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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

#481

Post by pjc50 »

jude- wrote: post #474
pjc50 wrote: post #442

Earlier quoted context omitted.

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.

Yes. See the Reg A token sale filing docs on the SEC Edgar system for the STX token [1]. Disclaimer: I work on STX and its blockchain [1] https://www.sec.gov/Archives/edgar/data/1693656/000110465919...

Very interesting! What's the conclusion? The last document appears to be dated 2019: https://www.sec.gov/Archives/edgar/data/1693656/000110465919...

So they did make token sales, and complied with the "accredited investor" rule.

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

#482

Post by yieldcrv »

ceejayoz wrote: post #419
yieldcrv wrote: post #46

Earlier quoted context omitted.

> Why didn't Coinbase just register everything non-Bitcoin? The organizations that created the assets have to register them as securities, Coinbase didn't create the assets. A broker-dealer (a securities exchange) can only trade registered securities, broker-dealers have to register to exist. So even if Coinbase went through the process of registering as a broker dealer (to be a securities exchange), they could not t…

> So the SEC changed its strategy recently and started suing exchanges using circular logic, claiming assets that they never said were securities to be securities and saying "these are unregistered securities and you are trading them in violation of Federal Securities laws", having never proved in court that these were securities. You're describing the procedure of proving in court that they're securities. The SEC cl…

When the SEC had a disagreement about the category of an asset or transaction, they would go to court to hoping to get the judge to agree those were securities being traded noncompliantly, with the defendant being the issuer

After getting an agreeing verdict on that they would go to the promoters and exchanges and sue them too

Now they're skipping that and going straight to the exchanges, because the SEC wasn't exactly winning

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

#483

Post by everfree »

janandonly wrote: post #371
everfree wrote: post #213

Earlier quoted context omitted.

What do you call the group of developers who control write access and pull request approvals for the Bitcoin Core GitHub repository? You can't just apply to become one of these devs; they're grandfathered in from the early days. And they're the sole group who effectively have the final say on what features make it into the network protocol. To me, that sounds like a centralized team employing centralized decision mak…

The Bitcoin network is steered by these developers, but as we saw with the User Acitvated Soft Fork (UASF) of 2016, the users ultimately decide what Bitcoin is. The vast number of users, or at least, those who run their own node, choose to run a forked version of the client software that activated a contentious upgrade (the upgrade was Segregated Witness). Only after the fact, this code was merged into the Core branc…

> Only after the fact, this code was merged into the Core branch.

That's incorrect. The code was merged into the Core branch first. The protocol change was initiated by the developers, not by the users.

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

#484

Post by Ensorceled »

crazygringo wrote: post #43
everfree wrote: post #13

I stopped reading the article when it started comparing cryptocurrency exchanges to the business of selling heroin. No matter your opinion on the issue, that's just alarmist nonsense. I agree that it's reasonable to apply existing securities laws to cryptocurrency, and I agree that "but they let us go public" is a bad argument, but Gensler's SEC has also been intentionally obtuse about how those securities laws shoul…

I was taken aback at first as well but then I realized I was misunderstanding the point. The article isn't saying crypto is harmful like heroin at all -- it's just using heroin as an arbitrary example of something illegal. It's clear to everyone that selling heroin is illegal, in a way that e.g. insider trading perhaps isn't. So it's not alarmist nonsense, it's just a vivid analogy.

> So it's not alarmist nonsense, it's just a vivid analogy.

And, given this discussion, it vividly illustrates the point.

The number of people who literally can't entertain even the vague possibility that Coinbase might be doing something illegal (as in illegal like heroin) and thus can ONLY interpret the analogy as Coinbase is bad (as in bad like heroin).

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

#485

Post by everfree »

KingOfCoders wrote: post #350
everfree wrote: post #254

Earlier quoted context omitted.

> 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…

"The USA is the world's finance hub because it has the most reliable systems for trading financial assets" Because there is regulation. You seem to get cause and effect mixed up.

As a counterexample, I haven't needed regulations to be able to have great confidence that my Uniswap DeFi trades will settle within seconds. The system is extremely reliable, despite no other participant in it being regulated or even trustworthy.

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

#486

Post by everfree »

lukeramsden wrote: post #388
everfree wrote: post #213

Earlier quoted context omitted.

What do you call the group of developers who control write access and pull request approvals for the Bitcoin Core GitHub repository? You can't just apply to become one of these devs; they're grandfathered in from the early days. And they're the sole group who effectively have the final say on what features make it into the network protocol. To me, that sounds like a centralized team employing centralized decision mak…

The difference is that nobody has to actually accept updates that the core team make - and this has happened a few times, resulting in forks, although those cases were for things the core team refused to do - how can you “fork” a security? What is the common enterprise when forking a PoW chain?

> how can you “fork” a security?

Exactly the same way you fork a non-security. Security is a legal designation, not a description of how a particular asset is implemented (in a forkable structure like a blockchain).

> What is the common enterprise when forking a PoW chain?

The developers/promoters of the fork, potentially.

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

#487

Post by everfree »

ceejayoz wrote: post #422
everfree wrote: post #24

Earlier quoted context omitted.

The Howey test is applied to the current status of an asset. It doesn't take an asset's origins into consideration. If you believe that Ethereum currently represents "an investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others", then it is a security. If not, then not.

If it was a security, but no longer is, the sale of an unregistered security back then was still a violation of the law that (barring statutes of limitations) could presumably still be prosecuted. The sale of ETH today would not be if it has transitioned into commodity status. The Howey test would be applied to the status of the asset at the time of the alleged violation of the law that is being prosecuted.

Right, but past violations of the law have nothing to do with how an asset should currently be regulated, which is what this thread is about.

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

#488

Post by hluska »

miracle2k wrote: post #448
hluska wrote: post #428

Earlier quoted context omitted.

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…

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

And investigations obviously take time. We don’t want a securities regulator who blindly files lawsuits against public companies.

Sorry but your arguments aren’t very convincing and I really dislike crypto.

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

#489

Post by ceejayoz »

everfree wrote: post #487
ceejayoz wrote: post #422

Earlier quoted context omitted.

If it was a security, but no longer is, the sale of an unregistered security back then was still a violation of the law that (barring statutes of limitations) could presumably still be prosecuted. The sale of ETH today would not be if it has transitioned into commodity status. The Howey test would be applied to the status of the asset at the time of the alleged violation of the law that is being prosecuted.

Right, but past violations of the law have nothing to do with how an asset should currently be regulated, which is what this thread is about.

It has plenty to do with it.

People are going "well they say BTC and ETH are OK, why not this random shitcoin?"

The answer is "ETH wasn't OK when it was still like said random shitcoin".

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

#490

Post by jacquesm »

Dylan16807 wrote: post #214
jacquesm wrote: post #210

Earlier quoted context omitted.

Yesterday would be fine too. In general you should not hold a balance anywhere but in a bank that is backed by the Federal Deposit Insurance Corporation (FDIC) or your local equivalent. If it's pocket change then it doesn't really matter.

FDIC is great, sure. But there's a significant difference in risk in having $500 in Amazon gift cards versus that store in the dying mall that's probably going to be gone in six months. And it's reasonable to try to figure out which one Coinbase is. There are many value that are neither trivial nor worth the effort of upgrading from pretty safe storage to completely safe storage.

These have nothing to do with each other.
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