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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

#431

Post by tim333 »

miracle2k wrote: post #378

When approving the S-1, the SEC was asked to review a business, not one selling filtration technology, but one selling illegal securities , well within their area of expertise. I think Americans should fairly expect their regulators to be clear enough about the rules that the very securities regulator, whose job in large part it is to protect retail investors, not allow a company who is in the business of selling ill…

> I think Americans should fairly expect their regulators to be clear enough about the rules that...

The trouble is that there aren't really clear existing rules - they are getting made at the moment by court judgement. If he had the power Ginsler would probably ban cryptocurrency but he doesn't.

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

#432

Post by lolinder »

Spivak wrote: post #430
itsoktocry wrote: post #386

Earlier quoted context omitted.

> whose job in large part it is to protect retail investors, not allow a company who is in the business of selling illegal securities to go public, and then take multiple years to file suit First, it's not ideal, but an investigation takes time. Second, had the SEC said "we're not allowing you to go public because we think your business might be breaking ambiguous laws" it would have destroyed Coinbase with a combina…

> because we think your business might be breaking ambiguous laws I think Coinbase and the their investors would have appreciated a real a priori ruling on whether their business is an illegal securities exchange before going public but we can't do that for some reason. Risks To Our Business: The SEC might shut us down for being an illegal securities exchange but has no way of telling us in advance if we're breaking…

They didn't use those words, but they basically did put that in the S-1 [0]:

> We are subject to an extensive and highly-evolving regulatory landscape and any adverse changes to, or our failure to comply with, any laws and regulations could adversely affect our brand, reputation, business, operating results, and financial condition.

> ...

> A particular crypto asset’s status as a “security” in any relevant jurisdiction is subject to a high degree of uncertainty and if we are unable to properly characterize a crypto asset, we may be subject to regulatory scrutiny, investigations, fines, and other penalties, and our business, operating results, and financial condition may be adversely affected.

> ...

> The SEC and its staff have taken the position that certain crypto assets fall within the definition of a “security” under the U.S. federal securities laws. The legal test for determining whether any given crypto asset is a security is a highly complex, fact-driven analysis that evolves over time, and the outcome is difficult to predict. The SEC generally does not provide advance guidance or confirmation on the status of any particular crypto asset as a security.

[0] https://www.sec.gov/Archives/edgar/data/1679788/000162828021...

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

#433

Post by ceejayoz »

cliftonk wrote: post #421
lclc wrote: post #404

Earlier quoted context omitted.

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.

vitalik and the ethereum foundation hold less than 0.5% of the eth supply.

"Your Honor, I didn't murder the victim today, just a few years ago. Surely that doesn't count?"

They crowdfunded $18M and used that to develop and issue tokens. It was clearly under their control at the time.

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

#434

Post by purpleflame1257 »

miracle2k wrote: post #378

When approving the S-1, the SEC was asked to review a business, not one selling filtration technology, but one selling illegal securities , well within their area of expertise. I think Americans should fairly expect their regulators to be clear enough about the rules that the very securities regulator, whose job in large part it is to protect retail investors, not allow a company who is in the business of selling ill…

By analogy FDA would never let an intentionally tainted drug go to market. Shouldn't we expect the SEC to behave similarly?

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

#436

Post by pjc50 »

amalcon wrote: post #425
miracle2k wrote: post #378

When approving the S-1, the SEC was asked to review a business, not one selling filtration technology, but one selling illegal securities , well within their area of expertise. I think Americans should fairly expect their regulators to be clear enough about the rules that the very securities regulator, whose job in large part it is to protect retail investors, not allow a company who is in the business of selling ill…

"Any [person] who [disagrees with me] is [committing an error]" is a thought-terminating statement. Best to avoid using that kind of language -- it doesn't particularly hurt anyone else, but it will hurt the growth of one's own understanding.

On the other hand, sometimes people are just not correct, due to motivated reasoning, and keep asking the same question ("Is this an illegal security?" "Yes") over and over again hoping to get a different answer. Ultimately you have to terminate thought somewhere or you get bogged down in trivialities by people who are trying to exhaust you.

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

#437

Post by pjc50 »

linuxftw wrote: post #390
miracle2k wrote: post #378

When approving the S-1, the SEC was asked to review a business, not one selling filtration technology, but one selling illegal securities , well within their area of expertise. I think Americans should fairly expect their regulators to be clear enough about the rules that the very securities regulator, whose job in large part it is to protect retail investors, not allow a company who is in the business of selling ill…

Well, not really. When they decided to file the S-1, they were likely in a very different business model, and the underlying cryptos (for the most part) were very much non-scams (as far as that can be applied to cryptos). It would be like going public as a company that looked like ebay, and then later most of your userbase is buying and selling heroin, and now your business totally revolves around the heroin, and you…

This is almost exactly what happened with Craigslist and FOSTA/SESTA.

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

#438

Post by semiquaver »

pylua wrote: post #2

It is scary to me how much legislating is done by these government bodies inside the (executive ?) branch. I do sympathize with anyone trying to get clear requirements in black and white terms of what is and isn’t acceptable . I think this is more of a systemic failure.

  > clear requirements in black and white terms of what is and isn’t acceptable.
I’ll give you the benefit of the doubt and assume you have been misled by this frequently made claim. It’s just not true. The requirements have been clearly stated for a long time, they’re just not what people in the crypto space want to hear, so they pretend the guidance and law doesn’t exist.

This document dates from 2019 and lays out in detail what constitutes a security wrt cryptocurrency from the SEC’s perspective. They’ve been quite clear about this for a long time. The relevant case law has been settled for 70 years.

https://www.sec.gov/corpfin/framework-investment-contract-an...

The SEC has repeatedly and publicly stated in no uncertain terms, what the definition of a security is and also identified specific coins traded on coinbase that they believe to be securities. Here’s an example from last year from an insider trading case.

https://www.sec.gov/litigation/complaints/2022/comp-pr2022-1...

  > For example, on November 12, 2021, Ishan learned that Coinbase would soon announce the listing of the crypto asset POWR. As alleged further below, POWR was a crypto asset security

  > A digital token or crypto asset is a crypto asset security if it meets the definition of a security, which the Securities Act defines to include “investment contract,” i.e., if it constitutes an investment of money, in a common enterprise, with a reasonable expectation of profit derived from the efforts of others.

  > Coinbase planned to announce the listing of crypto asset AMP on its platform. As alleged further below, AMP was a crypto asset security.

  > Coinbase intended to announce on July 14 that the RLY token would be listed on its platform. As alleged further below, RLY was a crypto asset security.
Rather than accept those statements and obey the law coinbase chose to ramp up the PR offensive instead.

The real issue is that cryptocurrency companies hoped they had found a loophole —they wish the law and SEC guidance weren’t what it is, and they keep dishonestly claiming a lack of clarity exists in the hope that doing so will change things.

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

#439

Post by adsfgiodsnrio »

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…

There is nothing in the law that explicitly prevents the registration of a cryptocurrency. The problem is that the people making them are not able to answer the kinds of questions the SEC asks. How many cryptocurrency companies do you know of that could pass an audit? Even when ICOs aren't out-and-out scams I have never encountered one transparent enough for me to want to touch it with a ten foot pole. Why should the SEC bend over backwards to create new rules that allow exactly the sort of opaque, unaccountable offerings it is their job to prevent?

Everything about this screams "system working as designed to protect the public".

Would you kindly point out a company that tried and failed to register an ICO? I have done a little research and been unable to find any that even went through the motions. Perhaps the specifics matter.

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

#440

Post by lolinder »

pjc50 wrote: post #436
amalcon wrote: post #425

Earlier quoted context omitted.

"Any [person] who [disagrees with me] is [committing an error]" is a thought-terminating statement. Best to avoid using that kind of language -- it doesn't particularly hurt anyone else, but it will hurt the growth of one's own understanding.

On the other hand, sometimes people are just not correct, due to motivated reasoning, and keep asking the same question ("Is this an illegal security?" "Yes") over and over again hoping to get a different answer. Ultimately you have to terminate thought somewhere or you get bogged down in trivialities by people who are trying to exhaust you.

On an internet forum you do that by deciding not to engage, not by issuing a drive-by top-level comment that preemptively cuts off any dissent.
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