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SEC charges Kraken for operating as an unregistered securities exchange

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Re: SEC charges Kraken for operating as an unregistered securities exchange

#61

Post by SeanAnderson »

kylebenzle wrote: post #53
SeanAnderson wrote: post #51

Earlier quoted context omitted.

Well, I had started the conversation about BTC not BCH. Personally, I feel that BCH has more of a team associated with it than BTC. That said, none of what we're talking about addresses the fact that, in 2018, Gensler said, quote, "Bitcoin. Ether. Litecoin. Bitcoin Cash. Why did I name those four? They’re not securities." Since then, things have changed, and now Gensler only highlights BTC as not a security. If the i…

Isn't BTC controlled by one single very centralized group, Blockstream? I could be wrong but I thought Adam Back's Blockstream long ago hijacked the GitHub repo and took full control of that project.

It very may well be. I don't own any BTC and I had limited awareness of Blockstream until you mentioned it. I feel that this would make a stronger case for it being considered a security, though, no? And yet on September 27th 2023 Gensler reiterates Bitcoin is not a security:

https://www.forbes.com/sites/jasonbrett/2023/10/01/sec-chair...

I feel we're getting a bit into the weeds, though.

Is your stance that Bitcoin is a security and that remarks made two months ago by the Chairperson of the SEC are misguided?

Or is it that Bitcoin is not a security, but Ethereum is? If so, is that for technical reasons or just due to how it's discussed and marketed?

Re: SEC charges Kraken for operating as an unregistered securities exchange

#62

Post by yieldcrv »

lettergram wrote: post #47
yieldcrv wrote: post #44

Earlier quoted context omitted.

This logic is why the SEC is losing in court The SEC’s first strategy was to go after the companies creating the crypto. Most that are targeted settled and exchanges delisted those crypto assets that were ruled to be securities - registered or not - then the SEC went after well funded, more professional and less risk averse ones and have been losing in court. So this is a war of attrition so the SEC then just went wi…

It’s because laws set out what are securities. A distributed ledger of cryptographic tokens is by definition not a security. So the SEC just claiming they are isn’t going to win any court. Their goal is really to drain funds and get companies to settle. Because the SEC isn’t supposed to determine what is a security

the security law regulates transactions, that is sufficiently enough to cover cryptographic tokens and the ways they are settled, and thats not where the SEC loses

they lose because they cant articulate when they are securities and when they're not securities

their theory does play into a trap you pointed out, in that there are plenty of non crypto products that function the same way - limited supply runs sold by corporate issuer where a ton of speculator collectors hope the price goes up based on the actions of the issuer - that the SEC never bothered with. Either they're all securities or none of them are. The SEC has been asked to explain the difference and fails. People on this forum played devils advocate on a supposed legal difference just because they dont like crypto, but their arbiter - the SEC - fails to find those points strong enough to argue its position at all! the courts and the senate are like “wait, you don’t have an argument at all? good lord”

but like an abusive spouse it just keeps circling over the same word salad of “you’re supposed to know what I want, its been sufficiently clear the entire time” instead of articulating themselves using their words, to the shock of the couples counselor who already had a bias towards the spouse but can’t come up with anything to help their ridiculous case

Re: SEC charges Kraken for operating as an unregistered securities exchange

#63

Post by wmf »

Ferret7446 wrote: post #28
kklisura wrote: post #24

Earlier quoted context omitted.

I find following more troubling: > As alleged in the complaint, Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash. Didn't FTX/SBF do same?

Is that inherently problematic, as long as they're accounting properly?

Every regulation comes from some past scam. Clearly there must have been enough "oopsies" in the past attributed to commingled assets that regulators said "no more".

Re: SEC charges Kraken for operating as an unregistered securities exchange

#64

Post by koolba »

ForkMeOnTinder wrote: post #36
Animats wrote: post #32

Earlier quoted context omitted.

Yes. Because they're gambling with the customers' money. That seldom ends well.

Commingling doesn't imply gambling. I could borrow $10 from Jim, and $20 from Sue, and deposit them both into the same Chase account which now has $30. As long as the balance stays above $30, everything is fine.

You could let the balance fall below $30 in your example because it’s a loan (“borrow”), not a deposit.

If you’re claiming to hold the funds on their behalf and do otherwise (like “investing” them in your less than arm’s length hedge fund), then you’re breaking your fiduciary obligations.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#65

Post by ascendantlogic »

I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#66

Post by kova12 »

ascendantlogic wrote: post #65

I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.

such approach has been working fine for IRS

Re: SEC charges Kraken for operating as an unregistered securities exchange

#67

Post by lettergram »

yieldcrv wrote: post #62
lettergram wrote: post #47

Earlier quoted context omitted.

It’s because laws set out what are securities. A distributed ledger of cryptographic tokens is by definition not a security. So the SEC just claiming they are isn’t going to win any court. Their goal is really to drain funds and get companies to settle. Because the SEC isn’t supposed to determine what is a security

the security law regulates transactions, that is sufficiently enough to cover cryptographic tokens and the ways they are settled, and thats not where the SEC loses they lose because they cant articulate when they are securities and when they're not securities their theory does play into a trap you pointed out, in that there are plenty of non crypto products that function the same way - limited supply runs sold by cor…

https://www.nyse.com/publicdocs/nyse/regulation/nyse/sea34.p...

You can read the act yourself, a cryptocurrency (depending on the type) is not a security by the definition provided. Nor does the cryptographic token have an issuer. Quite literally, most crypto has none of what’s defined under the SEC scope.

That said, sure _some_ of the crypto tokens would could count as securities. But even then it’s not clear the exchanges should be the ones being targeted.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#68

Post by kadoban »

ascendantlogic wrote: post #65

I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.

Law enforcement has no obligation to explain the laws to you.

Re: SEC charges Kraken for operating as an unregistered securities exchange

#69

Post by nijaar »

kova12 wrote: post #66
ascendantlogic wrote: post #65

I feel like this won't end up going well for the SEC. This whole methodology of telling exchanges "I don't know, you figure it out" when they ask for clarity and then turning around and suing them for not figuring it out is extremely shaky legal ground.

such approach has been working fine for IRS

Not really bc the IRS actually has puts guidelines (although kind of slow) for crypto unlike the SEC

Re: SEC charges Kraken for operating as an unregistered securities exchange

#70

Post by freejazz »

SeanAnderson wrote: post #6

Uhh, what? I've always considered Kraken to be the most rules-abiding exchange - more so than Coinbase. They're quite shrewd in what they're willing to list. I wonder if SEC is charging Coinbase soon, too?

Didn't Kraken always refuse out of principle to get a NYS Bitlicense?
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