Feds Shut Down Allegedly Fraudulent Cryptocurrency Offering (arstechnica.com)

An anonymous reader quotes a report from Ars Technica: The Securities and Exchange Commission on Monday announced that it was taking action against an initial coin offering (ICO) that the SEC alleges is fraudulent. The announcement represents the first enforcement action by the SEC's recently created cyber fraud unit. In July, the agency fired a warning shot. It announced that a 2016 fundraising campaign had run afoul of securities law, but that the SEC would decline to prosecute those responsible. The hope was to get the cryptocurrency world to take securities laws more seriously without doing anything drastic. Now the SEC is taking the next step by prosecuting what it considers to be one of the most egregious scams in the ICO world. The SEC's complaint, filed in federal court in New York, is against Dominic Lacroix, whom the SEC describes as a "recidivist securities law violator." The SEC considers Lacroix's cryptocurrency project, PlexCoin, to be a "fast-moving Initial Coin Offering (ICO) fraud that raised up to $15 million from thousands of investors since August by falsely promising a 13-fold profit in less than a month." The PlexCoin website has a hilariously vague description of this supposedly revolutionary cryptocurrency. "The PlexCoin's new revolutionary operating structure is safer and much easier to use than any other current cryptocurrency," the site proclaims. "One of the many features of PlexBank will be to secure your cryptocurrency from market variation, which is highly volatile, and invest your money in a place where you can get interesting guaranteed returns." According to Ars, "The SEC isn't impressed and is arguing that PlexCoin has 'all of the characteristics of a full-fledged cyber scam.' The agency is seeking to freeze the assets of the PlexCoin project in hopes of getting investors' funds back to them."

Comments

Not really

[Interfacer]

Plenty of coin are scams or 'get rich quick' schemes that sponsor the developers of a crypto project. But scarcity is still assured because while there can be infinite coins, most of them are coins that people don't want, or want badly enough.

Bitcoin will always be scarce. Having some schmuck mint another billion Doge coins on a whim is not going to affect scarcity at all because those are pretty much the equivalent of monopoly money compared to Euros or Dollars.

Re:Stop this government madness

[Hal_Porter]

You can make a case that the subprime mortgage crisis was caused by the government forcing banks to lend money to people who were likely to default

https://en.wikipedia.org/wiki/...

Several administrations, both Democratic and Republican, advocated affordable housing policies in the years leading up to the crisis. The Housing and Community Development Act of 1992 established, for the first time, an affordable housing loan purchase mandate for Fannie Mae and Freddie Mac, a mandate to be regulated by the Department of Housing and Urban Development (HUD). Initially, the 1992 legislation required that 30 percent or more of Fannie's and Freddie's loan purchases be related to affordable housing. However, HUD was given the power to set future requirements. During the later part of the Clinton Administration, HUD Secretary Andrew Cuomo announced "new regulations to provide $2.4 trillion in mortgages for affordable housing for 28.1 million families, which increased the required percentage of mortgage loans for low- and moderate-income families that finance companies Fannie Mae and Freddie Mac must buy annually from the then current 42 percent of their total purchases to a new high of 50 percent. Eventually (under the Bush Administration) a 56 percent minimum was established. Additionally, in 2003, "The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago."

Fanny and Freddy were encouraged to underwrite loans to people who shouldn't have got them. Banks knew the FDIC would bail them out and that they were 'too big to fail' so if the FDIC ran out of cash the government could either print money and fix things or see the whole economy disappear.

They also knew if they made profits they could keep them.

The whole system had the wrong set of incentives. People got bonuses and social brownie points for lending to people who couldn't afford the interest. Banks privatised profit and knew they could socialise loss.

When it came time to bail the whole system out Hank Paulson, formerly of Goldman Sachs, decided to do QE by buying T bills on the open market, which allowed Goldman Sachs to front run the Fed instead of buying them from the Treasury directly.

https://www.youtube.com/watch?...

And Paulson had a clear conflict of interest

https://en.wikipedia.org/wiki/...

It has been pointed out that Paulson's plan could potentially have some conflicts of interest, since Paulson was a former CEO of Goldman Sachs, a firm that might benefit largely from the plan. Economic columnists called for more scrutiny of his actions. Questions remain about Paulson's interest, despite having no direct financial interest in Goldman, since he had sold his entire stake in the firm prior to becoming Treasury Secretary, pursuant to ethics law. The Goldman Sachs benefit from the AIG bailout was recently estimated as US$12.9 billion and GS was the largest recipient of the public funds from AIG. Creating the collateralized debt obligations (CDO's) forming the basis of the current crisis was an active part of Goldman Sach's business during Paulson's tenure as CEO. Opponents argued that Paulson remained a Wall Street insider who maintained close friendships with higher-ups of the bailout beneficiaries.

And of course QE only helps very rich people by blowing up asset prices

https://www.youtube.com/watch?...

People like Buffett maneuver the government into policies that make them billions and then write editorials advocating tax increases that would cost them millions as a quid pro quo.

I.e. t