ICO: There’s No Such Thing

I learned a long time ago; if you act like a target, people will take shots at you.

There is no such thing as an initial coin offering or “ICO”. 

Why all the insistence on the part of a radically smart group of people to use an antiquated, grossly inaccurate term to describe a process that has absolutely nothing to do with coins? 

We are not offering coins. In fact, the term “Initial Coin Offering” is a gross misrepresentation and a material misstatement of what is actually occurring. If you are developing true network utilities, it has nothing whatsoever to do with coins.

The fact that network utilities develop a value is incidental. From the perspective of the developers of such utilities, it should remain that way. You don’t see Bob Metcalfe conducting an offering of new Ethernet tokens. Do you?

As the world of finance changes so does it’s culture. I’ve witnessed significant cultural change in the last 30 years I’ve been practicing. There; I just dated myself. I assure you, this time it really IS different. But not in the usual delusional way.

Just because the original Satoshi Crew showed the world that pulling a lever no longer effects positive change for people, doesn’t give their newly sovereignized, constitutionalized descendants the right to spit in the face of the sleeping guard dogs who regulate the world under old sovereign constitutions.

I operate under the misguided assumption that most of us are actually trying to build something highly disruptive dispite the fact that some of you are tokenizing arrays of fire hydrants and party favors. If you’re doing the latter, please stop. If you have the aptitude you can join our incubator. If you can’t stop, file an S1 or seek an exemption. Either way, please tell the truth and we beg of you; be good actors. Otherwise your just building a Trojan Horse for the SEC or CFTC to roll into our sovereign city.

I have been conducting securities offerings my entire adult life. At one point we were leading or co-managing one IPO per week before Gramm-Leach-Bliley destroyed small to medium sized enterprise IPO. 

I lived in the time of the invention of Ethernet by Bob Metcalfe. Strangely, a lot of people who claim to be in Blockchain don’t even know who he is.  There’s a big difference between a securities offering and an emission or release of new distributed network utilities. 

First of all, when it comes to this business of ICOs, Merriam-Webster defines a coin as “a small, flat, and usually round piece of metal issued by a government as money”. so  there’s no coin involved in what we’re doing. Second; a distributed ledger network “DLN” is initialized at the genesis block or at the fork of an existing DLN so the word initial is also not accurate either. Third; NO OFFERING IS BEING CONDUCTED! 

What is actually occurring, is an exchange of one or more emitted or released distributed network utilities for the emission or release of a new one in an ever widening and infinite distributed network loop. Again, this assumes you are actually building something compatable and disruptive and your network utility or “token” is exactly that; a utility in the Bob Metcalfe sense. Please call it what it actually is. 

The use of the term token is also somewhat confusing but far more accurate, however, they are currently developed parallel to DLN initialization and emitted as incentive for DLN role participation. 

Basic network protocol actually relied on tokenization of its components and is superceded by Ethernet. This time it’s different and the difference lies in the nature and integration of utility as well as its separation and transferability all based on decentralization. As far as custody, it’s debatable where these digital assets lie since they are, in fact, virtual.

The development of value of network utilities and the frequency in which they are exchanged depends on the extent to which they bind a network together or govern the behavior of network protocol. The more utility they have for and in the network, the more valuable they should be. The value of a network however should STILL be measured in accordance with Metcalfe’s Law. 

Decentralization and emission just accelerates the basic principles of Metcalfe’s Law. It doesn’t supersede it. There’s no such thing as an ICO.

When those ferocious sleeping dogs wake up; and they WILL wake, the first count in the enforcement action will be misrepresentation and missstatement of material facts. Those are regulatory words. The DOJ calls it fraud. There’s no such thing as an ICO.

Under that vein, for those who are emitting or releasing true network utilities, the moniker “ICO” given to these processes is exactly that; a misrepresentation and a material misstatement of fact.

Are Satoshi descendants in such awe of their new found freedom that the need for adult supervision must supersede misguided and inaccurate cultural expression?

The cultural evolution of our crowd has given rise to an inaccurate term that could very well interrupt the greatest technical, political and monetary revolution since…well…there is no comparison.

Please continue to govern yourselves but do so accordingly lest intervention by government centralize the very decentralized movement that’s changed us forever.

Jason Meyers is a venture capitalist and a Blockchain incubator based in NYC


Winklevoss Bitcoin Trust: Not Rejected. Just Inadequate.

Winklevoss Bitcoin Trust: Not Rejected. Just Inadequate.

The Securities Exchange Commission didn’t “reject” or “disapprove” the Winklevoss Bitcoin Trust. That’s not what the SEC does. They just didn’t believe that the registration statement, as amended for the ninth time, contained a full and fair disclosure and therefore did not declare it “effective”. Meaning it took no further action notifying the issuer that they had no additional comments.

So what’s the difference? Keep reading.

Full and fair disclosure is highly subjective. If an issuer grows and sells bananas (or marijuana) and files a S-1 registration statement offering its shares to the public, the SEC wants the issuer to disclose all aspects of the financial and operating condition of the company, audited financial statements, a statement about its management and experience and the nature of the industry it operates in as well as all the risks that the company can quantify about the company, the weather, soil quality, distribution competition, etc. Sounds fair. Right?

The problem with the proposed ETF is the nature of the singularity of the asset in question. You can’t eat Bitcoin. It’s not a currency or a security. It’s not a commodity. What is it?

The SEC is taking the position that Bitcoin; the only asset that the ETF proposes to “hold in trust” for the benefit of investors in the ETF itself, has no transparent or regulated market.

Bitcoin exchanges are not regulated and are not federally compelled to cooperate in consolidating market and trade pricing data in the way most other exchanges that trade assets do. Its not centrally cleared; one of the more positive features of its nature as it is cleared by the Bitcoin Blockchain, a constellation of algorithmic consensus based voluntary computing power. It’s a “dark” market.

In order to get this ETF registration statement “declared effective by the SEC, the Winklevoss twins would have to compel the bulk of exchanges that dominate trading volume to subject themselves to regulatory oversight. How do you do that? Well, the first step is to convince the exchanges to enter into cooperative surveillance agreements, adopt compliance and procedures manuals that describe, in highly explicit detail, how orders will be handled, routed, displayed and executed. How will all exchanges cooperate to consolidate the “confines” of bid/ask data. How will exchanges assure enforcement of fair and orderly markets and place priority on the reporting of all market data to a consolidated repository for all investors to discover? And that’s only about 5% of the obligations they would have to undertake AND document.

What the Winklevi would essentially be asking is for all exchanges to give up those profitable spreads; give up their ability to hide liquidity when convenient, stimulate liquidity when convenient and basically give up everything they depend on that made it attractive to trade Bitcoin in favor of the possibility that increased volume will make up lost profits and all the while, subjecting themselves to sometimes ex-constitutional regulation. We all know how that worked out. Just ask the market makers of equities like Knight Securities and UBS.

No. The only way any registration statement of any ETF trading solely in Bitcoin gets declared effective by the SEC is to convince all exchanges trading in Bitcoin to actually become exchanges, as that term is defined by the SEC.

If Bitcoin could talk, you know what most of the exchanges would say on its behalf? Fork you!

Jason Meyers is the Founder of Vestcomp Ventures.

Proper Counsel Is Critical – Jason Meyers


Proper Counsel Is Critical

By Jason Meyers

I often urge young entrepreneurs and startups as well as small public companies to be sure that they retain proper counsel, especially for securities matters. Its kind of like having a five star general lead your battalion onto the battlefield. Remember; there’s a war on! The rapidly changing kaleidoscopic array of rules on the regulatory battlefield is littered with landmines of all kinds. Stepping on one is painful, if not lethal and sometimes triggers the detonation of others. Its expensive and counterproductive to have to surgically remove regulatory shrapnel, assuming your still alive.

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Blurred Lines – Jason Meyers

I am a music lover and historian. In the last 10 or so years, I have felt that it seems to be all but impossible to be musically original. There is no tune that any artist can originate that does not seem to sound like a song previously written and/or recorded by another artist. That being said, the verdict in the case against Pharrell Williams, Robin Thicke and T.I. seems to draw a certain controversy to me. I am a business person in the field of investment banking so I am involved in many industries. I also specialize in intellectual property, specifically in patents.

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The Case For Singapore – Jason Meyers – March 10, 2015

The Case for Singapore – Jason Meyers

The Republic of Singapore is 276 square miles. By comparison, it’s about 2/3 the size of New York City. As of 2014, its total population is almost 5.5 million. It is one of the most educated societies in the world. 90% of its residents own their own homes. The divorce rate is approximately 7%. There are also 10 females for every 9 males! // read more

Who Wins and Who Doesn’t – Jason Meyers

Who Wins and Who Doesn’t – Jason Meyers, March 8, 2015

What’s the difference between a company that succeeds and company that doesn’t? This is a question everyone wants to know. Is it strategy? Execution? Management? Proper funding? Planning? Market demand?

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Jason Meyers – Tech Bubble Theory

Jason Meyers – Tech Bubble Theory – March 7, 2015

The escalation of noise about valuations of technology startups as compared to the 1999-2000 tech bubble is highly subjective and misguided. One must first examine the differences between what is now the subject of debate and the conditions that caused the precipitous decline in the value of technology startups 16 years ago. // read more