The bell tolls for Mr. ICO Advisor

Leo Zhang

By Leo Zhang

There's nothing new under the sun, not even in the back-alley world of ICO advisory. Convinced that everything is better when digitized, young fund managers hung their "venture capital" careers on the "blockchain not Bitcoin" narrative. This narrative was crafted by enterprise technology marketers at companies like IBM, Microsoft, Deloitte, and McKinsey. The pitch might work for those incumbents when they pitch their Fortune 50 clients, but a story about overhauling corporate infrastructure is not credible coming from a mob of crowdfunded startups. The SEC agrees.

bettercallsaul_me

U.S. Judge says initial coin offering covered by Securities Law
(Bloomberg, by Patricia Hurtado, Benjamin Bain, and Camila Russo)

"The New York case, which prosecutors said was the first criminal prosecution of its kind, involves Maksim Zaslavskiy. The Brooklyn businessman was charged with conspiracy and two counts of securities fraud for his role in allegedly defrauding investors in two initial coin offerings. He’d argued that the ICOs at issue weren’t securities but instead currencies. Zaslavskiy also said securities law was too vague to be applied to initial coin offerings."

SEC hits crypto asset fund and 'ICO superstore' with penalties
(CoinDesk, by Christine Kim, Anna Baydakova, and Stan Higgins)

"Separately, the SEC accused TokenLot LLC and its owners, Lenny Kugel, and Eli L. Lewitt, of acting as unregistered broker-dealers. The agency said that TokenLot – described as a kind of 'ICO Superstore' – 'received orders from more than 6,100 retail investors and handled more than 200 different digital tokens, which the SEC found included securities.'"

A number of tokens SEC treats as securities in the case

Why the EU is furious with Malta
(Bloomberg, by Monte Reel)

"In April, just as several Asian countries were cracking down on cryptocurrencies, Muscat announced that Malta would become the first country in Europe to create a regulatory and legislative framework specifically designed to attract virtual currencies. Shortly thereafter, Binance Holdings, the world’s largest cryptocurrency exchange, announced it was moving its headquarters from Hong Kong to Malta. Within weeks, Morgan Stanley analysts were reporting that a majority of the world’s crypto trading volume was moving through companies based in Malta."

Technical Updates

Single collateral Dai -- 9 months in review
(Mike McDonald)

"If you would have asked me in January if I thought Dai could survive a drop in ETH to sub $200, I probably would have said no. But it has been incredible to watch Dai’s resilience and the system function as designed throughout the last 9 months. At no point has the overall system collateralization approached dangerous levels, and CDPs of all sizes continue to be opened."

On the (in)stability of stablecoins
(Bob McElrath)

"While governments typically operate currency pegs manually, crypto stablecoin enthusiasts often propose algorithmic solutions. The fact that a peg is algorithmic doesn’t really matter, since any human intervention bond purchasing/selling strategy can be turned into an automatic algorithm. The point of this article is to show that no algorithm exists that can maintain a peg. Argentina, Mexico, Greece and Thailand are countries which learned this lesson the hard way."

What is the ETH value when all the miners will quit and the blockchain will melt?

Card

Making the strongest case for small blocks
(Sosthene)

"Bitcoin does impose a trade-off between 'ease-of-transaction' (enabled by having bigger blocks) and 'ease-of-validation' (the smallest the blocks, the easier to validate). What’s important is the two side of the deal are not of equal importance : the latter is critical while the former is not. That means we must never trade 'ease-of-validation' for 'ease-of-transaction'."

Intel's Exascale dataflow engine drops X86 and Von Neumann
(TheNextPlatform, by Timothy Prickett Morgan)

"The basic idea is to take the dataflow graph of a program, which is created by all compilers, before it is crunched down to a specific processor’s instruction set and data storage and flows and lay down that data flow directly on a massively parallel series of compute elements and interconnects between them. You lay this dataflow down on static hardware etched in silicon rather than created it in Verilog or VHDL like an FPGA, so don’t be mistaken about what configurable means here."

News & Commentary

Whitestone Bridge
(Epsilon Theory, by W.Ben Hunt)

"I think we are still capable of building mighty bridges, physical and digital alike. I think we are still capable of being motivated by a sense of wonder and progress. It’s not going to emerge from government, but it can’t be divorced from government. It’s not going to come from private enterprise, but it can’t be divorced from private enterprise. It has to be ALL of that, in the form of a Movement. And yes, it’s going to need a Robert Moses or two or fifty."

Robinhood is making millions selling out their millennial customers to high-frequency traders
(SeekingAlpha, by Logan Kane)

"Robinhood not only engages in selling customer orders but seems to be making far more than their competitors from it. Among brokers that receive payment for order flow, it's typically a small percentage of their revenue but a big chunk of change nonetheless. Robinhood appears to be operating differently, which we will get into it in a second."

Cixin Liu, China, and the future of science fiction
(The Paris Review, by Amanda DeMarco)

"Like life in Beijing, the experience was magnificent and exhausting and thrilling and flawed. Science fiction might be the genre best suited to Chinese society today; the breakneck pace of change becomes a constant, and to live in the present is to anticipate what is to come. When we told our acquaintance that we’d like to return next summer, she responded as many of our Chinese friends did: 'You might not recognize it here.'"

Quoth the Raven #68 - Our bullshit economy: part 1 of 515

What drives long-term national debt growth?

From Trump to trade, the financial crisis still resonates 10 years later
(NYT, by Andrew Ross Sorkin)

"In the United States, the crisis exposed an economy that had been a charade — one that most Americans didn’t understand or appreciate. The use of debt had masked the real problems underneath the surface: a significant decrease in worker participation, automation that would take jobs and stagnant wage growth."