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

blog.coinbase.com

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

#71

Post by dustintrex »

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…

Agreed, and this line pretty much sums it up:

> Customers won’t be “investing” in the program, but rather lending the USDC they hold on Coinbase’s platform in connection with their existing relationship.

"Give me money for a fixed period of time and I'll pay a guaranteed return on your principal. No, it's not an "investment", you're just lending it in connection with our existing relationship!"

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

#72

Post by chitowneats »

seibelj wrote: post #31
peterbonney wrote: post #25

“We have no idea why the SEC intends to sue us! It is a complete mystery.” (Later in the post…) “All we’ve done is create a thing that people can trade which we are moving towards selling to investors against specific SEC advice to the contrary, but it is definitely not a security and as a result it is completely fine even though we have not complied with SEC regulations in any way with respect to it.” A mystery inde…

Coinbase wants to know the legal rationale as to why it's a security, but SEC is stonewalling them and goading them to get into a legal fight. The opposite of "talk to us, come in" that the SEC claims the crypto industry refuses to do.

Presumably this has been explained. Threatening a lawsuit is not an action the SEC takes lightly. Coinbase will have plenty of opportunity to contest it in court.

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

#73

Post by dataflow »

OldHand2018 wrote: post #70
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…

> 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 instantly just makes me feel like they’re playing a PR game. Grewal was a federal (magistrate) judge in SF before he quit to go work at Facebook. Everyone I kn…

> his entire legal career has been patents

I'm confused, is patent experience particularly relevant to this case about securities law?

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

#74

Post by baybal2 »

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…

In other news today: Facebook starts a payday loan business

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

#75

Post by chitowneats »

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.

The SEC has limited resources. I applaud their decision to go after (potential) bad actors operating at scale.

6 months is a long time for back and forth to be had. It's not like they dropped this on Brian Armstrong's desk without notice.

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

#76

Post by rjknight »

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…

IANAL, but isn't the point of the Howey test that you're making investments with variable returns, where those returns depend on the efforts of others? If Coinbase is _guaranteeing_ you a 4% return, then there is no variability and the efforts of others are irrelevant. Coinbase could spend all of the money on JPEGs of my cat and they would still have to pay a 4% return to the people they borrowed the money from.

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

#77

Post by hackingforfun »

zxcvbn4038 wrote: post #63

Coinbase is even shifter then PayPal. It took several months and numerous support tickets before they clarified that they take a percentage of all ACH withdrawals regardless if it is cash you deposited or proceeds of a crypto sale. If you take money out you pay them a percentage. They try really to hide that in their pricing matrix. Every time I asked about it I would either get a form letter pointing me to the prici…

Coinbase Pro [1] definitely has free ACH deposits and withdrawals, i.e. see the Fiat Deposit (Add Cash) and Withdrawal Fees table here [2]. That said I have heard that Coinbase does need to get their support in order, although that is surprising that with Coinbase.com (I'm guessing that's what you used) they would charge you to withdrawal cash.

When buying or selling crypto on Coinbase.com vs Coinbase Pro, the trading fees are for sure lower on Coinbase Pro. However, this applies to crypto exchanges in general when you don't use their "advanced" interfaces (which are basically more like brokerage accounts with market / limit / stop orders, vs just simple buy / sell interfaces). Gemini is another offender in that regard, i.e. if you don't use their ActiveTrader interface, their fees are quite a bit higher [3].

[1] https://pro.coinbase.com

[2] https://help.coinbase.com/en/pro/trading-and-funding/trading...

[3] https://www.gemini.com/fees

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

#78

Post by onlyrealcuzzo »

rjknight wrote: post #76
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…

IANAL, but isn't the point of the Howey test that you're making investments with variable returns, where those returns depend on the efforts of others? If Coinbase is _guaranteeing_ you a 4% return, then there is no variability and the efforts of others are irrelevant. Coinbase could spend all of the money on JPEGs of my cat and they would still have to pay a 4% return to the people they borrowed the money from.

Lend can pay you less than 4%.

That being said, loans are not usually considered securities.

Although they are regulated by FINRA.

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

#79

Post by iblaine »

>we’re seeking to allow eligible customers to earn interest on select assets on Coinbase, starting with 4% APY on USD Coin (USDC)

My uneducated view of the Howie test is an investment qualifies as a security if you invest, do nothing, and expect a return. That’s my dumbed down definition that makes sense to me, a non lawyer. I do think Coinbase has painted a target on their back, the govt sees crypto as a threat to stability, and this lawsuit is an attempt to create stability.

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

#80

Post by julianz »

serial_dev wrote: post #61
throw123123123 wrote: post #19

Interesting that they had to delete it. I have it on my cache!

It's still available on https://medium.com/@coinbaseblog

You can see the teasers for the articles, but clicking on one goes to the Medium homepage.
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