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Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

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Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#31

Post by UncleMeat »

geophile wrote: post #9

I don't follow crypto, so these are actual questions, not trolling: - If Celsius is a trading platform, how can Celsius itself owe anybody anything? - My naive understanding is that cryptocurrency, being based on blockchain, is a log of universally agreed upon, legitimate transactions. So how can there be a liquidity crisis at all, let alone one in the billions? How is the platform allowing transactions not backed by…

You lend Celsius some coins. In return they promise to pay you some % of interest. Celsius takes those coins and sticks them in another lending system that pays them a higher % of interest. The other lending system collapses and cannot return the coins because of an exploit. Celsius customers demand their coins back and Celsius cannot return them.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#32

Post by jqpabc123 »

Clent wrote: post #30
jqpabc123 wrote: post #20

Earlier quoted context omitted.

Quoted post unavailable.

It's as "funny money" as any other security. Just because you feel they may be "funnier" doesn't affect the laws around selling and trading securities.

Your post is based on an assumption --- that crypto is legally defined as a "security".

Do you have any reference to support this?

If this is true, then the crypto market is subject to existing security laws. And government needs to launch an extensive investigation of crypto exchanges who have been operating without the required authorization or oversight.

As I said, this cuts to the very core of the crypto market.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#33

Post by jedberg »

Oh hey look the consequences of a monetary system that isn't backed by a legal system (that is backed up by people with guns).

The reason fiat money works is because at the end of the day if you run into trouble you have the legal system to make things right. And if the perpetrator of the crime doesn't listen to the legal system, there are people with guns/violence to back that up. That's why the whole system works -- because of the threat of violence.

Crypto doesn't have that. It has a lot of advantages (I use crypto myself) but it also has a big disadvantage, for now.

When the USA starts issuing it's own crypto they might solve this problem by requiring KYC to get the coins, but then of course you loose the anonymity aspect.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#34

Post by rzwitserloot »

jqpabc123 wrote: post #11
a2tech wrote: post #2

gasp I'm shocked, absolutely SHOCKED, that people involved in crypto would be scam artists.

And the most amazing part --- it's not even a scam. He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.

Let's say my company has $400,000 in earnings left over. I could pay it to myself but then I have to pay income tax and all that jazz.

So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself.

HA! I dodged it all!

.... no. The spirit of the law is that this is a financial transaction just the same.

BitCoin and all the other crypto currencies are no different. It's all play money.

A story as old as time. For example, in the past (and even today), you can buy pricey paintings. Still fraud if you use that to dodge taxes. Still fraud if you steal a painting, and not because it's a physical object. It's something that is considered to have value, based on the notion that it is not hard to sell.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#35

Post by TomGullen »

UncleMeat wrote: post #31
geophile wrote: post #9

I don't follow crypto, so these are actual questions, not trolling: - If Celsius is a trading platform, how can Celsius itself owe anybody anything? - My naive understanding is that cryptocurrency, being based on blockchain, is a log of universally agreed upon, legitimate transactions. So how can there be a liquidity crisis at all, let alone one in the billions? How is the platform allowing transactions not backed by…

You lend Celsius some coins. In return they promise to pay you some % of interest. Celsius takes those coins and sticks them in another lending system that pays them a higher % of interest. The other lending system collapses and cannot return the coins because of an exploit. Celsius customers demand their coins back and Celsius cannot return them.

> The other lending system collapses and cannot return the coins because of an exploit

And also because the entire business model is completely unsustainable, preying on peoples greed.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#37

Post by geraldcombs »

woah wrote: post #27

This isn't crypto, it's just a shady investment fund that happened to invest in crypto

If you have enough shady people involved in a particular activity, then that activity is effectively shady. Similar to the fact that if you add enough raw sewage to the water supply, you don't have a water supply any more, you just have more sewage.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#38

Post by toomuchtodo »

jqpabc123 wrote: post #32
Clent wrote: post #30

Earlier quoted context omitted.

It's as "funny money" as any other security. Just because you feel they may be "funnier" doesn't affect the laws around selling and trading securities.

Your post is based on an assumption --- that crypto is legally defined as a "security". Do you have any reference to support this? If this is true, then the crypto market is subject to existing security laws. And government needs to launch an extensive investigation of crypto exchanges who have been operating without the required authorization or oversight. As I said, this cuts to the very core of the crypto market.

https://www.manatt.com/insights/newsletters/financial-servic...

> As noted above, in categorizing the tokens as a security, the SEC’s complaint makes reference to the Howey Test, under which a digital asset, including a “crypto asset security” will be deemed a security “if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.” The DOJ’s complaint alleges that “the defendants made illegal trades in at least twenty-five different crypto assets and realized ill-gotten gains totaling approximately $1.5 million.” The SEC’s complaint claims that at least nine of the 25 crypto assets were “crypto asset securities,” and therefore the defendants’ insider trading of securities fell within the SEC’s “broad jurisdiction to regulate the securities markets and to bring actions for violations of the federal securities laws, including fraud and insider trading.”

> None of the issuers of the nine “crypto asset securities,” or Coinbase itself, are named as a defendant in Wahi as this is an insider trading case. Issuers and exchanges of tokens should take caution, however, as the SEC’s stance in Wahi reiterates the SEC’s a broad view of digital assets as securities and its ability to regulate them.

As duped mentions, if it's not a security, it's a commodity falling under the regulation of the CFTC.

https://www.cftc.gov/digitalassets/index.htm

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#39

Post by hn_throwaway_99 »

syntaxing wrote: post #5

Crypto is pretty much speed running our existing financial institutions’ past history.

What's hilarious to me is that crypto boosters would often cheer about how crypto doesn't "suffer" from the same things as our existing financial system (e.g. potential run on the bank in a fractional reserve system) - but then they went and built up all the same things they originally said crypto was immune from, this time with no regulations or legal framework.

Re: Celsius Execs Cashed Out $40M in Crypto Before Halting Withdrawals for Customers

#40

Post by jqpabc123 »

rzwitserloot wrote: post #34
jqpabc123 wrote: post #11

Earlier quoted context omitted.

And the most amazing part --- it's not even a scam. He really didn't cash out anything that was legal tender --- what he cashed out was a bunch of play money. Technically, this isn't a crime because it wasn't "real" money.

Let's say my company has $400,000 in earnings left over. I could pay it to myself but then I have to pay income tax and all that jazz. So, instead I buy something fungible-ish that isn't on anybodys immediate radar as a 'security', say, some Black Lotus cards from Magic the Gathering, and I then give those to myself. HA! I dodged it all! .... no. The spirit of the law is that this is a financial transaction just the…

Still fraud if you steal a painting

Celsius didn't steal anything.

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