Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

newsletter.mollywhite.net

Post reply on HN
Print view View original

271–280 of 557 posts

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

#271

Post by saiya-jin »

arcticbull wrote: post #208
RestlessMind wrote: post #25

I like reasoned critiques of crypto. Heck, I think many crypto actors are scammers and should be punished. However, a lot of crypto is legit and this piece reeks of bias. Some examples: - comparison with heroin - wtf? To extend that ridiculous analogy, it would be akin to FDA approving heroin based products (similar to how SEC approved Bitcoin ETF in 2021) and then going after heroin. What message is SEC trying to de…

> To extend that ridiculous analogy, it would be akin to FDA approving heroin based products (similar to how SEC approved Bitcoin ETF in 2021) and then going after heroin. So uh, you know you just described the opioid crisis in a nutshell right? Modern opioid painkillers are in fact generally if not entirely accurately, 'heroin based products.' Not just that, prior to the Narcotics Tax Act of 1914 it was kind of a fr…

> Opium was used to settle fussy babies (note, I'm sure it was very effective)

In central/eastern Europe, there was historically brew/tea being done from poppy heads, to calm down babies. Generally poppy growing is very much allowed in places like Slovakia and Czech republic and part of many cakes and pastries, and nobody thought about doing opium/heroin out of it.

But go over the border to Poland and its all banned, just like most of Europe, for obvious reasons. Imagine raising a really fussy kid as opium addict in medieval ages...

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

#272

Post by handsclean »

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.

I think I’ve run into this misunderstanding in my own conversations. The problem is that there are two different lines of reasoning that can look very similar:

A: You say “Z is true of X”, and I respond “Z is false for thing-like-X”, implying “Z is likely false for X”.

B: You say “Z is true”, and I respond “Z is false for Y”, implying not “Y is like X therefore Z is likely false”, but “Z is sometimes false, so we need to actually evaluate whether it’s true of X”.

I think people who use this reasoning would do well to make it more explicit.

(Here, Z is “there must be a path to compliance”, X is Coinbase, and Y – not, I believe, thing-like-X – is heroin.)

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

#273

Post by JumpCrisscross »

Linosaurus wrote: post #267
JumpCrisscross wrote: post #236

Earlier quoted context omitted.

> comparing cryptocurrency to heroin Which is damn smart given we let regulated persons manufacture and distribute opiates. In this analogy, Coinbase is upset its heroin sales are illegal when a licensed pharmacist can sell a similar product. If someone is having a strong emotional reaction, substitute any regulated product—jumbo jets, vodka, legal advice—and move on.

> In this analogy, Coinbase is upset its heroin sales are illegal when a licensed pharmacist can sell a similar product. In this analogy Coinbase' story seems to be that they asked how to apply to become a licensed pharmacist, but never got an answer. While the SEC suggests they never tried. This gets confusing when the crime is phrased as unregistered heroin sales.

> Coinbase' story seems to be that they asked how to apply to become a licensed pharmacist, but never got an answer. While the SEC suggests they never tried

They got an answer they didn't like: they'd have to change how they did business. (Also, what they list. The SEC issued The DAO Report in 2017.) We enacted the '34 Exchange Act in part to segregate the broker, exchange and custodial functions of securities trading. Coinbase was asking how to become a licensed pharmacist without having to check prescriptions.

> gets confusing when the crime is phrased as unregistered heroin sales

Try "opiate." Coinbase thought they found something new, and asked if it was okay. They didn't think they got a clear answer and proceeded. Now they're crying foul at the lack of prior guidance, or that someone else does have a license. The author's point is that these arguments don't make sense. There may be other arguments that do, but these aren't among them.

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

#274

Post by scott_w »

rockemsockem wrote: post #206
bb88 wrote: post #196

Earlier quoted context omitted.

I quote from TFA: Coinbase also writes in great detail in the S-1 about the risk that the SEC might bring a lawsuit exactly like the one they just have: [W]e could be subject to legal or regulatory action in the event the SEC, a foreign regulatory authority, or a court were to determine that a supported crypto asset currently offered, sold, or traded on our platform is a “security” under applicable laws… [W]e could b…

Sounds like they expected in advance for the SEC to do something stupid and were very upfront about that fact. Now that the SEC has done a stupid thing they are complaining that the SEC in fact did the stupid thing. Sounds perfectly reasonable to me.

Enforcement agencies don't have to stop you ahead of time, even if that action is disallowed or even illegal.

For example, police officers will regularly sit by the side of the road with a speed gun. They'll make no attempt to stop you driving at 150mph on the motorway but, in the UK, you'll receive a court summons through your door after the fact (and probably lose your license).

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

#275

Post by jazzyjackson »

AnthonyMouse wrote: post #255
hef19898 wrote: post #253

Earlier quoted context omitted.

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.

You can write rules without knowing how they'll be broken.

Some people defend themselves by saying they didn't take the action they're accused of, others can cop to the action they took, and argue that the law doesn't apply because x, y, z.

So, like, that's why case law is a whole thing, it extends "the rules" to "here's how the rules have been interpreted in these situations"

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

#276

Post by WinstonSmith84 »

JumpCrisscross wrote: post #209
RestlessMind wrote: post #25

I like reasoned critiques of crypto. Heck, I think many crypto actors are scammers and should be punished. However, a lot of crypto is legit and this piece reeks of bias. Some examples: - comparison with heroin - wtf? To extend that ridiculous analogy, it would be akin to FDA approving heroin based products (similar to how SEC approved Bitcoin ETF in 2021) and then going after heroin. What message is SEC trying to de…

> comparison with heroin - wtf? To extend that ridiculous analogy, it would be akin to FDA approving heroin based products (similar to how SEC approved Bitcoin ETF in 2021) and then going after heroin You’re describing regulated opiates versus street heroin. That is the point. Nobody thinks street heroin distributors can reasonably be shocked they’re breaking the law just because pharmacists distribute similar produc…

> Is he required to?

Not knowing the answer to the most obvious question is mildly embarrassing, to say the least. It's clear that he didn't do his due diligence and jeopardized the SEC competency and integrity. His very clear conflict of interests with FTX (i.e. Sam) and Binance (where he was refused a position some years ago) were already not really helping.

And yeah, not knowing the most obvious answer just begs a simple question: how shall all these crypto exchanges have known (better than the SEC) that A, B or C are a commodity but D or E aren't? Please...

Crypto will prevail, Gary is just a bump in the road. The question is how much more damage he is going to cause to the US before he is removed, while the world is watching China toying with Ethereum having issued yesterday tokenized notes on that blockchain.

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

#277

Post by scott_w »

hef19898 wrote: post #231
friend_and_foe wrote: post #181

Earlier quoted context omitted.

Youre completely.ignoring the fact that "heroin is illegal" is cut and dry. Securities are not illegal. Selling them without a license is. Asking them to clarify the law and getting told "the law is clear" is not in any way the same as selling heroin knowing it is illegal.

Heroin, as in heroin derivates, are not illegal. That's what a lot of hard, medical painkillers are. Same goes for weapons in some of the countries with the most restrictions on gun sales and ownership, it is still perfectly legal to sell military grade weapons to the military in those countries. Funny, how HN seems to qctively failing to understand how regulations and compliance works as soon as they themselves, or…

It seems a common "debating" tactic to spend inordinate amounts of effort questioning the analogy and seemingly pretending to not understand what an analogy is.

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

#278

Post by fullspectrumdev »

RestlessMind wrote: post #25

I like reasoned critiques of crypto. Heck, I think many crypto actors are scammers and should be punished. However, a lot of crypto is legit and this piece reeks of bias. Some examples: - comparison with heroin - wtf? To extend that ridiculous analogy, it would be akin to FDA approving heroin based products (similar to how SEC approved Bitcoin ETF in 2021) and then going after heroin. What message is SEC trying to de…

> reasoned critiques > bias

It’s a piece by Molly White, temper your expectations lol, she’s rabidly against cryptocurrency in pretty much any format ever full stop.

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

#279

Post by iterativ »

Dylan16807 wrote: post #165
stickfigure wrote: post #158

Earlier quoted context omitted.

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

It's not "alarmist nonsense", it's just an example of something illegal. And it's not "cryptocurrency" being compared to illegal things, but unregistered security cryptocurrencies. Bitcoin, the biggest name in cryptocurrency, is fine.

Yes well, some claim it's "securities", there is no clear law for that. Can I give you, for example, Amazon shared and get a coffee or a pizza ? Directly, not liquidate it first.

Let's find out how the Ripple lawsuit is going to end, there is good chance to win it.

The woke up one day and they "hey this crypto is a threat to our dollar'. Gensler said "we don't need any more digital currencies, we have USD, EUR, YEN". And that for centuries there was no need to transfer value through more than one medium. That can explain their views clearly.

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

#280

Post by Dylan16807 »

JumpCrisscross wrote: post #260
Dylan16807 wrote: post #245

Earlier quoted context omitted.

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.

If it's clear enough for certain popular tokens then the SEC should have just declared them as securities years ago.
Post reply on HN