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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

#421

Post by arcticbull »

SilasX wrote: post #419
arcticbull wrote: post #413

Earlier quoted context omitted.

> No, it feels like my reaction is akin to basic government accountability and asking why enforcement is so inconsistent. Coinbase isn't complaining that the law exists -- as in the Twitter thread, they're happy to comply with the law, so long as they know what it is! I'm sorry - they know what it is. Any lawyer will tell you exactly what it is. It's the Howey test, it's been the law of the land for 70 years and the…

>It's the Howey test, it's been the law of the land for 70 years and the SEC issued guidance on how it applies to digital assets. Did you miss where I said the issue is that they're being treated differently? I spent at least two paragraphs on the concept. Even if it's "obviously" a security by the Howey test, that doesn't explain why others get a free pass, or why they can't confirm that's their reasoning, or why ot…

We may be talking past eachother so let's re-state our points of alignment.

1. Coinbase Lend is clearly a security.

2. ...because it fails the Howey test.

3. ...for reasons that are clear and self-evident.

4. ...and Coinbase, as a registered broker-dealer would know or be expected to know that in advance.

[note: for 1-4 see Anderson Kill]

5. There's a few people offering similar products.

6. They're all doing crime.

Here's where we seem to disagree.

1. Coinbase should be told by the SEC exactly why it fails the Howey test. No. It clearly fails, and the SEC isn't required to provide their opinion of why outside the court of law. It is up to the SEC and Coinbase to present their arguments to a judge. The resolution will form precedent.

2. Coinbase is being treated differently in some way, and that's bad. The first person charged for anything is obviously being treated differently, until the others are charged. That's not bad, that's bad luck. See the speeding cars anaology.

3. The first person to commit a crime has some obligation to be charged first. No, they don't. Usually police and regulators go after who they have the strongest case against in no particular order. The resolution gives them a weapon they can use against those they have a weaker case against.

4. All criminals committing the same crime should be charged together or at the same time. No, there's no expectation of that, or precedent of that. In fact its usually easier when the cases are separate.

5. This is taking a long time because some other offerings have been on the market for 6 months. The SEC just went after Bitconnect. That was in 2016. The wheels of justice turn slow.

You'll have a point if after Coinbase is convicted the SEC leaves everyone else alone. Until then its safe to assume they're being made an example of, and with that example the SEC is going to come by and knock some heads together.

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

#422

Post by SilasX »

arcticbull wrote: post #421
SilasX wrote: post #419

Earlier quoted context omitted.

>It's the Howey test, it's been the law of the land for 70 years and the SEC issued guidance on how it applies to digital assets. Did you miss where I said the issue is that they're being treated differently? I spent at least two paragraphs on the concept. Even if it's "obviously" a security by the Howey test, that doesn't explain why others get a free pass, or why they can't confirm that's their reasoning, or why ot…

We may be talking past eachother so let's re-state our points of alignment. 1. Coinbase Lend is clearly a security. 2. ...because it fails the Howey test. 3. ...for reasons that are clear and self-evident. 4. ...and Coinbase, as a registered broker-dealer would know or be expected to know that in advance. [note: for 1-4 see Anderson Kill] 5. There's a few people offering similar products. 6. They're all doing crime.…

>They're all doing crime.

No, not a point of agreement -- if the SEC is silently accepting a new exception to Howey based on market realities, then what Coinbase is doing isn't a crime. We don't know until they go on record saying what their opinion is. That happens all the time in regulation: they realize, long after the fact that something is technically violating the rules but just grandfather it in since it's become so ubiquitous and issue new clarification. But it helps to know what the case actually is!

That's the problem with stonewalling: You don't know what the other side actually objects to!

You seem to be in some kind of mentality where equality before the law doesn't matter, and if some people are persistently let of off the hook "that's just life, man". No ... that's not how rule of law or ex-3rd world regulation works. Haphazard enforcement isn't just a "fact of life", it actively disrupts the functioning of markets, and you don't look clever with the sage "it is what it is" attitude.

>Coinbase is being treated differently in some way, and that's bad. The first person charged for anything is obviously being treated differently, until the others are charged. That's not bad, that's bad luck.

Wait, really? You're saying that turning a blind eye to persistent violation is "just" "bad luck"?

Okay I just wish you had initially been clearer about your premise of rejecting equality under the law. Then again, that would have made your position more obviously wrong, and your arguments seem less clever, so I can see the tendency to avoid that!

It's probably similar to the reason why you make huge edits to your post long after the fact without noting them.

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

#423

Post by [deleted] »

elliekelly wrote: post #420
olalonde wrote: post #411

Earlier quoted context omitted.

But can they fight the decision in court before breaking it and risking fines/jail time?

You’re never risking jail time with the SEC. They’re civil enforcement so they can only pursue fines and injunctions. Like all civil matters, a person can negotiate with the (allegedly) aggrieved party, in this case the SEC, and settle the matter with them before a suit is filed.

[deleted]

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

#424

Post by arcticbull »

SilasX wrote: post #422
arcticbull wrote: post #421

Earlier quoted context omitted.

We may be talking past eachother so let's re-state our points of alignment. 1. Coinbase Lend is clearly a security. 2. ...because it fails the Howey test. 3. ...for reasons that are clear and self-evident. 4. ...and Coinbase, as a registered broker-dealer would know or be expected to know that in advance. [note: for 1-4 see Anderson Kill] 5. There's a few people offering similar products. 6. They're all doing crime.…

>They're all doing crime. No, not a point of agreement -- if the SEC is silently accepting a new exception to Howey based on market realities, then what Coinbase is doing isn't a crime. We don't know until they go on record saying what their opinion is. That happens all the time in regulation: they realize, long after the fact that something is technically violating the rules but just grandfather it in since it's bec…

> [edit] No, not a point of agreement -- if the SEC is silently accepting a new exception to Howey based on market realities, then what Coinbase is doing isn't a crime.

That's not what they're doing, and yes it is a crime lol. It would work just as well with murder, but you're choosing to look the other way because it's white collar.

> That's the problem with stonewalling: You don't know what the other side actually objects to!

No, that's why I re-stated my assumptions, including any potentially hidden ones, so that you could follow up and respond individually and explain where the gap is. This is a useful tool to resolve conflicts.

> Wait, really? You're saying that turning a blind eye to persistent violation is "just" "bad luck"?

No, I'm saying the wheels of justice turn slow and this shit takes time [edit] and regulators literally have to start somewhere because they have limited resources. So long as it happens within the statute of limitations its explicitly in play.

> Okay I just wish you had initially been clearer about your premise of rejecting equality under the law.

You're obviously either misreading my point or not interested in understanding. You pick one. Get a judgement. Apply that judgement. This is equal treatment.

> It's probably similar to the reason why you make huge edits to your post long after the fact without noting them.

No, I limit my edits to the first two to three minutes after I write a comment, to before anyone can reply. If someone can reply I annotate my edits. This is my workflow.

[edit] My point is it's way too soon to know if you're right or I'm right, we must wait and see a year from now, or two years from now. 180 days is nothing.

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

#425

Post by phkahler »

hajile wrote: post #397
phkahler wrote: post #367

Earlier quoted context omitted.

>> The real answer is to do away with the fractional reserve lending where a bank gets $100 and then proceeds to loan out $900. That is simply not true. It's a fiction (of sorts) told by people who feel fucked by the financial system.

It is basically true. I work hard and get paid $100 for what I did. I then deposit $100. The bank loans $90 to person X. Person X gives the money to person Y for some good or service. Person Y deposits $90 and now there is $190 in the bank. The bank loans $81 to person X+1. Person X+1 gives the money to person Y+1 for some good or service. Person Y+1 deposits $81 and now there is $271 in the bank. The bank loans $72.…

What you're really complaining about is the bank lending out money. There is no way to know if deposit X+1 is money that was already loaned out. Your accounting of the work done is plain wrong - each of the people in the chain (person Y for example) did some real work and got paid for it (otherwise why did X pay Y at all?). If whomever paid you the $100 got it from a bank, that doesn't invalidate the work you did.

What you're describing is related to the "velocity of money" and "propensity to save" which are odd concepts but also one of the most direct ways behavior effects the economy.

>> If I printed $900 and loaned it out, I'd be arrested.

The bank didn't print one damn thing in your example. They loaned out money that people gave them as deposits.

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

#426

Post by olalonde »

elliekelly wrote: post #420
olalonde wrote: post #411

Earlier quoted context omitted.

But can they fight the decision in court before breaking it and risking fines/jail time?

You’re never risking jail time with the SEC. They’re civil enforcement so they can only pursue fines and injunctions. Like all civil matters, a person can negotiate with the (allegedly) aggrieved party, in this case the SEC, and settle the matter with them before a suit is filed.

I think you misunderstood my question. Let's say the SEC tells you "don't do X or we will sue you" but you believe that the SEC's request is invalid for whatever reason. Is there a way to get a judge to decide on whether you are right, before you do X and get sued?

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

#427

Post by qeternity »

dcolkitt wrote: post #378
qeternity wrote: post #320

Earlier quoted context omitted.

Please show me which laws Uber and Airbnb have changed. If anything, those companies have trended towards existing regs. File sharing creating an entire industry of copyright enforcement, far from whatever you’re suggesting. Internet pornography ending obscenity laws? What in the hell are you on about? Those laws changed before the Internet and not because of technology. Drug laws have changed for no reason other tha…

The price of a NYC taxi medallion fell from $1 million in 2014 to under $50,000. How else do you explain that besides the disruption caused by Uber. You might point and stammer " but, but, the rules written in the book still say the same thing! " But that's not how legal realism works. Law is not some magical words in a special book. Law is the way that the legal system shapes human society. Would any neutral third p…

“Please show me which laws were changed”

Proceeds to show zero law changes.

For someone who responds like a prick, you have surprisingly little substance.

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

#428

Post by dragonwriter »

olalonde wrote: post #426
elliekelly wrote: post #420

Earlier quoted context omitted.

You’re never risking jail time with the SEC. They’re civil enforcement so they can only pursue fines and injunctions. Like all civil matters, a person can negotiate with the (allegedly) aggrieved party, in this case the SEC, and settle the matter with them before a suit is filed.

I think you misunderstood my question. Let's say the SEC tells you "don't do X or we will sue you" but you believe that the SEC's request is invalid for whatever reason. Is there a way to get a judge to decide on whether you are right, before you do X and get sued?

> Let's say the SEC tells you "don't do X or we will sue you" but you believe that the SEC's request is invalid for whatever reason. Is there a way to get a judge to decide on whether you are right, before you do X and get sued?

I believe you can file an action seeking a declaratory judgement, but as I understand there is generally little reason: a Wells Notice is not, as I understand it, a “we might sue you if you do X” thing but more of “our staff have determined you have done X and that we should sue you for it on basis Y, but you have an opportunity to submit a legal brief to convince us that our staff are wrong before we approve their recommendation” thing.

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

#429

Post by nostrademons »

bastawhiz wrote: post #416
nostrademons wrote: post #395

Earlier quoted context omitted.

Those risks apply to the traditional banking system as well. Someone could phish your login and password. Someone could steal your checks. Someone could open a policy with Progressive Insurance, provide a stolen account number, and pay their premiums out of your bank account while conducting progressively larger insurance fraud. Your bank could get hacked. Your bank could go bankrupt. We dealt with an identity theft…

Account security best practices are orthogonal to how your assets are handled behind the scenes. The SEC isn't regulating securities because someone might log into your account, they regulate them because someone at Coinbase could be deceiving investors or hiding risk. Money doesn't appear magically from nowhere. If someone is offering you return for holding your cash, it's not just sitting there. The risk is implici…

But with regards to this subthread specifically - the risks that the OP points out are account security best practices, and common to both Coinbase and traditional banks. If you're going to point them out as reasons that your capital is at risk, you also have to point out that your capital is at risk with traditional financial institutions.

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

#430

Post by dragonwriter »

elliekelly wrote: post #420
olalonde wrote: post #411

Earlier quoted context omitted.

But can they fight the decision in court before breaking it and risking fines/jail time?

You’re never risking jail time with the SEC. They’re civil enforcement so they can only pursue fines and injunctions. Like all civil matters, a person can negotiate with the (allegedly) aggrieved party, in this case the SEC, and settle the matter with them before a suit is filed.

> You’re never risking jail time with the SEC.

That's not true.

> They’re civil enforcement so they can only pursue fines and injunctions

A lot of SEC things are both civil and criminal, and while the SEC doesn't file criminal charges, it does send referrals to DOJ. So, yes, though there are more steps before it gets to jail time, disputes with the SEC do carry that risk.

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