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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

#261

Post by hnthrowaway2 »

Tenoke wrote: post #197
rockbruno wrote: post #165

...How childish is for someone in an executive position to start whining on Medium in the name of the company about something as serious as legal issues? Did they start hiring 12 year olds after the recent mass exodus?

It's not childish. It can easily be a strategy to convince (retail) investors and users that Coinbase is in the right thus they shouldn't worry about this going too bad for them.

It is charitable to call it childish. It is unprofessional. And it indicates a culture of "the rules don't apply to us because we are so cool".

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

#262

Post by vmception »

dustintrex wrote: post #71
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!"

Read the securities act for once.

The exceptions make the rule.

Especially the big glaring exception for securities maturing in less than 270 days being completely exempt from the act no matter the nature of the transaction.

There is a difference between excepted practice, regulator musings, and using a plain reading of the law no matter what people think.

Protip: the regulator has no idea which part of the law you are using, and legally cant know when your lawyers have all the supporting documents. Make it more expensive for the regulator to find out, so they’ll choose to go after people without lawyers instead, who cant afford their rights. USA

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

#263

Post by dcolkitt »

qeternity wrote: post #176

Why do some in the crypto community think that technology magically changes the fundamental tenets of a given activity? Nobody would argue that it's impossible to commit wire fraud with a cellphone because it's wireless. And it's similarly disingenuous to argue the Howey test is irrelevant because it's decades old. Is the First Amendment just some dusty old law that doesn't apply anymore because the Founding Fathers…

Did Uber not fundamentally change the taxi and limousine laws? Did AirBnB not fundamentally change hotel and rental law? Did file sharing not fundamentally change copyright enforcement? Did Internet pornography not fundamentally end obscenity laws? Does delta-8 not fundamentally change cannabis prohibition?

The point is that technology very often can and does magically change the tenets of an activity. This is just a fact of legal realism. The law can say whatever it works, but if the government is no longer capable of enforcing it, because tech moves faster and is more agile, then for most intents and purposes the law has fundamentally changed.

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

#264

Post by dboreham »

davedx wrote: post #180
JumpCrisscross wrote: post #98

Earlier quoted context omitted.

> lending the bank your money with an 0.04% interest rate. Is that a security? No. Banks are regulated separately and more strenuously than securities firms, much less issuers. If Coinbase wants to offer Lend as an FDIC-insured deposit account, I’m sure the SEC would be fine with it. But Coinbase can’t do that because it doesn’t follow the rules banks must follow.

But is Lend a security ? As far as I can tell, there's no contract for capital flows that you can trade with others. Lend isn't fungible, the USDC is.

Everyone in the cryptocurrency industry is familiar with the Howey test.

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

#265

Post by jrochkind1 »

vmception wrote: post #256
qwertox wrote: post #211

Earlier quoted context omitted.

This is such a good explanation. It made me understand that this is all about protecting the customers investment, and, if nobody is protecting it, then it would have to be the SEC who does it, but they can only do this if it is a security. If it isn't a security which has to be protected by the SEC -- like Coinbase is claiming -- then who is protecting it? This appears to be what the SEC wants to have answered. Coin…

Which should be a choice for all US residents to participate in, residents who can also go lose their money at casinos if they wanted, but are literally barred from participating in positive expected value financial systems. Just like Texas abortion laws, this is not enforced against the US resident, it is against the service providers, which has allowed this framework to persist for 70 years.

Casinos are pretty highly regulated.

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

#266

Post by jrochkind1 »

jrochkind1 wrote: post #3

Seems to be gone from the internet. Can't find it in archive.today or archive.org either. reddit comment thread: https://www.reddit.com/r/CryptoCurrency/comments/pk2rjl/coin... Which points to a tweet thread from Brian Armstrong of Coinbase that is still there for now.... https://twitter.com/brian_armstrong/status/14354409980546539... unrolled (and probably will still be there even if tweets deleted?) https://threadr…

And it's back for me!

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

#267

Post by vmception »

fogof wrote: post #42

> 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 Supreme Court of 1910 declared “motion pictures” to not be covered by the first amendment

Reversing itself in the 1950s, long after religious and exclusionary states made censorship boards across the republic

It is absolutely possible to create room for introspection for old rulings

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

#268

Post by cplex »

vmception wrote: post #256
qwertox wrote: post #211

Earlier quoted context omitted.

This is such a good explanation. It made me understand that this is all about protecting the customers investment, and, if nobody is protecting it, then it would have to be the SEC who does it, but they can only do this if it is a security. If it isn't a security which has to be protected by the SEC -- like Coinbase is claiming -- then who is protecting it? This appears to be what the SEC wants to have answered. Coin…

Which should be a choice for all US residents to participate in, residents who can also go lose their money at casinos if they wanted, but are literally barred from participating in positive expected value financial systems. Just like Texas abortion laws, this is not enforced against the US resident, it is against the service providers, which has allowed this framework to persist for 70 years.

I mean, maybe? It’s quite clear to most people at casinos that they can lose all their money. Is it just as clear to people who “lend” uninsured money to a company?

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

#269

Post by vmception »

madamelic wrote: post #235
fogof wrote: post #42

> 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.

I am going to guess the article is PR to Coinbase going ahead with plans and getting sued, in the hopes they set a new precedent. I am cautiously hopeful for cryptocurrency in general, but this genuinely seems like it would be an easy lay up for the SEC.

There are plenty of exemptions for Coinbase to lean on

The SEC doesn't get to know which one, so if they auto-disagree let them waste their budget finding out in court

This will be a decent dip to buy Coinbase stock from paper hand bootlickers

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

#270

Post by vmception »

jrochkind1 wrote: post #265
vmception wrote: post #256

Earlier quoted context omitted.

Which should be a choice for all US residents to participate in, residents who can also go lose their money at casinos if they wanted, but are literally barred from participating in positive expected value financial systems. Just like Texas abortion laws, this is not enforced against the US resident, it is against the service providers, which has allowed this framework to persist for 70 years.

Casinos are pretty highly regulated.

at the state level, and the choice is still available to participants to lose their money whether it is plainly obvious or buried in 30 pages of disclaimers
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