Some people have a "lightning doesn't strike twice" theory about the SEC where getting busted once means you can do the same thing 10x more in the future and won't be busted again. So a $100M fine today unlocks billions in "legitimate" profit tomorrow.
Blockfi agrees to pay $100M in penalties and pursue registration
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Re: Blockfi agrees to pay $100M in penalties and pursue registration
#62Re: Blockfi agrees to pay $100M in penalties and pursue registration
#63The SEC has a whistleblower program that can award up to 30% of the fine to a whistleblower. Here's an example of someone receiving $32 million: https://www.sec.gov/news/press-release/2021-211 If crypto prices go down, it might become more lucrative for crypto employees to start talking to SEC rather than trying to sell their tokens. If you work at one of these places, why not start collecting documentation now.
Does the program also work for bigtech employees?
I think that program is for any industry
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#64Interesting to read BlockFi's own statement about the event: https://blockfi.com/regulatory-developments/ No mention of the fine at all, and instead framed as "first SEC registered crypto interest-bearing security" (from BlockFi's page) rather than "[BlockFi] failing to register the offers and sales of its retail crypto lending product" and "the SEC also charged BlockFi with violating the registration provisions of t…
I have a vested interest in this domain now that I'm starting up in this space so am closely following these and related products.
A whole bunch of these startups have sprung up; which take up real money (USDT or even USD, INR etc.,) promising very attractive guaranteed returns without locking up customers' fund. Look at these[1] for examples. Anyone who knows anything about banking in the traditional world knows how ridiculous it is. And indeed some of these are beginning to unravel[2]. In Anchor's case there are way more lenders than borrowers so Anchor is resorting to pay those high yields from their reserves. It's cutting close to being a Ponzi scheme at the moment.
In a traditional banking world businesses take a loan either to cover for a short-term cashflow crunch (example an invoice that's delayed by their client) or for longer term investment. That money usually goes into economic activities which are expected (hoped?) to bear fruit to repay the loan.
In the crypto world however such loans are taken only to be put back into the crypto world; to be swapped into some hot new coin to be staked and what not. The music has got to stop at some point.
I'm really glad SEC has been proactive. I hope regulators in other countries do so. Because 99% of the money flowing into these are totally guidable and clueless people; they need to be protected for their own sake.
[1] https://www.pillow.fund [1] https://www.flint.money
[2] https://au.finance.yahoo.com/news/anchor-protocol-reserves-s...
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#65HSBC got fined $84M for laundering mexican drug cartel money. The proportions don't add up.
https://www.complianceweek.com/regulatory-enforcement/hsbc-h...
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#66I (along with other) have been filing whistleblower reports on blatant price manipulation on an OTC stock for the entirety of last year (about 30 reports of naked short selling, wash trading). Not one peep from the SEC. It's been eye-opening to see the amount of fraud in the financial markets that goes unchecked. Sometimes I question my sanity that I persist in this stock and whether what I see is illegal. Good to se…
> on blatant price manipulation on an OTC stock
Which stock?
There are a lot of cult-ish communities around certain stocks that "know just enough to be dangerous" and end up misinterpreting a lot of signals as naked shorting and such. The narratives sound good to people who are holding the stock, but they're almost always completely flawed.
If the complaints are basically coming in bulk with the same reports that can be traced back to a Reddit post or something, they're probably going straight to the trash.
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#67Is there something about Gemini's version of the interest bearing account that makes it less problematic than Blockfi's offering? Why is it that Blockfi has taken so much heat and Gemini has seemed to fly completely under the radar? Does this suggest that the issue was the marketing and the implementation that was the issue rather than the product itself?
Same question, with Celsius.
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Re: Blockfi agrees to pay $100M in penalties and pursue registration
#68Earlier quoted context omitted.
> Unless regulators shut them down or expose them quite clearly as mlm/ frauds I suspect this isn’t going to stop. It seems, based on this action that the SEC just went through with, that things like BlockFi are not "clearly MLM / fraud" as you say, as otherwise they would indeed try to get them shutdown, not just slap a tiny fine on them.
The SEC doesn't do MLMs. Herbalife and Lularoe operate in broad daylight. The US has always been very kind to such scams
> The SEC doesn't do MLMs.
It does if they are selling securities (either as their main business or securities for their business).
The FTC does regular MLMs.
> Herbalife and Lularoe operate in broad daylight.
Herbalife was restructured to settle a pyramid-scheme lawsuit by the FTC. [0] And subsequently also settled a lawsuit from the SEC. [1]
LulaRoe has managed not to be sued by the FTC, but that seems mostly to be because that process is complaint driven and the complaints have instead either gone to state regulators or directly into private lawsuits; LulaRoe has a pile of direct- and class-action lawsuits from distributors, settled a State of Washington lawsuit for $4.75 million, has been sued by it's main supplier, etc.
[0] https://www.consumer.ftc.gov/blog/2016/07/restructured-herba...
[1] https://www.forbes.com/sites/lisettevoytko/2019/09/27/herbal...
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#69Where is the $100 million going to come from? Do they have that much money to spare? Or are their customers about to take a haircut?
On that topic, where does BlockFi's profit come from? They're offering 9% (previously 12%) interest on deposits. Are they really re-loaning that money to other people at the 20-30% interest rate required to produce those returns (high interest rates come with high default rates, so you need to overshoot your target by a lot to make up for defaults).
Re: Blockfi agrees to pay $100M in penalties and pursue registration
#70Interesting to read BlockFi's own statement about the event: https://blockfi.com/regulatory-developments/ No mention of the fine at all, and instead framed as "first SEC registered crypto interest-bearing security" (from BlockFi's page) rather than "[BlockFi] failing to register the offers and sales of its retail crypto lending product" and "the SEC also charged BlockFi with violating the registration provisions of t…
I have a vested interest in this domain now that I'm starting up in this space so am closely following these and related products. A whole bunch of these startups have sprung up; which take up real money (USDT or even USD, INR etc.,) promising very attractive guaranteed returns without locking up customers' fund. Look at these[1] for examples. Anyone who knows anything about banking in the traditional world knows how…
I have a vested interest in this domain now that I'm starting up in this space ... 99% of the money flowing into these are totally guidable and clueless people
Is your startup going after the consumers? If most prospective customers are clueless, and many of the remaining customers are sharks or early investors looking for suckers, that doesn't bode well for new companies in this space, even the ones that are trying to do things right.