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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

#121

Post by xwolfi »

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.

> The SEC’s complaint also alleges that Kraken’s business practices, deficient internal controls, and poor recordkeeping practices present a range of risks for its customers. As alleged in the complaint, Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash. Kraken also allegedly commingles its customers’ crypto assets with its own, creating what its own auditor had identified as “a significant risk of loss” to its customers.

Sounds clear enough to me...

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

#122

Post by BlueTemplar »

Uptrenda wrote: post #120
jcranmer wrote: post #73

Earlier quoted context omitted.

Matt Levine I think put it best: if Bernie Madoff were to go to the SEC and ask them "I don't know how to run a Ponzi scheme legally, can you please update the guidelines to make it easier", of course the SEC is going to refuse. And the situation with cryptocurrencies seems to be broadly similar: there's actually a pretty clear answer as to what would need to be done to be fully above-the-board and legal, it's just n…

[flagged]

Didn't FTX also have "notable investors", which despite this, were so careless with their money that they didn't even think sending an accountant to check on the (nonexistent) FTX books ?

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

#123

Post by Geee »

FabHK wrote: post #103
kylebenzle wrote: post #53

Earlier quoted context omitted.

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.

Seems to me that one can make an argument that the following people, named in bitcoin/src/kernel/chainparams.cpp, control BTC: vSeeds.emplace_back("seed.bitcoin.sipa.be."); // Pieter Wuille, only supports x1, x5, x9, and xd vSeeds.emplace_back("dnsseed.bluematt.me."); // Matt Corallo, only supports x9 vSeeds.emplace_back("dnsseed.bitcoin.dashjr.org."); // Luke Dashjr vSeeds.emplace_back("seed.bitcoinstats.com."); //…

Those are the seed nodes for finding peers in the network when you're starting Bitcoin for the first time, and there aren't other known peers. Sure, you could ask around for additional peers through other channels.

Btw, I couldn't find these on the newest version, so I'm not sure how they do it now.

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

#124

Post by Quindecillion »

ChainOfFools wrote: post #116
Quindecillion wrote: post #114

Earlier quoted context omitted.

There's a lot of problems with your post, but I'm going to focus on the one that bamboozled me the most. > illegal mining What exactly is "illegal mining"?

2022: https://www.bangkokpost.com/thailand/general/2455120/thousan ... 2023: (much smaller scale than above but still stealing over USD $150000 a year in electricity) https://www.bangkokpost.com/thailand/general/2569745/crypto- ... This time around the authorities estimate that they've only found 1%, not 10% as they had before, of the illegal mining done in their country.

100 million baht in 2 years? So about $1.5m USD in a year.

That's not exactly "staggering" or significant in the context of the Bitcoin network. Unlikely that such operations have any meaningful control over the network or liquidity, even if it's just 1% of what's known.

You seem to think that these sorts of operations are somehow connected in a large coordinated cartel the controls the industry, but given that they're illegal, isn't it far more likely that these "black market" operators are fairly small by comparison to the legitimate players in the US?

The mining ban in China a couple of years back gave us a pretty good indication of the size of the legitimate industry in that country, and it absolutely DWARFS the biggest of the illegal examples you gave.

Interesting way to word it too, "illegal mining". They're just stealing electricity. If they used that stolen electricity for heating, you wouldn't call it "illegal heating", would you?

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

#125

Post by hn_throwaway_99 »

kadoban wrote: post #68
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.

Many organizations in law enforcement have explicit programs to do exactly that. Here is one from the IRS: https://www.irs.gov/retirement-plans/determination-opinion-a...

Basically, the rules for whether a retirement plan meets the qualifications for favorable tax treatment are highly complex, so a plan sponsor can ask the IRS to determine if the structure of the plan fits the rules by asking for a "Favorable Determination Letter". This seems to me highly analogous to what crypto exchanges wanted from the SEC.

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

#126

Post by landemva »

SeanAnderson wrote: post #42
ketzo wrote: post #37

Earlier quoted context omitted.

I mean, Kraken is not a registered securities exchange. They offer many cryptocurrencies. The SEC has indicated that it considers most, probably all, cryptocurrencies to a be securities. The writing has been on the wall for a while -- Coinbase got a Wells letter, basically a "lawsuit is coming" warning, months ago.

Well, Gary Gensler is on record in 2023 saying Bitcoin is not a security. So, I don't think it's accurate to say "probably all." In previous years Ethereum had also been described as not a security, but that opinion seems to have shifted with time. It's still not super clear to me why he says Bitcoin is not a security, but that Ethereum would be a security. I'm fine with whatever ruling as long as I can understand ho…

> I feel pretty good about considering stable coins securities.

Take that further to airline points and Chipotle points. If the stablecoin does not provide returns to the holder, how is it an investment contract?

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

#127

Post by jabits »

BlueTemplar wrote: post #122
Uptrenda wrote: post #120

Earlier quoted context omitted.

[flagged]

Didn't FTX also have "notable investors", which despite this, were so careless with their money that they didn't even think sending an accountant to check on the (nonexistent) FTX books ?

This is such a weak reply. If you have something to add, it should pertain to the broad market, like the comment you re responding to does...

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

#128

Post by patmorgan23 »

ascendantlogic wrote: post #96
kadoban wrote: post #68

Earlier quoted context omitted.

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

At some point someone has to explain to you what law you broke and how you broke it. We'll see how this goes for the SEC. I'm not convinced they're going to end up on the winning side with these vague enforcement lawsuits substituting for policy/law from the legislative branch.

"At some point someone has to explain to you what law you broke and how you broke it. "

Yes, that would be what the SEC is doing right now by initiating enforcement actions.

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

#129

Post by lmm »

kadoban wrote: post #68
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.

Morally they do. Secret laws and secret courts are widely recognised as inimical to democracy; laws that are too complex for regular people to understand are too, for the same reasons.

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

#130

Post by patmorgan23 »

jongjong wrote: post #80
jcranmer wrote: post #73

Earlier quoted context omitted.

Matt Levine I think put it best: if Bernie Madoff were to go to the SEC and ask them "I don't know how to run a Ponzi scheme legally, can you please update the guidelines to make it easier", of course the SEC is going to refuse. And the situation with cryptocurrencies seems to be broadly similar: there's actually a pretty clear answer as to what would need to be done to be fully above-the-board and legal, it's just n…

The SEC has no place in a free market. If people trust a company which co-mingles funds, they should be punished for misplacing their trust. Both the scammer and the scammed deserve a share of the punishment. Life naturally punishes the scammed already and teaches them a lesson at the same time... Without the help of the SEC... How good is that?! If my startup fails because I hired the wrong people, I take the full b…

You're assuming perfect information which does not exist in the real world.

Regulators are good actually.

Forcing companies to make truthful and accurate disclosures and forcing them to implement basic controls is important. It makes everyone better and protects investors and customers from unnecessary frauds and disruptions.

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