The SEC has told us it wants to sue us over Lend. We don’t know why • Hacker News Board

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#41

Post by runawaybottle » Wed, Sep 08, 2021, 5:08 AM UTC

ac29 wrote: post #34

bpodgursky wrote: post #29

Earlier quoted context omitted.

Brian's concern in the tweet thread is that a lot of other companies are already providing lending services without SEC action, putting Coinbase at a disadvantage. The rule should be applied across the industry in a standard manner, no matter which direction the SEC rules, and it is apparently not being applied consistently currently.

Something tells me courts wont be too sympathetic to the "but other people are criming as well" argument.

It’s a good way to shut down your competitors and get certain legislation in place where only your mega corp can meet the standards. They bought a lot of Bitcoin recently, which could be decent enough collateral to offer a SEC-sanctified lending product. The other low-end Bitcoin companies may not be able to play at a poker table with that high of a buy in.

The only other companies that will be able to offer something like that will be mega corps like the big banks, PayPal, etc. If they need to also buy large amounts of Bitcoin as collateral, that’s a win-win for their entire industry (price goes way up).

The name of the game is not user adoption. The name of the game is pump the price, because that’s marketing on its own.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#42

Post by fogof » Wed, Sep 08, 2021, 5:09 AM UTC

> They have only told us that they are assessing our Lend product through the prism of decades-old Supreme Court cases called Howey and Reves ... These two cases are from 1946 and 1990.

Trying to make out like Howey is some obscure precedent from decades ago which the SEC is nitpicking over. The Howey test is the test applied to determine if something is an investment contract.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#43

Post by skybrian » Wed, Sep 08, 2021, 5:10 AM UTC

bpodgursky wrote: post #30

ivalm wrote: post #28

Earlier quoted context omitted.

They are operating by transparent rules. Howey test has been on the books since 1946: 1. The existence of an investment contract 2. The formation of a common enterprise 3. A promise of profits by the issuer 4. The use of a third party to promote the offering

At minimum, if that was true, Coinbase's competitors would not be freely operating the same service without SEC action.

That might change. Maybe they're going after Coinbase first?

Making an argument based on SEC's action or inaction assumes you have a good model of how the SEC makes decisions. I sure don't. Do you?

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#44

Post by arcticbull » Wed, Sep 08, 2021, 5:10 AM UTC

bpodgursky wrote: post #29

uncomputation wrote: post #23

I actually initially wanted to be on Coinbase’s side here, but after a quick google of “Howey test” and reading even just the introduction on Wikipedia, I cannot imagine how they don’t see the SEC’s reasoning about Lend wrt Howey. If you want to argue that Howey does not apply or fight the decision/lawsuit, then fine. But feigning ignorance of something a (non-legal expert) programmer can connect the dots of instantl…

Brian's concern in the tweet thread is that a lot of other companies are already providing lending services without SEC action, putting Coinbase at a disadvantage. The rule should be applied across the industry in a standard manner, no matter which direction the SEC rules, and it is apparently not being applied consistently currently.

"But mom everyone else is doing crime, why cant I do crime? Not doing crime puts me at a major disadvantage with respect to my criminal peers." - Brian Armstrong, TLDR

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#45

Post by pavlov » Wed, Sep 08, 2021, 5:10 AM UTC

bpodgursky wrote: post #30

ivalm wrote: post #28

Earlier quoted context omitted.

They are operating by transparent rules. Howey test has been on the books since 1946: 1. The existence of an investment contract 2. The formation of a common enterprise 3. A promise of profits by the issuer 4. The use of a third party to promote the offering

At minimum, if that was true, Coinbase's competitors would not be freely operating the same service without SEC action.

The SEC is not under obligation to sue offenders in a chronological order of market entry.

They may have been looking at this space for a while, and Coinbase’s size made them act to stop the proposed product where a smaller actor’s existing product wasn’t weighty enough to sue yet.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#46

Post by khuey » Wed, Sep 08, 2021, 5:10 AM UTC

bpodgursky wrote: post #30

ivalm wrote: post #28

Earlier quoted context omitted.

They are operating by transparent rules. Howey test has been on the books since 1946: 1. The existence of an investment contract 2. The formation of a common enterprise 3. A promise of profits by the issuer 4. The use of a third party to promote the offering

At minimum, if that was true, Coinbase's competitors would not be freely operating the same service without SEC action.

This is essentially "why did you pull me over for speeding officer? everyone else was speeding too!" and it's not an argument that works in court.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#47

Post by harry8 » Wed, Sep 08, 2021, 5:10 AM UTC

ac29 wrote: post #34

bpodgursky wrote: post #29

Earlier quoted context omitted.

Brian's concern in the tweet thread is that a lot of other companies are already providing lending services without SEC action, putting Coinbase at a disadvantage. The rule should be applied across the industry in a standard manner, no matter which direction the SEC rules, and it is apparently not being applied consistently currently.

Something tells me courts wont be too sympathetic to the "but other people are criming as well" argument.

How about the SEC has repeatedly refused to prosecute for X in the past showing they, like us and multiple other parties doing business in this space, do not believe X is a crime. Given they've shown they don't think it's a crime and we and we agree and also don't think X is as crime, we have no idea why they're prosecuting us?

I dunno, seems like an obvious interpretation but I could be totally missing it. I could care f.all about the SEC and blockchain coin stuff.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#48

Post by McAtNite » Wed, Sep 08, 2021, 5:10 AM UTC

ivalm wrote: post #28

bpodgursky wrote: post #24

I would like to think that even the most crypto-skeptical here, those who wish the entire ecosystem would collapse in flames, would agree that the SEC and other regulatory bodies need to operate with transparent rules, making it clear when and why a company is violating the law. Operating short of that is not, by conventional definition, operating under the rule of law. It seems pretty clear that the SEC is not curre…

They are operating by transparent rules. Howey test has been on the books since 1946: 1. The existence of an investment contract 2. The formation of a common enterprise 3. A promise of profits by the issuer 4. The use of a third party to promote the offering

I think part of the confusion is, if the product is what they claim it is, it already exists with a multitude of other companies.

There’s a US company named Celsius in NY that already offers fixed interest for crypto and loans. Ethereum has a dozen different defi options for lending out crypto. This isn’t some new thing that the SEC has never seen before.

It seems weird that if the SEC intends to use that ruling that they haven’t yet applied it to any of the existing products on the market or at the very least released a guidance.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#49

Post by arcticbull » Wed, Sep 08, 2021, 5:12 AM UTC

harry8 wrote: post #47

ac29 wrote: post #34

Earlier quoted context omitted.

Something tells me courts wont be too sympathetic to the "but other people are criming as well" argument.

How about the SEC has repeatedly refused to prosecute for X in the past showing they, like us and multiple other parties doing business in this space, do not believe X is a crime. Given they've shown they don't think it's a crime and we and we agree and also don't think X is as crime, we have no idea why they're prosecuting us? I dunno, seems like an obvious interpretation but I could be totally missing it. I could c…

Have they refused to prosecute X or have they not gotten around to prosecuting X? Gotta start somewhere and the statute of limitations is ticking so...

The wheels of justice turn slow but they generally don't stop when they get to ya just because there's a big line of folks behind ya.

Unless either the statute has expired or the SEC issues a written determination that you're in the clear you're not in the clear. And neither is anyone else doing the same thing.

Re: The SEC has told us it wants to sue us over Lend. We don’t know why

#50

Post by Aunche » Wed, Sep 08, 2021, 5:12 AM UTC

From the Coinbase page about Lend:

>Lend your crypto to earn 4% APY

>Your principal is guaranteed

This definitely seems fishy. I don't see how this is possible unless if their position isn't levered. However, if they aren't levered, then why can't they just lend USDC themselves?