SEC Launches an ICO
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
The SEC Has an Opportunity You Won’t Want to Miss! Howey Coins is the agency’s first ICO. Of course it’s fake, and a very well done setup for idiot investors who have been pouring billions of dollars into scams. And yes, the offering/website name is a tongue-in-cheek reference to the Howey Test. Here’s the full text of the press release:  The SEC Has an Opportunity You Won’t Want to Miss! FOR IMMEDIATE RELEASE 2018-88 Washington D.C., May 16, 2018 — If you’ve ever been tempted to buy into a hot investment opportunity linked with luxury travel, the Securities and Exchange Commis ..read more
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ICO’s in Violation of FinCEN
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
In February, the Financial Crimes Enforcement Network (FinCEN) made it very clear that ICO issuers need to get registered as a money services business (MSB). This means that before you launch your ICO you need to go through the expensive, time-consuming process of… Creating a BSA program, including a written AML compliance program; Hiring an experienced compliance officer; Training all staff on AML and KYC obligations; Getting registered as an MSB; Performing AML on all persons, on every transaction; Filing SAR’s and CTR’s; Retaining training, compliance and reporting records; and, Accommodat ..read more
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What Have ICO’s Become?
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
To date, people have bought many types of digital coins (“crypto”), both in initial coin offerings (ICO) and secondary resales (via various exchanges). And now the SEC is stepping in to spoil the party. As is the US Treasury (more on that in a moment). Are ICO’s “Securities Offerings” and are Coins “Securities? The SEC is now saying that pretty much all ICO’s are securities offerings (and therefore all coins are securities), and subject to their rules and regulations. Are they right, or is that an over-reach? Most industry participants argue that while some ICO’s are indeed securities offering ..read more
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ICO’s Explained
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
“ICO”. “Blockchain”. “Digital wallet”. “Crypto”. “Bitcoin”. “Tokens”. “SAFT”. Wow, the acronyms are a bit overwhelming. Let’s simplify things… An “Initial Coin Offering” (ICO) is not a Bitcoin. It is a securities offering by a company that is raising capital, or a participation interest in something (more on that in a moment). What does that mean exactly? GOLD CERTIFICATES. GOLD “COIN”. The analogy I like to use (dust off your history books) is Gold Certificates. Since gold is heavy and difficult to transport, in the 1800’s various repositories (e.g. the US Treasury, some states, some banks, s ..read more
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ICO’s & Bitcoin – a reality-check
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
At Prime Trust I receive ICO (“Initial Coin Offering”) inquiries almost daily, with people wanting us to act as escrow agent for the offerings. More on this in a moment. There are things that I truly admire about Bitcoin. In particular, the potential to ease international settlements is incredibly promising. And there are a number of interesting industrial uses for the exchange mechanism, and possibly even some consumer uses such as in-app micro-payments. Like any commonly-accepted commodity (e.g. gold, diamonds), Bitcoin can act as a medium of exchange that isn’t tied to any specific currency ..read more
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Arcimoto & NASDAQ – a new paradigm for Reg A
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
Today marks a watershed moment for the Reg A industry as Arcimoto, led by WR Hambrecht + Co, successfully closed their offering and begins trading on NASDAQ tomorrow. The problem: Although most Reg A issuers have no intention of immediately trading their shares on a national exchange, the very real problem for issuers who do want to list on OTC, NASDAQ or NYSE is how to combine a traditional broker-dealer selling syndicate with a direct-to-the-crowd sales model without requiring direct investors to suffer the friction of opening brokerage accounts. A New Paradigm: The coalition of Arcimoto and ..read more
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Real Estate Crowdfunding – when things go badly
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
I’ve been hearing some unsettling things in the real estate crowdfunding sector. One mid-tier platform (approx 100 deals done) is not letting investors log onto their accounts, is not answering their phone and not responding to email, with unsubstantiated rumors that a lot of their deals have gone south. A major-tier firm is, from what I’ve heard, experiencing default rates in excess of 30%. Wow (if true). This is NOT a “doom & gloom” alert by any means. We open, on average, 70 new escrows a month, the majority of them for real estate folks. And as we handle the payments to investors for m ..read more
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Credit Cards & Crowdfunding – Some Considerations
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
The industry, at long last, has a credit card processor willing to service equity and debt crowdfunding. As portals, brokers and other people jump to do this, I want to take a moment to discuss a few things. WHO: the credit card company only wants to sign “platforms”, as the underwriting process for a single small issuer is just too much and not worth their time. This means brokers, funding portals, and platforms who bring on numerous offerings per year. NOTE THAT THE PLATFORM IS THE “MERCHANT”, not the issuer (critical point, as I’ll discuss below). FUNDS LANDING: Unless you are a trust compa ..read more
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Escrow Costs for Crowd-Direct Offerings Significantly Lowered by FundAmerica and Prime Trust
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
Traditional bank escrow agents cringe at this new era of “crowd-direct” offerings. Their business models, catering to offerings with perhaps just a handful of investors, never required them to develop much technology. With direct-to-crowd offerings, the complications (and risks) are exponentially higher. For instance, we had a Reg A expire without meeting its minimum, resulting in refunds going to all investors…11,542 of them. We had a real estate developer want to send partial refunds to 97 investors, requiring new subscription agreements from each one before escrow could close. We’ve seen th ..read more
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Credit Cards & Securities Offerings
FundAmerica - Crowdfunding Technology & Compliance
by Scott Purcell
3y ago
Can people use credit cards to invest in securities offerings? And if yes, how can issuers enable that? This has been a constant request…the thinking is that since Kickstarter allows people to contribute via a credit card, so it must be possible to invest in a securities offering. Even the SEC realized this and specifically called for allowing the use of credit cards in Title III offerings in the final crowdfunding rules. But why is nobody yet doing this? And what about Reg A or Reg D offerings? Lets answer these: Reg CF (crowdfunding): YES! The rules clearly permit the use of credit cards. Ho ..read more
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