“Innovators who seek to revolutionize and disrupt an industry must tell investors the truth about what their technology can do today, not just what they hope it might do someday.” That quote, from
the director of the SEC’s San Francisco office, Jina Choi, referred to Theranos, the blood-test company and one-time Silicon Valley darling that the agency charged with fraud last week.
But you could be forgiven for thinking it was about the cryptocurrency space, given the frenzied fundraising through initial coin offerings (ICOs) for projects with little more than grand visions,
a buggy prototype, zero users and plenty of speculators betting it can work. To be sure, a cryptocurrency is not equity in a business (at least, it’s not supposed to be), and an open-source project is not the same thing as a company. But the Theranos case, in which founder and CEO Elizabeth Holmes paid a $500,000 fine and was barred from serving as a public company executive or director for 10 years, offers several sobering lessons for the blockchain community.