Please keep in mind that Fusu is quite new for the domain industry. We did not know a year ago if anyone (let alone any serious domainer like David) would ever consider listing a domain with Fusu, or if anyone would ever want to invest in domain interests. It is clear by now that there is business viability behind this concept; now we know this is a worthwile undertaking.

It is also clear that it is our responsibility to provide more answers, and we are working on it.

I have no doubt you would do what you say you will.

Your and your brother ‘s integrity is top rate and not in question.

My concern is that anyone getting involved at this point should know the issues and risks involved with the exchange

The critical question is are domain “shares” securities? I am quite confident in saying that as far as the SEC rules are concerned, unfortunately, yes they are.

They key is the derivation of profit from the actions of others. Since domain investors on Fusu do nothing
to directly impact the success of the investment, have the expectation of profit and the possibility of loss, it is the definition of a security.

To illustrate just what extent the SEC is willing to go over this definition let me tell you a story about some brokers who were trying to make a little extra cash during the .com crash in 2000-2001.

They happened upon a “home based business” type program that involved leasing pay phones to businesses like gas stations, convenience stores etc.

They completed an outside business activities form for their firm, a standard practice. It was signed off by their Compliance officer. It had nothing to do with the market, no one saw any problem with it.

Except the SEC, who determined they were engaged in selling unregistered securities. They were fined and suspended. For selling phones. The phone lease contracts qualified as securities, I bet a lot of MLMs do also if you think about it.

So it’s a serious issue. That being said, for the SEC to get involved there would have to be a complaint. It ‘s also a lot more likely for them to go after someone doing this if they are a registered person then if they’re not.

In other words, as long as those selling the “unregistered securities” are not brokers it is more likely they didn’t know what they were involved in and are therefore less culpable unless clear evidence to defraud is present.

I’ve brought these issues up with Tobias via email and he is aware of the complexity of his project.

Being in Slovakia shields Fusu and even if it doesn’t shield the domain owner (the security issuer), I think it’s fortunate the venue itself is located outside US jurisdiction so the proof of concept can be established, polished and adapted to regulations. If Fusu would have chosen to open shop in the US it most likely would have been shut down already.

Personally, I think Fusu has a bright future. New types of securities are created every day. If CMOs can be registered as securities, why not domain shares?

I think this is where a large part of the industry is headed. If we as domainers truly believe in the inherent value of our holdings it just seems the next logical step.

So here’s the next question: If domain shares are securities…who are qualified to be the analysts? I wouldn’t trust an opinion on a domain from J.P. Morgan any more than Estibot or some newb on NamePros. (In other words never.)

We’ve come full circle, just what are these things worth?

That is the question.

And, yes, it is my understanding that Fusu has now contracted with a US attorney we all know quite well.

Fusu.com site, only names EuroDns.com.

http://www.fusu.com/fusu-regulations/fusu-certified-registrars.html

The US security issues should have been dealt with before the first dollar was taken and before the first share was traded.

They at the very least should have gotten an US securities lawyer to issue an opinion letter, stating that exchange and selling or buying in the exchange complied with US laws.

There are security laws in the rest of the world as well, especially in the EU which must also be dealt with.

People do not have to lose money for enforcement action by the SEC to be taken.