:35','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Amy-Winehouse.jpg',0,'attachment','image/jpeg',0),(7406,1,'2021-01-01 18:54:53','2021-01-01 18:54:53','<p><span style=\"font-size: 12pt;\">Reg CF SAFEs will stay. The SEC’s <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> reversed its proposal to remove Reg CF ‘nontraditional’ securities in its 18-month private-exemption review. Companies have used Simple Agreements for Future Equity (SAFEs), Simple Agreements for Future Tokens (SAFTs), and revenue shares in the Reg CF space, <a href=\"https://www.thecrowdfundinglawyers.com/are-safes-unsafe-for-equity-crowdfunding/\">worrying the Commission</a> about investor confusion. The surprise move came amidst uproar from market actors including portals that sell Reg CF securities.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Beyond investor confusion the Commission sought to algin Reg CF securities with Reg A+. Congress limited Reg A+ securities to: “equity securities, debt securities, and debt securities convertible or exchangeable to equity interests, including any guarantees of such securities.” But this wouldn’t have solved the Commission’s perceived problem since SAFE’s are “exchangeable to equity interests.” Thus, it went further and planned to explicitly ban SAFEs. Commentators balked, <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7253886-217531.pdf\">arguing SAFEs are just convertible notes</a> with a zero percent interest rate. Removing the debt feature has many advantages, including eliminating tax-reporting headaches for what is usually minimal interest.</span></p>\r\n<h1 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SAFE creator defends SAFEs</span></strong></h1>\r\n<p><span style=\"font-size: 12pt;\">Carolynn Levy, the original SAFE creator at Y combinator <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7254270-217568.pdf\">submitted an SEC comment</a> explaining SAFEs sought to “keep the convertibility feature of the [convertible] notes intact, but remove the debt features.” Others stated eliminating Reg CF SAFEs in name would mean issuers would still use them but call them ‘<a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7253886-217531.pdf\">zero-interest convertible notes</a>.’ Thus, eliminating Reg CF SAFEs would not kill the concept but would only add extra paperwork and compliance hours for the same thing.</span></p>\r\n<p><span style=\"font-size: 12pt;\">SAFEs also have other advantages. As Sara Hanks, CEO of Crowdcheck stated in her <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7306916-218148.pdf\">SEC Comment</a>, “One of the primary drivers of the use of SAFEs is to delay substantive analysis of the valuation of the issuer when that issuer is still in its developmental stages.” Startups are notoriously hard to value, many will fail, many won’t scale, making early valuations mostly useless. As Reg CF caters to early-stage companies, priced rounds make little sense. </span></p>\r\n<p><span style=\"font-size: 12pt;\">SAFEs convert to equity upon a set of defined triggers. Most often that trigger is a future financing round. As the <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7246786-217248.pdf\">Wefunder SEC comment</a> stated, SAFE holders are betting the company will attract later funding. If it does the SAFE converts, if it doesn’t needless lawyer billables aren’t wasted. In Silicon Valley equity raises don’t usually begin until the $2 million mark, when VCs negotiate Series A. But companies eschewing VC money can trigger SAFE conversion with a merger, public offering, or later Reg A+ financing.</span></p>\r\n<h1 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Reg CF SAFE complaints focus on generally accepted practices</span></strong></h1>\r\n<p><span style=\"font-size: 12pt;\">Reg CF SAFE complaints focus on issues common in the Reg CF area. First is lack of Reg CF SAFE voting rights. But any kind of security can prohibit voting, including common stock. In fact, Reg CF securities typically avoid voting rights. It would make no sense for investors with commitments as little $100 and companies with management structures often in flux. Thus, Mississippi law professor Mercer Bullard complaint quoted by the Consumer Federation of America in its <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7283360-217896.pdf\">SEC comment</a> makes no sense. </span></p>\r\n<p><span style=\"font-size: 12pt;\">And it is typical of academic hostility to innovation and capitalism. Bullard states, “These three types of securities [SAFEs, crowd notes, and revenue shares] share the disadvantages that they are nonvoting and lack the information rights that are typical for common shareholders.” Mandating voting rights or limiting security structures will only force companies to forgo crowdfunding and harm choices for retail investors. Ironically these are the cohorts consumer groups and academics claim to defend.</span></p>\r\n<p><span style=\"font-size: 12pt;\"><img class=\"size-full wp-image-981 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Jen-An2.gif\" alt=\"\" width=\"498\" height=\"214\" /></span></p>\r\n<p><span style=\"font-size: 12pt;\">A second Reg CF SAFE complaint is the typically included repurchase provisions. This allows issuers to buyout SAFE holders after later financing. But again, buyback provisions exist with any security type including common stock. One reason buyback provisions are necessary is the 12(g) rule. This rule forces young companies with “too many” investors to worry about being forced into the public markets. The SEC conditionally exempts Reg CF investors from this count. But it could have exempted them unconditionally. Not doing so necessitated buy-back provisions in Reg CF securities.</span></p>\r\n<h1 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Nontraditional Reg CF instruments will lead to industry disruption</span></strong></h1>\r\n<p><span style=\"font-size: 12pt;\">Other ‘nontraditional’ securities popular in Reg CF are SAFTs and revenue shares. The Commission’s struggle with token sales is well known and unresolved. It’s attempt to clarify its position in <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">2019 guidance was a legendary fail</a>. Its appointment of a <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">“Crypto Czar” Valerie Sczcepanik</a> solved nothing. And banning Reg CF SAFTs change little.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Last is revenue shares. In contrast to most securities, revenue shares are easy to understand. Investors get a prorated share of company revenue. Reg CF Rev-Share-holders are not equity holders who may have to wait years for a return. ‘Businesses’ based on single project like a movie, literary work, or music album can thrive with this model. It aligns the project’s backers with the creators for marketing and signal boosting. One VC fund involved with video games and virtual reality already employs this model. More will follow as the entertainment evolves to include fans as stakeholders.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The SEC’s reversal on Reg CF SAFEs, SAFTs, and revenue shares was welcome and wise. It aligned with the overall move to allow companies and retail investors more freedom and choices. Whilst unpopular with anti-innovation academics and the consumer lobbyists, it will ultimately benefit everyone as new and profitable capital-raising models emerge.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>','Reg CF SAFEs Stay in SEC Final Rules','','publish','open','open','','reg-cf-safes-stay-in-sec-final-rules','','','2021-01-01 18:54:53','2021-01-01 18:54:53','',0,'https://www.thecrowdfundinglawyers.com/?p=7406',0,'post','',0),(7412,1,'2021-01-02 22:50:07','2021-01-02 22:50:07','','VC pic','','inherit','open','closed','','vc-pic','','','2021-01-02 22:50:46','2021-01-02 22:50:46','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/VC-pic.jpg',0,'attachment','image/jpeg',0),(7414,1,'2021-01-02 23:57:02','2021-01-02 23:57:02','<p>New Demo Day rules, part of the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">SEC’s new</a> private-capital raising rules, polices speech and hurts entrepreneurs and investors. Demo Days are sponsored “pitch” events where founders present to potential investors.</p>\r\n<p>Questions have long existed about whether these events trigger dreaded “general solicitation,” banned in Reg D 506(b). In theory, sponsors can avoid worry by inviting only <a href=\"https://www.thecrowdfundinglawyers.com/how-the-expanded-accredited-investor-definition-affects-equity-crowdfunding/\">accredited investors</a> where a pre-existing substantive relationship exists. But this is impractical. And so, these events whilst valuable to speaker and audience come tethered with lawyer angst.</p>\r\n<p>The SEC <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rule</a> (Rule 148) seeks to ease general solicitation concerns for Demo Day participants.  But while marginally helpful, it misses the sponsor-founder-investor dynamic.</p>\r\n<h2 style=\"text-align: center;\"><strong>New Demo Day rules fail to reconcile the main point</strong></h2>\r\n<p>At heart Demo Days are about speech. They entail all the awkwardness, adrenaline, excitement, and curiosity that surround high-stakes human interaction.</p>\r\n<p>Part of the Commission’s goal in policing ‘general solicitation’ is to protect nonaccredited investors. It fears they may hear “broad offering related communications” for investments they can’t back. But at least one Commissioner doesn’t get it. As she often does, Commissioner <a href=\"https://www.thecrowdfundinglawyers.com/cryptomom-versus-the-machine/\">Hester Peirce</a>, staked a lonely position in her <a href=\"https://www.sec.gov/news/public-statement/peirce-harmonization-2020-11-02\">public statement</a> after the Final Rules vote:  “I would have favored loosening restrictions on the information permitted to be conveyed at these events and the individuals permitted to participate online, which frankly is the only way anyone is participating these days.  How would attendees at these events be hurt by simply hearing details about an offering in which they cannot invest?”</p>\r\n<p>Professor <a href=\"https://digitalcommons.law.uga.edu/fac_artchop/939\">Usha Rodrigues</a> reiterates this point. One the investor-protection focused Commission never seems to recognize. “Securities law . . . in theory, as in practice, marginalizes the average investor without acknowledging that it does so, let alone justifying it.”</p>\r\n<h2 style=\"text-align: center;\"><strong>New Demo Day rules disfavor tax-paying entities</strong></h2>\r\n<p>To protect nonaccrediteds and ensure others don’t hear “too much,” Rule 148 mandates criteria that remove general solicitation worries. It limits who can sponsor Demo Days to a college, university, or other institution of higher education, State or local government or instrumentality thereof, nonprofit organization, or angel investor group, incubator, or accelerator. The Commission repeatedly states in policy for entities that lack profit motive.</p>\r\n<p>But as Heritage Foundation <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7261535-217655.pdf\">David Burton Senior Fellow</a> commented, official disfavor of profit is a government position lacking rationale:</p>\r\n<blockquote>\r\n<p>The Commission should be reluctant to create artificial regulatory barriers to entrepreneurial capital formation unless there is a very sound policy reason to do so. It is also problematic to afford special advantages to governments or tax-exempt organizations. Paying taxes and running a business should not be disfavored. Thus, I would recommend allowing any business or organization to hold “demo days” unless the sponsor of the event is in a prohibited class (which in the proposed rule would include broker-dealers and investment advisers).</p>\r\n</blockquote>\r\n<h2 style=\"text-align: center;\"><strong>While also limiting sponsor and founder speech</strong></h2>\r\n<p>Rule 148 restricts sponsor speech in numerous ways:. Adverts can’t mention specific offerings by the issuer; sponsors can’t make recommendations, engage in investment negotiations, or anything that may put them in broker-dealer land. Moreover, the Commission restricts sponsors’ and potential attendees’ freedom of association by limiting who can attend in person or virtually.</p>\r\n<p>As important, Rule 148 caps founder speech to distinct bits of offer data: a notification that the issuer has an offer; the type and amount of securities being offered, the intended use of proceeds, and the unsubscribed amount.</p>\r\n<h2 style=\"text-align: center;\"><strong>Consumer lobbying groups and academics attack new Demo Day rules</strong></h2>\r\n<p>Whilst some, like Commissioner Peirce may wonder what these speech and association controls accomplish, another group bitterly complained the new Demo Day rules portend a dark future for investors.</p>\r\n<p>The Consumer Federation of America (CFA) leads the charge. This group which works closely with other union-backed and public-pension-funded groups including Healthy Markets, Better Markets, and the Council of Institutional Investors. These groups try to stifle founder speech and startup capital whilst trying to force companies into the public markets where they can be controlled.</p>\r\n<p><a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7283360-217896.pdf\">CFA’s 58-page bromide</a> attacks the Commission and Commissioners for failing to restrict companies’ and investors’ speech, freedom, and choices. This includes a rhetorical flourish where it accuses <em>some</em> Commissioners of abandoning the agency’s mission in the service of ideological-driven regulatory policy.</p>\r\n<p>CFA’s Rule 148 attack typifies its view. It approvingly quotes a Mississippi law professor who accuses the Senate of engaging in “the de facto repeal of offering regulation” in an unpassed bill almost verbatim to Rule 148. The unpassed bill-turned-Rule 148 “purports to require that ‘no specific information regarding an offering of securities by the issuer [be] communicated or distributed by or on behalf of the issuer,’ and then creates an exception that covers all of the essential specific information that an issuer would want to communicate regarding its offering.”</p>\r\n<h2 style=\"text-align: center;\"><strong>Market Actors see things different</strong></h2>\r\n<p>Sara Hanks disagrees. The CEO of Crowdcheck works with entrepreneurs. As someone who actually advises Demo Day presenters her view was practical. She accused Rule 148 of limiting issuers to “reading out tombstone adverts on a platform.” She then <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7306916-218148.pdf\">compared the speech-stifling approach</a> to a Monty Python Cheese Shop sketch:</p>\r\n<blockquote>\r\n<p>“So what traction do you have?” “Sorry, can’t answer that.”</p>\r\n<p>“How is your solution better than your competitors?” “Sorry, can’t answer that.”</p>\r\n<p>“What was your valuation on your Series B?” “Well actually . . . no, sorry, can’t answer that.”</p>\r\n</blockquote>\r\n<p>The contrasting views expose the gulf between those that understand the grind of running a startup and raising capital and lobbying groups academics and that answer to the amorphous “public interest.”</p>\r\n<p><img class=\"wp-image-5174 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/idea-4a.gif\" alt=\"\" width=\"587\" height=\"391\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>Consumer groups want to curtail Demo Days</strong></h2>\r\n<p>In fact, CFA frowns on pitch days in general, arguing they may favor some presenters over others. The Commission asserts loosening or at least clarifying these rules may help traditionally underfunded founders including women, but CFA disagrees.</p>\r\n<p>It cites a <a href=\"https://whr.tn/3co4ZUx\">female-led study</a> that avers men are more likely to get Demo Day funding even when pitching the same company. CFA excludes the fact the study specifically states “good looking men” are most favored. So only a third of men may benefit if divided into three categories: unattractive, average, and good-looking. And instead of finding ways improve female founder pitching skills, which is essentially sales—a skill all founders must have. It instead attacks the Commission for sanctioning Demo Days at all.</p>\r\n<h2 style=\"text-align: center;\"><strong>New Virtual Demo Day rules arbitrarily exclude people</strong></h2>\r\n<p>Rule 148’s virtual Demo Days restrictions also make no sense. Rule 148 caps virtual audiences so only select invitees can attend:</p>\r\n<blockquote>\r\n<p>Individuals who are members of, or otherwise associated with the sponsor organization (for example, members of an angel investor group or students, faculty, or alumni of a college or university); (b) individuals that the sponsor reasonably believes are accredited investors; or (c) individuals who have been invited to the event by the sponsor based on industry or investment-related experience reasonably selected by the sponsor in good faith and disclosed in the public communications about the event.</p>\r\n</blockquote>\r\n<p>The Commission considers this an investor protection:</p>\r\n<blockquote>\r\n<p>The limitations we are adopting will help prevent broad offering communications over the internet to unlimited numbers of non-accredited investors by requiring the sponsor to limit participation to a population of potential investors related to the sponsor or about whose qualifications the sponsor has some knowledge, but at the same time will provide sponsors with ample flexibility to continue to conduct such events.</p>\r\n</blockquote>\r\n<p>But how is preventing people from hearing truthful information via “broad offering communications” a worthy policy goal irrespective of statutory origins?  As Commissioner Peirce might ask, what are the consequences? For instance, why does it benefit sponsor-university students to attend but not someone at a nearby junior college or the would-be entrepreneur saving to start a business. In fact, the prohibition functions like an arbitrary restriction on people’s First Amendment right to hear information.</p>\r\n<p><img class=\"size-full wp-image-417 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-3.gif\" alt=\"\" width=\"488\" height=\"275\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>The SEC should stop policing speech and focus on sales</strong></h2>\r\n<p>Despite what consumer lobbying groups and academics might think, the SEC should stop regulating offers and exit the speech-policing business. No one is harmed just from hearing an offer. The rules reify concerns animating the original securities acts but untethered to the modern communications world.</p>\r\n<p>The new Demo Day rules reflect a genuine Commission effort to improve and clarify rules. Unfortunately, it reinforces the reality that the Commission has anointed itself speech cops for so long it can’t grasp an alternative.  </p>\r\n<p>By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></p>','New Demo Day Rules Police Speech and Harm Investors','','publish','open','open','','new-demo-day-rules-police-speech-and-harm-investors','','','2021-01-02 23:57:02','2021-01-02 23:57:02','',0,'https://www.thecrowdfundinglawyers.com/?p=7414',0,'post','',0),(7430,1,'2021-01-16 23:24:07','2021-01-16 23:24:07','','CE Logo 2','','inherit','open','closed','','ce-logo-2-2','','','2021-01-16 23:24:07','2021-01-16 23:24:07','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CE-Logo-2.jpg',0,'attachment','image/jpeg',0),(7431,1,'2021-01-16 23:43:16','2021-01-16 23:43:16','<p><span style=\"font-size: 12pt;\"><a href=\"https://neighborhoodsun.solar/\">Neighborhood Sun</a>, a Maryland Public Benefit Corp, completed it\'s Reg CF raise on Wefunder last week raising $930k. The raise almost reached the current maximum 12-month offer limit of $1,07M. This raise shows how companies can use this new capital raising tool. Reg CF allows innovative companies to incorporate existing and future customers as investors. Neighborhood Sun is also contributing to the<a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/\"> momentum Reg CF showed last year</a>. And with the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">SEC implementing new rules</a> on March 15 companies will have even more Reg CF opportunities.  </span></p>\r\n<p><img class=\"size-full wp-image-5173 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/raise-5-1.gif\" alt=\"\" width=\"450\" height=\"253\" /></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com</a>  </span></p>\r\n<p>Disclaimer: Jossey PLLC performed paid legal services for this raise. </p>\r\n<p>&nbsp;</p>','Neighborhood Sun closes equity crowdfunding campaign with $930,000!','','publish','open','open','','neighborhood-sun-closes-equity-crowdfunding-campaign-with-930000','','','2021-01-16 23:43:16','2021-01-16 23:43:16','',0,'https://www.thecrowdfundinglawyers.com/?p=7431',0,'post','',0),(7440,1,'2021-01-25 19:23:40','2021-01-25 19:23:40','','SEC Reg A+ graph','','inherit','open','closed','','sec-reg-a-graph','','','2021-01-25 19:53:35','2021-01-25 19:53:35','',7443,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/SEC-Reg-A-graph.png',0,'attachment','image/png',0),(7441,1,'2021-01-25 19:24:13','2021-01-25 19:24:13','','SEC Minority Capital','Source: Securities and Exchange Commission','inherit','open','closed','','sec-minority-capital','','','2021-01-25 19:58:52','2021-01-25 19:58:52','',7443,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/SEC-Minority-Capital.png',0,'attachment','image/png',0),(7442,1,'2021-01-25 19:44:45','2021-01-25 19:44:45','','Biden Administration','','inherit','open','closed','','biden-administration','','','2021-01-25 20:00:06','2021-01-25 20:00:06','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Biden-Administration.jpg',0,'attachment','image/jpeg',0),(7443,1,'2021-01-25 20:08:48','2021-01-25 20:08:48','<p><span style=\"font-size: 12pt;\">Biden administration officials placed a plenary hold on all new regulations on the new president’s first day. The <a href=\"https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/regulatory-freeze-pending-review/\">directive</a> covers all rules not already effective even if published in the Federal Register. The SEC voted to harmonize and simply private capital rules (<a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a>) on November 2, 2020. The Federal Register published them on January 15, 2020. Now they must undergo further review and approval by the new agency head. If the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> are delayed it could open a second comment period or the SEC chair could send them to OMB to kill them altogether.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Although the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> are faulty in several respects including new <a href=\"https://www.thecrowdfundinglawyers.com/new-demo-day-rules-police-speech-and-harm-investors/\">Demo Day rules</a> and crowdfunding special purpose vehicle rules, they vastly improve the status quo. Equity crowdfunding industry players <a href=\"https://mailchi.mp/c9722a915f25/how-to-save-americas-restaurant-industry-local-communities-invest-with-matching-funds-from-the-government-to-create-long-term-success-2639084?e=bc28fdc60a\">lauded them</a> especially increases in overall offer and induvial limits.</span></p>\r\n<p><span style=\"font-size: 12pt;\">At the least, the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> must now survive a <a href=\"https://www.crowdfundinsider.com/2021/01/171487-presidential-action-taken-by-biden-administration-may-delay-investment-crowdfunding-improvements/\">60-day hold</a>. The agency head or designated person will review the rules for “questions of fact, law, and policy the rules may raise.” As the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> completed a thorough 18-month process with robust public comment they are unlikely to face any ‘fact or law’ scrutiny. Policy, however, may be a different story. And it may depend on who does the review.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Biden Administration SEC pick or SEC Acting Chair will conduct review</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">President Biden has selected <a href=\"https://www.coindesk.com/gary-gensler-confirmed-as-joe-bidens-sec-chair-pick\">Gary Gensler</a> to chair the SEC. His thoughts on the rules are at present unknown but Senators may hear them during the confirmation process. Mr. Gensler may not want to waste political capital on rules the Commission has already approved, undergone staff review, and are published in the Federal Register. This may be especially so with other Commission priorities like finally providing <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">clear crypto guidance</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">If for some reason the Senate holds up Mr. Gensler’s appointment, the task may fall to acting Chair Allison Herren Lee. Commissioner Herren Lee discussed the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> in a <a href=\"https://www.sec.gov/news/public-statement/lee-harmonization-2020-11-02\">public statement</a> joining her ‘no’ vote. She stated her “concerns with the individual provisions of the final rule are numerous.” Her statement also made some questionable assumptions. For instance, “I question, for example, the wisdom of increasing capital raising limits in offerings such as Regulation A, Crowdfunding, and Rule 504 when investors have demonstrated no interest, and issuers no need, for such increases.” For support she cites, a <a href=\"https://www.sec.gov/comments/s7-08-19/s70819-5800855-187067.pdf\">comment letter</a> stating only a fraction of Reg A+ and Reg CF offerings are hitting their maximum offering limits.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Delaying Final Rules will harm entrepreneurs, investors, and workers</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">This is one way to look at it. Another is to observe the rapid growth in offerings as issuers, investors, and regulators adapt to the still-new exemptions. For instance, a <a href=\"https://www.sec.gov/files/regulationa-2020.pdf\">2020 SEC Reg A+ report</a> shows steady use of the exemption and how it has particularly benefited certain industries including real estate and community banks.</span></p>\r\n\r\n[caption id=\"attachment_7440\" align=\"aligncenter\" width=\"976\"]<img class=\"wp-image-7440 size-full\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/SEC-Reg-A-graph.png\" alt=\"SEC Reg A+ Graph\" width=\"976\" height=\"567\" /> <strong>Source: Securities and Exchange Commission</strong>[/caption]\r\n\r\n<p><span style=\"font-size: 12pt;\">The Reg CF story is even more compelling. From 2018 to 2019 capital investment grew 37%. According to <a href=\"https://crowdfundcapitaladvisors.com/sec-increases-regulation-crowdfunding-maximum-raise-to-5-million-as-october-reaches-record-breaking-investment-level/\">Crowdfund Capital Advisors</a>, since the COVID pandemic Reg CF has exploded accounting for 300% growth from February to October 2020.</span></p>\r\n\r\n[caption id=\"attachment_7445\" align=\"aligncenter\" width=\"975\"]<img class=\"size-full wp-image-7445\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Reg-CF-capital-growth.png\" alt=\"CCA Reg CF Capital Growth\" width=\"975\" height=\"554\" /> <strong>Source: Crowdfund Capital Advisors</strong>[/caption]\r\n\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Biden Administration taking cues from Congresswoman Maxine Waters</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The Biden Administration’s moves appear to be the result of lobbying by Rep. Maxine Waters the Chairwoman of the House Committee on Financial Services. She sent two letters requesting the actions the Biden Administration eventually took, one on <a href=\"https://www.crowdfundinsider.com/2020/12/169934-democratic-members-of-house-committee-on-financial-services-send-requests-to-president-elect-biden-including-madden-v-midland-change-rescind-cfpb-sandbox-stop-banks-from-holding-crypto/\">December 4, 2020</a> and a second on <a href=\"https://www.crowdfundinsider.com/2021/01/171284-representative-maxine-waters-chair-of-house-committee-on-financial-services-asks-president-elect-biden-to-suspend-midnight-regulations/\">January 14, 2020</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Whilst everyone expects the typical gamesmanship of new administrations, Rep. Waters actions harm her constituents. Her district is 85% minority with 50% Hispanic and 20% Black. In <a href=\"https://censusreporter.org/profiles/50000US0643-congressional-district-43-ca/\">her district</a>, 37% of households earn less than $50,000 annually and 14.5% live under the poverty line.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Congress designed the JOBS Act and especially Reg CF to help \"outsider\" entrepreneurs like many in Rep. Waters district. Startups in these areas need access to alternative capital as they are less likely to get conventional funding. According to the SEC Office of the Advocate for Small Business Capital Formation in its <a href=\"https://www.sec.gov/files/2019_OASB_Annual%20Report.pdf\">2019 annual report</a>, minority-owned businesses are three times more likely to be denied loans. Further new black-owned businesses start with almost three times less in terms of overall capital ($35,205) compared with new white-owned businesses ($106,720). Further minorities report this lack of capital access unduly harms business prospects.</span></p>\r\n\r\n[caption id=\"attachment_7441\" align=\"aligncenter\" width=\"975\"]<img class=\"size-full wp-image-7441\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/SEC-Minority-Capital.png\" alt=\"SEC Minority Capital\" width=\"975\" height=\"375\" /> <strong>Source: Securities and Exchange Commission</strong>[/caption]\r\n\r\n<p><span style=\"font-size: 12pt;\">Rep. Waters could stop any delay to <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rule</a> implementation by letter to Mr. Gensler or Commissioner Herren Lee. She should. Too much is at stake for the future of alternative startup capital to play politics.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>','Biden Administration may kill new private capital rules','','publish','open','open','','biden-administration-may-kill-new-private-capital-rules','','','2021-01-26 22:29:34','2021-01-26 22:29:34','',0,'https://www.thecrowdfundinglawyers.com/?p=7443',0,'post','',0),(7445,1,'2021-01-25 19:56:19','2021-01-25 19:56:19','','CCA Reg CF capital growth','Source: Crowdfund Capital Advisors','inherit','open','closed','','cca-reg-cf-capital-growth','','','2021-01-25 19:57:37','2021-01-25 19:57:37','',7443,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Reg-CF-capital-growth.png',0,'attachment','image/png',0),(7463,1,'2021-02-01 16:32:57','2021-02-01 16:32:57','','Rev share loan table','Source: Localstake.com','inherit','open','closed','','rev-share-loan-table','','','2021-02-01 16:44:41','2021-02-01 16:44:41','',7465,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Rev-share-loan-table.png',0,'attachment','image/png',0),(7464,1,'2021-02-01 16:36:40','2021-02-01 16:36:40','','rev share','','inherit','open','closed','','rev-share','','','2021-02-01 16:42:00','2021-02-01 16:42:00','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/rev-share.jpg',0,'attachment','image/jpeg',0),(7465,1,'2021-02-01 16:54:05','2021-02-01 16:54:05','<p><span style=\"font-size: 12pt;\">Crowdfunded revenue share loans hold promise for certain businesses raising capital during the pandemic. The SEC considered banning these Reg CF instruments along with other nontraditional instruments like <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf-safes-stay-in-sec-final-rules/\">SAFEs</a> during its recent review and <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> vote. The Commissioners, however, kept them in Reg CF raises. (The <a href=\"https://www.thecrowdfundinglawyers.com/biden-administration-may-kill-new-private-capital-rules/\">Biden Administration’s plenary freeze</a> on regulatory actions means the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> are not yet live.)   </span></p>\r\n<p><span style=\"font-size: 12pt;\">Once the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a> go live, these instruments could play a bigger role in Reg CF funding. They offer the benefits of simplicity, flexibility, and brand loyalty.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Rev shares <a href=\"https://www.lightercapital.com/revenue-based-financing/\">emerged</a> in the early 20<sup>th</sup> century to finance oil and gas exploration. Eventually they spread to entertainment and startups. But they were not part of public financing provided by capital markets, thus few investors could access them.  This changed with the JOBS Act of 2012 and Reg CF which went live in 2016. Now everyone, not just wealthy financiers, can participate in such projects and see immediate returns.</span></p>\r\n<h3 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Brick-and-mortar businesses could benefit from crowdfunded revenue share loans</span></strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Crowdfunded revenue share loans are acutely suited for brick-and-mortar stores like restaurants, breweries, and bars. They also hold promise for other retail-based industries and subscription-based services.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">How crowdfunded revenue share loans work</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Like the name states, crowdfunded revenue share loans are crowdfunded loans (notes). Loyal customers and brand ambassadors will purchase these instruments first and hopefully spread the word. The company (issuer) <a href=\"https://faculty.washington.edu/mrwagner/FatehiWagner_18.pdf\">pays a percentage</a> of its top-line revenue to noteholders until it repays the debt. Payments <a href=\"https://localstake.zendesk.com/hc/en-us/articles/215567847-What-are-the-standard-terms-for-a-revenue-share-loan-\">vary with revenue</a>—when revenue rises the issuer pays more and vice versa. If the issuer has not repaid the loan by the maturity date it becomes fully <a href=\"https://localstake.zendesk.com/hc/en-us/articles/215567847-What-are-the-standard-terms-for-a-revenue-share-loan-\">due and payable</a>. Here are some standard loan terms:</span></p>\r\n\r\n[caption id=\"attachment_7463\" align=\"aligncenter\" width=\"832\"]<img class=\"size-full wp-image-7463\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Rev-share-loan-table.png\" alt=\"Revenue Share loan table\" width=\"832\" height=\"491\" /> <strong>Source: Localstake.com</strong>[/caption]\r\n\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Crowdfunded revenue share loans benefit both issuers and investors</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Many advantages exist for issuers and noteholders using rev shares. First, they are easy to understand. Retail investors and loyal customers will buy these loans. This cohort will likely be unfamiliar with equity investments, for instance the terms, rights, and responsibilities of <a href=\"https://www.thecrowdfundinglawyers.com/reg-cf-safes-stay-in-sec-final-rules/\">SAFEs</a> or preferred stock. Issuers choosing these instruments are likely to have loyal and local followings and aren’t aiming for mass adoption where equity works better. Retail investors will see a return almost immediately and have the satisfaction of helping local entrepreneurs and boosting a local economy. Issuers avoid the complication of messy capitalization tables.</span></p>\r\n<p><span style=\"font-size: 12pt;\">According to a <a href=\"https://faculty.washington.edu/mrwagner/FatehiWagner_18.pdf\">2018 study</a>, issuers have more success with crowdfunded revenue share loans than other types of loans like bank or SBA loans. Bank loans will have higher interest rates and a greater chance <a href=\"https://faculty.washington.edu/mrwagner/FatehiWagner_18.pdf\">bankruptcy</a>. SBA loans are very selective, and processing takes many months.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Issuers can couple these rev shares with perquisites like with Kickstarter campaigns. Companies can provide T-shirts or other swag, exclusive deals, private receptions, or anything thematic to the business and raise. This will further strengthen their relationship and brand loyalty with customers.</span></p>\r\n<p><span style=\"font-size: 12pt;\"><img class=\"size-full wp-image-981 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/06/Jen-An2.gif\" alt=\"\" width=\"498\" height=\"214\" /></span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Issuers and investors should consult professionals before investing</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Of course, this blog post is not investment advice. As with any investment risks abound. The business could fail and default on the loans. Investors get no say in how the business operations. Issuers must accommodate potentially dozens (even hundreds) of note holders that may complicate accounting and <a href=\"https://localstake.zendesk.com/hc/en-us/articles/212618158-How-is-a-revenue-share-loan-taxed-\">tax structures</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Crowdfunded revenue share loans will not work for all companies, but it can be great for some. Congress designed Reg CF to help the millions of businesses ignored by venture capital. These instruments could further help them whilst strengthening brand loyalty. Provided the <a href=\"https://www.thecrowdfundinglawyers.com/biden-administration-may-kill-new-private-capital-rules/\">Biden Administration</a> doesn’t unnecessarily delay the <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">Final Rules</a>, these rev shares could emerge as a Reg CF force.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>','Crowdfunded revenue share loans offer promise for retail businesses','','publish','open','open','','crowdfunded-revenue-share-loans-offer-possibilities-for-retail-businesses','','\nhttps://www.thecrowdfundinglawyers.com/biden-administration-may-kill-new-private-capital-rules/','2021-02-01 16:54:53','2021-02-01 16:54:53','',0,'https://www.thecrowdfundinglawyers.com/?p=7465',0,'post','',0),(7492,1,'2021-02-04 19:38:12','2021-02-04 19:38:12','<p><span style=\"font-size: 12pt;\">The <a href=\"https://cablj.org/current-issue/\">Arizona State Corporate and Business Law Journal\'s Winter 2021 issue</a> features an article by Paul H Jossey, founder of thecrowdfundinglawyers.com. </span></p>\r\n<p><span style=\"font-size: 12pt;\">Read the full article: <a href=\"https://bit.ly/2O6W6br\">https://bit.ly/2O6W6br</a></span></p>\r\n<p><img class=\"size-full wp-image-7496 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Screenshot-37.png\" alt=\"law review screen shot \" width=\"836\" height=\"920\" /></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com</a></span></p>','Paul H Jossey, founder of thecrowdfundinglawyers.com publishes law review article','','publish','open','open','','paul-h-jossey-founder-of-thecrowdfundinglawyers-com-publishes-law-review-article','','','2021-02-04 19:38:12','2021-02-04 19:38:12','',0,'https://www.thecrowdfundinglawyers.com/?p=7492',0,'post','',0),(7496,1,'2021-02-04 19:26:41','2021-02-04 19:26:41','','Screenshot (37)','','inherit','open','closed','','screenshot-37','','','2021-02-04 19:29:19','2021-02-04 19:29:19','',7492,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Screenshot-37.png',0,'attachment','image/png',0),(7499,1,'2021-02-04 19:35:49','2021-02-04 19:35:49','','CABL','','inherit','open','closed','','cabl','','','2021-02-04 19:35:49','2021-02-04 19:35:49','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CABL.png',0,'attachment','image/png',0),(7518,1,'2021-03-03 22:24:16','2021-03-03 22:24:16','<p><span style=\"font-size: 12pt;\">US crypto policy remained clouded after Gary Gensler’s<a href=\"https://www.banking.senate.gov/hearings/02/22/2021/nomination-hearing\"> Senate testimony</a> yesterday. President Biden nominated him to chair the Securities and Exchange Commission (SEC). Surprisingly, crypto policy appeared sparingly in the three-hour hearing, which also included the Consumer Financial Protection Bureau nominee. The hearing centered on issues arguably outside financial-regulator purview like climate policy and the gender and racial composition of boards. (Another large portion featured senators and nominees repeatedly thanking each other for pre-hearing meetings.).</span></p>\r\n<p><span style=\"font-size: 12pt;\">Mr. Gensler did discuss US crypto policy. But he shrouded his remarks in the familiar non-answer answers that define these hearings and prevent observers from gaining insight. </span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">US crypto policy will focus on investor protection</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Unsurprisingly, Mr. Gensler did repeatedly state investor protection would be his central focus. This aligns with SEC culture. Investor protection always comes first, even though it is one prong of the commission’s tripartite mission. The <a href=\"https://www.sec.gov/about.shtml\">SEC exists</a> to protect investors, maintain fair orderly, and efficient markets; and facilitate capital formation.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Indeed, Congress became so frustrated with the Commission’s investor-protection focus, it intervened. In 1996 Congress <a href=\"https://www.sec.gov/comments/s7-08-19/s70819-6240706-192714.pdf\">amended Section 2(b)</a> of the 1933 Act to require the Commission to “consider, in addition to the protection of investors, whether the action will promote efficiency, competition and capital formation.” This move had little effect.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Mr. Gensler favors government surveillance</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Beyond his testimony, observers may glean insight into Mr. Gensler’s crypto-policy stances elsewhere. As a former chair of the Commodities Futures Trading Commission and a professor at MIT teaching blockchain classes, such material exists. At the CFTC, Mr. Gensler created a “holistic trade surveillance program” as opposed to prosecuting wrongdoing after the fact. A recent <a href=\"https://www.coindesk.com/gensler-sec-see-his-cftc\">op-ed</a> noted Mr. Gensler has “frequently emphasized the need for modern [government] surveillance of markets.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">Micro-surveillance of crypto where change happens quickly will likely stifle innovation and harm the burgeoning tokenized economy. (Mr. Gensler’s 2018 <a href=\"https://ocw.mit.edu/courses/sloan-school-of-management/15-s12-blockchain-and-money-fall-2018/index.htm\">graduate-level blockchain course</a> doesn’t even mention <a href=\"https://www.thecrowdfundinglawyers.com/defi-is-rising-and-stumbling/\">DeFi</a>, a now central part of crypto infrastructure.).</span></p>\r\n<p><span style=\"font-size: 12pt;\">However the technology changes, Mr. Gensler believes regulators should cram it into existing cubbyholes and strictly surveil it. As matter of human nature, this is understandable. Like his <a href=\"https://www.thecrowdfundinglawyers.com/competitive-enterprise-institute-criticizes-sec-shallow-end-jay-for-crypto-intransigence/\">predecessor</a>, Mr. Gensler has little appetite for taking blame should some scandal arise during his tenure. Better to play it safe.</span></p>\r\n<p style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">US crypto policy suffers from clear guidance</span></strong></p>\r\n<p><span style=\"font-size: 12pt;\">But that attitude has a flip side. US crypto policy has to date been a dismal, dreadful thing. Regulators express it though speeches (often at high-dollar conferences, off-the-cuff remarks, and confusing ‘guidance.’ Things got so bad, the Commission deemed career SEC bureaucrat <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">Valerie Szczepanik</a> its Crypto Czar.</span></p>\r\n<p><span style=\"font-size: 12pt;\">But in typical government fashion, that meant to clarify only obfuscated. After industry clamor for clarification Ms. Szczepanik produced a universally panned <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">13-page word salad</a>. Indeed, it even drew a rebuke from <a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Commissioner Hester Peirce</a>, who compared it to a “Jackson Pollock painting.” And Mr. Gensler seems unlikely to change the Commission’s take-it-slow-and-don’t-get-blamed culture.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">US Crypto Policy needs bold action, it won’t come from the SEC</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Mr. Gensler is obviously knowledgeable about crypto. And seems aware of its vast potential. Moreover, viewing his online lectures he is a likable fellow. But his penchant for government surveillance and regulatory minutia means real crypto guidance must arrive from the political branches (itself an unlikely scenario given the new administration’s <a href=\"https://www.coindesk.com/bitcoin-warren-yellen-speculative-nature\">Treasury pick</a>).</span></p>\r\n<p><span style=\"font-size: 12pt;\">Mr. Gensler wants to be the ‘<a href=\"https://www.crowdfundinsider.com/2021/03/172750-nomination-hearing-today-for-gary-gensler-for-sec-chairman-in-prepared-remarks-gensler-states-markets-and-technology-are-always-changing-our-rules-have-to-change-along-with-them/\">cop on the beat</a>.’ And that’s fine. But what US crypto policy defined rules. And less Enforcement Division constantly looking over its shoulder and handwringing about investor protection.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>\r\n<p>&nbsp;</p>','US Crypto Policy Remains Clouded After Gensler Confirmation Hearing','','publish','open','open','','us-crypto-policy-remains-clouded-after-gensler-confirmation-hearing','','','2021-03-03 22:24:16','2021-03-03 22:24:16','',0,'https://www.thecrowdfundinglawyers.com/?p=7518',0,'post','',0),(7520,1,'2021-03-03 22:17:33','2021-03-03 22:17:33','','Gensler Pic','','inherit','open','closed','','gensler-pic','','','2021-03-03 22:18:19','2021-03-03 22:18:19','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Gensler-Pic.jpg',0,'attachment','image/jpeg',0),(7530,1,'2021-03-15 19:54:52','2021-03-15 19:54:52','','CCA Graph2','','inherit','open','closed','','cca-graph2','','','2021-03-15 20:10:58','2021-03-15 20:10:58','',7532,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Graph2.png',0,'attachment','image/png',0),(7531,1,'2021-03-15 19:55:09','2021-03-15 19:55:09','','CCA Graph3','','inherit','open','closed','','cca-graph3','','','2021-03-15 20:11:27','2021-03-15 20:11:27','',7532,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Graph3.png',0,'attachment','image/png',0),(7532,1,'2021-03-15 20:24:45','2021-03-15 20:24:45','<p><span style=\"font-size: 12pt;\">New SEC crowdfunding rules go live today. Some questioned whether the <a href=\"https://www.thecrowdfundinglawyers.com/biden-administration-may-kill-new-private-capital-rules/\">Biden Administration</a> would try to kill the rules approved last November. But that did not happen, and now entrepreneurs and private investors can engage more freely, although further improvements await.</span></p>\r\n<p><span style=\"font-size: 12pt;\"><a href=\"https://crowdfundcapitaladvisors.com/quick-facts-on-new-regulation-crowdfunding-rules-that-launch-march-15-2021/\">Crowdfund Capital Advisors summarized</a> the new changes below:</span></p>\r\n<p style=\"text-align: center;\"><span style=\"font-size: 18pt;\"><strong>Regulation Crowdfunding changes before and after</strong></span> <br />\r\n<img class=\"size-full wp-image-7530 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Graph2.png\" alt=\"\" width=\"709\" height=\"858\" /></p>\r\n<p><img class=\"size-full wp-image-7531 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/CCA-Graph3.png\" alt=\"\" width=\"708\" height=\"629\" /></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">New SEC crowdfunding rules leave questions unanswered</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Although new SEC crowdfunding rules vastly improve the status quo, questions remain. Foremost are how special purpose vehicle (SPV) rules will work. In theory, SPVs should ease messy cap table issues and other hurdles linked to unaccredited investors. But the Commission’s rule-heavy approach may kill this innovation before it blooms. At the least, the Commission’s crowdfunding-vehicle exception will force issuers into a cost-benefit analysis.</span></p>\r\n<p><span style=\"font-size: 12pt;\">While supporting the crowdfunding-vehicle concept, <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7306916-218148.pdf\">critics</a> <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7261535-217655.pdf\">panned</a> the costs and complexity. Wefunder, the largest portal by volume, <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7246786-217248.pdf\">will not support it</a>. <a href=\"https://www.crowdfundinsider.com/2020/04/160187-crowdfunding-industry-insider-criticizes-sec-proposal-on-special-purpose-vehicles-for-reg-cf/\">As envisioned</a>, one raise may require multiple crowdfunding vehicles. The SPV also saddles issuers with cost burdens, substantially increasing upfront outlays for an already expensive option. Even with proxies, the need to gain permission from security holders for transactions will burden administrators. There are also additional disclosure obligations and questions about who will manage the vehicle and distribute paperwork.  These issues will hamper and may foreclose crowdfunding-vehicle use altogether.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The marketplace may have solved this ‘messy-cap dilemma’ on its own. <a href=\"https://www.sec.gov/comments/s7-05-20/s70520-7246786-217248.pdf\">Wefunder created</a> a ‘custodian’ model that reduces Reg CF investors to one line. Other <a href=\"https://netcapital.com/legal\">portals</a> followed. The SEC has not publicly commented on the new structure, which may signal tacit approval.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC should further improve crowdfunding rules</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">As I have written in ‘<a href=\"https://cablj.org/wp-content/uploads/2021/02/Jossey_READY.pdf\">Fixing the JOBS Act and Inviting the Tokenized Future, the Need for Congressional Action</a>,’ many more fixes remain. These include:</span></p>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">Regulate sales not offers.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Exempt Secondary Trading for Regulation A+ and Regulation CF.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Preempt state filing requirements and notice fees for Regulation A+ and Regulation Crowdfunding.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Exempt Regulation A+ and Regulation Crowdfunding from the 12(g) Rule.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Raise the Regulation A+ Offer Limit to $100 million.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Raise the Regulation Crowdfunding Offer Limit to $20 million.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Simplify or eliminate individual limits for Regulation A+ and Regulation Crowdfunding.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Limit financial and reporting requirements for Regulation A+ and Regulation CF.</span></li>\r\n</ul>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC is unlikely to pursue new crowdfunding improvements</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Unfortunately, further improvements to the SEC’s crowdfunding rules are unlikely. The election brought a leadership change at the Commission. <a href=\"https://www.thecrowdfundinglawyers.com/us-crypto-policy-remains-clouded-after-gensler-confirmation-hearing/\">Gary Gensler</a> will assume the chair once confirmed. Senators did not query Mr. Gensler about the new crowdfunding rules or the JOBS Act in general. But both Democrat-appointed Commissioners voted no. Acting Chair Allison Herren Lee and Commissioner Caroline Crenshaw <a href=\"https://www.sec.gov/news/public-statement/crenshaw-harmonization-2020-11-02\">released</a> <a href=\"https://www.sec.gov/news/public-statement/lee-harmonization-2020-11-02\">statements</a> claiming the new rules lacked investor protection and were unnecessary. For what its worth, Mr. Gensler forcefully stated his investor-protection priorities during his <a href=\"https://www.thecrowdfundinglawyers.com/us-crypto-policy-remains-clouded-after-gensler-confirmation-hearing/\">confirmation hearings</a> and his <a href=\"https://ocw.mit.edu/courses/sloan-school-of-management/15-s12-blockchain-and-money-fall-2018/index.htm\">MIT tenure</a>. This likely foretells his posture toward private-capital expansion.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Finally, the Commission has already declared priority shifts. On March 4 it announced an <a href=\"https://www.sec.gov/news/press-release/2021-42\">Enforcement Task Force Focused on Climate and ESG Issues</a>. This followed a March 3 release of <a href=\"https://www.sec.gov/news/press-release/2021-39\">2021 Examination Priorities</a>, a February 5 announcement of a new <a href=\"https://www.sec.gov/news/press-release/2021-27\">Acting Deputy Director of Division of Enforcement</a>, and a February 1 new <a href=\"https://www.sec.gov/news/press-release/2021-20\">Senior Policy Advisor for Climate and ESG</a>.  </span></p>\r\n<p><span style=\"font-size: 12pt;\">Commissioners Hester Peirce and Elad Roisman have objected. The Republican-appointed duo <a href=\"https://www.sec.gov/news/public-statement/roisman-peirce-sec-focus-climate-change\">questioned</a> what the flurry of climate-and-ESG-focused moves may mean. They averred new standards in this highly charged space may only arise via Commission vote. Regardless, the PR blast assuredly ends momentum for further private-capital changes.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">New SEC Crowdfunding Rules will improve entrepreneurship</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The new SEC crowdfunding rules will open opportunities for investors and startups alike. The rules will help the already booming <a href=\"https://www.thecrowdfundinglawyers.com/equity-crowdfunding-keeps-gaining-despite-national-uncertainty/\">alternative-capital industry</a> grow. While further boosts are now unlikely, the industry can blossom before future revisits.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>','New SEC Crowdfunding Rules Go Live','','publish','open','open','','new-sec-crowdfunding-rules-go-live','','\nhttps://www.thecrowdfundinglawyers.com/us-crypto-policy-remains-clouded-after-gensler-confirmation-hearing/','2021-03-15 20:24:45','2021-03-15 20:24:45','',0,'https://www.thecrowdfundinglawyers.com/?p=7532',0,'post','',0),(7541,1,'2021-03-22 13:15:08','2021-03-22 13:15:08','','Jossey_READY','','inherit','open','closed','','jossey_ready','','','2021-03-22 13:15:08','2021-03-22 13:15:08','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/Jossey_READY.pdf',0,'attachment','application/pdf',0),(7548,1,'2021-03-22 13:31:25','2021-03-22 13:31:25','','','','publish','closed','closed','','7548','','','2021-03-22 13:31:29','2021-03-22 13:31:29','',0,'https://www.thecrowdfundinglawyers.com/?post_type=pdfposter&#038;p=7548',0,'pdfposter','',0),(7549,1,'2021-03-22 13:31:09','2021-03-22 13:31:09','','Jossey_READY-compressed','','inherit','open','closed','','jossey_ready-compressed','','','2021-03-22 13:31:09','2021-03-22 13:31:09','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/03/Jossey_READY-compressed.pdf',0,'attachment','application/pdf',0),(7571,1,'2021-04-07 15:22:42','2021-04-07 15:22:42','','Reg CF Crowdfunding Commitments for March','','inherit','open','closed','','screenshot-41','','','2021-04-07 15:27:22','2021-04-07 15:27:22','',7575,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Screenshot-41.png',0,'attachment','image/png',0),(7572,1,'2021-04-07 15:23:22','2021-04-07 15:23:22','','lawyers','Lawyers looking stern','inherit','open','closed','','lawyers','','','2021-04-07 15:25:22','2021-04-07 15:25:22','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/lawyers.jpg',0,'attachment','image/jpeg',0),(7575,1,'2021-04-07 16:19:20','2021-04-07 16:19:20','<p><span style=\"font-size: 12pt;\">Equity crowdfunding (Reg CF) <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">exploded in 2020</a> setting records for new investors and capital raised. <a href=\"https://www.thecrowdfundinglawyers.com/crowdfunded-startups-get-boost-with-new-sec-rules/\">New rules</a> begun in March will mean even more records as companies can offer, and investors can devote, more per raise.</span></p>\r\n\r\n[caption id=\"attachment_7571\" align=\"aligncenter\" width=\"670\"]<img class=\"wp-image-7571 \" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Screenshot-41.png\" alt=\"Reg CF Crowdfunding Commitments for March\" width=\"670\" height=\"469\" /> <strong>Source: Crowdfund Capital Advisors</strong>[/caption]\r\n\r\n<p><span style=\"font-size: 12pt;\">But as more founders find Reg CF, many will err in portal choice. It’s understandable. Portals are the “face” of Reg CF, where companies pitch themselves to potential investors and interested backers peruse deals. They are offer value by facilitating the securities transaction and exposing companies to scores of potential investors.</span></p>\r\n<p><span style=\"font-size: 12pt;\">But all portals are not created equal. For a variety of reasons many companies will choose the wrong one and leave money on the table. Experienced counsel can guide new companies through every step of the raise, including portal choice.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Here are eight reasons companies should retain a lawyer before choosing an equity crowdfunding portal.</span></p>\r\n<ol>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Portals secure their bottom line before founders’ top line. </strong></span>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">Different portals have different strengths, different fee structures, have different geographic profiles, have investor lists geared toward different industries, and place varying pre-raise scrutiny levels on companies.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Naturally, their primary concern is attracting as many quality companies to their site as possible. Their main selling point is their investor list. Thus, the better companies they attract, the more investors those companies will provide them, the more their investor list grows.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">No portal is going tell a good company ‘You’re great but we aren’t the best portal for you because of X, Y, and Z.’ But a lawyer who understands each portal’s strengths and weaknesses will.</span></li>\r\n</ul>\r\n</li>\r\n	<li><strong><span style=\"font-size: 12pt;\">Portals may have ‘Preferred Partners’ that may charge above market prices for ancillary services</span>. </strong>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">Depending on a company’s offer limit, security type, and how much ‘crowd’ it can self-generate, it will need other professional services such as a CPA, transfer agent, or marketing.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">A portal may have side deals with these professional services that may charge above market rates. Novice companies may pay more for less.</span></li>\r\n</ul>\r\n</li>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Experienced crowdfunding lawyers can provide warm introductions to portal representatives. </strong></span>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">An experienced lawyer should provide a personal introduction to portal representatives. This allows a company to bypass an impersonal website application and talk to portal staff <em>before</em> making a final decision.</span></li>\r\n</ul>\r\n</li>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Good lawyers have their own networks of potential investors and signal boosts to help the raise. </strong></span>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">Lawyers should be as committed to the raise as the founders. That means sharing the raise to their networks, signal boosting updates, and raising awareness on social media. Equity crowdfunding is a team effort, everyone must contribute.</span></li>\r\n</ul>\r\n</li>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Reg CF lawyers will discuss the intricacies of financial instruments with the founders and tailor it to fit the company and raise. </strong></span>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">Many founders choose a portal-provided template for the company’s financial instrument without understanding it. Portals sometimes prefer these premade templates because it standardizes raises.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">But what is easy for the portal is not necessarily best for the company. Many factors go into choosing which financial instrument is best and each has parts founders must separately consider or modify. One size does not fit all.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Even on relatively straightforward instruments like Simple Agreements for Future Equity (SAFEs), calculations, valuations, and discount rates can vary widely. For instance, most founders won’t know the difference between a pre-money SAFE and a post-money SAFE, or which is more founder friendly. A portal representative is not going to explain it (if they even know themselves).</span></li>\r\n</ul>\r\n</li>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Lawyers protect companies in the ‘Risk’ section. </strong></span>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">‘Risks’ provided by portals are usually boilerplate that appear on almost all Form Cs. Portals will not spend the time and effort to get into specific risks the raise will encounter particular to the founder’s business or industry.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Hopefully the raise and business succeed so what risk disclosures the Form C lists won’t matter. But the more specific and tailored to the raise the risk disclosures are the more protected the company is from future litigation should something go wrong.</span></li>\r\n</ul>\r\n</li>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Experienced lawyers can draft suggested answers for investor questions during the raise and keep founders compliant both inside and outside the portal.</strong></span>\r\n<ul>\r\n	<li><span style=\"font-size: 12pt;\">An important part of Reg CF raises are questions potential investors ask founders on the portal page. Some questions are business-centric about revenue and future plans etc. These are best answered by founders. But many involve legal questions about securities, the Form C, and other complex topics where founder won’t be versed. Legal counsel can draft answers that keep founders compliant and stop them from saying (or promising) things that can produce liability.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Lawyers will also review founder communications and marketing outside the portal to keep companies compliant with Reg CF’s myriad communication rules.</span></li>\r\n</ul>\r\n</li>\r\n	<li><span style=\"font-size: 12pt;\"><strong>Lawyers represent the founders, no one else. </strong></span><span style=\"font-size: 12pt;\">The company’s lawyer has one focus during the raise. They are the only ones in the process who’s only job is to protect the company’s interests. Good ones will not only keep founders compliant but maximize the raise. With potentially millions of dollars at stake, it pays to have someone in your corner.</span></li>\r\n</ol>\r\n<p><img class=\"size-full wp-image-417 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-3.gif\" alt=\"\" width=\"488\" height=\"275\" /></p>\r\n<p><span style=\"font-size: 12pt;\">As decentralized finance and equity crowdfunding explodes in popularity, founders should engage legal counsel to guide them through the process and allow them to focus on what matters most: getting capital to grow their business.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a> </span></p>','Eight reasons founders should retain a lawyer before a portal when crowdfunding','','publish','open','open','','eight-reasons-founders-should-retain-a-lawyer-before-a-portal-when-crowdfunding','','','2021-04-07 16:19:20','2021-04-07 16:19:20','',0,'https://www.thecrowdfundinglawyers.com/?p=7575',0,'post','',0),(7583,1,'2021-04-08 23:50:25','2021-04-08 23:50:25','','Clayton Tweet','','inherit','open','closed','','clayton-tweet','','','2021-04-09 14:34:39','2021-04-09 14:34:39','',7587,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Clayton-Tweet.png',0,'attachment','image/png',0),(7585,1,'2021-04-09 13:46:27','2021-04-09 13:46:27','','Godzilla','','inherit','open','closed','','godzilla','','','2021-04-09 14:31:43','2021-04-09 14:31:43','',7587,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Godzilla.gif',0,'attachment','image/gif',0),(7586,1,'2021-04-09 13:48:50','2021-04-09 13:48:50','','Clayton','','inherit','open','closed','','clayton-2','','','2021-04-09 13:50:15','2021-04-09 13:50:15','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Clayton.jpg',0,'attachment','image/jpeg',0),(7587,1,'2021-04-09 14:46:02','2021-04-09 14:46:02','<p><span style=\"font-size: 12pt;\">“Citizen” Jay Clayton, former Securities and Exchange Commission chair, gave a <a href=\"https://twitter.com/SquawkCNBC/status/1377583405819424770\">recent interview</a> on Bitcoin. He stated he was “<a href=\"https://www.coindesk.com/former-sec-chairman-jay-clayton-new-bitcoin-regulations\">speaking as a citizen</a>.” This is fitting because his crypto-related speech whilst Commission-bound equally lacked insight.</span></p>\r\n<p><span style=\"font-size: 12pt;\">To say Chair Clayton’s crypto track record was dreadful would be an insult to tracks and records. When entrepreneurs needed guidance, the Do-Nothing Chair oversaw only <a href=\"https://www.thecrowdfundinglawyers.com/competitive-enterprise-institute-criticizes-sec-shallow-end-jay-for-crypto-intransigence/\">crypto sloth</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Crypto lowlights under now “Citizen” Jay Clayton’s tenure:</span></p>\r\n<h3 style=\"text-align: center;\"><strong>Chair Clayton failed to approve a Bitcoin exchange traded product</strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Companies have spent millions coaxing the SEC to approve Bitcoin ETPs. Yet the Commission remains paralyzed. Commissioner Hester Peirce’s sharply worded ETP dissents earned her the moniker “<a href=\"https://www.thecrowdfundinglawyers.com/crypto-mom-to-npc-valerie-get-a-job/\">Crypto Mom</a>.” Citizen Jay Clayton spurned “Crypto Dad” to become “Crypto Dud.” Recently, <a href=\"https://www.forbes.com/sites/stevenehrlich/2021/03/29/sec-commissioner-explains-why-a-delayed-bitcoin-etf-has-consequences/?sh=123e681856ea\">Peirce opined</a>,</span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">My view has been that we\'re overdue on approving one of these things. I also think we\'ve dug ourselves into a bit of a difficult hole by setting standards for approval that are difficult to figure out how to satisfy. So I really don\'t know where we\'re going to go. I think that a new chairman with a fresh perspective can be helpful in rethinking the approach to approving exchange-traded products.</span></p>\r\n</blockquote>\r\n<p><span style=\"font-size: 12pt;\">That’s Commissioner side eye.</span></p>\r\n<h3 style=\"text-align: center;\"><strong>\"Citizen\" Jay Clayton was caught flatfooted during the 2017 ICO craze then killed the industry.  </strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Classifying ICOs flummoxed the Commission through Clayton’s tenure. His halting, indecisive CYA approach became nauseating. Not exactly the model of leadership.</span></p>\r\n<p><span style=\"font-size: 12pt;\">In 2017 the Commission finally discussed the DAO. But instead of bringing ICOs into compliance, the Commission waited until people spent billions. It then unleashed subpoena hell. To be sure, ICO scammers needed nailing. This should have fulfilled the Commission. Instead, it indiscriminately blasted everyone like Godzilla attacking Tokyo.</span></p>\r\n<p><img class=\" wp-image-7585 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Godzilla.gif\" alt=\"\" width=\"239\" height=\"239\" /></p>\r\n<p><span style=\"font-size: 12pt;\">This now includes LBRY that boasts 10 million users and lacks any fraud. It also includes Ripple, which whatever the merits, the Commission allowed to exist for years before suing.</span></p>\r\n<h3 style=\"text-align: center;\"><strong>He cheered Valerie Szczepanik as Senior Advisor for Digital Assets and Innovation, who then took months to produce 2019’s worst government work product.</strong></h3>\r\n<p><span style=\"font-size: 12pt;\">If ICOs caught the Commission flatfooted its ‘crypto czar’ appointment was worse. But Chair Clayton <a href=\"https://www.sec.gov/news/press-release/2018-102\">lavishly praised</a> her choice:</span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">Valerie’s thought leadership in this area is recognized both within the Commission and across financial regulators in the United States and abroad. . . . With her demonstrated skill, experience, and keen awareness of the importance of fostering innovation while ensuring investor protection, Val is the right person to coordinate our efforts in this dynamic area that has both promise and risk.</span></p>\r\n</blockquote>\r\n<p><span style=\"font-size: 12pt;\">Apparently, nothing screamed “innovation” to Chair Clayton like a career bureaucrat since the Clinton Administration. <a href=\"https://www.sec.gov/news/speech/peirce-how-we-howey-050919\">Ms. Szczepanik</a> then jaunted about the country at taxpayer expense repeating (surprise!) the SEC would follow the <em>Howey </em>test and everything was “facts and circumstances.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">Ten months in, <a href=\"https://www.thecrowdfundinglawyers.com/amy-winehouse-to-valerie-szczepanik-come-on-over/\">Ms. Szczepanik</a> finally produced a <a href=\"https://cdn.crowdfundinsider.com/wp-content/uploads/2019/04/SEC-dlt-framework-April-3.pdf\">13-page</a> Framework for “Investment Contract” Analysis of Digital Assets. (Innovation at the speed of government!). And what a disaster. The Framework sought to clarify crypto policy. It failed. Commissioner Peirce compared it to a “Jackson Pollock painting,” she then <a href=\"https://www.sec.gov/news/speech/peirce-how-we-howey-050919\">twisted the knife</a>:</span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">While <em>Howey</em> has four factors to consider, the framework lists 38 separate considerations, many of which include several sub-points. A seasoned securities lawyer <em>might</em> be able to infer which of these considerations will likely be controlling and might therefore be able to provide the appropriate weight to each. Whether the framework gives anything new to the seasoned securities lawyer used to operating in the facts and circumstances world of <em>Howey</em> is an open question. I worry that non-lawyers and lawyers not steeped in securities law and its attendant lore will not know what to make of the guidance. Pages worth of factors, many of which seemingly apply to all decentralized networks, might contribute to the feeling that navigating the securities laws in this area is perilous business.</span></p>\r\n</blockquote>\r\n<h3 style=\"text-align: center;\"><strong>Chair Clayton failed to clarify when decentralized networks could escape securities regulation.  </strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Decentralization is a <a href=\"https://www.thecrowdfundinglawyers.com/kik-lawsuit-must-decide-decentralization-question/\">key blockchain concept</a>. It makes pigeonholing tokens into securities world suspect. If users run a platform who do the laws protect? In 2018, Corp Fin chief Bill Hinman <a href=\"https://www.sec.gov/news/speech/speech-hinman-061418\">stated this</a>. When <a href=\"https://finance.yahoo.com/news/sec-chairman-confirms-ethereum-isn-144009375.html\">Congress pressed</a>, Clayton agreed. But he went no further except excepting Ethereum. Suing Ethereum’s creators or nonprofit would have been foolhardy, and the Commission wisely refrained. There are issues with decentralization as a workable securities-law model, as this <a href=\"https://ssrn.com/abstract=3326244\">paper outlines</a>. But heads of major agencies are supposed to confront hard problems.</span></p>\r\n<p><img class=\"size-full wp-image-7583 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/Clayton-Tweet.png\" alt=\"\" width=\"920\" height=\"317\" /></p>\r\n<p><span style=\"font-size: 12pt;\">Once again only Commissioner Peirce seems willing to face an issue the whole commission should address. As she <a href=\"https://www.forbes.com/sites/stevenehrlich/2021/03/29/sec-commissioner-explains-why-a-delayed-bitcoin-etf-has-consequences/?sh=123e681856ea\">recently stated</a>: </span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">[I]f you truly achieve decentralization, then I question whether it makes sense to apply the securities laws. Because the securities disclosure laws are designed for a situation where I\'m running a company, I want you to buy shares of my company, and I have all the information. You need that information in order to figure out whether you want to buy. It\'s the information asymmetry problem. If you really have a decentralized project, then there is no one who has a monopoly on information. At that point, who would even be providing the information? So that\'s something we have to think about. </span></p>\r\n</blockquote>\r\n<h3 style=\"text-align: center;\"><strong>Mediocrity paid for “Citizen” Jay Clayton.</strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Speaking as the functionary he was born to be, “Citizen” Jay Clayton stressed in the interview that regulation is everything. And that regulation should come in all different flavors, direct, indirect, domestic, foreign. And of course, as a hedge fund “advisor” he’s available to influence that regulation to benefit his client.</span></p>\r\n<p><span style=\"font-size: 12pt;\">He is not alone. Mary Jo White now bursts with crypto opinions. The 2013-2016 <a href=\"https://www.crowdfundinsider.com/2021/02/172439-former-sec-chair-mary-jo-white-whos-now-representing-ripple-in-sec-lawsuit-shares-views-on-xrp-sale-and-court-case/\">chair claims</a> the SEC has it all wrong, at least when it comes to her client Ripple. She also stated there is a ‘crying need for [crypto] clarity.’ Of course, crypto existed when she ran things. But broken clocks and what not.</span></p>\r\n<p><span style=\"font-size: 12pt;\">“Citizens” Jay Clayton and Mary Jo White now shop their crypto opinions to the highest bidder. But they are views the crypto world could do without.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>','“Citizen” Jay Clayton should shut it about crypto','','publish','open','open','','citizen-jay-clayton-should-shut-it-about-crypto','','','2021-04-12 12:03:51','2021-04-12 12:03:51','',0,'https://www.thecrowdfundinglawyers.com/?p=7587',0,'post','',0),(7600,1,'2021-04-13 01:35:29','2021-04-13 01:35:29','','percentage-of-total-mark','','inherit','open','closed','','percentage-of-total-mark','','','2021-04-13 14:42:31','2021-04-13 14:42:31','',7602,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/percentage-of-total-mark.png',0,'attachment','image/png',0),(7602,1,'2021-04-13 14:47:46','2021-04-13 14:47:46','<p><span style=\"font-size: 12pt;\">SEC Ether comments, recent though little noticed, were nonetheless worrisome. In a recent <em>SEC vs. Ripple</em> hearing, an SEC lawyer gave conspiracists “proof” the U.S. government secretly wants crypto replaced with an ‘official’ version. Dugan Bliss averred Ether’s status as a non-security was uncertain. He thus <a href=\"https://cryptobriefing.com/sec-disagreement-emerges-whether-ethereum-security/\">toppled</a> what many thought former CorpFin director Bill Hinman had <a href=\"https://www.sec.gov/news/speech/speech-hinman-061418\">settled</a> three years ago. <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/04/210406_HearingTranscript_Apr6_2021_2pm_20Civ10832.pdf\">Bliss said not</a>:</span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">Now, there was a speech by a high-ranking person who said that to him that’s what it looked like, but there has been no action letter, no enforcement action, none of the official ways in which the SEC takes a position on that matter that has occurred.</span></p>\r\n</blockquote>\r\n<p><span style=\"font-size: 12pt;\">Whether lawyerly bluster or a viable threat the comments should finally spur Congress to unleash crypto startups from the Commission’s <em>Howey</em> test tether. The token economy needs the space.</span></p>\r\n<h3 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC Ether Comments accompany other Commission changes</span></strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Alone, observers might brush aside Mr. Bliss’s comments as puffery. But they conjunct with regime change. Gone are Hinman and Chair Jay Clayton. Soon-to-be <a href=\"https://www.thecrowdfundinglawyers.com/us-crypto-policy-remains-clouded-after-gensler-confirmation-hearing\">Chair Gary Gensler</a> will now set priorities. Watchers hail Mr. Gensler as the first Commissioner cum crypto expert. But what that means for the regulatory paradigm is unclear. Mr. Gensler <a href=\"https://www.nytimes.com/2018/04/22/technology/gensler-mit-blockchain.html?mtrref=t.co\">stated in 2018</a> he believed Ether was sold as an unregistered security. In his MIT ‘<a href=\"https://ocw.mit.edu/courses/sloan-school-of-management/15-s12-blockchain-and-money-fall-2018/video-lectures/session-6-smart-contracts-and-dapps/\">Blockchain and Money</a>’ course he stated Hinman provided Ether “regulatory forbearance” but did not opine on its propriety. </span></p>\r\n<p><span style=\"font-size: 12pt;\"> The stakes are high. Ether is the second largest cryptocurrency claiming 12% market cap. </span></p>\r\n<p><img class=\"size-full wp-image-7600 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/percentage-of-total-mark.png\" alt=\"Crypto Market Capitalization\" width=\"800\" height=\"550\" /></p>\r\n<h3 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Ethereum is leading a crypto revolution</span></strong></h3>\r\n<p><span style=\"font-size: 12pt;\">But unlike the larger-cap Bitcoin, Ether and the “virtual machine” it powers are not mainly a store of value. In fact, Ethereum has spawned nearly every crypto innovation post the Satoshi Nakamoto <a href=\"https://bitcoin.org/bitcoin.pdf\">white paper</a>. These include token sales (Initial Coin Offerings), Nonfungible Tokens (NFTs), and <a href=\"https://www.thecrowdfundinglawyers.com/defi-is-rising-and-stumbling/\">Decentralized Finance (DeFi)</a>. The Ethereum network is so useful because of its programmable design. What innovations come next is beyond the realm of ordinary thinking, much less that of bureaucrats.</span></p>\r\n<p><span style=\"font-size: 12pt;\">As George Gilder states in <em>Life After Google</em>:</span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">Altogether Ethereum comprised a new global computer platform, a new software language for smart contracts and corporations, a new currency with a new measuring stick rooted in unchanging energy units, and a new business model of fund raising. . . . In the history of enterprise there has never been anything like the launch of Ethereum. The value of ether often rising far faster than the value of Bitcoin, albeit from a lower base, [Ethereum creator Vitalik] Buterin seems to be on track to excel Bitcoin and even Satoshi [Nakamoto] in impact and importance.</span></p>\r\n</blockquote>\r\n<p><span style=\"font-size: 12pt;\">Ethereum is the brainchild of “child,” Mr. Buterin. The prodigy wrote the Ethereum whitepaper at 19. Before that he taught himself Mandarin at seven and immersed himself in Excel spreadsheets at four.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Before intellectuals permanently captured the federal government in the 1930s, Americans admired and encouraged that kind of genius. We did not contemplate killing it via decades-old laws and legal interpretations.</span></p>\r\n<h3 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC Ether comments are a microcosm of the coming crypto divide</span></strong></h3>\r\n<p><span style=\"font-size: 12pt;\">Mr. Bliss’s comments precisely expose the divide of the coming age. Buterin represents new thinking that supplants the established order’s staid credentialism. It is inescapable that nothing produced in the Web 3.0 revolution thus far emerged from academia, government, or large corporations. Nakamoto’s whitepaper is famously academically thin. In fact, years into its existence, scholars were <a href=\"https://queue.acm.org/detail.cfm?id=3136559\">publishing papers</a> arguing Bitcoin couldn’t work.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Buterin spent just a year in college. He then landed a Theil Fellowship. As Gilder described, “The Thiel Fellowships and the 1517 Fund are protesting the layers on layers of government grants that impose a stifling conformity on our universities through the indoctrination there of a single system of the world.” Buterin and the revolution he and others lead cast asunder this single system of the world and replace it with a world of empowered individuals.  </span></p>\r\n<p><span style=\"font-size: 12pt;\">This places the SEC along with innumerable nation states and haughty international bodies in an awkward position. Either allow the human flourishing they all claim as missions to occur without them or stifle it through endless rules, protections, and interpretations that keep themselves in charge.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>','SEC Ether Comments Invite Crypto Armageddon','','publish','open','open','','sec-ether-comments-invite-crypto-armageddon','','','2021-04-13 15:24:51','2021-04-13 15:24:51','',0,'https://www.thecrowdfundinglawyers.com/?p=7602',0,'post','',0),(7637,1,'2021-04-30 14:17:24','2021-04-30 14:17:24','','SR Webinar','','inherit','open','closed','','sr-webinar','','','2021-04-30 14:20:42','2021-04-30 14:20:42','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/04/SR-Webinar.jpg',0,'attachment','image/jpeg',0),(7641,1,'2021-05-02 19:13:24','2021-05-02 19:13:24','<p><span style=\"font-size: 12pt;\"><strong>About this webinar</strong></span></p>\r\n<p><span style=\"font-size: 12pt;\">This webinar will cover all aspects of Regulation Crowdfunding (Reg CF) from the rules (including November 2020 amendments), choosing a financial instrument, portal economics, how the industry has evolved since its 2016 inception, and why it\'s crucial for companies to hire legal representation to guide them through the process.</span></p>\r\n<p><span style=\"font-size: 12pt;\"><strong>In this webinar, attendees will learn the following:</strong></span></p>\r\n<ol>\r\n	<li><span style=\"font-size: 12pt;\">Equity crowdfunding is a new and exciting way to decentralize capital raising, meld existing (or future) customers with investors, and distinguish successful companies in the marketplace.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">The industry has grown exponentially in the past year and new rules effective March 15, 2021, provide opportunities for companies to compliment or bypass more traditional capital-raising methods.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">But the process is complicated, it involves securities transactions worth potentially millions of dollars. Companies choosing the wrong portal or financial instrument can lock themselves into bad deals that thwart company progress.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">During and after a successful raise companies can encounter pitfalls with advertising rules and post-raise SEC compliance.</span></li>\r\n	<li><span style=\"font-size: 12pt;\">Legal representation is crucial to guide companies through the process to ensure companies stay compliant and use this capital-raising tool to its maximum potential.</span></li>\r\n</ol>\r\n<p><span style=\"font-size: 12pt;\">And much more…</span></p>\r\n<p><span style=\"font-size: 12pt;\"><strong>Meet the speakers:</strong></span></p>\r\n<p><span style=\"font-size: 12pt;\"><strong>Anthony Millin</strong></span></p>\r\n<p><span style=\"font-size: 12pt;\"><em>Founder and Chair, NEXT</em></span></p>\r\n<p><span style=\"font-size: 12pt;\">Anthony Millin is a trusted legal and business advisor to startup and emerging growth companies. As a startup attorney, a serial entrepreneur, a venture capital partner, and the Chair of NEXT powered by Shulman Rogers, he brings a unique legal and business perspective to advising his clients. Anthony understands firsthand what it takes to start, scale and manage a company, to successfully prepare for and run a fund raising process, and to address the legal issues faced by a startup. This background provides him with valuable insights into the legal and business needs of his clients.</span></p>\r\n<p><span style=\"font-size: 12pt;\"><strong>Lawrence Bard</strong></span></p>\r\n<p><span style=\"font-size: 12pt;\"><em>Senior Attorney, NEXT</em></span></p>\r\n<p><span style=\"font-size: 12pt;\">Larry Bard is a highly regarded business attorney whose clients depend on his guidance in corporate finance and securities law matters, including public and private offerings, venture capital transactions and other financing transactions. He advises companies on issues of corporate governance, business planning, securities law compliance, executive compensation, commercial contracts and complex joint ventures. Larry has completed several initial public offerings for companies in the mid-Atlantic region and has extensive experience in mergers and acquisitions.</span></p>\r\n<p><span style=\"font-size: 12pt;\"><strong>Paul H. Jossey</strong></span></p>\r\n<p><span style=\"font-size: 12pt;\"><em>Principal Attorney, Jossey PLLC</em></span></p>\r\n<p><span style=\"font-size: 12pt;\">Paul H. Jossey is principal attorney at Jossey PLLC, which specializes in JOBS Act capital raises. He is also founder of thecrowdfundinglawyers.com, which provides legal commentary on cryptocurrencies, equity crowdfunding, and the Securities and Exchange Commission. He authored the law review article ‘Fixing the JOBS Act and Inviting the Tokenized Future, the Need for Congressional Action,’ published in February 2021. Finally, he recently accepted an Adjunct Fellowship with the Competitive Enterprise Institute, where he will research and publish on cryptocurrency and equity crowdfunding policy.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Register Here: <a href=\"https://marketing.next.law/next-equity-crowdfunding-webinar#webinar-form\">https://marketing.next.law/next-equity-crowdfunding-webinar#webinar-form</a></span></p>','Join thecrowdfundinglawyers.com founder Paul H Jossey, on May 19 for a free Equity Crowdfunding Webinar!','','publish','open','open','','join-thecrowdfundinglawyers-com-founder-paul-h-jossey-on-may-19-for-a-free-equity-crowdfunding-webinar','','','2021-05-02 19:13:24','2021-05-02 19:13:24','',0,'https://www.thecrowdfundinglawyers.com/?p=7641',0,'post','',0),(7670,1,'2021-05-24 13:09:20','2021-05-24 13:09:20','<p><span style=\"font-size: 12pt;\">thecrowdfundinglawyers.com founder Paul H Jossey has joined the Competitive Enterprise Institute as an Adjunct Fellow for Cryptocurrencies and Crowdfunding. In this role, Mr. Jossey will research and publish on crypto, equity crowdfunding, alternative and decentralized finance, and the JOBS Act of 2012. His research will cover these topics in a range of formats including blog posts, op-eds, and policy papers. </span></p>\r\n<p><span style=\"font-size: 12pt;\">His first blog post is here: <a href=\"https://cei.org/blog/lbry-cryptocurrency-prosecution-shows-secs-misplaced-priorities/\">https://cei.org/blog/lbry-cryptocurrency-prosecution-shows-secs-misplaced-priorities/</a></span></p>\r\n<p><span style=\"font-size: 12pt;\">About CEI </span></p>\r\n<p><span style=\"font-size: 12pt;\">Founded in 1984, the Competitive Enterprise Institute is widely recognized as a leading and effective advocate for freedom on a wide range of critical economic and regulatory policy issues. Each year, our research and analysis are cited thousands of times in major media outlets, relied upon by scholars and advocates, and used by members of Congress, executive branch officials, and other federal and state policymakers as the basis for reform actions and proposals. Our work provides policymakers with user-friendly data and analysis, as well as concrete, actionable reform proposals.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Readers can learn more about CEI here:<a href=\"https://cei.org/\"> https://cei.org/</a></span></p>','thecrowdfundinglawyers.com founder Paul H Jossey joins Competitive Enterprise Institute as Adjunct Fellow','','publish','open','open','','thecrowdfundinglawyers-com-founder-paul-h-jossey-joins-competitive-enterprise-institute-as-adjunct-fellow','','','2021-05-24 13:09:20','2021-05-24 13:09:20','',0,'https://www.thecrowdfundinglawyers.com/?p=7670',0,'post','',0),(7680,1,'2021-05-24 13:19:27','2021-05-24 13:19:27','','Screenshot (50)','','inherit','open','closed','','screenshot-50','','','2021-05-24 13:20:01','2021-05-24 13:20:01','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/05/Screenshot-50-1.png',0,'attachment','image/png',0),(7682,1,'2021-05-24 13:41:20','2021-05-24 13:41:20','<p><span style=\"font-size: 12pt;\"><a href=\"https://www.thecrowdfundinglawyers.com/\">thecrowdfundinglawyers.com</a> founder Paul H Jossey joined<a href=\"https://www.shulmanrogers.com/attorneys/anthony-l-millin/\"> Anthony Millin</a> and <a href=\"https://www.shulmanrogers.com/attorneys/lawrence-r-bard/\">Larry Bard</a> of the <a href=\"https://next.law/\">Next</a> startup law program at Shulman Rogers for a webinar presentation about equity crowdfunding. The presentation covered the rules, elements of successful raises, industry trends, and more. </span></p>\r\n<p><span style=\"font-size: 12pt;\">Readers can view the presentation here:<a href=\"https://f.hubspotusercontent20.net/hubfs/7477171/NEXT%20Equity%20Crowdfunding%20Webinar%205_19.mp4?utm_medium=email&amp;_hsmi=128699786&amp;utm_content=128699786&amp;utm_source=hs_email\"> https://f.hubspotusercontent20.net/hubfs/7477171/NEXT%20Equity%20Crowdfunding%20Webinar%205_19.mp4?utm_medium=email&amp;_hsmi=128699786&amp;utm_content=128699786&amp;utm_source=hs_email</a></span></p>\r\n<p><span style=\"font-size: 12pt;\">Readers can view the slide presentation here: <a href=\"https://drive.google.com/file/d/1LsTCCmpSRo6pxn9mIWm-cXZvU9It5VJa/view?_hsmi=128699786\">https://drive.google.com/file/d/1LsTCCmpSRo6pxn9mIWm-cXZvU9It5VJa/view?_hsmi=128699786 </a></span></p>\r\n<p><img class=\" wp-image-5169 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2020/09/raise-5.gif\" alt=\"\" width=\"491\" height=\"276\" /></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com</a> </span></p>','thecrowdfundinglawyers.com founder Paul H Jossey joins Next by Shulman Rogers for Equity Crowdfunding Webinar','','publish','open','open','','thecrowdfundinglawyers-com-founder-paul-h-jossey-joins-next-by-shulman-rogers-for-equity-crowdfunding-webinar','','','2021-05-24 13:41:20','2021-05-24 13:41:20','',0,'https://www.thecrowdfundinglawyers.com/?p=7682',0,'post','',0),(7703,1,'2021-06-13 22:13:58','2021-06-13 22:13:58','<p><span style=\"font-size: 12pt;\">LBRY prosecution via the Securities and Exchange Commission (SEC).</span></p>\r\n<p><span style=\"font-size: 12pt;\">The SEC continued its punitive push against blockchain companies that sold native tokens with its recent <a href=\"https://www.sec.gov/litigation/complaints/2021/comp25060.pdf\">LBRY complaint</a>. The <a href=\"https://lbry.com/\">crypto company</a> promotes an “open, free, and fair network for digital content” and boasts 10 million users. Someday it could someday rival YouTube, Amazon, and other video-content providers. But first it risks bankruptcy in legal fight with the government that lacks victims.</span></p>\r\n<p><span style=\"font-size: 12pt;\">LBRY offered LBRY Credits (LBC) to software developers for network contributions and sold LBC on exchanges to encourage use and fund operations. The SEC claims LBC are unregistered securities despite their actual and widespread network utility. The suit seeks a permanent injunction, disgorgement of “ill-gotten gains,” civil penalties, and other remedies. If successful, the Commission will stifle innovation and entrench incumbents whilst harming platform users the Commission claims to protect.</span></p>\r\n<p><img class=\" wp-image-3931 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/10/Michael-Scott-eww.gif\" alt=\"\" width=\"258\" height=\"260\" /></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">LBRY prosecution reinforces SEC investigations as the punishment</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The SEC investigated LBRY for three years before filing suit. These inquiries are notoriously painful; <a href=\"https://www.crowdfundinsider.com/2017/11/124483-first-regulated-initial-coin-offering-conference-ico-2-0-summit-dives-deep-ico-legal-regulatory-economic-implications/\">described</a> by one seasoned securities lawyer as “living in hell without dying.” Thus far the <a href=\"https://helplbrysavecrypto.com/faq\">company claims</a> the process has cost thousands of manhours and one million dollars in legal fees. But a few things are missing from the complaint. First is any claim of injury by platform users. Second is any discussion of LBRY’s decentralized nature.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Decentralization is a factor <a href=\"https://www.sec.gov/news/speech/speech-hinman-061418\">previously suggested</a> by former SEC Corporation Finance Division Chief Bill Hinman as an escape hatch from securities-related burdens for networks where public benefits were absent. LBRY claims decentralization via hundreds of contributing developers around the globe, many unknown to the company.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Instead, the Complaint rests on the decades-old <em>Howey</em> test that covers a security type called “investment contracts.” In short, that LBRY sold LBC (contribution of money); the company has contributed to platform success (a common enterprise); and LBC may rise in value with continued success (expectation of profits), LBC is a security and thus LBRY is in legal limbo.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">LBRY prosecution shows SEC Crypto Policy is a mess</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The move against LBRY, and the higher profile Ripple action, are the SEC’s latest steps to bring crypto companies under its ambit. Unfortunately, the Commission has chosen costly years-long investigations as its primary interface with these new technology players. Its most prominent non-enforcement action was the widely panned 2019 staff “guidance.” The thirteen-page document, which Commissioner Hester Peirce <a href=\"https://www.sec.gov/news/speech/peirce-how-we-howey-050919\">likened</a> to a “Jackson Pollock painting,” only heightened calls for crypto clarity. </span></p>\r\n<p><span style=\"font-size: 12pt;\">At present, the Commission leaves crypto entrepreneurs few good options: (i.) create a functioning platform with a native currency and wait for a dreaded SEC inquiry; (ii.) go through a costly registration or qualification process with perpetual reporting obligations and annual six-to-seven-figure compliance costs; or (iii.) move to a different jurisdiction and don’t sell tokens to U.S. citizens.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Permissionless, open source blockchain projects, which die without developer buy in and mass adoption don’t gel with these options. Decentralized networks by their nature don’t have central points of authority but usually rely on founding teams and seed capital to gain traction. </span></p>\r\n<p><img class=\"size-full wp-image-398 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/05/dwight-2.gif\" alt=\"\" width=\"488\" height=\"275\" /></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">The SEC’s unending prosecutions of blockchain companies has real consequences</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The consequences of the SEC’s enforcement-first paradigm are stark. It discourages those creating the future economy from starting U.S. blockchain companies or allowing its citizens full access. Also, it creates roadblocks for founders trying to lure developers and programmers into new projects. And it impedes the network effects new blockchain projects need to thrive. Finally, it squelches competition. Finally, mass adoption and regulatory capture allow tech giants to collect economic rents. Consumers seeking decentralized, censorship-resistant alternatives have fewer choices.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Unfortunately, a putative SEC victory against LBRY will continue its winning streak against token upstarts. Other high profile nonfraud defendants Telegram and Kik surrendered after millions in legal fees and federal court defeats.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Yet the story here is worse. LBRY only sold most LBC after its network was live and functioning. Because as Commissioner Peirce <a href=\"https://www.sec.gov/news/speech/peirce-regulation-view-inside-machine\">previously stated</a>, “Tokens sold for use in a functioning network, rather than as investment contracts, fall outside the definition of securities.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">Given the lack of Commission clarity for decentralized platforms, the path ahead offers little room for innovation for those lacking the budgets and stomach for years-long legal fights.  Yet, the SEC will no doubt tout a putative court victory as a win for consumers and another fulfillment of its investor-protection mandate. But LBRY’s millions of users would disagree.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>\r\n<p><span style=\"font-size: 12pt;\"><em>A version of this post originally ran on the Competitive Enterprise Institute blog on 4/12/2021 <a href=\"https://cei.org/blog/lbry-cryptocurrency-prosecution-shows-secs-misplaced-priorities/\">https://cei.org/blog/lbry-cryptocurrency-prosecution-shows-secs-misplaced-priorities/</a> </em></span></p>','LBRY prosecution shows SEC’s misplaced priorities','','publish','open','open','','lbry-prosecution-shows-secs-misplaced-priorities','','','2021-06-13 22:13:58','2021-06-13 22:13:58','',0,'https://www.thecrowdfundinglawyers.com/?p=7703',0,'post','',0),(7705,1,'2021-06-13 22:02:33','2021-06-13 22:02:33','','LBRY','','inherit','open','closed','','lbry','','','2021-06-13 22:02:33','2021-06-13 22:02:33','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/06/LBRY.jpg',0,'attachment','image/jpeg',0),(7710,1,'2021-06-20 02:42:16','2021-06-20 02:42:16','<p><span style=\"font-size: 12pt;\">CBDCs invite government abuse.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The Biden administration and Congressional Democrats are intensifying calls for government crypto regulation. On May 19, Senate Banking Committee Chair Sherrod Brown (D-OH) wrote a scathing <a href=\"https://www.banking.senate.gov/imo/media/doc/brown_letter_to_hsu_-_crypto.pdf\">letter</a> to Treasury. In it he urged a scrapping a Trump administration policy granting bank charters to some cryptocurrency firms.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Yet Brown and other <a href=\"https://www.thecrowdfundinglawyers.com/citizen-jay-clayton-should-shut-it-about-crypto/\">crypto trolls</a> want the Fed to charge ahead with its own “central bank digital currency” (CBDC). Chairman Brown in a March <a href=\"https://www.banking.senate.gov/imo/media/doc/Federal%20Reserve_%20Letter%2003012021.pdf\"> letter</a> urged the Fed to “lead the way” on CBDCs while restricting privately run cryptocurrencies. Brown proclaimed that “the Fed must not stop at regulating a privately issued digital currency. It must go further and explore a publicly-issued digital dollar.”</span></p>\r\n<p><img class=\" wp-image-3463 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/07/Michael-Scott-GIF-No.gif\" alt=\"\" width=\"427\" height=\"348\" /></p>\r\n<p><span style=\"font-size: 12pt;\">Dubbed the “digital dollar,\" a CBDC would extend government control over the creation of the money supply -- which it already has through interest rate-setting and other policies -- to control over which business and individuals U.S. currency is distributed to.</span></p>\r\n<h2 style=\"text-align: center;\"><strong>CBDCs won\'t deliver on their promise</strong> </h2>\r\n<p><span style=\"font-size: 12pt;\">But despite rhetoric about imposing fairness and equity in the financial system and financial technology (FinTech) landscape, a government digital currency will not solve financial inclusion, illegal activity, or the dollar’s global status.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Most Americans already have access to banking. The FDIC states <a href=\"https://www.fdic.gov/analysis/household-survey/index.html\"> only 5.4%</a> of Americans are unbanked, a percentage that has steadily dropped and is currently at a nadir, in part of because of private FinTech solutions like Dave and Chime. Further, CBDC accounts alone won’t help anyone. Per the FDIC, the top reasons people eschew banking services include insufficient funds, privacy concerns, and aversion to fees.</span></p>\r\n<p><span style=\"font-size: 12pt;\">In fact, certain government policies have created more problems than solutions. For example, the 2010 Dodd-Frank/Durbin Amendment payment card price caps shifted nearly all debit-card processing costs from retailers to consumers, “and <a href=\"https://cei.org/studies/government-run-payment-systems-are-unsafe-at-any-speed-2/\"> the poorest consumers paid the biggest price</a>.” The Durbin Amendment made free checking accounts unfeasible for low-income consumers, resulting in over one million Americans leaving the banking system, according to a George Mason University <a href=\"https://www.law.gmu.edu/assets/files/publications/working_papers/1418.pdf\"> study</a>. </span></p>\r\n<p><span style=\"font-size: 12pt;\">Just as CBDCs would not save the poor from bad government policies, they also would not curtail illicit activity such as money laundering and terrorist financing. Despite perception, blockchain analytics firm Chainalysis <a href=\"https://cryptoforinnovation.org/resources/Analysis_of_Bitcoin_in_Illicit_Finance.pdf\"> found</a> from 2017 to 2020 illicit transactions accounted for less than one percent of crypto activity. Cash is still king for illegal trades, and not even CBDC zealots like Sen. Brown would <a href=\"https://www.banking.senate.gov/imo/media/doc/Federal%20Reserve_%20Letter%2003012021.pdf\"> remove it</a> from our monetary basket.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Domestically, CBDCs would invite more financial instability than widespread use of Bitcoin or its brethren ‘stablecoin’ currencies—so named for their value pegs mostly but not exclusively to the dollar.  Whether in the Brown-envisioned maximalist CBDC version where citizens got “<a href=\"https://www.banking.senate.gov/imo/media/doc/Federal%20Reserve_%20Letter%2003012021.pdf\">Fed accounts</a><u>”</u> through government-controlled digital wallets or the minimalist bank-intermediated version, where select banks and credit unions performed customer service and recordkeeping functions, instability looms.</span></p>\r\n<h2 style=\"text-align: center;\"><strong>CBDCs could destroy the banking system </strong></h2>\r\n<p><span style=\"font-size: 12pt;\">As a recent Bank Policy Institute <a href=\"https://bpi.com/central-bank-digital-currencies-costs-benefits-and-major-implications-for-the-u-s-economic-system/\"> report</a> explains, CBDCs would reduce or potentially eliminate fractional reserve lending, a practice whereby banks lend out the majority of their deposits. Rather, banks and credit unions would have to hold equal amounts of CBDC at the central bank as they hold for customers to ensure all CBDC requests would be honored. That would deny lenders the leverage of the current fractional reserve lending system and vastly increase banking and credit costs. Financial institutions would likely subsidize losses with higher fees, which would further harm the vulnerable.</span></p>\r\n<p><span style=\"font-size: 12pt;\">During high economic stress, digital runs—panic conversions of other forms of money into CBDCs—would further destabilize the system. Even in prosperous times, CBDCs would provide a huge target for hackers and terrorists seeking fortune or havoc.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Worst of all, CBDCs would create all these problems to counter an imaginary threat. Private cryptocurrencies, particularly stablecoins, do not threaten the dollar’s global dominance. In fact, the overwhelming preference for the dollar peg shows its strength and leaves China and the European Union envious.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The Fed would gain unprecedented power over Americans’ financial lives. The government could access reams of personal financial data, including purchases of disfavored items or support for unpopular causes.</span></p>\r\n<p><img class=\"size-full wp-image-3701 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Homer-Simpson-GIF.gif\" alt=\"\" width=\"480\" height=\"360\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>CBDCs will wreak havoc on financial privacy </strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The control would differ in degree, but not kind, from the Chinese CBDC model currently being piloted. Chinese officials make no secret about exploiting this trove for political ends. Chinese rulers will infuse it into the social-credit system and, according to officials, help “<a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">enforce party discipline</a>.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">Whilst US officials declare the Chinese system unworkable here; they simultaneously eschew anonymity. Fed Chair Jerome Powell <a href=\"https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=407279\"> has called</a> for “balance” and “appropriate protections.” Whatever that entails will not secure Americans’ privacy.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The past decade shows a bureaucracy—either politicized or incompetent—that regularly exposes sensitive data in their charge. In 2013, the IRS was caught targeting Americans supporting the Tea Party movement. Less publicized scandals reveal organizations repeatedly victimized with <a href=\"https://www.washingtonexaminer.com/why-the-irs-will-pay-this-conservative-group-50-000\"> donor</a> and <a href=\"https://publicintegrity.org/politics/irs-outs-handful-of-donors-to-republican-group/\"> sensitive-data</a> leaks. Bureaucrats likely sneaked the <em>New York Times</em> President Trump’s tax returns. The recent Supreme Court case <em>Americans for Prosperity vs. California</em> revealed repeated data breaches that Justice Samuel Alito <a href=\"https://www.scotusblog.com/2021/04/justices-doubtful-on-california-donor-disclosure-requirement/\"> labeled</a> “grossly negligent.” </span></p>\r\n<p><span style=\"font-size: 12pt;\">In the current politicized era, the government will likely continue its dismal track record. That risk is not worth taking for an unneeded program that will curtail private innovation and embed the Fed with unprecedented power. Congress and the Fed should resist pressure to solve nonexistent crypto problems and instead allow entrepreneurs to innovate and empower our lives.</span></p>\r\n<p>A version of this article appeared in National Review on June 3, 2021 https://www.nationalreview.com/2021/06/central-bank-digital-currency-the-feds-coming-power-grab/</p>','CBDCs invite government abuse','','publish','open','open','','cbdcs-invite-government-abuse','','\nhttps://bpi.com/central-bank-digital-currencies-costs-benefits-and-major-implications-for-the-u-s-economic-system/','2021-06-20 02:42:38','2021-06-20 02:42:38','',0,'https://www.thecrowdfundinglawyers.com/?p=7710',0,'post','',0),(7713,1,'2021-06-20 02:39:44','2021-06-20 02:39:44','','CBDC','','inherit','open','closed','','cbdc','','','2021-06-20 02:41:02','2021-06-20 02:41:02','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/06/CBDC.jpg',0,'attachment','image/jpeg',0),(7723,1,'2021-06-26 23:32:55','2021-06-26 23:32:55','<p><span style=\"font-size: 12pt;\">Digital Yuan is threat to global freedom</span></p>\r\n<p><span style=\"font-size: 12pt;\"> <em>“[Bitcoin] is an escape hatch from tyranny and nothing less than freedom money.”</em> <a href=\"https://reason.com/video/2021/02/05/bitcoin-is-protecting-human-rights-around-the-world/\">Alex Gladstein, Human Rights Foundation</a></span></p>\r\n<p><span style=\"font-size: 12pt;\">The world is recognizing Bitcoin and other cryptocurrencies’ emerging utility. In the past decade crypto has risen from quirky cypherpunk play toy to global acceptance as a store of value, unit of account, and medium of exchange. Lesser known is its service as a dissident lifeline. Predictably, therefore, authoritarian regimes <a href=\"https://www.bitcoininsider.org/article/104629/human-rights-foundations-alex-gladstein-calls-bitcoin-escape-hatch-tyranny\">disdain it</a>. Instead, these nations and <a href=\"https://www.bis.org/publ/bppdf/bispap107.pdf\">nearly all others</a> are developing government substitutes called <a href=\"https://www.thecrowdfundinglawyers.com/cbdcs-invite-government-abuse/\">Central Bank Digital Currencies (CBDC)</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The coming official crypto is nowhere more ominous than China. The Asian juggernaut with its massive population, economic power, technical expertise, and penchant for social control poses a legitimate threat to global freedom via its digital yuan or Digital Currency/Electronic Payments (DCEP). Indeed, China plans to <a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">ban cash</a> and force DCEP as the lone exchange medium. More concerning is its aim to globally export its model through international standard-setting bodies. If successful, China will thwart cryptocurrency’s promise of an individual-empowered world. But the US should influence global financial bodies to ensure China’s brand of digital tyranny remains domesticated.</span></p>\r\n<h2 style=\"text-align: center;\"><span style=\"font-size: 12pt;\"><strong><span style=\"font-size: 18pt;\">China’s journey to digital yuan</span>   </strong></span></h2>\r\n<p><span style=\"font-size: 12pt;\">China jumped on the digital money bandwagon early. Starting in 2014, it established the <a href=\"https://www.chinabankingnews.com/wiki/digital-currency-research-institute-peoples-bank-china/\">Digital Currency Research Institute (DCRI)</a>, a branch of its central bank, the Peoples Bank of China (PBOC). Last year it began testing DCEP in four cities and plans to sync a nationwide rollout with next year’s Beijing-based Olympics. It is also expanding <a href=\"https://www.bloomberg.com/news/articles/2021-05-13/hong-kong-looks-to-expand-cross-border-tests-of-digital-yuan\">cross-border pilots</a> after a successful test with the Hong Kong Monetary Authority.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Ostensibly, China’s charge into digital currency is superfluous. Indeed, one billion Chinese already transact electronically. And digital transactions <a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">jumped 50%</a> from 2018 to 2019 from 220 billion to 331 billion. Native commercial giants WeChat Pay and AliPay have <a href=\"https://www.tbstat.com/wp/uploads/2020/08/KPMG-CBDC-Report.FINAL_.v.1.02.pdf\">volumes surpassing</a> Visa and Mastercard.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Chinese Communist Party (CCP) leaders envy this private-sector success. Indeed, its DCEP goals involve reasserting payment-system dominance and harnessing private innovation. If its objectives ended there, it would be an unfortunate but domestic matter. But Chinese aims go much further.</span></p>\r\n<h2 style=\"text-align: center;\"><span style=\"font-size: 18pt;\"><strong>Chinese will incorporate Digital Yuan into social credit system</strong></span></h2>\r\n<p><span style=\"font-size: 12pt;\">DCEP is a springboard for nothing less than total financial population control and the global adoption of the DCEP system through the central-bank governing system. If Bitcoin is freedom money, DCEP digital tyranny.</span></p>\r\n<p><span style=\"font-size: 12pt;\">China operates a <a href=\"https://www.wired.co.uk/article/china-social-credit-system-explained\">social-credit system</a> that gives local (and eventually central-government) functionaries ways to nonperson dissidents for real or imagined offenses. The Chinese Supreme Court <a href=\"https://www.wired.co.uk/article/china-social-credit-system-explained\">placed</a> journalist Liu Hu on a ‘List of Dishonest Persons Subject to Enforcement.’ The label meant he could not fly, travel by some rails, buy property, or borrow money. Officials in Inner Mongolia threatened the jobs and benefits of parents protesting the absence of Mongolian language instruction. Police entered homes and forced protestors to sign obedience pledges. Those that refused were <a href=\"https://www.latimes.com/world-nation/story/2020-09-03/china-inner-mongolia-bilingual-education-assimilation-xinjiang-resistance-crackdown\">subject to</a> arrest and lifelong surveillance.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The near-certain infusion of DCEP data with the social credit system will combine financial authoritarianism with existing political oppression. Chinese officials, unconcerned with Western public relations sensitivities, openly admit this. The former DCRI head <a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">wrote</a> in 2018 paper DCEP would “cut intermediary links in currency operation. . .  [Thus] offering a new way for economic control.”  Party stalwarts <a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">envision</a> using DCEP to “enforce party discipline.” And an article by the aptly named Central Commission for Discipline Inspection <a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">stated</a> DCEP would be used to thwart bribery, fraud, and “other crimes that cannot be tolerated.” In a country currently <a href=\"https://www.usatoday.com/in-depth/news/politics/2021/04/02/is-china-committing-genocide-what-you-need-know-uyghurs/7015211002/\">committing genocide</a>, these statements should cause concern.</span></p>\r\n<p><span style=\"font-size: 12pt;\">As the authors of an <a href=\"https://s3.us-east-1.amazonaws.com/files.cnas.org/documents/CNAS-Report-Chinas-Digital-Currency-Jan-2021-final.pdf?mtime=20210125173901&amp;focal=none\">influential report</a> by the Center for a New American Security (CNAS) state, “The [DCEP] technical architecture will allow for real-time or near-real-time financial surveillance of all users’ transactions, something currently not feasible by any country in today’s global banking system. DCEP is not just a technical experiment. It is a giant leap for the CCP’s control and influence in Chinese society.”</span></p>\r\n<h2 style=\"text-align: center;\"><span style=\"font-size: 18pt;\"><strong>From Satoshi to Digital 1984</strong></span></h2>\r\n<p><span style=\"font-size: 12pt;\">Satoshi Nakamoto’s Bitcoin vision of a peer-to-peer payment system sought to eliminate trusted intermediaries. And since his world-changing <a href=\"https://bitcoin.org/bitcoin.pdf\">2008 white paper</a>, innovators have added breakthroughs in anonymity, programmability, and speed. But DCEP takes Satoshi’s individual-empowered idea and creates digital ‘1984.’ DCEP eschews Distributed Ledger Technology (DLT) or blockchain to verify transactions and diffuse power. Instead, the PBOC will verify and monitor every transaction. As a <a href=\"https://ir.citi.com/6kaLOQ3DM84cUKeGSN0Vh2aTe7bi%2F%2BYrozLZ%2FuyAz5OHKIII0RFdq2LkPxTRKvFdnKelEwDGV9c%3D\">Citi report</a> explains, “At the core of DCEP is its registration center, managed by the PBOC in a centralized approach without the need for a blockchain consensus mechanism, hence it can be more efficient.” Citi touts “regulatory transparency” and “risk control” as DCEP benefits over cash. The report further explains:</span></p>\r\n<p><span style=\"font-size: 12pt;\">Each DCEP token has a standardized structure which entails information on user ID, transaction value, issuer, owner etc. Information gets updated with each transaction and is stored in a centralized registration center managed by the PBOC. As such, the PBOC would only need to extract information on one DCEP token to trace all underlying transactions. . . DCEP will also resolve difficulty in tracking transactions involving cash, as the PBOC could easily extract transaction details of every DCEP payment from the central data depository and authorization center (to find out the real identity of payer/payee).</span></p>\r\n<p><span style=\"font-size: 12pt;\">According to Yaya J. Fanusie, <a href=\"https://www.coindesk.com/us-china-digital-yuan-cbdc-geopolitical-power-report\">co-author of the CNAS report</a> “Anyone using a digital yuan pretty much concedes his or her financial privacy directly to the Chinese government.” It doesn’t stop there. Extractable metadata extractable <a href=\"https://www.coindesk.com/us-china-digital-yuan-cbdc-geopolitical-power-report\">could track</a> personal and device movements.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Money laundering and other financial crimes may dwindle. And as Citi lauds, the CCP will no doubt benefit from DCEP’s efficiency, transparency, and risk control. But these virtues come with frightening tradeoffs. It is the complete real time control of a population unprecedented in history.</span></p>\r\n<h2 style=\"text-align: center;\"><span style=\"font-size: 18pt;\"><strong>China’s Digital Yuan Signals Global Ambitions</strong></span></h2>\r\n<p><span style=\"font-size: 12pt;\">The PBOC is eager to export their CBDC model worldwide. This process would involve acceptance by the Bank of International Settlements (BIS). Known as the <a href=\"https://www.bis.org/\">bank for central banks</a>, the BIS sets international currency standards. It is keen to avoid CBDC competition from private alternatives as it <a href=\"https://www.theblockcrypto.com/linked/98913/bis-research-cbdc-cross-border-stablecoins?utm_source=coinbase&amp;utm_medium=rss\">readily admits</a>. To do this, it understands the need to coordinate and set standards. It <a href=\"https://www.bis.org/publ/bppdf/bispap115.pdf\">realizes</a>; however, cooperation of this magnitude won’t be easy:</span></p>\r\n<p><span style=\"font-size: 12pt;\">[A] single [internationally coordinated] CBDC system raises a raft of policy issues for central banks. The (shared) management of the rulebook and governance arrangements for the shared system will be just one aspect. The wider implications of issuing a <a href=\"https://www.thecrowdfundinglawyers.com/cbdcs-invite-government-abuse/\">CBDC</a> for monetary policy, financial stability and payments policy will need to be worked through for each central bank, potentially requiring trade-offs in the final design. For example, central banks will need to evaluate whether they are willing to relinquish some system control and monitoring functions to an operator, for which the governance arrangements would need to be (jointly) agreed. Negotiating these trade-offs across multiple central banks will be a challenge.</span></p>\r\n<p><span style=\"font-size: 12pt;\">In this unsettled space China sees opportunity. Chinese officials say privacy as now understood is outdated. It should be <a href=\"https://www.tbstat.com/wp/uploads/2020/08/KPMG-CBDC-Report.FINAL_.v.1.02.pdf\">reinterpreted</a> into “<a href=\"https://www.tbstat.com/wp/uploads/2020/08/KPMG-CBDC-Report.FINAL_.v.1.02.pdf\">controlled anonymity</a>.” That is, transacting parties can hide from one another but never from the state. As Mu Changchun, current head of the DCRI recently <a href=\"https://www.coindesk.com/peoples-bank-of-china-official-says-fully-anonymous-digital-yuan-not-feasible\">remarked</a> in a BIS speech, the BIS must balance privacy with “international consensus” on risk control. He <a href=\"https://www.reuters.com/article/us-cenbanks-digital-china-rules/china-proposes-global-rules-for-central-bank-digital-currencies-idUSKBN2BH1TA\">further stated</a> <a href=\"https://www.thecrowdfundinglawyers.com/cbdcs-invite-government-abuse/\">CBDC</a> fund movements should be “synchronized” to help regulators “monitor the transactions for compliance.” In other words, “controlled anonymity” for all.</span></p>\r\n<h2 style=\"text-align: center;\"><span style=\"font-size: 18pt;\"><strong>Digital Yuan forces a crossroads for the West </strong></span></h2>\r\n<p><span style=\"font-size: 12pt;\">The world currently sits at a crossroads. Whilst dissidents strafing under authoritarian regimes use crypto to escape persecution, China tries to create a hegemonic financial system that will surveil everyone. Its growing economic might combined with its early mover status give it enormous sway on how the <a href=\"https://www.thecrowdfundinglawyers.com/cbdcs-invite-government-abuse/\">CBDC landscape</a> will evolve. The U.S. and the West must fiercely counter this model not only for their economic self-interest but humanity’s future.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via<a href=\"https://www.thecrowdfundinglawyers.com/\"> www.thecrowdfundinglawyers.com</a> </span></p>\r\n<p><span style=\"font-size: 12pt;\">A version of this post first appeared on the blog of the Competitive Enterprise Institute on 6/16/2021 <a href=\"https://cei.org/blog/digital-yuan-threatens-global-freedom/\">https://cei.org/blog/digital-yuan-threatens-global-freedom/</a></span></p>','Digital Yuan Threatens Global Freedom','','publish','open','open','','digital-yuan-threatens-global-freedom','','\nhttps://www.thecrowdfundinglawyers.com/cbdcs-invite-government-abuse/','2021-07-01 05:34:11','2021-07-01 05:34:11','',0,'https://www.thecrowdfundinglawyers.com/?p=7723',0,'post','',0),(7727,1,'2021-06-26 23:28:15','2021-06-26 23:28:15','','Digital-Yuan-578x324-c-default','','inherit','open','closed','','digital-yuan-578x324-c-default','','','2021-06-26 23:28:15','2021-06-26 23:28:15','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/06/Digital-Yuan-578x324-c-default.jpg',0,'attachment','image/jpeg',0),(7737,1,'2021-07-10 23:38:20','2021-07-10 23:38:20','<p><span style=\"font-size: 12pt;\">SEC Chair Gensler is harming retail investors</span></p>\r\n<p><span style=\"font-size: 12pt;\">In a rush to protect retail investors, new Securities and Exchange Commission Chair Gary Gensler is promoting ill-considered policies that will undermine everyday investors. That means business as usual at the SEC, continuing a pattern of failing to trust retail investors while favoring established players.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Whether it’s app-based trading, cryptocurrencies, or reckless tweets, politicians have fretted this year about tech-savvy predators conning retail investors, and now Gensler is charging in. During recent congressional testimony and other public appearances, Mr. Gensler claimed that legal gaps threaten investors. Thus the Commission must “<a href=\"https://www.sec.gov/news/testimony/gensler-testimony-20210505\">freshen up</a>” rules, promote an “<a href=\"https://www.sec.gov/news/speech/gensler-finra-conference\">active policy agenda</a>,” and urge new congressional action.</span></p>\r\n<p><span style=\"font-size: 12pt;\">That doesn’t bode well.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC Chair Gensler continues the Commission’s insular ways</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Mr. Gensler’s protective instincts continue a pattern of mistrust of technology and outsiders that harms those the Commission is most keen to protect. For example, the private markets cater to accredited investors the Commission believes can “fend for themselves” without mandated and costly disclosures. This market aggregates around $1.5 trillion per year; all the risk and rewards go to the already well-off. It’s why one wealthy investor’s <a href=\"https://www.forbes.com/sites/alexkonrad/2021/04/14/initialized-investor-garry-tan-turned-300k-bet-on-coinbase-into-680-million/\">$300,000 Coinbase investment</a> morphs into $680 million, while “protected” investors scrounge for <a href=\"https://www.proactiveinvestors.com/companies/news/949982/coinbase-tumbles-below-ipo-price-amid-crypto-massacre-949982.html\">public-market scraps</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">But in fact, when given the opportunity retail investors have traversed the private markets just fine. Congress passed the JOBS Act of 2012 to open the private-market door slightly to retail investors, mainly through Title III (internet-based equity crowdfunding). Due in part to COVID online crowd-based capital raising <a href=\"https://crowdwise.org/funding-portals/2020-us-equity-crowdfunding-stats-year-in-review/\">has exploded</a> recently both in investors and investment, without any <a href=\"https://www.sec.gov/regulation-crowdfunding-2019_0.pdf\">incidents of fraud</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Equity crowdfunding’s success came despite strong Commission opposition. Commissioners then were convinced fraudsters would con everyday Americans and the Commission would get the blame. </span></p>\r\n<p><img class=\"size-full wp-image-3701 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Homer-Simpson-GIF.gif\" alt=\"\" width=\"480\" height=\"360\" /></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC aversion to innovation is nothing new</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Commissioner Luis Aguilar <a href=\"https://www.sec.gov/news/public-statement/2012-spch031612laahtm#P13_1260\">stated</a>, “I cannot sit idly by when I see potential legislation that could harm investors. This bill seems to impose tremendous costs and potential harm on investors with little to no corresponding benefit.” Then-Chair Mary Schapiro joined, attacking the crowdfunding provision as enabling “fraudulent schemes designed as investment opportunities.” The bill’s sponsor Rep. Patrick McHenry (R-NC) later <a href=\"https://oversight.house.gov/sites/democrats.oversight.house.gov/files/documents/2012-06-28-SC-Financial-Services.pdf\">described</a> Ms. Schapiro’s actions as “being sideswiped by a regulatory body at the eleventh hour.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">In fact, the Commission has never welcomed innovation. Large companies excel at navigating the complex SEC-mandated compliance. This leaves investors with more information but less choice. It also breeds familiarity between regulators and businesses that distort priorities. In fact, massive frauds have occurred under the Commission’s nose while it racked ever higher but meaningless enforcement “wins.”  The list of boondoggles it missed despite red flags and whistleblowers could be a corporate Hall of Shame, including <a href=\"https://www.thetimes.co.uk/article/sec-missed-enron-signals-fsxcdpq2hpm\">Enron</a>, <a href=\"https://www.propublica.org/article/sec-rebuked-for-regulatory-failure-with-lehman-brothers\">Lehman Brothers</a>, and <a href=\"https://www.npr.org/templates/story/story.php?storyId=124208012\">Bernie Madoff</a>.</span></p>\r\n<p><span style=\"font-size: 12pt;\">As Gensler’s fellow Commissioner Hester Peirce has <a href=\"https://www.sec.gov/news/speech/peirce-regulation-view-inside-machine\">stated</a><u>, </u>“Entrepreneurship and innovation do not have the happiest of relationships with regulation. Regulators get used to dealing with the existing players in an industry, and those players tend to have teams of people dedicated to dealing with regulators.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">SEC Chair Gensler’s crypto ambitions</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The huge new opportunities for innovation and wealth creation include app-based trading and cryptocurrency. Regarding crypto, Commission chair <a href=\"https://www.thecrowdfundinglawyers.com/citizen-jay-clayton-should-shut-it-about-crypto/\">Jay Clayton</a> appeared habitually perplexed, fumbling to appoint a crypto ‘czar’ and seemingly most concerned to avoid leadership on this dynamic issue. </span></p>\r\n<p><span style=\"font-size: 12pt;\">Yet the Commission under Mr. Gensler seems poised to take an even more restrictive approach than his predecessor. In a recent <a href=\"https://www.youtube.com/watch?v=gmTE9_KqpXo\">interview</a>, Gensler refused to rule out banning so-called ‘payment for order flow.’ This mechanism allows apps to offer commission-free trading. Of course, this trading isn’t costless, tradeoffs lurk as with “free” Facebook accounts. But instead of letting users decide, Gensler opined, “transparency may not be enough.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">The news is even worse for crypto. Gensler also advocates for a new federal regime to oversee crypto exchanges and a <a href=\"https://www.sec.gov/news/speech/gensler-finra-conference\">new wave of crypto prosecutions</a>. This is disappointing, because he has substantial crypto competence, having taught a course on ‘Blockchain and Money’ at MIT. But it does align with the federal government’s wide-ranging assault on crypto, from the Federal Reserve stating a <a href=\"https://www.thecrowdfundinglawyers.com/cbdcs-invite-government-abuse/\">Central Bank Digital Currency</a> is a ‘<a href=\"https://cointelegraph.com/news/us-fed-cbdc-a-very-high-priority-to-combat-bad-private-sector-money\">very high priority</a>,’ to Senator Sherrod Brown (D-OH) seeking to <a href=\"https://www.banking.senate.gov/imo/media/doc/Federal%20Reserve_%20Letter%2003012021.pdf\">regulate</a> away private currencies, to onerous digital-wallet rules, to the IRS <a href=\"https://finance.yahoo.com/news/irs-seize-crypto-assets-failure-110033048.html\">war on gains</a>. For years, the <a href=\"https://www.barrons.com/articles/why-some-experts-think-a-bitcoin-etf-will-be-delayed-51620853749\">Commission has repeatedly blocked</a> Bitcoin exchange-traded products.</span></p>\r\n<p><img class=\"size-full wp-image-3463 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/07/Michael-Scott-GIF-No.gif\" alt=\"\" width=\"320\" height=\"261\" /></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Retail investors will bear the brunt of SEC Chair Gary Gensler’s reforms</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Mr. Gensler’s would-be “reforms” will lead to costs borne most by everyday Americans. Gensler, whose net worth <a href=\"https://www.bloomberg.com/news/articles/2021-02-12/biden-sec-nominee-gary-gensler-worth-as-much-as-119-million\">exceeds $100 million</a><u>, </u>won’t be affected. But he will undermine others seeking financial success through America’s still-dynamic entrepreneurial spirit. This stratifies wealth in our society while effectively discouraging innovation. </span></p>\r\n<p><span style=\"font-size: 12pt;\">What Mr. Gensler should do is re-focus the Commission on prosecuting wrongdoers within its midst and spare innovators his regulatory weapons. The Commission should punish fraud, but it must abstain from protecting people from technologies they embrace and risks they willingly take as with app-based trading and crypto investing. </span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>\r\n<p><span style=\"font-size: 12pt;\"><em>Real Clear Markets ran a version of this article on June 22, 2021</em> <a href=\"https://www.realclearmarkets.com/articles/2021/06/22/eager_to_protect_small_investors_gary_gensler_leaves_them_scraps_782067.html\">https://www.realclearmarkets.com/articles/2021/06/22/eager_to_protect_small_investors_gary_gensler_leaves_them_scraps_782067.html</a></span></p>','SEC Chair Gensler is harming retail investors','','publish','open','open','','sec-chair-gensler-is-harming-retail-investors','','','2021-07-10 23:38:20','2021-07-10 23:38:20','',0,'https://www.thecrowdfundinglawyers.com/?p=7737',0,'post','',0),(7755,1,'2021-08-07 20:13:46','2021-08-07 20:13:46','<p><span style=\"font-size: 12pt;\">DeFi regulation, just say no</span></p>\r\n<p><span style=\"font-size: 12pt;\">A new form of consumer finance could upend the entire banking and finance system that’s plagued by expensive fees, limited “bankers hours,” public mistrust, bailouts and insider government favors.</span></p>\r\n<p><span style=\"font-size: 12pt;\">But Congress and the U.S. Securities and Exchange Commission (SEC) may kill the movement – decentralized finance, or DeFi – in the name of our own protection. Regulators should prosecute fraud, but also acknowledge the limits of their effectiveness and allow DeFi to mature without the burden of governmental compliance.</span></p>\r\n<p><span style=\"font-size: 12pt;\">People are on the verge of cutting out the middleman in finance. Just as Bitcoin decentralized money transfers, DeFi could decentralize all of finance, from lending, borrowing and exchanging to more exotic forms of interest collection.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">DeFi applications are not banks, they shouldn’t be regulated like them</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">DeFi eschews heavily regulated, fee-collecting intermediaries to allow peer-to-peer money flows. In just three years, it has grown from an <a href=\"https://www.coindesk.com/ethereum-defi-platforms-eth-history\">idea on Meetup</a> to a <a href=\"https://defipulse.com/\">$50 billion industry</a>. Yet DeFi’s astounding growth has also attracted opportunists looking to fleece naïve newcomers. Hackers and rug pullers – developers creating new products and then absconding with the loot – have plagued the growing industry. According to one source, <a href=\"https://www.wsj.com/articles/crypto-frauds-target-investors-hoping-to-cash-in-on-bitcoin-boom-11623058380\">fraudsters stole</a> $83.4 million between January and April this year.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Sen. Elizabeth Warren (D.-Mass.) fired off a <a href=\"https://www.warren.senate.gov/imo/media/doc/Draft%20SEC%20Crypto%20Exchange%20Letter%2007.7.2021%20clean.pdf\">letter</a> asking SEC Chairman Gary Gensler what more Congress could do to empower the commission to rein in DeFi. Mr. Gensler needs no persuading. He has repeatedly made <a href=\"https://www.coindesk.com/sec-chair-gary-gensler-recommends-congress-regulate-crypto-exchanges\">requests</a> for additional authority to bring non-security cryptocurrencies under the SEC’s ambit. Dan Berkovitz, a commissioner at the SEC’s sister agency, the Commodities Futures Trading Commission (CFTC), recently agreed. While praising financial intermediaries, he <a href=\"https://www.cftc.gov/PressRoom/SpeechesTestimony/opaberkovitz7\">described DeFi</a> as a “bad idea, and “Hobbesian,” and questioned its legality.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The message from the Biden administration and its appointees is clear: Without us, scams will proliferate and retail investors will get hosed.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">DeFi regulation is favored by all the wrong people</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Bringing a nascent industry under the government’s thumb does have benefits for politicians and regulators. It provides politicians steady campaign contributions and lobbying perks. Regulators get employment, prestige and often lucrative post-public service landing spots. Industry incumbents use the rules to keep barriers to entry high.</span></p>\r\n<p><span style=\"font-size: 12pt;\">But big government hasn’t been great at preventing fraud. Since the federal government started regulating the financial sector in earnest in the 1930s, the government’s track record has been downright dismal. A <a href=\"https://www.jstor.org/stable/2351027\">landmark study</a> by future Nobel laureate George Stigler showed the rates of return in the 1950s mirrored those of the pre-SEC 1920s, dispelling the myth that 1920s Wall Street was rife with fraud and abuse.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Decades later, two scholars <a href=\"https://scholarship.law.ufl.edu/cgi/viewcontent.cgi?article=1257&amp;context=facultypub\">lamented</a>, “[Ex]amination of the securities violations…reveals that no amount of technical exemption requirements will hinder the fraud artists from their endeavors…Fraudulent and deceptive schemes have unfortunately continued unabated and independent of formal registration or exemption requirements.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">Even Congress’s own research arm, the <a href=\"https://crsreports.congress.gov/product/pdf/R/R46208\">Congressional Research Service</a>, is skeptical the SEC framework can remedy market manipulation.</span></p>\r\n<h2 style=\"text-align: center;\"><strong><span style=\"font-size: 12pt;\">Prosecutors should focus on fraud not DeFi regulation</span></strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Regulators should focus on prosecuting fraud and allow the industry to grow past its infancy without smothering it first with massive federal disclosure mandates. Many scams and rug pulls had glaring red flags, like <a href=\"https://cryptobriefing.com/7-million-lost-flash-loan-attack-bsc-burgerswap/\">anonymous developers</a> and promises of outlandish returns like <a href=\"https://cryptobriefing.com/iron-finance-denies-rug-pull-after-token-collapse/\">10,000 percent interest</a>. The market will weed these scammers out.</span></p>\r\n<p><span style=\"font-size: 12pt;\">As the industry matures, industry gatekeepers will develop standards that imbue credibility. These standard setters will include trade associations, code auditors, insurance markets and standards bodies that provide reputation scores to counter the proliferation of bad actors.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Regulators should prosecute scams harshly. <a href=\"https://crsreports.congress.gov/product/pdf/LSB/LSB10227\">Federal courts</a> have buttressed CFTC jurisdiction to prosecute crypto fraud. Politicians will score points and regulators will avoid blame by taking the path that gives them the most power and control. But some humility on the limits of their effectiveness would be welcome.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Previous attempts to rein in finance’s bad actors fell flat. The notorious Dodd Frank financial regulation law passed after the 2008 financial crisis has <a href=\"https://thehill.com/blogs/congress-blog/economy-budget/248964-dodd-frank-failure\">utterly failed</a>. The push to regulate DeFi will, as well. At best, it will send DeFi underground.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Regulators should allow DeFi to flourish as it upends the decades-old order and renders entrenched industry players irrelevant. Suffocating DeFi in the name of investor protection will kill its promise and continue the entrenchment of massive industry insiders as overlords of the U.S. financial system.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"http://www.thecrowdfundinglawyers.com\">www.thecrowdfundinglawyers.com</a></span></p>\r\n<p><span style=\"font-size: 12pt;\">A version of this article first appeared in Coindesk on July 23, 2021 <a href=\"https://www.coindesk.com/washington-should-let-defi-succeed\">https://www.coindesk.com/washington-should-let-defi-succeed</a></span></p>','DeFi regulation, just say no','','publish','open','open','','defi-regulation-just-say-no','','','2021-08-07 20:31:01','2021-08-07 20:31:01','',0,'https://www.thecrowdfundinglawyers.com/?p=7755',0,'post','',0),(7764,1,'2021-08-07 20:28:29','2021-08-07 20:28:29','','DeFi image','','inherit','open','closed','','defi-image','','','2021-08-07 20:29:25','2021-08-07 20:29:25','',0,'https://www.thecrowdfundinglawyers.com/wp-content/uploads/2021/08/DeFi-image.jpg',0,'attachment','image/jpeg',0),(7765,1,'2021-08-07 20:48:54','2021-08-07 20:48:54','<p><span style=\"font-size: 12pt;\">SEC discovery tactics questionable in Ripple case </span></p>\r\n<p><span style=\"font-size: 12pt;\">The Securities and Exchange Commission (SEC) has gotten away with questionable investigation and litigation methods for years. The Commission’s Enforcement Division tactics are so well known they have earned a particular kind of lore among securities lawyers, <a href=\"https://www.crowdfundinsider.com/2017/11/124483-first-regulated-initial-coin-offering-conference-ico-2-0-summit-dives-deep-ico-legal-regulatory-economic-implications/\">described</a> by one as “like living in hell without dying.” But in the SEC’s epic battle against cryptocurrency company Ripple and two of its executives, the agency’s go-to tactics are finally being challenged.</span></p>\r\n<p><span style=\"font-size: 12pt;\">In April, U.S Magistrate Judge Sarah Netburn <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/04/210406_HearingTranscript_Apr6_2021_2pm_20Civ10832.pdf\">ordered</a> the SEC to produce documents, including certain internal and external communications, along with a log of privileged documents, that could reveal potentially sensitive or embarrassing information about SEC crypto legal uncertainty in the midst of dozens of prosecutions. Of the high-profile nonfraud crypto cases—<a href=\"https://www.thecrowdfundinglawyers.com/sec-goes-for-kik-will-it-get-knifed/\">Kik</a>, <a href=\"https://www.thecrowdfundinglawyers.com/sec-telegram-fight-shows-government-at-its-worst/\">Telegram</a>, <a href=\"https://cei.org/blog/lbry-cryptocurrency-prosecution-shows-secs-misplaced-priorities/\">LBRY</a>, and the current case involving Ripple—the Ripple litigation is the first time a court has forced the SEC’s own actions to the fore.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The implications are huge—for crypto companies and perhaps for all facing securities investigations.</span></p>\r\n<h2 style=\"text-align: center;\"><strong>SEC discovery tactics questionable from the start </strong></h2>\r\n<p><span style=\"font-size: 12pt;\">This drama started on December 22, 2020, when then-SEC Chairman Jay Clayton, on his last day, greenlit the lawsuit against Ripple and two of its executives, accusing the firm of selling unregistered securities in the form of its cryptocurrency, XRP, which Ripple began selling in 2013.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The company and its individual defendants claim the SEC failed to provide constitutionally required fair notice about XRP’s status in form of due process. After years of crypto prosecutions, this is a potential problem the SEC is only now having to confront.</span></p>\r\n<p><span style=\"font-size: 12pt;\">As Commissioner Hester Peirce <a href=\"https://www.sec.gov/news/speech/peirce-why-behind-no-051118\">stated</a>:</span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">Given the power and reach of the Commission, due process is of paramount importance. The rules should be clear, so that individuals know in advance the actions that constitute violations. In enforcing the rules, the SEC should be even-handed and sensible. An unwavering commitment to due process is particularly important in light of the continued growth in the volume and complexity of the securities rulebook.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Following due process principles is rarely costless, comfortable, or convenient for a regulator, but doing so speaks volumes of the agency’s integrity and helps to bolster the agency’s standing in the markets, the courts, and the minds of the American people. In short, an agency that adheres to basic principles of due process will be more effective at carrying out its mission.</span></p>\r\n</blockquote>\r\n<h2 style=\"text-align: center;\"><strong>Defendant lawyers turn tables on SEC </strong></h2>\r\n<p><span style=\"font-size: 12pt;\">Defendant lawyers, naturally, requested internal and external communications between staff and commissioners regarding XRP and non-security cryptocurrencies Bitcoin and Ether. In a change from other crypto cases, Judge Netburn <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/04/210406_HearingTranscript_Apr6_2021_2pm_20Civ10832.pdf\">ordered the SEC</a> to produce documents including certain internal and external communications along with a log of privileged documents. The Commission is not handling it well.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The SEC <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/04/210421_SEC_Motion_-Discovery_Order.pdf\">refused</a>, telling the judge brazenly that she didn’t understand how the SEC worked and that any information defendants sought could be obtained on their website: </span></p>\r\n<blockquote>\r\n<p><span style=\"font-size: 12pt;\">The Court further indicated a lack of familiarity with how the SEC operates and required the parties to meet and confer about “whether” the SEC should produce or enter onto a privilege log memos or other official documents “expressing <em>the agency’s</em> interpretation or views” as to XRP, Bitcoin and ether. <em>Id.</em> at 53:2-13 (emphasis added). As detailed below, the SEC expresses its interpretations and views in a number of ways, all of which are public. These agency interpretations and views are subject to the Order, but internal emails and memos expressing SEC staff interpretations and views are not.</span></p>\r\n</blockquote>\r\n<p><span style=\"font-size: 12pt;\">(Incidentally, when convenient, the SEC discards even statements available on its website, like a former director’s pronouncement that <a href=\"https://www.thecrowdfundinglawyers.com/sec-ether-comments-invite-crypto-armageddon/\">Ether was not a security</a>).</span></p>\r\n<p><img class=\"size-medium wp-image-3701 aligncenter\" src=\"https://www.thecrowdfundinglawyers.com/wp-content/uploads/2019/08/Homer-Simpson-GIF-300x225.gif\" alt=\"\" width=\"300\" height=\"225\" /></p>\r\n<h2 style=\"text-align: center;\"><strong>Magistrate Judge unhappy with SEC discovery tactics  </strong></h2>\r\n<p><span style=\"font-size: 12pt;\">The judge, not accepting the SEC’s recalcitrance, <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/05/210506_1-20-cv-10832_Order_-US-Judge-Netburn_May-6-2021.pdf\">again ordered</a> the SEC to produce certain internal and external documents along with a log of documents it was withholding based on privilege claims.</span></p>\r\n<p><span style=\"font-size: 12pt;\">Has that transpired? Nope. According to <a href=\"https://www.dropbox.com/s/3z2q5ybulvnll61/Motion%20to%20Compel%20Internal%20Documents.pdf?dl=0\">defendant lawyers</a>, two months since the initial order, SEC lawyers have not produced a single internal document or external-response document, but told the judge the ordered discovery was “irrelevant and needless.”</span></p>\r\n<p><span style=\"font-size: 12pt;\">SEC lawyers are also refusing to produce other discoverable documents, like communications from the Office of Investor Education and Advocacy or from its financial technology email inbox, <a href=\"mailto:FinTech@SEC.gov\">FinTech@SEC.gov</a>. Defendant lawyers have <a href=\"https://www.dropbox.com/s/3z2q5ybulvnll61/Motion%20to%20Compel%20Internal%20Documents.pdf?dl=0\">now requested</a> a third hearing, and that motion is pending, but the judge may decide three strikes is enough.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The SEC’s questionable tactics don’t stop there. While <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/04/210421_SEC_Motion_-Discovery_Order.pdf\">accusing Ripple lawyers</a> of “gamesmanship,” “harassing” the SEC, and seeking invasive materials, prosecutors sought eight years of personal bank statements and attorney-client-privileged <a href=\"https://www.crypto-law.us/wp-content/uploads/2021/05/210507_SEC-Letter-re-Waiver_vPublic.pdf\">legal advice</a> from defendants.</span></p>\r\n<h2 style=\"text-align: center;\"><b>New SEC Chair on board with SEC discovery tactics </b></h2>\r\n<p><span style=\"font-size: 12pt;\">New SEC Chair Gary Gensler hasn’t commented on the legal team’s conduct or its adherence to SEC rules. The SEC’s Canon of Ethics <a href=\"https://www.law.cornell.edu/cfr/text/17/200.66\">warns</a>: “The power to investigate carries with it the power to defame and destroy.” Its <a href=\"https://www.sec.gov/files/FY%202022%20Congressional%20Budget%20Justification%20Annual%20Performance%20Plan_FINAL.pdf\">stated values</a> include integrity (“We inspire public confidence and trust by adhering to the highest ethical standards”), accountability (“We embrace our responsibilities and hold ourselves accountable to the American public”), and fairness (“We treat investors, market participants, and others fairly and in accordance with the law”).</span></p>\r\n<p><span style=\"font-size: 12pt;\">But Gensler has had plenty to say about crypto enforcement intentions. In <a href=\"https://www.sec.gov/news/testimony/gensler-2021-05-26\">congressional testimony</a>, he signaled a looming new wave of crypto prosecutions, lamenting that the SEC has only managed 75 thus far. The SEC <a href=\"https://www.sec.gov/files/enforcement-annual-report-2020.pdf\">also touts</a> its performance in this regard during the past pandemic year—namely, only a meager decline in prosecutions but still a record uptick in penalties. That includes $1.2 billion it disgorged from Telegram, which forced the company to shutter its blockchain project.</span></p>\r\n<p><span style=\"font-size: 12pt;\">The SEC’s actions do not serve the public interest. Instead of protecting consumers, regulators trample constitutional rights, foist millions in legal fees on companies trying to offer innovative consumer products and, ultimately, disadvantage the U.S. economy vis á vis global competitors. </span></p>\r\n<p><span style=\"font-size: 12pt;\">Hopefully, Judge Netburn in the <em>Ripple</em> case will start holding the SEC accountable to its own ideals and mission, which has veered so far from what is fair and decent.</span></p>\r\n<p><span style=\"font-size: 12pt;\">By <a href=\"https://twitter.com/thecrowdfundlaw\">Jossey PLLC</a> via <a href=\"https://www.thecrowdfundinglawyers.com/\">www.thecrowdfundinglawyers.com </a></span></p>\r\n<p><span style=\"font-size: 12pt;\"><em>For more perspectives on the ongoing SEC v. Ripple case, listen to this </em><a href=\"https://fedsoc.org/events/sec-v-ripple-labs-cryptocurrency-and-regulation-by-enforcement\"><em>podcast</em></a><em> of a panel of the Federalist Society featuring CEI Senior fellow John Berlau.</em></span></p>\r\n<p>&nbsp;</p>','SEC discovery tactics questionable in Ripple case','','publish','open','open','','sec-discovery-tactics-questionable-in-ripple-case','','','2021-08-07 20:48:54','2021-08-07 20:48:54','',0,'https://www.thecrowdfundinglawyers.com/?p=7765',0,'post','',0);

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