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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

#441

Post by iHeartVLC »

lolinder wrote: post #424
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 crypto sceptic who does not see a problem with this is tainted by their priors. I'm not qualified to comment on the legal or financial aspects, but this is a hostile and aggressive statement that detracts from the conversation. You made a claim and offered reasons why you believe that claim. The correct thing to do from there is to allow other people to defend the other position, not end the discussion by sayin…

[dead]

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

#442

Post by pjc50 »

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…

Did anyone actually try? https://www.sec.gov/education/smallbusiness/goingpublic/regi...

Is there a blog somewhere put out by one of these companies with their back-and-forth? It would be informative reasoning.

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

#443

Post by roywiggins »

xioxox wrote: post #333
sebzim4500 wrote: post #331

Earlier quoted context omitted.

And if that same policeman happened to be speaking to parliament and was asked whether going 150 mph was legal he would be able to give a clear answer.

A better example is HMRC, the tax authority, in the UK. They won't tell you if your tax avoidance scheme is legal or not, but they will fine you or take you to court if they later decide it is not.

In the US, taxes is one of the cases where you can actually get a letter from the IRS saying "yeah this is probably okay":

https://www.investopedia.com/terms/p/plr.asp

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

#444

Post by jmull »

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…

This is a losing argument, IMO.

Reviewing the S1 is not a complete review of the legitimacy of a business model, and, of course, cannot predict whether a company will comply with regulations in the future.

It’s notable your argument doesn’t address the fact that the S1 disclosures seemed accurate, e.g.:

> [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 be subject to judicial or administrative sanctions for failing to offer or sell the crypto asset in compliance with the registration requirements, or for acting as a broker, dealer, or national securities exchange without appropriate registration.

It seems coinbase knew there was a substantial risk and proceeded anyway.

> Any crypto sceptic who does not see a problem with this is tainted by their priors

Someone shoulda stopped me is never a good defense. Perhaps they should have. But if it was so clear to them, it should have been even more clear to you, and you have the primary responsibility for your actions and decisions.

It’s up to coinbase and the others to figure out how to create a legal business model around crypto, not the SEC.

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

#445

Post by pjc50 »

pylua wrote: post #10
JohnFen wrote: post #7

Earlier quoted context omitted.

The SEC is not part of the executive branch. It is an independent agency. While it is also not part of the legislative branch, the legislative branch is the one that effectively controls it.

Thanks for the insight. It does feel like the organizations ability to interpret the laws is more related to a political agency than the letter of the law. There should just be a letter of the law , analytical meaning branch of government.

> There should just be a letter of the law , analytical meaning branch of government.

This is called "a court".

(There is a particular phrase for "the law is unclear so I'm going to sue the regulator in advance to determine if something is legal", but I've forgotten it. It's linked to judicial review)

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

#446

Post by linuxftw »

pjc50 wrote: post #437
linuxftw wrote: post #390

Earlier quoted context omitted.

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.

Backpage is the more relevant example, at least in the US IMO. But, no as much drugs as the 'adult services.' I don't think they were publicly traded, either.

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

#447

Post by wbl »

everfree wrote: post #87
ceejayoz wrote: post #84

Earlier quoted context omitted.

And you think all the SEC’s “hint hint, time to register!” for years was understood by Coinbase as “you guys are fine, we’re not talking about you”?

I don't agree that a regulatory agency saying "hint hint time to register" for years on end is an effective way to regulate. The first step of effective regulation is to state exactly what is out of compliance, which they finally did only a few days ago by listing which particular coins are the ones that put Coinbase out of compliance. The second step is to explain why those particular coins cause them to be non-comp…

They already did. Bitcoin doesn't involve an expectation of profit from a common enterprise while e.g. liquidity tokens do.

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

#448

Post by miracle2k »

hluska wrote: post #428
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…

You made a good comment and then absolutely ruined it with your last sentence. Blanket statements like that are not only disrespectful but they’re useless. This isn’t Fox News…it is Hacker News. Second, you’re arguing they were involved in illegal activities since before going public. How do you know that for sure?

> You made a good comment and then absolutely ruined it with your last sentence. Blanket statements like that are not only disrespectful but they’re useless. This isn’t Fox News…it is Hacker News.

I appreciate this feedback. I like how another commenter put it: "I think there is very little room for this sequence of events to be considered fine" - from a non-crypto-partisan, rule-of-law perspective.

> Second, you’re arguing they were involved in illegal activities since before going public. How do you know that for sure?

Because that is what the SEC is alleging in their lawsuit.

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

#449

Post by dogleash »

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…

> 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.

> Any crypto sceptic who does not see a problem with this is tainted by their priors.

My priors include the idea federal agencies operate within a scoped statutory authority, and the scope of that authority can even vary from function to function. It's a very "swim in your own lane" kind of partitioning.

It can lead to counterintuitive interactions, but on the whole makes sense if you step back and look at the system of congressional delegation to agencies they legislatively invent.

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

#450

Post by JumpCrisscross »

ceejayoz wrote: post #416
JumpCrisscross wrote: post #351

Earlier quoted context omitted.

The laws pertinent to the SEC's complaint are the '33 Act, '34 Act and court cases which constructed the Howey Test. None of them were created by the SEC.

The '33 and '34 Acts give the SEC the ability to write the regulations, via wording like "under rules and regulations which the Commission shall prescribe". Congress defines a variety of things, but the SEC makes most of the nitty gritty procedure/rules out of those definitions and directives. The Howey test exists because the SEC enforced said new-ish regulations against someone, and the court agreed with them, hold…

> the SEC makes most of the nitty gritty procedure/rules out of those definitions and directives

The violations the SEC describes in its complaint (¶ 8) are not nitty gritty. It's all bare-boned Exchange Act malfeasance.

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