Valu created a platform that allows YouTube personalities to sell shares in their brand through cryptocurrency. However, creating a platform that simply enables anyone to sell shares, without certain caveats, can lead to turmoil. As Nikkei reports, Valu recently underwent a conversion to a platform which includes such caveats.
According to the paper, a popular Japanese blogger called Hikaru dumped a ton of shares in himself in August, leading to a price depression. Valu has asked the stars’ representation agencies to make things right with investors who were basically robbed, and changed policy to disallow this. Previously, stars had no obligation or vesting structure. Specifically, Valu has drastically reduced potential trading volume (although gaming the system is to be expected):
Starting next Monday, daily selling will be restricted to less than 10% of all VAs issued — including shares issued by sellers themselves. Furthermore, traders will only be able to purchase 10 VAs in a single issuer per day.
It’s hard to regulate against inside parties dumping stocks, shares, tokens, coins, whatever. The reason for this is that there is an industry of intermediaries and other types of agents who can execute trades for motivated individuals. From a capitalist point of view, it’s also pointless to regulate against it: failing companies will fail anyway.
However, it’s in a company’s best interest (or an invested-in parties’) to exercise restraint and responsibility when selling shares, and it’s only occasionally we see such perverse actions as Equifax executives selling sizable portions of their trades while being privy to the information that the database had been compromised. Perhaps insider trading law could be expanded to include this type of abuse (regulators will have to determine if it does currently). The point is, Equifax’s actions led to half the US’s people’s data being breached, and the executives took a reward in the form of pre-existing stock prices.
This isn’t what happened with the social media kids. They’re really just kids, and perhaps the whole idea of trying to bring them into crazy cryptocurrency schemes involving their value as social media stars is ill-fated anyway you look at it. One has to ask: why shouldn’t they have dumped? Social media is constantly shifting. One wrong move on YouTube can have their account banned. So why should they not take advantage of their celebrity while it exists?
Well, like we said: they should, but some self-directed vesting would be appreciated by the “investors,” which is to say, (most likely) helpless regular people who likely believe that the more popular their chosen celebrities get, the more their token is worth, which just isn’t how trading markets behave. There’s a requirement that share sellers are demanding appropriate prices. A company can be doing the best business of its life and still suffer stock price setbacks, if people decide to sell for lower prices.
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Last modified: June 11, 2020 10:09 AM UTC