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

Post by JumpCrisscross » Wed, Sep 08, 2021, 5:55 AM UTC

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.

Post by JumpCrisscross » Wed, Sep 08, 2021, 5:56 AM UTC

modeless wrote: post #88

habitue wrote: post #82

Earlier quoted context omitted.

They're guaranteeing it in the same way that when you buy a corporate bond with a 4% yield, you're guaranteed to get the money[0]. A bond is still a security. [0] Right? Counterparty risk!

Not all loans are bonds though. How does the law define the difference?

Post by seibelj » Wed, Sep 08, 2021, 5:59 AM UTC

peterbonney wrote: post #92

seibelj wrote: post #86

Earlier quoted context omitted.

The blog post says they did not give a rationale. That is the entire essence of the post. Did you read the post?

They repeatedly refer to lengthy sets of questions they received from the SEC, both in person and in writing. If you don’t think that is the SEC communicating their “rationale” for a decision and offering insight into what acceptable alternatives might look like then you obviously haven’t dealt with the SEC, nor do you understand what it is that they do. (I actually do have some relevant experience here - I was a par…

Post by adrr » Wed, Sep 08, 2021, 6:00 AM UTC

onlyrealcuzzo wrote: post #78

rjknight wrote: post #76

Earlier quoted context omitted.

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.

Post by [deleted] » Wed, Sep 08, 2021, 6:01 AM UTC

JumpCrisscross wrote: post #91

rjknight wrote: post #76

Earlier quoted context omitted.

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.

> 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? No. By that standard, no bonds would qualify as securities.