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“But the SEC let us go public” and other flawed arguments in Coinbase's defense

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Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#251

Post by Scarblac »

stickfigure wrote: post #158
bb88 wrote: post #127

Earlier quoted context omitted.

TIL to stop reading the top voted comment if it appears to be outrage and just read the article for myself instead. Just FYI here's the quote in context. She's posing a hypothetical here and not actually comparing Coinbase to a heroin dealer. This is very much in the style of Matt Levine at Bloomberg, btw. If a company went to the FDA and said “hello, we’d like to start selling heroin to the public for recreational u…

She's comparing cryptocurrency to heroin. The parent's point stands.

No, it's just hyperbole.

Using a much more extreme example to make the point (that companies don't automatically have a right to a path to compliance) obvious.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#252

Post by AnthonyMouse »

rjbwork wrote: post #250
AnthonyMouse wrote: post #244

Earlier quoted context omitted.

> It would be absurdly burdensome and expensive for the government to have to advise people on how to follow the law when they're not following the law. Isn't this the exact same burden it would be for that person to hire a lawyer? All it would do is require the government to internalize the cost of regulatory compliance, which would increase efficiency by aligning the incentives of the government with reducing compl…

>If you hire a lawyer and they tell you that the law is ambiguous and there isn't any relevant caselaw yet, you still have no idea if you're following the law or not. Then you have a couple of choices with various outcomes. One of which is exactly what is happening to Coinbase right now. You can either 100% unambiguously follow the law, or you can push your luck and adhere to what you think either is or should be the…

But that's ridiculously inefficient compared to just going to the regulatory agency before you do the ambiguous thing and having them clarify it. Except that they won't do it.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#253

Post by hef19898 »

AnthonyMouse wrote: post #244
rjbwork wrote: post #228

Earlier quoted context omitted.

It would be absurdly burdensome and expensive for the government to have to advise people on how to follow the law when they're not following the law. If you're not sure how to follow the law, get an expert in the law! That's why there's a regulated profession that explicitly provides expert advice on following the law. I don't want to press too far, because I don't think you actually meant it, but...it's like you're…

> It would be absurdly burdensome and expensive for the government to have to advise people on how to follow the law when they're not following the law. Isn't this the exact same burden it would be for that person to hire a lawyer? All it would do is require the government to internalize the cost of regulatory compliance, which would increase efficiency by aligning the incentives of the government with reducing compl…

Without case law, authorities don't know neither. With the two law suites, Coinbase and Binance, we are goong to find out.

Generally so, if a company works in, or close, to a highly regulated industry it is up to that company to do so in a compliant way. Or generally compliant, there isba tendency of start-ups in Germany complaining about how taxes apply to them as well. If said company is not comoliant, it is on them. And does happen all over the place, to all companies, all the time. For stuff ranging from export, to taxes, to anti-trust and corruption. Only that, say, Lockheed isn't getting any slack when it comes to creative sales techniques.

And compliance costs are costs of doing business. If you cheap out on that, well, ypu deserve what ever is coming your way.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#254

Post by everfree »

JumpCrisscross wrote: post #229
everfree wrote: post #176

Earlier quoted context omitted.

> A tiny, and some might argue irrelevant, part of the US fintech industry is moving offshore. You'd better be very sure of its irrelevancy before sending it all to the UK, where they're embracing it with a clear regulatory framework. If you are right, the US pushes a small ("irrelevant") amount of crime offshore. But in the off chance you are wrong, the USA risks losing their position as the world's financial superp…

> better be very sure of its irrelevancy before sending it all to the UK Why? We’re allies and economically connected. > the USA risks losing their position as the world's financial superpower Wat. > US is itself planning a version of the US dollar with a design inspired by distributed ledger technology This project, thankfully, was dropped by the Fed after preliminary study.

> Wat.

The USA is the world's finance hub because it has the most reliable systems for trading financial assets, and because it has the most reliable currency. But Ethereum network transactions are pretty damn reliable too, even more reliable than wire transfers in some ways (if a bit costly at the moment). Trading on Uniswap is generally more reliable than trading stocks in my brokerage account, and I like how I can bundle multiple trades, borrows and sends together so that they execute atomically, a feature that my brokerage account doesn't support and probably never will. I like that with DeFi, I get to choose my asset-backed loan underwriter separately from my custodian, rather than them both having to be my broker (many of which charge way above market rates for margin loans). Trade settlement happens within seconds, not days. And there has been a cambrian explosion of stablecoin designs, some of them unreliable, some of them quite a bit more reliable than most government currencies.

Is any of it truly better than the current way stocks and currency are traded and held? Maybe, maybe not, but the stakes are much higher than I think most people understand. Distributed ledgers certainly offer some specific advantages that people really sleep on.

> This project, thankfully, was dropped by the Fed after preliminary study.

Nope.

https://www.whitehouse.gov/wp-content/uploads/2022/09/09-202...

https://en.wikipedia.org/wiki/History_of_CBDCs_by_country#Un...

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#255

Post by AnthonyMouse »

hef19898 wrote: post #253
AnthonyMouse wrote: post #244

Earlier quoted context omitted.

> It would be absurdly burdensome and expensive for the government to have to advise people on how to follow the law when they're not following the law. Isn't this the exact same burden it would be for that person to hire a lawyer? All it would do is require the government to internalize the cost of regulatory compliance, which would increase efficiency by aligning the incentives of the government with reducing compl…

Without case law, authorities don't know neither. With the two law suites, Coinbase and Binance, we are goong to find out. Generally so, if a company works in, or close, to a highly regulated industry it is up to that company to do so in a compliant way. Or generally compliant, there isba tendency of start-ups in Germany complaining about how taxes apply to them as well. If said company is not comoliant, it is on the…

> Without case law, authorities don't know neither.

Authorities are the ones who create the rules. If they tell you what the rule means, that's what the rule means, because it's their rule. That's the point of having them be the one to tell you.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#256

Post by bb88 »

AnthonyMouse wrote: post #252
rjbwork wrote: post #250

Earlier quoted context omitted.

>If you hire a lawyer and they tell you that the law is ambiguous and there isn't any relevant caselaw yet, you still have no idea if you're following the law or not. Then you have a couple of choices with various outcomes. One of which is exactly what is happening to Coinbase right now. You can either 100% unambiguously follow the law, or you can push your luck and adhere to what you think either is or should be the…

But that's ridiculously inefficient compared to just going to the regulatory agency before you do the ambiguous thing and having them clarify it. Except that they won't do it.

Coinbase makes their money by working in a grey area. Why should the public subsidize (or reward) Coinbase for their shady business strategy? Why can't it be part of Coinbase's business strategy to remain on the correct side of the law and then lobby congress for changes to those laws?

That's how it's been done for the past two centuries. Why change now?

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#257

Post by friend_and_foe »

JumpCrisscross wrote: post #225
AnthonyMouse wrote: post #220

Earlier quoted context omitted.

> It's not the job of regulatory agencies to advise companies on how to become compliant with the law and their rules. Honestly this should be a core mission of all regulatory agencies and the fact that it isn't is a disgrace.

> this should be a core mission of all regulatory agencies and the fact that it isn't is a disgrace You want public sector corporate law? If we’re socialising law, I’d think we’d start with criminal defense.

Theres a distinction somewhere between "socializing law" and "tell me why you'd sue me before I do it accidentally."

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#258

Post by JumpCrisscross »

everfree wrote: post #254
JumpCrisscross wrote: post #229

Earlier quoted context omitted.

> better be very sure of its irrelevancy before sending it all to the UK Why? We’re allies and economically connected. > the USA risks losing their position as the world's financial superpower Wat. > US is itself planning a version of the US dollar with a design inspired by distributed ledger technology This project, thankfully, was dropped by the Fed after preliminary study.

> Wat. The USA is the world's finance hub because it has the most reliable systems for trading financial assets, and because it has the most reliable currency. But Ethereum network transactions are pretty damn reliable too, even more reliable than wire transfers in some ways (if a bit costly at the moment). Trading on Uniswap is generally more reliable than trading stocks in my brokerage account, and I like how I can…

> USA is the world's finance hub because it has the most reliable systems for trading financial assets, and because it has the most reliable currency

We had the largest consumer market which underwrote a deep financial system. That depth and breadth, together with a rules-based system, is what fuels American financial hegemony. Between political volatility, sanctions and our archaic payment system, we do not hold out reliability as a selling point. (You have to go out to the 1910s to see American financial infrastructure being at the forefront.)

There are definitely lessons to be ported from crypto to our system. But they can come from academia and non-commercial hobbyists or be copied once demonstrated in e.g. London.

> Nope

Yes. You’re citing Q3 ‘22 materials. The programme lost the support it was limping on after Silvergate, SVB and Signatures’ failures. FedNow makes more sense anyway. (We probably wouldn’t have it without crypto.)

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#259

Post by friend_and_foe »

growse wrote: post #201
friend_and_foe wrote: post #177

Earlier quoted context omitted.

I did... the article lists several examples with the claim that the SEC cannot be expected to understand every business under the sun before approving a public sale, completely ignoring the fact that in this case, knowing if a company is operating as an unregistered securities exchange is their supposed expertise and reason to exist. Did you read it?

Do you think that if the SEC thinks that Coinbase is operating some sort of unregulated securities exchange, that they should bring some sort of enforcement action?

Yes, but I think first, they ought to tell us what their criteria is in no uncertain terms.

Re: “But the SEC let us go public” and other flawed arguments in Coinbase's defense

#260

Post by JumpCrisscross »

Dylan16807 wrote: post #245
JumpCrisscross wrote: post #237

Earlier quoted context omitted.

> want them to decide if I'm trading securities, especially when "this might be considered a security" is in my S1. Nothing more Investment banks would love this. It’s pro bono legal advice. If this is important, require a legal opinion or no-action letter prior to investing in the IPO. Coinbase didn’t secure those and investors didn’t demand it. Here we are.

You could make them pay for it. Also there is potential fine revenue. But for big enough companies, some amount of taxpayer-paid analysis makes sense. It ultimately benefits consumers. Isn't analyzing the S1 "pro bono legal advice" to begin with? And they did have legal opinions, just not from the SEC that is still almost entirely refusing to evaluate crypto tokens. Would a no action letter have been feasible?

> Would a no action letter have been feasible

Probably not, given the integrated broker-exchange-custodian model. But that’s the point. We specifically outlawed that in 1934. Coinbase was counting on rules being changed in the midst of regulatory inertia.

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