US SEC sues Coinbase, one day after suing Binance • Hacker News Board

Re: US SEC sues Coinbase, one day after suing Binance

#121

Post by koonsolo » Tue, Jun 06, 2023, 3:44 PM UTC

isp wrote: post #44

TimPC wrote: post #2

Crypto companies think they don't trade securities which is clearly wrong and contradicted by their own advertising. People buy crypto without a real use for crypto because they think they can sell it for more later. Everyone under the sun knows this. It's obviously a security and failing to register should be met by SEC cases like this one.

> Crypto companies think they don't trade securities To quote the Binance Chief "Compliance" Officer: "we are operating as a fking unlicensed securities exchange in the USA bro" Source: Quoted in the filing yesterday where SEC sued Binance > 111. As Binance’s CCO bluntly admitted to another Binance compliance officer in December 2018, “we are operating as a fking unlicensed securities exchange in the USA bro.” https:…

> in the USA

Important part of the conversation that some people here seem to forget.

Re: US SEC sues Coinbase, one day after suing Binance

#122

Post by dragontamer » Tue, Jun 06, 2023, 3:45 PM UTC

andreygrehov wrote: post #94

dragontamer wrote: post #71

Earlier quoted context omitted.

> I've made $86,000 trading Ethereum That's not the problem. The problem is that companies like Celsius, FTX, and Voyager are disappearing and collapsing. Binance and Coinbase are two other companies that could just randomly disappear because of how incredibly sketchy their products are (especially "Earn" or "Staking" products). I'm pointing out companies that collapse (taking literally Billions of American money awa…

Dude, I made that comment in response to your "My coworker lost $X0,000 over Celsius" to highlight the fact that not everyone's circle is losing money. > Coinbase is doing the same thing as Celsius, Voyager, and FTX with their Earn / Staking products. And now the SEC is suing them over it. Why can't SEC work with Coinbase before suing them? Again, Coinbase has been seeking help from SEC for years. Brian Armstrong, th…

> Dude, I made that comment in response to your "My coworker lost $X0,000 over Celsius" to highlight the fact that not everyone's circle is losing money.

But you making money doesn't allow my friend, or anyone from FTX, or Voyager to get their money back.

And you fail to see that it is HOW he lost money that I take issue with. Celsius lied about unregulated staking/interest yielding instruments to him and the natur of how it worked.

And Coinbase is making the same lie right now with Coinbase Earn. And you are sitting here defending it, and ignoring three major collapses last year while doing so.

Re: US SEC sues Coinbase, one day after suing Binance

#123

Post by vkou » Tue, Jun 06, 2023, 3:47 PM UTC

dcow wrote: post #105

TimPC wrote: post #2

Crypto companies think they don't trade securities which is clearly wrong and contradicted by their own advertising. People buy crypto without a real use for crypto because they think they can sell it for more later. Everyone under the sun knows this. It's obviously a security and failing to register should be met by SEC cases like this one.

There are two modalities to crypto and the law needs to treat them differently. Running a node on a crypto currency network does not generate securities. It generates commodities. We don't tax people on the FMV of gold when they dig it out of the ground. But, speculating on the price of gold by creating a virtual token/contract/etc. and selling that, well that’s obviously a security. Just because people buy gold spec…

> We don't tax people on the FMV of gold when they dig it out of the ground.

Why shouldn't we? We tax people on the FMV of something valuable created out of thin air, why should gold be an exception?

Re: US SEC sues Coinbase, one day after suing Binance

#124

Post by johndhi » Tue, Jun 06, 2023, 3:48 PM UTC

Question: is it even possible to register as a security? If you do, what follows?

So if SOL for example were to register somewhere, what would they need to do, and what would I need to do to buy it?

Re: US SEC sues Coinbase, one day after suing Binance

#125

Post by cultureswitch » Tue, Jun 06, 2023, 3:48 PM UTC

And there we go. The promise of a form of cash outside of USA government control is terrifying to the USA government. And well, most other governments too.

It is pretty obvious that when the USA government goes after crypto exchanges, what matters is to get the exchange shut down. The actual justification for doing so is an afterthought.

I'm torn on the issue of whether dematerialized privacy-preserving cash (and yeah, I know crypto exchanges had very little to do with that) is even a good thing to begin with. To me the strongest argument for it is that the crimes that would be facilitated by that are already trivial, as long as you're rich enough. You don't need Monero when you can "sell" a Monet in exchange for services instead. It is incredibly hypocritical of governments to complain that privacy-preserving currencies enable criminals when they have done literally nothing to stop the numerous convenient ways to launder money that are accessible only to rich and powerful people.

Re: US SEC sues Coinbase, one day after suing Binance

#126

Post by koonsolo » Tue, Jun 06, 2023, 3:48 PM UTC

soco wrote: post #13

datadeft wrote: post #4

The end of an era.

The era of the few crypto billionaires and the crowd of regular Joe money-losers. Ah, those times.

Go and take a look at the long term price of bitcoin. How anyone can lose money in that market is beyond me.

Re: US SEC sues Coinbase, one day after suing Binance

#127

Post by taeric » Tue, Jun 06, 2023, 3:49 PM UTC

vkou wrote: post #112

taeric wrote: post #104

Earlier quoted context omitted.

He wouldn't start answering. He was asked "yes or no, is ..." and would start hemming and hawing with words that were neither "yes" or "no."

Have you stopped beating your wife? Yes or no. No hemming or hawing. It's a simple question, yes, or no? ---- Is it clear to you now that a simple yes or no question, couched in an incorrect assertion is not actually a simple yes-or-no question?

A question where answering easily implies past behavior is very different from one that does not. "Do you think it is ok to beat your spouse?" better not get any slow rolled answer, and is more comparable here.

Hell, I'd be fine with a hedged answer of "it can be." That would make a ton of sense and would make sense. Akin to asking "is it speeding to drive your car at 40?" The answer would be "in certain situations, certainly. Can be too fast and it can be too slow." So an answer of "I can't answer without more context" would be fine.

None of that is what I saw.

Re: US SEC sues Coinbase, one day after suing Binance

#128

Post by mrcode007 » Tue, Jun 06, 2023, 3:49 PM UTC

jcranmer wrote: post #120

butlerm wrote: post #48

If you look up the definitions of "security", "financial instrument", "commodity", and "currency", it is pretty clear that a plain vanilla crypto-currency like Bitcoin is no ordinary security nor a financial instrument. It is not a claim on something else, even less so than a traditional bank note. It is more like a commodity. Since when is "aluminum" a security? A crypto currency business however may be engaged in t…

SEC isn't suing Coinbase over Bitcoin. They're suing under two things: 1. Unregistered exchange for several tokens the SEC believes are securities: > This includes, but is not limited to, the units of each of the crypto asset securities further described below—with trading symbols SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO—(the “Crypto Asset Securities”). 2. Unregistered sale of securi…

Very good points. People often go a long way to argue against the Howey test. The best example is Howey Co case. If someone is a lawyer dealing in securities and acting as an advisor I would have expected them to be familiar with the law. Coinbase issuing public statements to SEC “tell us what is a security” were basically a ploy or the lawyers involved were extremely inexperienced.

https://en.m.wikipedia.org/wiki/SEC_v._W._J._Howey_Co.

Re: US SEC sues Coinbase, one day after suing Binance

#129

Post by lottin » Tue, Jun 06, 2023, 3:50 PM UTC

dcow wrote: post #116

ethanbond wrote: post #61

Earlier quoted context omitted.

I think the real crux of the issue is that these instruments were designed to be confusing to regulate and, alas, they're confusing to regulate. The error was in thinking that a confused regulator says "I don't understand what's going on here, carry on and rest easy" rather than what actually happens: "I don't understand what's going on here, and until I do -- on my schedule, not yours -- your business is always at r…

I don't think the pure commodity coins (layer 1 networks like btc, xch, etc) are confusing at all. You do work and get rewarded with a digital commodity. It’s exactly like digging up gold, or tapping a tree for maple syrup. Then a bunch of crypto anarchists showed up and started speculating that these coins would be worth a lot in the future because we could topple the financial hegemony by their powers combined. Oka…

But what on earth is a digital commodity? I think the whole concept of digital commodity is nonsensical.

A commodity is a product. Products are either consumed or used as raw materials. A digital commodity is not a product. It can't be consumed or used, because it's entirely imaginary.

I think a better term is "abstract unit of account".

Re: US SEC sues Coinbase, one day after suing Binance

#130

Post by dcow » Tue, Jun 06, 2023, 3:52 PM UTC

dsg42 wrote: post #106

butlerm wrote: post #48

If you look up the definitions of "security", "financial instrument", "commodity", and "currency", it is pretty clear that a plain vanilla crypto-currency like Bitcoin is no ordinary security nor a financial instrument. It is not a claim on something else, even less so than a traditional bank note. It is more like a commodity. Since when is "aluminum" a security? A crypto currency business however may be engaged in t…

The only question here is whether cryptocurrency is a security or a commodity. Securities fall under regulation by the SEC (SECURITIES and Exchange Commission). Commodities are regulated by the CFTC (COMMODITIES Future Trading Commission). SEC Chair Gensler agrees that Bitcoin is a commodity, but thinks everything else is a security.[1] Securities are much more tightly regulated than commodities. The SEC is making it…

Curious: is "bitcoin" being used by the SEC as a general term to mean "all cryptos that fundamentally employ a work-based consensus algorithm", or "pure" cryptos or whatever? Or is it not yet clear to the SEC that there are more instances of Nakamoto consensus networks out there and not everything other than BTC is a security?

I agree that staked projects and derivative projects are securities since they are fundamentally a representation of or proxy for the actual thing of value, BTC, XCH, formerly ETH, etc.