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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

#401

Post by PretzelPirate »

gumby wrote: post #356
nickff wrote: post #32

Earlier quoted context omitted.

I suspect that Gensler was obfuscating intentionally when asked about cryptocurrency. Modern regulators seem to prefer retrospective punishment over prospective advice and regulation.

> Modern regulators seem to prefer retrospective punishment over prospective advice and regulation. In most cases that’s what you want. The Communications Decency Act was written way too early and most of it was struck down, except the important section 230. When the Food, Drug and Cosmetic Act was revised in 1962 a huge swath of previously approved drugs of longstanding experience (e.g. aspirin) were grandparented.…

I think there's a reasonableiddle ground and that the SEC waited far too long to take a stance. Allowing companies like Block One, Solana, and IOHK to start up and offer highly-centralized "crypto" assets to US consumers put those consumers at risk of "highly volatile crypto" + centralized control.

The SEC did the right thing when suing Ripple, but they've missed opportunities to go after bad actors who were misrepresenting their product as a decentralized network, and now retail investors will be the one who lose.

In my opinion, they've failed to act in a reasonable time frame and their inability to do their job will end up hurting common people in the US. I'd like to see Gary Genslar held accountable for his mistake. It's not like he is ignorant around crypto assets and he even evangelised his friends blockchain network to his students when he was teaching at MIT.

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

#402

Post by throwaway6977 »

Eisenstein wrote: post #397
throwaway6977 wrote: post #392

Earlier quoted context omitted.

I don't think I said that. You seem to be setting up a(nother) false dichotomy here as if there can only be one end of the spectrum or the other, with no grey area or nuance in-between.

What is a grey area for 'makes a binding ruling regarding interpretation of law'?

I'm sorry, but I'm not willing to answer that for you in a binding way.

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

#403

Post by PretzelPirate »

potatototoo99 wrote: post #31
gurchik wrote: post #3

Sorry for the stupid questions, I really know very little about crypto. With that said, > Gensler firmly maintains that the vast majority of crypto assets are securities, with the exception of Bitcoin Why? From an article on Reuters[1], > Bitcoin is not considered a security because its anonymous and open-source origins mean investor profits are not dependent on the efforts of developers or managers, said Carol Gofor…

In bitcoin software contributors can propose changes to the protocol and software, but they have no absolute power since they can just be rejected by the miners, who are not paid directly from bitcoin raising in price, but from fees from the operation of the network itself. So there is no organization or entity promising returns for owning bitcoin. In Ethereum, a centralized group of people put together a public sale…

> Ethereum is an extremelly centralized business

The development of Ethereum is more decentralized than the development of Bitcoin. Bitcoin is primarilly developed by Bitcoin Core while Ethereum has multiple client implementations.

Anyone can join the Core Devs meeting and discuss new features and push back on ideas. You can also propose these features outside of the core dev meetings and never attend that meeting if you don't want to.

New ideas aren't centrally proposed and are handled by raising an EIP and getting support for it, just like BIPs in Bitcoin.

For example, EIP 1559 was dead for years until a community member decided it was time to push it and worked with many different people to present it in a way that convinced multiple teams to implement it in their client.

The validators can always reject a change just like Miners can reject changes to Bitcoin clients. The big difference is that Bitcoininers don't have many clients to choose from, so they have to be more willing to accept whatever Bitcoin Core implements.

The bug difference between BTC and ETH from the SEC perspective is the initially issuance being an investment of money, and whether PoS is a return on investment or if running a node is similar to running a PoW node and you're providing a service and not simply expecting a return. In other networks, you can "stake" without running any hardware and that's clearly different than Ethereum's PoS model.

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

#404

Post by lclc »

georgeecollins wrote: post #52
crazygringo wrote: post #12

> Coinbase, as with most crypto platforms, has decided it wants to simultaneously operate as an exchange, broker-dealer, and clearing agency. These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. Coinbase…

Rather that claim knowledge, I would suggest you read Matt Levine's newsletter on this. He is a former securities lawyer who is extremely knowledgeable. -- I mean very extremely, he wrote an entire Business Week magazine about it. Some key takeaways: For historical reasons as well as practical ones (who would you sue) BTC and ETH are probably considered commodities. Most of the rest are very similar to ICOs which wer…

For ETH they can sue Vitalik Buterin, the rest of the Ethereum Co-Founders, and the Ethereum foundation. They are the issuers and majority of the ETH supply is there since the beginning.

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

#405

Post by agentgumshoe »

gigatexal wrote: post #399
cr__ wrote: post #391

Earlier quoted context omitted.

If there’s no way to register, why did they proceed?

Getting rich off of shit-coins in this wild west of digital currencies, that's why.

Not sure why this is downvoted, it's absolutely true.

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

#406

Post by lclc »

ETH_start wrote: post #305
throwaway22032 wrote: post #56

Earlier quoted context omitted.

For those who saw Bitcoin and Ethereum from day 1 or close to it it makes more sense. Bitcoin started out as a toy with no value, even perhaps a proof of concept, which eventually gained value and began to be traded. Even years after its' creation people gave it away for free, there were faucets. The creator disappeared and the protocol intentionally has been designed in such a way that making changes is difficult an…

> Ethereum has nothing like the same origin story. Ethereum was the first token sale. There was no precedent established at the time of people profiting off of token sales. The token sale agreement explicitly said not to expect a profit. It was treated by participants as more of a kickstarter to crowdfund the launch of a new kind of decentralized computing platform. Going off tangent: if a token sale explicitly state…

> Ethereum was the first token sale.

That's not true. The first token sale (ICO) was Mastercoin, 1 year before Ethereum's ICO.

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

#407

Post by shagie »

Dylan16807 wrote: post #376
vkou wrote: post #322

Earlier quoted context omitted.

What does that have to do with the price of butter? Coinbase isn't being sued because it's trading Eth. It's being sued because it's trading a lot of things that aren't BTC or Eth.

> It's being sued because it's trading a lot of things that aren't BTC or Eth. Which the SEC was also refusing to rule on, even though it would have been easy and consumer-protective to get that done within a month or two of the coins gaining popularity. If I don't treat that as uncertainty, I guess I have to assign significantly worse motivations...

When Coinbase did its S-1 it said that it was trading digital assets - not securities and not unregistered securities. It did say that those assets may be considered securities under future regulatory inspection.

The SEC doesn't rule on things. They make rules (not laws), but they don't decide those things. That is the domain of the judicial branch - not the SEC.

The SEC can say "I consider X to be a security" but it's the judges that apply those rules and decide if the proper regulations are followed.

You will note that its a judge demanding that the SEC respond to Coinbase (U.S. Court Tells SEC to Respond to Coinbase's Rulemaking Petition Within a Week - https://www.coindesk.com/policy/2023/06/07/us-court-tells-se... ).

The SEC, as part of the legislative branch makes the rules to follow under its creation as part of the Securities and Exchange Act of 1934. It can bring things to be enforced or decided to the judicial branch - it isn't the judge or jury.

It would be improper for the SEC to make claims that haven't been decided by judicial branch. The SEC can say "we consider digital assets that can gain value by actions of others to be securities" but its consider - saying "yes, ETH is a security" is something for a judge to decide, not the SEC. The way that is done is for the SEC to take a company that is trading what it considers to be an unregistered security to retail customers to court.

---

(edit)

Additionally from the Coinbase S-1 https://d18rn0p25nwr6d.cloudfront.net/CIK-0001679788/cbfab06...

    Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

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

#408

Post by dopidopHN »

TeMPOraL wrote: post #400
jazzyjackson wrote: post #295

Earlier quoted context omitted.

If you can't cash out it's just entertainment. That's why you don't have to be 18 to play pinball. [actually the history of pinball and other arcade games is fraught with legal action, there were a few iterations of payout before we got to the harmless, kid-friendly machines of today, really good podcast about it, interviewing the guy who heads the Pacific Pinball Museum: https://art19.com/shows/the-madecast/episodes…

> harmless, kid-friendly machines of today "Kid-friendly" but really kid-robbing, though - AFAIK most of arcade games that let you win something, e.g. a toy, have subprograms that can override your victory, making it look like you've lost; those are triggered randomly, based on venue-configurable parameters like "max winning rate" and "daily wins threshold". This is designed to ensure the venue always makes a profit,…

are you specifically referring to pinball ? Or any arcade games that you see in fair ?

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

#409

Post by jongjong »

norswap wrote: post #383
crazygringo wrote: post #12

> Coinbase, as with most crypto platforms, has decided it wants to simultaneously operate as an exchange, broker-dealer, and clearing agency. These three functions — bringing together securities orders for buyers and sellers, trading securities on behalf of others, and intermediating trades — are typically required to be separate due to conflicts of interest that emerge when one entity controls all of them. Coinbase…

It's important to note that event for the projects creating new tokens, there is NO WAY to register. It exists, in theory. Many people have tried, nothing has progressed even an inch. It's not even a matter of the SEC putting out a list of clear conditions that people deem unacceptable. Instead, the applications just seem to be mired in bureaucracy. As I understand, there is deliberate gaslighting from the SEC and Ga…

The veneer of a working system really started coming off over the past few years. Everything feels like a massive psyop. At times it even feels like a significant portion of the population is in on it... I mean, most people are probably just brainwashed into compliance but their level of commitment to the whole charade makes it seem like they're actually in on it.

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

#410

Post by JumpCrisscross »

mattdesl wrote: post #393
JumpCrisscross wrote: post #387

Earlier quoted context omitted.

> If CEX operations are restricted in the US due to excessive, antiquated, or ambiguous regulations, citizens would be left with fewer ways to acquire these assets including research and hobby usage They can publish hypothetical blockchains in peer-reviewed journals and sell overseas. The point is to separate "acquir[ing] these assets," which has been a money pit, from the potential benefits of the data structure and…

A “hypothetical blockchain” sounds useless if it cannot legally be applied in practice. It’s the sort of draconian policy that HN commenters would abhor if it were anything but blockchain. To use these networks—and to test & objectively measure them—you need to be able to acquire tokens.

> to test & objectively measure them—you need to be able to acquire tokens

There is nothing in this that requires the tokens be distributed to the public, or if they are, that they be sold in exchange for cash and/or traded.

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