I have to say I'm getting tired of all these 'new economy' (is it still new?) companies, trying to get around established regulations which usually have been put into place for a good reason and using PR to create a narrative/pressure to say that regulations/regulators are hindering innovation and are not acting in good faith. Instead it seems to usually be the case that they are trying to do exactly what the regulation is trying to prevent. Just because because they come out of a "move fast and break things" culture, doesn't mean rules don't apply to them. Fortunately more and more people are seeing through these shenanigans.
The SEC has told us it wants to sue us over Lend. We don’t know why
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Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#142I mean why not go after Coinbase? The argument that everyone else is doing it why not go after them doesn't hold much water. Sometimes it makes sense to go after the biggest fish first. Also, is Coinbase saying Lend isn't an investment contract? It sure sounds like one to me. Lend my crypto to Coinbase and I get a 4% return? I like the idea but it sure sounds like an investment contract to me.
To me it sounds like banks can’t compete and just keep the 4%, so now they have the SEC go after their competition that can.
I don’t see the difference at all between a USD that makes (pitiful) interest in a bank savings account and a peg to USD that makes awesome interest in a Coinbase savings account. When I invest my USD with Wells Fargo bank they are converted to Wells Fargo Bucks that are tied to how efficient and generous the bank is (they aren’t) and my interest received is tied to that common enterprise. Those Wells Fargo Bucks aren’t classified as securities. The $1 portion will always be $1.
No one invests in Tether or USD hoping their investment increases in value, that is absurd. It’s always a $1, so it is always losing value unfortunately.
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#143> 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.
The Howey Test is absurdly broad. Two kids pooling their pocket money to buy the extra large bag of candy with a plan sell the extra gummy worms meets all four parts of the Howey Test and is unlicensed securities creation. Reminds me of the Bloomberg article "Everything Everywhere is Securities Fraud" https://www.bloomberg.com/opinion/articles/2019-06-26/everyt...
I don't see how that passes "effort of others". They're clearly working in the sales and distribution business at that point. Now, if they then went around the school and said to everyone, give us $1 and we'll pay you back by splitting half of the profits from our sale, then yes, that sounds very much like a security.
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#144Maybe they should have asked Brett Redfearn (former SEC director working at Coinbase) about the SECs reasoning. He left Coinbase in July? I guess the revolving door corruption failed (and/or he figured out where the wind is blowing)...
This is really all too transparent and obvious. A risk-free investment with 4% APY. What-aboutism about other exchanges (which are unregulated and off-shore). Not "understanding" the problems the "SEC" has (even though they have all the money to buy even former SEC directors knowledge about SEC procceses).
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#145Earlier quoted context omitted.
> his entire legal career has been patents I'm confused, is patent experience particularly relevant to this case about securities law?
No, that's why I'd like to assume that when he says he doesn't know why the SEC has a problem with their plan, he is telling the truth and this isn't just a PR attempt.
Except he says they got a wells notice, first hit for that on google:
> A "Wells Notice" is a letter sent by a securities regulator to a prospective respondent, notifying him of the substance of charges that the regulator intends to bring against the respondent, and affording the respondent with the opportunity to submit a written statement to the ultimate decision maker.
So did they receive a notice with the charges or didn't they?
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#146Mark Cuban's response is interesting: Brian, this is "Regulation via Litigation". They aren't capable of working through this themselves and are afraid of making mistakes in doing so. They they leave it to the lawyers. Just the people you don't want impacting the new technologies. You have to go on the offensive https://twitter.com/mcuban/status/1435454959441620995
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Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#147Mark Cuban's response is interesting: Brian, this is "Regulation via Litigation". They aren't capable of working through this themselves and are afraid of making mistakes in doing so. They they leave it to the lawyers. Just the people you don't want impacting the new technologies. You have to go on the offensive https://twitter.com/mcuban/status/1435454959441620995
That’s a bad take.
The problem for Coinbase is the SEC understands it all too well. This is an investment, very much like a certificate of deposit, which happens to be regulated so that investors don’t get screwed.
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#148I have to say I'm getting tired of all these 'new economy' (is it still new?) companies, trying to get around established regulations which usually have been put into place for a good reason and using PR to create a narrative/pressure to say that regulations/regulators are hindering innovation and are not acting in good faith. Instead it seems to usually be the case that they are trying to do exactly what the regulat…
Interesting how the folks so passionate about open-source are the most hostile to open finance
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#149I 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.
I can tell you have staking with Coinbase, first they can change the terms at anytime so you can't trust that you'll get what they say... Second, you'll be lucky to get anything at all. After staking with them for 6 months turns out I didn't get anything because their system was broken and guess what happened when I filed a support request? No response after multiple attempts and 3 months.
Re: The SEC has told us it wants to sue us over Lend. We don’t know why
#150Earlier quoted context omitted.
Not all loans are bonds though. How does the law define the difference?
> Not all loans are bonds though. How does the law define the difference? Bonds are raised from a diverse set of investors. Loans, in securities parlance, are raised from (and syndicated by) regulated banks.
Bonds are also registered investments which strict regulations about marketing (IPO), trading, and settlement. In some markets, "private placement" bonds are possible, but there are still many rules to follow created by financial regulators.
A cursory search of "loan vs bond" yields many interesting results. I am sure the variance matters from market to market.