Author Topic: Request for input on CIPHERTRADE, a new multi-coin securities exchange  (Read 112602 times)

Offline stereotype

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #45 on: November 18, 2013, 10:38:56 AM »
Does the SEC have any history of going after foreign exchanges over small amounts of money like this? I'm skeptical of all this fear of the SEC when all the exchanges which shut down were US based.

To my current knowledge, no. You could argue that Liberty Reserve has the closest parallels, but that case is pursued on money laundering laws which doesn't hold water in this context.

Theres obviously three targets that a regulatory body would choose to focus on. 1. The individual exchanger/trader. 2. The exchange operator/s 3. The security issuer/operator.


Are there really any precedences or examples for ordinary 9-5 Joe Public #1's?
 
Would you currently feel targeted and threatened as a US #2? I probably would, but i see no reason to fear the same if i was a #2 based outside of US (i would presume i would feel pretty confident and self-assured if i was a multi award winning business woman, who flys helicopters and rides tricked up Ducatis on London roads!!).

#3 is the problem here. The US issuers who reside in the US need the assurance that they and their families are protected from their own current regulatory controls, regardless where they list. And this looks like what Benny is going to test.
 
Watching with interest.

 

Offline WoodTech

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #46 on: November 18, 2013, 12:26:46 PM »
I think the questions on US residency have been answered by those much more expert than me. :)

I will ask Richard for some references re. the inadequacies of automated trading.

Kate.

Offline Notanon

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #47 on: November 18, 2013, 03:20:04 PM »
You might want to head to http://www.peercointalk.org/ and let them know about the support for PPC and XPM securities. I'm sure that will get them interested and get the ball rolling for dedicated securities for both currencies.

Offline evilscoop

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #48 on: November 18, 2013, 03:28:58 PM »
You might want to head to http://www.peercointalk.org/ and let them know about the support for PPC and XPM securities. I'm sure that will get them interested and get the ball rolling for dedicated securities for both currencies.

On my way, thx

And done :D
« Last Edit: November 18, 2013, 03:40:43 PM by evilscoop »

Offline Benny

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #49 on: November 18, 2013, 03:59:34 PM »
Does the SEC have any history of going after foreign exchanges over small amounts of money like this? I'm skeptical of all this fear of the SEC when all the exchanges which shut down were US based.

To my current knowledge, no. You could argue that Liberty Reserve has the closest parallels, but that case is pursued on money laundering laws which doesn't hold water in this context.

Theres obviously three targets that a regulatory body would choose to focus on. 1. The individual exchanger/trader. 2. The exchange operator/s 3. The security issuer/operator.


Are there really any precedences or examples for ordinary 9-5 Joe Public #1's?
 
Would you currently feel targeted and threatened as a US #2? I probably would, but i see no reason to fear the same if i was a #2 based outside of US (i would presume i would feel pretty confident and self-assured if i was a multi award winning business woman, who flys helicopters and rides tricked up Ducatis on London roads!!).

#3 is the problem here. The US issuers who reside in the US need the assurance that they and their families are protected from their own current regulatory controls, regardless where they list. And this looks like what Benny is going to test.
 
Watching with interest.

 

This is correct. If we weren't based in the US, it'd be very hard for the SEC to do something to you, in my opinion. However, our core business is based out of the US, and I don't have a very high tolerance for risk in regards to this business. A violation with the SEC is $250,000 USD which would wipe out our company. I'd rather play it safe, file with the SEC, and pay a few thousand dollars, rather than risk losing 50x the value by doing something wrong with the SEC.

My hope is that CipherTrade would partner with all securities to help them understand the legal framework that surrounds crypto-securities, and becomes a bellweather for legitimate crypto-securities. I think there's far more money to be had in a solid exchange that tries to go through (reasonable) rules and regulations, as opposed to something that could incur the wrath of the HMRC and SEC. That isn't to say that P2P/colored coins don't have a future usefulness, but I think, for now, we can use all of this as a very public test case to see how far down the rabbit hole we can go. My personal belief is that the SEC simply wants companies to follow their guidelines, and if followed, really could care less about crypto-securities.

Furthermore, by filing with the SEC, it allows us to list on OTC markets if CipherTrade ever went belly-up.

Offline richwest

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #50 on: November 19, 2013, 12:39:22 AM »
A bit off-topic, but do you mind expanding a bit on that (linking to the said papers for instance)? I've always though that would hardly be profitable but would love to read up on it.

Incidentally I second the liquidity argument.

Hi Tony,

Basically whether automated trading can be reliably profitable comes down to whether markets are predictable or not. Bitcoin, Litecoin etc. are rather a special case, but in generalised terms of all traded assets (stocks, bonds etc.), the "Efficient-market hypothesis" is what discusses this, and you should read around. It's a theory that markets are informationally efficient and prices already reflect all publicly available information - if correct, this means it's not possible to consistently make returns higher than the market average. This is far from being proven however, many papers have been published both in favour of and against the EMH.

A nice high level article on a similar topic is http://www.forbes.com/sites/rickferri/2012/03/12/why-smart-people-fail-to-beat-the-market/ - the linked paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356021 on luck vs. skill in fund returns is also very interesting, if not particularly conclusive.

For the Bitcoin market specifically, one thing we can be fairly certain of is that its value is influenced by external events outside the market itself. Some examples include: -
  • First major MtGox DDOS (steep fall)
  • Worry over the March 2013 block chain fork (fall)
  • Cyprus financial crisis (rise)

That helps lend weight to the case for Bitcoin not being easily predictable. Although some advanced stock market trading algorithms do try to factor in that kind of data (look up "sentiment analysis"), that's not really something that cryptocurrency trading bots appear to be capable of at this stage, at least not the ones that I'm aware of!

Being a practical chap, instead of endlessly speculating on issues that haven't been proven (and perhaps can't be proven) either way, it seemed wise to look at what trading algorithms were actually in widespread use among the cryptocurrency trading bots. By far the most prolific are EMA (exponential moving average) crossover based algorithms. These are used by some popular Bitcoin trading bots such as Butter Bot and Gekko. These work by periodically taking a moving average over a short period and a longer period - when these two averages cross, the bot assumes the direction of travel of the price chart is changing, and will buy or sell accordingly.

I did a lot of automated testing of thousands of different EMA algorithms, with a wide range of parameters, using real historical data, as well as various hypothetical scenarios. Like many trading algorithms, they tend to do well in a rising market, and badly in a falling market. Many investors wrongly assume they will protect against losses, but my testing with realistic data proved this not to be the case. Assets don't tend to fall in price in a straight line at a fixed rate (which EMA crossover algorithms would help with) - they bounce around with significant noise, there are panic sells and rallies etc.

A lot of the people using such algorithms have also done historical testing, and come to the different conclusion that they work fantastically well. The problem with that approach is that the Bitcoin market has been almost constantly rising in the longer term. If you'd invested $1000 in Bitcoins a year ago and just hung onto it, Bitcoin would have started at $13 or so, and now be $770, so you'd have made about $58,000, without trading at all. This market average is the benchmark that trading algorithms really need to be compared to. An algorithm that just randomly decided whether to buy or sell every day would still have made a massive profit over that period.

One thing I found very enlightening was to test algorithms over the real Bitcoin price movements, but with time reversed. This creates a hypothetical scenario where the market starts high and ends low, but with hopefully fairly realistic movements and random noise in the progression. I suggest that anyone who is convinced that their awesome EMA trading bot will never lose them money should do this kind of "worst case" testing for themselves and draw their own conclusions (although actually this just represents a fairly bad case and is nowhere near the worst case for an EMA algorithm).

The bottom line is that the current trading bots I've studied can't reliably make money or protect investments when conditions start to turn for the worse. They're heavily dependant on an endlessly rising market. In many cases just buying and holding coins would have beaten them. Whether or not it's theoretically possible for a trader to reliably make profits ahead of the market is a much wider and more open question, which so far hasn't been conclusively answered.

Offline tony.vonver

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #51 on: November 19, 2013, 04:12:56 AM »
A bit off-topic, but do you mind expanding a bit on that (linking to the said papers for instance)? I've always though that would hardly be profitable but would love to read up on it.

Incidentally I second the liquidity argument.

Hi Tony,

Basically whether automated trading can be reliably profitable comes down to whether markets are predictable or not. Bitcoin, Litecoin etc. are rather a special case, but in generalised terms of all traded assets (stocks, bonds etc.), the "Efficient-market hypothesis" is what discusses this, and you should read around. It's a theory that markets are informationally efficient and prices already reflect all publicly available information - if correct, this means it's not possible to consistently make returns higher than the market average. This is far from being proven however, many papers have been published both in favour of and against the EMH.

A nice high level article on a similar topic is http://www.forbes.com/sites/rickferri/2012/03/12/why-smart-people-fail-to-beat-the-market/ - the linked paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356021 on luck vs. skill in fund returns is also very interesting, if not particularly conclusive.

For the Bitcoin market specifically, one thing we can be fairly certain of is that its value is influenced by external events outside the market itself. Some examples include: -
  • First major MtGox DDOS (steep fall)
  • Worry over the March 2013 block chain fork (fall)
  • Cyprus financial crisis (rise)

That helps lend weight to the case for Bitcoin not being easily predictable. Although some advanced stock market trading algorithms do try to factor in that kind of data (look up "sentiment analysis"), that's not really something that cryptocurrency trading bots appear to be capable of at this stage, at least not the ones that I'm aware of!

Being a practical chap, instead of endlessly speculating on issues that haven't been proven (and perhaps can't be proven) either way, it seemed wise to look at what trading algorithms were actually in widespread use among the cryptocurrency trading bots. By far the most prolific are EMA (exponential moving average) crossover based algorithms. These are used by some popular Bitcoin trading bots such as Butter Bot and Gekko. These work by periodically taking a moving average over a short period and a longer period - when these two averages cross, the bot assumes the direction of travel of the price chart is changing, and will buy or sell accordingly.

I did a lot of automated testing of thousands of different EMA algorithms, with a wide range of parameters, using real historical data, as well as various hypothetical scenarios. Like many trading algorithms, they tend to do well in a rising market, and badly in a falling market. Many investors wrongly assume they will protect against losses, but my testing with realistic data proved this not to be the case. Assets don't tend to fall in price in a straight line at a fixed rate (which EMA crossover algorithms would help with) - they bounce around with significant noise, there are panic sells and rallies etc.

A lot of the people using such algorithms have also done historical testing, and come to the different conclusion that they work fantastically well. The problem with that approach is that the Bitcoin market has been almost constantly rising in the longer term. If you'd invested $1000 in Bitcoins a year ago and just hung onto it, Bitcoin would have started at $13 or so, and now be $770, so you'd have made about $58,000, without trading at all. This market average is the benchmark that trading algorithms really need to be compared to. An algorithm that just randomly decided whether to buy or sell every day would still have made a massive profit over that period.

One thing I found very enlightening was to test algorithms over the real Bitcoin price movements, but with time reversed. This creates a hypothetical scenario where the market starts high and ends low, but with hopefully fairly realistic movements and random noise in the progression. I suggest that anyone who is convinced that their awesome EMA trading bot will never lose them money should do this kind of "worst case" testing for themselves and draw their own conclusions (although actually this just represents a fairly bad case and is nowhere near the worst case for an EMA algorithm).

The bottom line is that the current trading bots I've studied can't reliably make money or protect investments when conditions start to turn for the worse. They're heavily dependant on an endlessly rising market. In many cases just buying and holding coins would have beaten them. Whether or not it's theoretically possible for a trader to reliably make profits ahead of the market is a much wider and more open question, which so far hasn't been conclusively answered.

Hi richwest,

Thanks a lot for that answer, I really appreciate it. I don't want to derail this thread more on that topic, but this is really interesting stuff, and I will definitely checkout those links!

Offline Rannasha

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #52 on: November 19, 2013, 07:35:38 AM »
A bit off-topic, but do you mind expanding a bit on that (linking to the said papers for instance)? I've always though that would hardly be profitable but would love to read up on it.

Incidentally I second the liquidity argument.

Hi Tony,

Basically whether automated trading can be reliably profitable comes down to whether markets are predictable or not. Bitcoin, Litecoin etc. are rather a special case, but in generalised terms of all traded assets (stocks, bonds etc.), the "Efficient-market hypothesis" is what discusses this, and you should read around. It's a theory that markets are informationally efficient and prices already reflect all publicly available information - if correct, this means it's not possible to consistently make returns higher than the market average. This is far from being proven however, many papers have been published both in favour of and against the EMH.

A nice high level article on a similar topic is http://www.forbes.com/sites/rickferri/2012/03/12/why-smart-people-fail-to-beat-the-market/ - the linked paper http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356021 on luck vs. skill in fund returns is also very interesting, if not particularly conclusive.

For the Bitcoin market specifically, one thing we can be fairly certain of is that its value is influenced by external events outside the market itself. Some examples include: -
  • First major MtGox DDOS (steep fall)
  • Worry over the March 2013 block chain fork (fall)
  • Cyprus financial crisis (rise)

That helps lend weight to the case for Bitcoin not being easily predictable. Although some advanced stock market trading algorithms do try to factor in that kind of data (look up "sentiment analysis"), that's not really something that cryptocurrency trading bots appear to be capable of at this stage, at least not the ones that I'm aware of!

Being a practical chap, instead of endlessly speculating on issues that haven't been proven (and perhaps can't be proven) either way, it seemed wise to look at what trading algorithms were actually in widespread use among the cryptocurrency trading bots. By far the most prolific are EMA (exponential moving average) crossover based algorithms. These are used by some popular Bitcoin trading bots such as Butter Bot and Gekko. These work by periodically taking a moving average over a short period and a longer period - when these two averages cross, the bot assumes the direction of travel of the price chart is changing, and will buy or sell accordingly.

I did a lot of automated testing of thousands of different EMA algorithms, with a wide range of parameters, using real historical data, as well as various hypothetical scenarios. Like many trading algorithms, they tend to do well in a rising market, and badly in a falling market. Many investors wrongly assume they will protect against losses, but my testing with realistic data proved this not to be the case. Assets don't tend to fall in price in a straight line at a fixed rate (which EMA crossover algorithms would help with) - they bounce around with significant noise, there are panic sells and rallies etc.

A lot of the people using such algorithms have also done historical testing, and come to the different conclusion that they work fantastically well. The problem with that approach is that the Bitcoin market has been almost constantly rising in the longer term. If you'd invested $1000 in Bitcoins a year ago and just hung onto it, Bitcoin would have started at $13 or so, and now be $770, so you'd have made about $58,000, without trading at all. This market average is the benchmark that trading algorithms really need to be compared to. An algorithm that just randomly decided whether to buy or sell every day would still have made a massive profit over that period.

One thing I found very enlightening was to test algorithms over the real Bitcoin price movements, but with time reversed. This creates a hypothetical scenario where the market starts high and ends low, but with hopefully fairly realistic movements and random noise in the progression. I suggest that anyone who is convinced that their awesome EMA trading bot will never lose them money should do this kind of "worst case" testing for themselves and draw their own conclusions (although actually this just represents a fairly bad case and is nowhere near the worst case for an EMA algorithm).

The bottom line is that the current trading bots I've studied can't reliably make money or protect investments when conditions start to turn for the worse. They're heavily dependant on an endlessly rising market. In many cases just buying and holding coins would have beaten them. Whether or not it's theoretically possible for a trader to reliably make profits ahead of the market is a much wider and more open question, which so far hasn't been conclusively answered.

Hi Rich,

your post is interesting and I do agree that bots that trade based on what they perceive (or should I say: compute) the market sentiment to be are unlikely to produce results that consistently outperform the market. These bots are typically based on technical analysis, which I personally prefer to call "chart astrology".

However, there are various other ways to trade automatically that don't rely on market sentiments. One example is automated market making: Bots that keep up competitive bids and asks in the same security (or forex pair) and profit from the spread. While the trade volume of the Bitcoin/Litecoin market may not be large enough for this to work very effectively, in the traditional markets there are companies with hundreds of employees making large amounts of money with these strategies (often involving high-frequency-trading).

Another automated trade avenue that I've exploited is arbitrage. In my case, for the set of DMS securities, which will be listed on CIPHERTRADE, where one security (DMS.PURCHASE) can be converted into a pair of the other two (DMS.MINING, DMS.SELLING). When the bot deemed it profitable, keeping the best ask-price on SELLING and once filled, acquire PURCHASE, exchange for a fresh pair of MINING & SELLING and dumping the MINING into the bids is an arbitrage-path that is extremely low risk (only exposed to changes in MINING price during the few minutes the share-exchange takes) and allows for small profits while keeping a constant long-term position in SELLING.

So in conclusion, while sentiment-predicting bots have a shaky track record, there are various other forms of automated trading that can offer profits at minimal risk. As such, I am glad that CIPHERTRADE will feature an API (and doubly so that this API is very similar to BTCT/LTC-G).

Offline LiteBit

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #53 on: November 19, 2013, 06:28:23 PM »
Exciting news for all of us. Cheers!

Any estimates on timeframe to market? www.ciphertrade.com is just a splash page for now... maybe a "Coming Soon" page with subscription box for updates?

Offline iourzzz

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #54 on: November 20, 2013, 08:41:10 AM »
Congrats so far on your progresss, I am impressed to see your vision of the site and I am looking forward to trading on it.  I usually don't post, but actually created an account to share one of my favorite things from trading on LTC and BTC Global that I have never seen anyone talk about.   This was the ability to place a buy order for multiple securities with the same BTC, for example, if I had a balance of 10 BTC, I could put in a 10btc order for Cognitive, AND a 10btc order for ASICMINER, AND a 10btc order for bASIC MINING.  This effectively multiplied my buying opportunity and I was able to support (and profit) from securities that had a sudden and unexpected drop.  I have not seen any other trading site and I personality HATE missing out on those opportunities when they come up.  Usually when I am sleeping  ;)

There are many other more important items than this, however, I believe that it was one of the many good things that Burnside did right to bring bigger money to the exchange.

I didn't think that LTCG/BTCTC allowed you to do that. Can someone else confirm please?

If so, how did it function? Once the first order was complete presumably the others got canceled?

To be honest I'm not sure that such a feature would be good for the exchange. It would allow people to create artificial buy walls which lacked real backing. You'd certainly not be able to do the opposite with shares; each sell order would lock them. The same applies to options.

Kate.


Yes, once the first order was filled all other orders that were not supported by the new balance would be immediately canceled.  My example was a simple one, I usually would have 2-4+ bids in on a couple of different securities trying to scale in, then trade out of it as the price would recover.  Of course on a single security my multiple bids could not exceed my balance.  If you were to combine all of my bids on all my securities, it would exceed my balance, understanding that not all could ever be filled simultaneously.  As orders were filled on one security, other different securities would be canceled starting with the lowest bid that was not supported by the new balance.  It was pretty impressive of how the software worked...

Yes, i thought that it did put up pseudo artificial walls, but at the same time it would create pseudo liquidity by having more bids in the que.  It is a double edge sword.

I was kind of hoping Cipher would have purchased the trade engine and I might have kept my trading edge for a while longer.  Honestly, either way, I guess that edge is now lost so it is up to you to manage how the trade engine will works.

I also enjoyed this great ability of ltcg and btct very much!

Artificial buying walls are possible without it as well, by just placing buy order that will be cancelled after that.

The ability to place bids on multiple securities using the same balance not only greatly increases real liquidity, but also makes the trading in calm fashion very convenient. When placing few orders we can be almost sure that at least part of them can filled while we are away. That makes trading much more efficient.

Surely it's up to you to implement this great feature or not. But it was indeed one of the best competitive advantages of the Burnside's exchanges.

p.s. Kate, thank you very much for your efforts to bring the new great and secure exchange to the world.

Offline Vingard

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #55 on: November 20, 2013, 01:21:28 PM »
Seems we're talking about conditional limit orders here.  For example, place two limit orders on two different securities and set a condition on each order that it should be cancelled if the other is executed.

Offline WoodTech

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #56 on: November 20, 2013, 07:39:10 PM »
So you know, richwest is part of my extended team. He is my expert on trading (we've been experimenting for a while now)

Offline coinx

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #57 on: November 20, 2013, 10:10:23 PM »
Interesting project. I curious how the compliance will work out.

Quote
Namecoin (NMC)
Namecoin was not designed for payments. There is no point in NMC based assets.

Offline cryptol0rd

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #58 on: November 20, 2013, 10:42:17 PM »
Does the SEC have any history of going after foreign exchanges over small amounts of money like this? I'm skeptical of all this fear of the SEC when all the exchanges which shut down were US based.

To my current knowledge, no. You could argue that Liberty Reserve has the closest parallels, but that case is pursued on money laundering laws which doesn't hold water in this context.

Theres obviously three targets that a regulatory body would choose to focus on. 1. The individual exchanger/trader. 2. The exchange operator/s 3. The security issuer/operator.


Are there really any precedences or examples for ordinary 9-5 Joe Public #1's?
 
Would you currently feel targeted and threatened as a US #2? I probably would, but i see no reason to fear the same if i was a #2 based outside of US (i would presume i would feel pretty confident and self-assured if i was a multi award winning business woman, who flys helicopters and rides tricked up Ducatis on London roads!!).

#3 is the problem here. The US issuers who reside in the US need the assurance that they and their families are protected from their own current regulatory controls, regardless where they list. And this looks like what Benny is going to test.
 
Watching with interest.

 

This is correct. If we weren't based in the US, it'd be very hard for the SEC to do something to you, in my opinion. However, our core business is based out of the US, and I don't have a very high tolerance for risk in regards to this business. A violation with the SEC is $250,000 USD which would wipe out our company. I'd rather play it safe, file with the SEC, and pay a few thousand dollars, rather than risk losing 50x the value by doing something wrong with the SEC.

My hope is that CipherTrade would partner with all securities to help them understand the legal framework that surrounds crypto-securities, and becomes a bellweather for legitimate crypto-securities. I think there's far more money to be had in a solid exchange that tries to go through (reasonable) rules and regulations, as opposed to something that could incur the wrath of the HMRC and SEC. That isn't to say that P2P/colored coins don't have a future usefulness, but I think, for now, we can use all of this as a very public test case to see how far down the rabbit hole we can go. My personal belief is that the SEC simply wants companies to follow their guidelines, and if followed, really could care less about crypto-securities.

Furthermore, by filing with the SEC, it allows us to list on OTC markets if CipherTrade ever went belly-up.

Why wouldn't all Americans just use Mastercoin, colored coin or Bitshares? I don't see why Ciphertrade has to list American securities at all really. Couldn't American securities list on the blockchain itself to avoid having to pay off the SEC?

Of course that wouldn't be all that good for Ciphertrade but I don't see how Ciphertrade will solicit for American customers anyway. I hope Ciphertrade is wise enough to implement these future technologies when the time comes and then it would make sense for American securities to list on their exchange knowing that if the SEC does become a problem they can decentralize and directly issue to Americans.

American issuers should just offer a direct decentralized issue of shares for American customers only. Nothing would stop you from issuing your shares on the decentralized exchange for Americans and on the centralized exchange for everyone else. This way everybody wins.


Offline Bonksnp

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Re: Request for input on CIPHERTRADE, a new multi-coin securities exchange
« Reply #59 on: November 21, 2013, 01:02:39 AM »
As Benny said, and which I agree, no serious company wants to try and circumvent the rules.  The United States might let you get away with something for a while, but it'll eventually catch up with you.  Any serious business that wants to be around for any reasonable period of time wants to comply with all rules instead of cutting corners to get a quick gain.  If they have to register with the SEC and pay a fee, then at least they've taken steps to ensure they will not be in violation of the law and have their entire company shut down.

And while I'm no exchange lawyer or SEC expert by any means, I'm quite sure offering shares on a centralized or decentralized exchange will make no difference.  Unless you've registered with the SEC as a legitimate business, they will eventually come after you if fiat is being exchanged.  I believe there are several examples of sites that have gone bankrupt because of exactly this.