Haven't confirmed personally yet, but if true, this touches on the exact regulatory concerns I alluded to in last week's thread.

Quick thread + caveats: 1) Assumes @AndreCronjeTech is right, 2) No insight into team's holistic legal strategy, 3) Glosses some nuanced legal issues. https://twitter.com/AndreCronjeTech/status/1297536932063457281

Some might recall me referencing "decentralization flirts" a few days ago. A core issue with these types of projects is that they undermine core principles underlying the arguments that securities/other laws may be obviated in certain #DeFi contexts. https://twitter.com/collins_belton/status/1295571800798064642?s=20

Specifically, when developers have no ability to modify a project other than launching an alternative and hoping people adopt it (along with other facts), imposing disclosure or registration requirements on them doesn't provide the market much material info to make decisions.

Further, from a Howey angle, it's harder to argue people have profit expectations from a developer's ongoing efforts if the dev literally has no ability to further develop the project (or such development is contingent on a vote they nor their affiliates control).

(This ignores some prior case law on *prior* efforts satisfying final prong of Howey. I'm personally skeptical these are slam dunks for the SEC as they historically are weakly reasoned IMO, but @lex_node highlighted potentially applicable precedent I'd be remiss not to mention).

But, when devs can show up to an ostensibly decentralized system and reimpose control, suddenly, disclosure about the relevant parties, their interests or conflicts, affiliate relationships, etc. all become much more relevant.

This logic my also apply to some proposals I've seen in the past few weeks on CT with DAO-like projects discussing boards or councils that can manage funds on behalf of the LPs, or majority voting systems where one group (+/- affiliates) control > 50%.

This is why a @UniswapProtocol, @iearnfinance or @YamFinance deployment should be distinguished from many other styles of launches IMO, and why the details of a voting system / ownership structure will matter for regulatory considerations long term.

And, I expect @iearnfinance and others w/ onchain voting that had fair launches may still grapple w/ challenges as they scale, b/c there are things that can be made "more efficient" by many voters delegating authority to a person or small group, and efficiency can be attractive.

But, where one person or affiliated group controls and manages a pool of capital on behalf of LPs and not on even footing with those LPs, you introduce material risks from a securities and commodities law perspective that require close scrutiny.

I like @CurveFinance a lot. This is not a condemnation of the company or some regulatory analysis to scare them; I don't even know if this founder still works there. They are by far more scrupulous than many others in the system and while I think this was stupid, I see no malice.

But, I do hope they and many others in #DeFi start thinking about optics and the principles for why #DeFi supposedly offers an alternative to the opaque world of cefi. Many regulatory schemes are "principle based," and undermining those principles is how you end up in court.

Ultimately, what @kaiynne says here is right. I expect there to be a ton of growing pains and lessons with onchain governance, and it may not ultimately work long term, but projects should study history and their ancestors to avoid auto-goaling. https://twitter.com/kaiynne/status/1297548884793671680?s=20