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_gabrielShapir0 Profile picture
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28 May, 6 tweets, 2 min read
no time to write something long, but don't be fooled by the fact that Bitconnect was a fraud--this case could become a blueprint for action against non-fraudulent DAOs

N.B.--Bitconnect was an "unincorporated association"
in this thread @collins_belton echoes conversations we have been having with DAOs for a while--they need to start thinking about indemnification structures to protect the core devs & others involved with the project

the SEC is smart. . .their theory on this case seems novel & susceptible of being challenged in several ways, but these particular defendants are un-sympathetic & will probably not have top-notch defense counsel; SEC will get a precedent it can then use against DeFi teams...
read the complaint; the SEC is not bringing fraud charges...they are saying that the promoters of a securities scheme should be treated as securities issuers...also, it's all about yield from automated trading software...doesn't bode well...
this also could reverberate beyond crypto

politicians are calling for a check on r/wallstreetbets

if Trevon James is a Bitconnect *issuer* because he *promoted*, then I don't see why redditors aren't also GME *issuers*--the SEC's reasoning seems wrong and could get weird fast..
BTW, they also have a backup claim that the Bitconnect promoters were acting as unregistered broker/dealers...that claim makes more sense to me

Having a really hard time seeing them as the securities "issuer" merely b/c they promoted & got paid referrals by the founder.

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More from @lex_node

_gabrielShapir0 Profile picture
28 May
How govt should do cryptolaw:

1. autonomous software systems = legal persons

2. tokenholders & miners get qualified limited liability

3. to qualify for #1 and #2, must have insurance pool (token premine or inflation), gov holds keys & can only tap pool with final court order
The insurance pool is sole source of legal remedies for most negative externalities associated with the autonomous software system.

As a legal person, the autonomous software system has rights and is deemed to own this pool--thus entitled to due process before assets seized.
Outright granting legal personhood to autonomous software is better than 'wrapping' it in traditional corporate personhood through e.g. an LLC. Business entities are nexuses of rights & obligations. Autonomous software systems are nexuses of powers & incentives.
Read 8 tweets
_gabrielShapir0 Profile picture
21 May
Governance tokens, done right, have a lot of intrinsic value and are a game-changer.

I do worry that 'done right' & intrinsic value also makes them more securities-like utility and MoE tokens but I am also optimistic. Here's why.
People are too quick to apply SEC's utility token guidance to governance tokens and I think this has spawned many misguided regulatory strategies. People need to think more about them in the context of the SEC's DAO Report.
The analogy between network miners or validators and DAO voters to achieve "sufficient decentralization" for regulatory purposes is way too facile.
Read 30 tweets
_gabrielShapir0 Profile picture
20 May
I've been thinking about this crypto crash & starting to realize it exposes a deeper issue:

blockchain's fundamental value is 'social scalability' (Szabo)

yet crypto constantly trades counter to the related fundamentals, driving futile boom/bust cycles;

here's what I mean:
when crypto clashes significantly enough with traditional institutions / govts (China ban, Tesla dump, Tether and Binance investigations), this is taken as a 'bear' signal, panic ensues and prices drop
when crypto is embraced by the mainstream (Elon/Saylor, 'enterprise blockchain' announcements by mainstream corps, regulatory safe harbors created, etc.), this is taken as a 'bull' signal, comfort sets in and prices rise
Read 13 tweets
_gabrielShapir0 Profile picture
13 May
the reason why Elon crashed Bitcoin is the same reason why he's been sued for breach of fiduciary duties, securities fraud, etc.-he thinks his "mission" (sometimes cloaking his mere whims & lulz) preempts every other concern, & his fawning simps agree
for example, this enabled him to bail out his own failing company (Solarcity) at the expense of Tesla stockholders because it's 'solar power' & therefore green & progressive / important--he is set to stand trial for breach of fiduciary duty over this

abcnews.go.com/Technology/wir…
this enabled him to tweet '$420 funding secured' when Tesla was in crisis, get a stock pump that may have saved the company, and get away with a slap on the wrist from the SEC
Read 15 tweets
_gabrielShapir0 Profile picture
11 May
It's a pleasure seeing @BryceWeiner throw down on the 'is XRP a security / part of a securities scheme?' debate in this thread

SEC hasn't done a great job articulating the legally relevant distinctions between BTC & ETH vs. XRP, but they are numerous & meaningful.
I tried to articulate a framework for understanding these issues here:

lex-node.medium.com/defining-decen…
I also recommend checking out @ketsal 's approach, which has a similar flavor to mine:
ketsal.com/wp-content/upl…
Read 4 tweets
_gabrielShapir0 Profile picture
27 Apr
'Transactional law' practice (venture, M&A, etc.) is fundamentally broken, marked by an evil convergence of self-perpetuating bad incentives that make it almost impossible to reform or even incrementally improve.

Yes, it's the lawyers' fault.
In any rational world, a deal would just be a checklist of standard terms, and the parties would argue about which boxes to check instead of their lawyers spending weeks trying to trick each other through bespoke verbiage spread out across 10 different docs.
Honestly can't believe I've wasted 11 years of my life on this stupidity. After I wrap up my current slate of deals I will no longer engage in this charade.
Read 14 tweets

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