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Don’t mess with Texas – especially when it comes to crypto

(FINANCE NEWS) The State of Texas is cracking down on crypto companies, and this won’t be the last cease and desist issued.

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After a one month undercover sting of crypto-currency startup DavorCoin, the Texas State Securities Board (TSSB) issued another cease-and-desist letter, ordering the cryptocurrency company to stop all operations in the state immediately; this is the state’s fourth emergency cease-and-desist in just one month regulating cryptocurrency companies.

Jason Rotunda, director of enforcement division at the TSSB told CNBC, “We confirmed our suspicion that they were being marketed toward retirees. [DavorCoin] was not disclosing the information that needs to be disclosed to an investor.”

Other cryptocurrencies being issued cease-and-desists include companies r2b coin, BitConnect, and USI-Tech Limited. All of these companies either were promising implausible or impossible returns on investment, low risk investments coming from Bitcoin mining–without the evidence to back it up, or not disclosing information required by state law.

After the TSSB pulled the plug on BitConnect, they started their investigation of DavorCoin for promising extremely similar ROI. DavorCoin also has another strike against it, a potentially more serious one: Investment fraud. DavorCoin, according to CoinDesk, has “intentionally hidden material information of its business–including its principles and business location, as well as how it plans to realize investment promises for investors.”

The lack of transparency on not just the basic information regarding the business itself, but also an investor disbursement plan violates sections of the Texas Securities Act.

Texas currently is leading the way regarding the regulation of cryptocurrenty investment opportunities, in which other states as well as the federal government are following suit. Other states filing formal complaints against cryptocurrency companies include Florida, North Carolina, Massachusetts, and Kansas.

The U.S. Securities and Exchange Commission, as well as the U.S. Commodity Futures Trading Commission, is taking note of the heightened amount of activity surrounding cryptocurrencies as well. Rotunda, also in his role as the vice chair of North American Securities Administrators Association, is trying to encourage regulatory agencies to adapt to this new way of doing business and investing.

“In both of those roles we’ve been monitoring cryptocurrencies quite a bit,” said Rotunda. “I think what we’re doing right now is we’re adapting to a new way of selling securities.”

The old adage is, after all, “don’t mess with Texas.” Especially when it comes to potentially defrauding investors through cryptocurrencies — but that’s kind of a mouthful.

Alexandra Bohannon has a Master of Public Administration degree from University of Oklahoma with a concentration in public policy. She is currently based in Oklahoma City, working as a freelance filmmaker, writer, and podcaster. Alexandra loves playing Dungeons and Dragons and is a diehard Trekkie.

Business Finance

Personal finance steps every freelancer must take to avoid ruin

(FINANCE) The government shutdown showcased financial instability, but what do people that have no paycheck guarantee need to do to be secure?

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In light of the recent government shutdown, there has been a lot of attention in regards to how missing paychecks impacts the average American. Most Americans don’t have a regular savings account and could not handle a $1,000 emergency, let alone miss practically a month of pay.

While things look positive for the backpay of those government workers, we all could benefit from some careful reflection about the precarious nature of our personal finances.

Particularly those of us who don’t receive a regular paycheck.

Entrepreneurs and those invested in the gig economy have volatile incomes, and literally no promise of a paycheck ever – that can impact your personal finances in a number of ways.

Variable incomes are normal for this group and can impact entrepreneurs in ways as simple as handling debt.

If this is you – here a few things to keep in mind that can help you deal with the volatility of living on a variable income and handling your personal finances.  

  • Set up an emergency fund. Start with 500 if you have too, and remember this an emergency fund for your personal expenses, not your business. If you have an emergency fund, make sure you identify what an emergency is and also be prepared to put money back when it comes out. If you have a hard time not spending money in front of you, put your money in a local bank or CU that you don’t have immediate access too.
  • Stick to a budget. when you can’t forecast your income appropriately, controlling expenses is so critical it’s the few things that are in your control.
  • Don’t mix business with personal. While you may be pouring your personal energy and time into your start up or gig, be careful about mixing expenses for two reasons: First, it messes up your budget. You need to have separate budgets for personal and business. Second, there could be tax challenges – consult a tax professional for more information. Here’s a little primer to get you started.
  • Save for retirement. There are tax benefits and come on, don’t wait till you can’t work anymore. Also, an IRA IS NOT AN EMERGENCY FUND.
  • Practice good financial behaviors. Automate bill pay. Online statements. Digital receipt tracking. The more you can automate your life, the better you are. You already have so many demands on your time, reduce that so you can spend more time doing what you love and what matters.
  • Consider diversifying your income. Either ensure you have multiple strings or a backup gig (even if it’s just uber driving); or be prepared to do temporary or contract labor during your slow seasons.

The path to entrepreneurship is rough. What we can learn from the very struggles of the federal employees and the government shutdown is that if the government can be unstable, those of you who work in the world of startups, gigs, and entrepreneurship, need to be even more on our toes. The “normal recommendation” for saving is 10% of your income, but normal may not be enough for you. Be prepared and save (more).

Disclaimer: I am neither a tax or investment professional. This is personal financial advice and I encourage you to visit a professional if you need more specific plans of action.

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Business Finance

Delivery startups skim customer tips to pay employees #wth

(FINANCE) Grocery delivery startups are flourishing, but stealing from employees isn’t a sustainable move…

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Popular grocery app Instacart has been using customers’ tips to pay its guaranteed $10/hour rate to employees, rather than using the tips as, you know, bonus money paid to workers on top of their normal pay. The way that you’d expect something called a “tip” to work.

According to the report, “Instacart confirmed that when its payment algorithm determines a driver should be paid below that guaranteed $10, the company uses the customer’s predelivery, ‘up front’ tip to cover the difference. The ‘up front’ tip is automatically set to 5% on the Instacart app; if the customer removes the tip, and the payout would be below $10, Instacart itself covers the cost.”

In this system, the customer’s tip for the deliverer subsidizes the company’s commitment to its employees. Once the change to the tipping policy was announced in workers began complaining about how it affected their earnings in 2017.

Even though the app’s customers have taken to social media to compare the policy to wage theft, the practice is actually legal. Because Instacart and other apps in the gig economy classify their workers as contractors instead of employees, they do technically still get 100 percent of the tips in their wages (even if the company doesn’t supply the same percentage of the wage they’d give the worker without the customer throwing in).

This kind of payment structure may be familiar to you if you’ve ever working in restaurants, bars, or another establishment that uses subminimum wages.

Sadly, Instacart is not the only grocery app that uses a dodgy tipping system. Shipt, DoorDash, and others have similar tipping policies. And they aren’t interested in changing them after all this week’s backlash.

If you’re concerned about making sure that you’re supporting the contractors for these grocery delivery services, some of the contracted workers have requested that you provide the tip in cash instead of tipping through the app and activating its algorithm.

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Business Finance

VCs don’t have a pipeline problem, they have a Harvard/Stanford crisis

(FINANCE) With 40% of all VCs graduating from just two schools, the diversity challenge of Silicon Valley is leaking out of The Bay.

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If you’ve pitched or even spoken with a venture capitalist before, odds are one of them went to Stanford or Harvard (and in some cases, they don’t let you forget it).

A new study shows out of a survey of over 1,500 VCs (venture capitalists,) a whopping 40 percent of them attended either Harvard or Stanford. We knew it was a big number, but 40% from just two schools?! Dang.

Although these programs are without a doubt impressive, this study spotlights the ever-present issue of diversity of VCs in Silicon Valley and technology in general.

As far as other stats go, still 70% of VCs are men (60% of VCs are white men), Asian representation climbed from 23% to 26% from 2016 to 2018, women jumped from 11% to 18% from 2016 to 2018, and Hispanic representation still remains at 1%.

Woof. The industry is slowly progressing, but there’s much more improvement to be made.

So why does this matter?

It’s no shocker that technology and especially VC firms struggle with both gender and ethnic diversity.

As a female founder myself, I’m not surprised that only 3% of founders receiving venture capital funding are women. Out of the dozens of VCs that I’ve met and also pitched to, I’ve only met two that are women.

However, educational diversity is a topic where we’re only beginning to skim the surface, and honestly, it’s long overdue.

In the workplace and even in the VC world, humans are just as prone to implicit and explicit biases: people want to work with people that look and think like themselves. It’s a huge part of how Silicon Valley operates.

Schools like Stanford and Harvard have relatively small alumni bases compared to other large universities in the US and around the world. (For instance, my alma mater, Texas A&M has 640,000 living alumni, and Stanford has 220,000.)

According to Richard Kerbey, an African-American VC who performed this study, believes: “Not only is our industry lacking in gender and racial balance, but we also suffer from a lack of cognitive diversity…It is not a coincidence that the amount of capital raised by minorities and women closely resembles their representation among venture capitalists. And furthermore, it is no surprise as to why the demographics of most venture-backed startups also reflects the demographics of the venture capitalists that fund these companies.”

Venture capitalists usually hire people like themselves and invest in things they usually understand. That doesn’t make them evil or bad, just limited.

Therefore, when someone tells me the lack of venture capital diversity is from a “pipeline problem,” I don’t believe them.

This is why the work of people like Arlan Hamilton at Backstage Capital and Preston L. James, II at DivInc. is so important. Once we have VCs that represent the world we live in from a variety of socioeconomic, ethnic, gender, and educational backgrounds, the better the world and Silicon Valley will be for it.

Want to see more data in the study? Check out Kerbey’s Medium Post and his dataset for some ~fun~ reading, if you’re into that sort of thing.

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