I think it's great that the Bored Ape Yacht Club is trying to do something more ambitious than just selling people code that says they own jpegs. I'm interested in whether or not the regulators will shoot the coin out of the sky before it has a chance to use the moon emoji.
I have been told by a group of people with more money than me that Web3 is the future and that I should join now. Maybe that is true. The future of the future is going to be important, and I remember the craze in the beginning of the year that ended in tears for the issuers. A lot of the regulatory path is still evolving. It is not good news for Yuga Labs, but it is great news for me, a person who loves drama.
A security is a category of financial instruments or interests, which include things such as stocks, bonds, options, and a whole bunch of other things. The Securities and Exchange Commission regulates the issuing of securities and protects investors from fraud. If Yuga Labs tried to form a separate company to prop up the value of BAYC and MAYC, they would have to register with the SEC before they sold their shares.
$APE is trading on a bunch of exchanges. It feels like a stock with the trading and speculation. It's just got, for lack of a better word, stock vibes.
Unlike a company that sells its shares, the Ape coin is not registered with the SEC. This is not a legally-recognized entity. It seems like an attempt to remain in a legal gray area.
A 1946 Supreme Court case called SEC v Howey shows how the standard test for determining whether something is a security or not is. Maybe he read something about how the US is moving away from fossil fuels, or maybe he saw a hot tip in his weekly horoscope. He thinks he will make money on this group effort. The Howey Test doesn't matter whether or not the company is incorporated, whether or not its shares are traded on Wall Street, or whether or not it has made a car yet.
The SEC said that the first DAO was a security. The organization was meant to invest in things, but it doesn't promise a profit to its coin holders.
Holders haven’t been promised profits from any of the enterprises it might take on in the future
The cryptocurrencies world favors a different framework for evaluation after a speech given by the SEC. In it, he suggests that if something is sufficiently distributed, it might not be a security. This isn't meant to challenge the Howey test, but to add to it the idea that in order to expect profit from others, you have to. By his logic, it wouldn't be securities for them to have that going for them.
The coin is centralized. Although holders haven't been promised profits from any of the enterprises it might take on in the future, it seems like a lot of people are. On the first day of trading, the coin closed at $8.52. It has risen as high as $18.25 per coin. As of this writing, it has a market cap of more than $3.5 billion.
The SEC will get involved if the SEC discovers that the security is unlicensed. I expect the community to copy its structure if it isn't a security. These silly simians are going to be influential.
The first use of the coin is for Animoca Brands. The game has a play-to-earn tier that requires a pass that costs 25 Ape Coins, plus whatever Eth is required for the transaction fee. They will earn token by playing the game, which can be swapped for a coin.
People who own BAYC and MAYC are receiving a gift. Moish Peltz and Kyle Lawrence are lawyers at Falcon Rappaport and Berkman. That part is fine.
The token serves as in-game currency according to the page. The voting rights of the holders of the ApeCoin are given by the governance token. I don't know how legally enforceable that right is.
The voting blocs that were formed between Yuga Labs and Andreessen Horowitz were easy to form due to the fact that DAOs are not asdecentralization as they initially seem.
In practical terms, how much control does Yuga Labs have over this entity? It kind of seems like a lot
Let's use the preferred standard of the industry, the HINman test, from a speech we talked about earlier. If something passes the Hinman test, it means it isn't regulated as a security. Some of the questions are related to whether a group has sponsored or promoted the digital asset. Is the purchaser looking for a return? Do people other than those who set the thing up have influence?
Yuga Labs has been adamant that they are not running the DAO, though they were obviously instrumental in setting it up and are likely to benefit from it. If the value of the DAO increases, Yuga Labs will profit from it. The answers to the rest of the questions are not clear.
Let's see if the token distribution clears anything up. There are 1 billion coins. Who gets what?
Animoca's contribution is obvious. John O' Brien, an outside spokesman for Yuga Labs, said that they helped in designing the ape coin. Okay, but how? Mike Manning didn't respond to the request for comment.
Almost 70 percent of the 530 million I have accounted for here are held by Yuga Labs, Yuga Labs founders, and its launch contributors. Over the next 48 months, there are going to be stages in which the 470 million token reserved for the treasury will be unlocked.
How much control does Yuga Labs have over this entity? It seems like a lot. O Brien confirmed that Yuga Labs owns seven Bored Apes and 10 Mutant Apes. The question is: which one is this effort about?
The Ape Foundation is a legal entity based in the Cayman Islands that is supposed to implement the DAO's decisions. The foundation is actually a legal entity.
The website explains that the Foundation doesn't have control of the coins. The management team is in charge of ensuring the decisions are implemented. Got it.
The Ape Foundation is both overseeing decisions at a high level and executing details on a day-to-day, but not controlling ApeCoin?
Maaria Bajwa, a principal at Sound Venture, said in an email that governance happens at the DAO level. The Ape Foundation does not act on behalf of any other organization.
According to a proposal, the board of the Ape Foundation will be paid $125,000 per 6-month term. The proposal was written by the Cartan Group, which is a consulting firm. Brian Tang, the Cartan Group's co-founder, is the person who posted them.
Tang didn't say whether the posts were his. He didn't say if the Cartan Group was a launch partner or if they had been compensated. He said the group would provide operational and project management support for the proposals.
The Cartan Group will be paid $150,000 a month over the course of a 6-month term.
This is not quite the decentralized future I was promised
Implementation of proposals will be managed by the project managers employed by the Foundation and may be altered for a variety of reasons.
The Foundation and the Cartan Group seem to be handling the voting on the proposals, which doesn't seem to be executed by the actual DAO. This is not the future I was promised.
It looks like the people who actually run the Ape Foundation are the board members and the Cartan Group, which is not really autonomously. Maybe it's just an O, not a DAO.
Lawrence thinks the setup will hold up under scrutiny. He wouldn't be surprised if the project got some attention from regulators.
Even with the microscope level scrutiny that everyone puts on, it's a coin flip.
What we do know for sure is that there is lots of buying and selling ApeCoin as a speculative asset
The target on the back of the coin gets bigger as it gets bigger. According to a dashboard put together by a Dune analytics power user, more than 85% of all airdropped ApeCoin has been claimed by NFT owners. According to WhaleStats, the most traded token by the biggest 100 wallets is ApeCoin.
There are a lot of people who hold onto their governance token for the voting power. Who knows? We do know that there is a lot of buying and selling of the coin.
There were a lot of initial coin offerings in the last year. These were attempts to raise money for a venture that was similar to an IPO. The Securities and Exchange Commission uses words like fraudulent, defrauding investors, and scam when it is unhappy with an Initial Public Offering. It is not enough to call a token a utility token.
Yuga Labs and its partners could be fined millions of dollars if the Biden Administration treats cryptocurrencies differently. This is a nice profit for Yuga Labs and other companies.
That's part of why I'm watching it so closely. To turn a profit, you have to create a business. It seems like starting a DAO is much quicker.
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